How Consumer Behaviour Is Driving Innovation in the UK Food Sector: Five Lessons from the Food Industry

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By Professor Ganna Pogrebna (Professor of Economics, University of Birmingham)
Ian Noble (Senior Research, Development and Quality Director, Mondelez International)
Rimi Obra-Ratwatte (Principal Scientist, Global Nutrition, Mondelez International)

The year 2017 marks a new chapter in the development of the UK Industrial Strategy, which will address a number of local challenges such as Brexit and growing political uncertainty. Under these circumstances, can innovation become the silver bullet for igniting growth of the British economy? And how is this influenced by consumer behaviour? Few sectors have better insight into how consumers can shape innovation than the food industry where manufacturers have invested in understanding consumer insights for years. So what lessons can we learn from companies in this sector, and in particular innovation within snack foods, which could help to shape industrial strategy for the whole UK food sector.

Lesson 1: Know your consumers

We live in an era of rapid technology evolution where information is increasingly more accessible to larger groups of people.  For example, consumers can readily access nutritional information about any product in a matter of seconds, and so the delivery of healthier food options using ingredients consumers understand becomes more imperative. In sweet snacking, a key part of the category has been availability through the impulse or convenient channel, however companies have recognised that consumers are still placing the same or even more demands on product nutrition, ingredients, portion size and satisfaction as they would on products they would consume within main meals. For example, Mondelez International (the company which was created when Kraft demerged its grocery business in 2011) has further evolved its wellbeing strategy to use more clean, simple and authentic ingredient labels. They have also invested in supporting Mindful Eating behaviours i.e. enjoying products with more consciousness in order to encourage healthier eating habits and relationships with food.

Lesson 2: Lead by nurturing talent to improve consumer experience

Individuals need to be supported to develop new ideas into creative products, services, and business models. Job security is imperative in improving the consumer experience, especially in the light of growing uncertainty associated with Brexit. The UK food industry is particularly good at nurturing as well as attracting talent. In recent years, the drive to look for local talent has been supported by the British media for example, TV shows such as the Great British Bake Off, among others, increased interest to the industry and promoted its capacity-building.

Lesson 3: Co-create with your consumers

Consumer experience is transforming the way in which companies do business. This is especially true when considering the growing demand for personalisation of products. Here, the main challenge is to balance the cost of product personalization with offering personalised features. In this domain, the future lies in working together with consumers to co-create new products. Several food companies around the globe already offer “chocolate as a service” by creating on-demand 3D-printed products made to order using consumer design, or by offering chocolate as a raw material to fit consumer-operated 3D printers. This allows consumers to have a first-class experience as chocolate creators. Even though at present, chocolate 3D printers are rather expensive retailing at £3k, it is expected that with the development technology they will become more accessible to consumers in the future.

Lesson 4: Make use of data to drive productivity

Consumers generate large amounts of data and making use this is imperative to business survival. Analysis of data allows companies to better predict consumer demands and, in return, improve business strategy. For example, data analytics of consumer behaviour helped Mondelez International to understand market trends in confectionery production.

The data, which demonstrated a strong market in the area, supported the company’s decision to invest £75m to modernise their Bournville factory near Birmingham, which not only helped Mondelez to increase productivity, but also to gain a greater market share in the UK.

Lesson 5: Focus on consumer happiness

Policy makers focus increasingly more on emotive measures of prosperity such as “happiness” and “wellbeing” which go beyond the traditional economic indicators such as GDP or national income. The National Wellbeing Programme uses a range of national-level indicators to approximate happiness in the UK. The government regularly conducts surveys asking Britons to reveal their mental wellbeing and job satisfaction. One of such surveys, has found using measures of Subjective Wellbeing (SWB) that 81% of UK citizens want the government to concentrate on increasing citizens’ wellbeing rather than the national wealth. Many lessons can be drawn from the food industry and, especially, chocolate producers who seem to know how to make their customers happy.

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