Put the consumer first

Editor's note: the following articles are from the recent International Egg Commission conference in London.

Egg producers have three customers: the retailer, the shopper and the consumer. "The most successful businesses are those that put the consumer at the center of their thinking every day," Jonathan Banks of A.C. Nielsen, said.

Egg sellers should continue to be enthused about the value for money and versatility of the product, emphasizing taste and convenience. But they also should remain nervous about animal welfare, salmonella and temperature control, avian influenza and other concerns such as saturated fats and cholesterol in yolks, and the possibility of pesticide residues, he said.

Banks highlighted the fact that consumers are getting older, richer and fatter, while at the retail end of the marketing chain, the growth is in hypermarkets, discounters, and in private label products.

One of the biggest impacts on the ways future business will be conducted will result from the increasing interest by both manufacturers and consumers in climate change. Retailers are beginning to face up to this issue and will put consumers under more pressure to address it as well.

Less Carbon, More Profits

Banks suggests that if companies conduct a carbon audit, they will find ways of reducing their carbon emissions. "If you reduce your carbon emissions you will reduce your energy costs and increase your profits," he added.

A key consumer trend is the increasing age of the population.

Since 1990, what he described as the global Middle Class has almost doubled to 1.4 billion. The growth in modern retail developments goes hand in hand with the economic development in a country. Thus, those countries with the highest GDP per capita have the highest percentage of modern format retailing

More Spent in Supermarkets subhed

"As we get richer we spend more of our shopping in super- and hypermarkets," he said. However, when it comes to the percentage of household income spent on food, in those countries with a high GDP/person, such as the United States, the United Kingdom and Norway, the percentage of household income spent on food is much smaller than in countries such as India, Romania, or Russia.

Recent years have seen the development of four mega trends in all developed economies: health/well-being, ethics, indulgence, plus pleasure and convenience/practicality. Health was the most important.

It is important to realize that perceptions, rather than truth, influence people, Banks said. Another major development among consumers is the increasing incidence of obesity.

Retail Concentration Pressures Prices

In many developed countries, just a handful of grocery retail groups account for the bulk of the businesses and their shares of the market are, in most instances, increasing. "We are seeing growth in the power of the bigger multiples," he added.

As a result, more pressure is being put on prices in stores because discount retailers have increased their overall market share. However, the success of discount retailing varies between countries. But, even so, the focus is on both quality and price.

Banks said that while consumers say that low prices are important, when purchases are examined, good value for money spent, high quality fresh food and having a good range of fresh products are perceived as being more important.

Over time, private label is increasing its market share where: brands have lost their edge in creating value (real or perceived), price has become the only differentiator, innovation was scarce, or there was production capacity with high overheads.

"Private labels grow in those categories where brand builders fail. Private label does not cause brands to be weak, it is the consequence," he added.

Commodity markets could be turned round. It is most important when you launch a brand that you support it for at least three years. "You must keep developing your distribution and penetration beyond year two," he added.