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Healthy food choices, and access to the information needed to make them, aren’t just important to consumers today – they are just as critical to the financial health and market positioning of consumer packaged goods (CPG) manufacturers.
A recent Capgemini report describes an emerging consumer segment referred to as LOHAS (Lifestyles of Health and Sustainability) which comprises about 19 percent of the U.S. adult population or about 41 million consumers. Capgemini expects sales from this segment to quadruple in five years.
Three significant forces are driving the industry to respond. First, consumers are increasingly concerned about the nutritional value of the products they are putting in their cart and can retrieve this information online or from a mobile application. Second, government agencies, public interest groups and industry initiatives are all positioning themselves to be the nutritional watchdogs in consumers’ kitchens. And third, the media provides a daily drumbeat of warnings about America’s health, including the widespread coverage of the country’s obesity and diabetes epidemics.
The widespread concern for American’s physical and economic health has sparked a concentrated, national effort to create more consumer demand for healthy food choices – especially for children – that will help battle hypertension and diabetes. As the population ages, older consumers are also seeking out nutritional information that will help them make educated choices in fighting heart disease and other chronic conditions.
Gluten-free products are just one example of this trend. Packaged Facts projects that U.S. sales of gluten-free foods and beverages alone, currently growing at a 30 percent compound annual growth rate, will approach $6 billion by 2015. Meanwhile, the share of the gluten-free market previously held by health and natural food specialty retailers has declined almost 50 percent as large supermarkets and mass merchant retailers increasingly target the nutrition needs of their customers, according to Packaged Facts.
Food retailers and manufacturers have also created their own nutritional labeling programs to address consumer concerns. The Food Marketing Institute says that almost half of retailers have implemented guidance programs designed to increase awareness of nutritional labeling and have created health and wellness programs to help guide their customers’ purchase decisions.
Meanwhile, government agencies, public interest groups and industry associations are also taking note – through programs like the USDA’s Choose My Plate meal planning initiative, the industry’s Healthy Weight Commitment program, and Michelle Obama’s Let’s Move! Program. These groups are raising awareness of the issues among both consumers and regulators and proactively offering a range of solutions.
As consumers question what’s in their food and pay increasing attention to the nutritional values of the ingredients of those products, it remains difficult for marketers and R&D teams to maintain an up-to-date view of what’s in their competitors’ products. It can be challenging for larger food manufacturers and distributors to maintain a single view of all the attributes of each product they, themselves, sell, due to the complexity of their organizations and business processes.
The Dynamic Data Challenge
We see manufacturers using internal resources, brokers and market research companies to shop for the latest products, but few have a systematic approach to acquiring and maintaining a complete database of this information. According to research by SymphonyIRI, CPG manufacturers introduced more than 150,000 new items in 2010 – with 96 percent of those being line extensions. With new products and variants introduced each month, this can be a significant, ongoing costly effort. This means that, in most cases, these efforts are done as needed for individual projects.
This ad-hoc approach can work well for small projects, but it runs into trouble for projects of any size or strategic importance for two reasons.
First, gathering a complete set of products for any category is challenging, requiring shopping trips to multiple retail outlets across the country. Leading brands and sizes are easy to find, but gathering all the flavors and packaging for important regional brands takes time. And any collection of products is out-of-date the day after it is assembled – new product introductions are a constant, so each collection of products requires continuous maintenance.
Second, once collected, information from each package needs to be captured and coded in a uniform way so it can be used for analysis. This would seem to be a simple requirement but it’s deceptive; the time and effort required mounts quickly.
Faced with these challenges, leading manufacturers have moved away from trying to maintain these databases themselves and, instead, are turning to third-party product databases for comprehensive, accurate and up-to-date nutritional information on products.
There are several advantages for CPG companies who are using a product database for their market intelligence needs. The dynamic nature of food product development – especially when it comes to changing nutrition information – means that firms don’t have to fight the never-ending battle of acquiring products and keying in nutrition information into their own databases.
The product database can also provide more comprehensive information much more quickly than any CPG company’s internal resources can gather and analyze for their own product development needs. Using a product database, marketing and R&D teams can quickly track dozens of attributes – including ingredients, product description and details, warnings, directions, indications, drug interactions, manufacturers’ claims, and nutritional profiles – across all the products in their categories.
With thousands of new products and package changes each month, a product database assures a timely capture of new product images and product information in a single location. That in turn provides great insights for the marketing team about emerging nutrition trends that they can leverage for their own merchandising and promotional activities.
No Longer an Outlier
Bringing more healthy products to consumers has become a great market opportunity for CPG manufacturers, but it is also a requirement in order to satisfy consumers’ growing preferences to eat – and be – healthier. Simply put, nutrition has gone mainstream, and CPG manufacturers looking for a competitive advantage are positioning themselves to be providers of healthy products.
To accomplish that, leading manufacturers are turning to product databases to better track what’s going on in their markets. Neutral third-party data suppliers help CPG companies compete more effectively by providing them with a thorough and timely understanding of the changing competitive environment. And this information is being used by the market leaders to create a healthier bottom line.
Editor’s Note: Susan B. Sentell is president and CEO for Gladson, a leading provider of consumer packaged goods (CPG) services for manufacturers, retailers, wholesalers and brokers. Gladson builds databases of product information and package images for a wide range of uses, including shelf space management, category management, research, and e-commerce applications such as online shopping and nutrition programs for consumers. Sentell can be reached at [email protected].