Changes Ahead In All Market Sectors

David Bosshart from the Gottlieb Duttweiler Institut in Switzerland told his audience that they must remember that there are always alternatives, and it is also important to note that no major trend goes on forever. “Always be on the lookout for a counter trend,” he said. It is dangerous to simply extrapolate from the past.

Key points from his paper included:

• The power shift from manufacturers to retailers, and now to consumers, would continue.

• No sector of the market was prepared for the demographic changes that were taking place.

• New technologies, especially the Internet, were giving consumers access to ever more choices.

• Only super brands and niche brands will survive.

• There would be both consolidation and deconsolidation in the retail grocery sector.

• Multidimensional superstores were the way forward providing three levels of price, quality and service - low, medium and high.

• Consumer health in aging western societies would be a major market. Markets would converge, i.e. leisure, hospitality, retail, health. Only a holistic approach will be successful.

The biggest challenge facing all rich western nations is that people were getting older. Demographics are changing rapidly. Within Germany, Italy and Spain, the fastest growing consumer segment is people aged between 100 and 110! “Are they going to eat eggs?” he asked. He felt that we are not yet prepared for these demographic changes.

There has also been a major shift in how people looked at their lives and what they were going to consume.

In many countries, where a large proportion of the population was elderly, people were looking backwards living off their memories and here he was sure that there would be a revival of many of the old brands with which they were familiar. “The development of the ‘memory market’ will be most interesting,” he added. Where the bulk of the population was over 55, you had a world of memories rather than dreams.

“The new middle age is now between 50 and 70. Our consumer culture is becoming more mature and more demanding. So there will be much more pressure in the future on TV ads to do much more to convince people to buy their products,” he said.

A major shift in attitudes in our global economy is that we now perceive nations in terms of consumer values. “We value nations in relation to their quality of service and their ability to deliver consumer values. Our relationship with a country is often determined by our first contact with food and drink. There has been a tremendous shift in perception of a country from its industrial/political position to one of food and/or leisure,” he added.

Looking at retailing, he said that it was no longer simply competition between retailers, as they were now also in competition with banks, insurance and mortgage companies and others. “People’s disposable incomes are shrinking, so they are becoming much more selective in deciding whether they should buy or save, so you have to do more to convince them to buy your products,” he added.

New technologies, and in particular the Internet, would help consumers access more choices. “The Internet transforms nearly everything into a commodity. There is now a cheap model everywhere. And where there is a cheap model, it can heavily influence the whole industry.” he added. More and more niche markets would emerge and survive. There would emerge niches within niches.

There are three retail models, all of which are going to change. The first is typified by Wal-Mart which has optimized its supply chain so that they deliver things faster, cheaper and better than anyone else. They want to be the number one in whatever they sell. However, he did not think this organization was able to determine trends.

In his view, the best at doing this is Tesco, which typifies the second type of retail category. Tesco is about customer clusters, or customer profiles. They have devised a customer base, which is divided into more redefined clusters. They know exactly what the people in each cluster are going to buy, and can anticipate their further needs,” he observed.

Discounters, such as Aldi, typify the third category. These operate on the strong concept of selling a limited number of products at the lowest possible price. Aldi achieves this by having an extremely simple supply chain. The danger here is the temptation to increase the number of articles offered, thereby increasing the complexity of the handling.

“However, all three types will have to change their business models,” he asserted. The future will see more small outlets, closer to the customer, selling maybe no more than 2000 items but offering good quality and choice at fair prices. Their product mix will be more finely crafted to the local market.

The mass market will continue to grow but also the premium niche markets.

There would be much more diversification and more smaller but profitable operations.

“This will enable retailers to return to what they were, a personalized business where the consumer is treated as an individual,” he asserted.

The “Golden Age”of Eggs is Here

“We are entering the golden age of the egg as a result of biotechnology,” said Dr. Geza Mezey of the Medical and Health Science Center of the University of Debrecen, Hungary.

Eggs are now classified as a functional food. These are foods that encompass potentially healthful products including any modified food or ingredient that may provide a health benefit beyond the traditional nutrients it contained. “The healing power of foods is a popular concept that focuses on how ‘super foods’ can have health-protecting properties. Medicinal foods have been part and parcel of the natural products industry for a long time and through emerging scientific research and particularly through growing public interest, they have reached the mainstream,” he added.

“The common egg is not yet gold but it is glittering,” he observed, stressing the energy and vitamin content along with the benefits derived from essential amino acids, the biologically well utilized proteins (for sportsmen and muscular atrophy in the elderly), lecithin, choline (aiding memory, Alzheimer’s disease), lutein and zeaxanthin (macular degeneration) and HISS, an hepatic insulin sensitizing substance (to aid diabetics).

He went on to say that eggs are “nutritional powers stations” which have led to the development of the Smart egg, the Designer egg, the High Tech egg, the Specialty egg and the omega-3 enriched egg.

He noted that there is growing concern among consumers over a healthier lifestyle and nutrition. This had led to an expanded market for functional foods, adding value to the egg.

Eggs Better Than Replacers, But More Costly

Although whole egg, whites and yolks were more expensive than their ‘chemical’ replacers, the industry should not be discouraged, as eggs will be used in the food manufacturing industry for many years yet, claimed Albert Monferrer of BDN, S.L. in Spain. There aren’t many competitors, but as they are by-products they are usually cheaper. However, comparing the functionality of egg products with their replacers, in most instances the egg product has a distinct advantage over its competitor, and it was unusual for a food manufacturer to totally replace the egg constituent.

Nevertheless, he admitted that in the USA, for example, eggs were not used in pasta mixes because of concerns over consumer allergies to eggs. However, he agreed that, if the same result could be achieved using a cheaper product, then a food manufacturer was likely to change the ingredient mix.

For the production of omelettes and cakes and muffins there is no real substitute for eggs. However, as a binder in the meat industry, whole egg is not commonly used; blood plasma (a by-product from poultry slaughter houses) and also soy protein isolates were the preferred additives. Traditionally custard and flans were made using whole egg but now this is not always the case. For cakes and muffins there is no complete substitute.

Eggs are not used in the batter for breading mainly because of price; flour and mainly soy protein concentrate being preferred. Although whole egg is used for both mayonnaise and salad dressings, there are some alternatives. Smoke fractions can substitute for eggs in browning.

While egg white improved the ‘mouth feel’ of ice creams, milk proteins or a mixture of emulsifiers and a cocktail of different stabilisers could substitute it. It is cheaper to stabilize mousse with vegetable proteins and gelatine but it was not possible to substitute egg white completely in the production of meringues, though chemical products could be used as partial substitution.


Hydrolyzed yeast can be used in cake production and gelatine in the manufacturing of marshmallows. There are several protein competitors to egg white for candy production.

Egg white has become too expensive to use as a clarifying agent in wine, being replaced by gelatine, which is much cheaper. There are substitutes for egg yolk both as an emulsifier and coagulator.

In homes in Spain, eggs are generally used in preference to replacers.

Help Your Customers Be Successful

Jim Wisner of the Wisner Marketing Group in the USA said that there are four keys for egg marketers to expand retail egg sales. They are:

1. Explain to your customers that much of their thinking about eggs is wrong and demonstrate how eggs can be the perfect product for them.

2. Help them to be more successful at selling eggs.

3. Support your industry organizations.

4. Spread the good news about how eggs can benefit consumers.

For many people, eggs are considered to be “bad for you”, a “low profit commodity” and “a product with no growth.” “For those who think that eggs are bad, you should point out that the opposite is true – eggs are good for you,” he said, and highlighted a number of studies that underlined this point. In particular, he stressed that it is now proven that dietary cholesterol is unrelated to chronic heart disease.

Some retailers consider eggs to be a low-profit commodity item. “Tell them that they should think again,” he extolled. Since the mid-19970s average retail profit margins in the USA doubled, and it can be shown that eggs were the most efficient and most profitable item in the dairy case. They are a “super star” and he stressed that:

1. They return the highest weekly sales/item in the dairy case,

2. They yield the highest rate of true profit – return on inventory investment,

3. They are the fastest turning item in-store and

4. They generate the grossest profit/unit.

Some retailers think that eggs are a tired, no-growth category. “They need to think again,” he maintained. In the USA egg production has increased by 6.5 billion in the past five years. He continued, “The retail sector leads egg industry growth. Its share of egg sales has risen from 55% in 1998 to 61% in 2004.”

He went on to state that people were eating more eggs every year and, more importantly, eggs appealed to growing customer segments in the US – the Hispanic/Latino and Asian sectors of the population and the over 50s.

Egg customers not only visited their store more often than non-egg buyers, but they spent more per shopping trip.

“Tell your retail customers that increasing the space given to eggs boosts sales,” he exhorted. In one test, increasing the linear space given to eggs by 50% pushed up sales by almost 43% overall, but for extra-large, the increase was an amazing 247%!

For those who think that promotions don’t really build business but simply move it around, he argued that proper shelf management yields results as it puts more eggs in the shopping cart, resulting in increased sales and profits.

Tie-ins build sales. One test with the focus of “build the perfect omelette” significantly expanded sales of both eggs and the tie-in products. Omelettes had a logical appeal as a low-calorie and highly nutritious meal option. “Focusing on eggs as a main dish is a successful sales strategy for both eggs and the related items,” he stressed.

In the USA, eggs are sold from chill cabinets, and the payback on the cabinet is quicker if tie-in sales were included in egg promotions. “Eggs can be a catalyst for other product categories,” he said.

Promotions generate incremental sales - one example showing that sales were still above normal levels several weeks following the promotion. “Promoting eggs more frequently presents an opportunity for retailers to increase sales and profits,” he added. Price is not the only point of difference for eggs. Higher prices result from added value. “Differentiation benefits you and your customer,” he said.

In the USA, eggs are the number one store brand item and were category leaders in private label penetration. For retailers, eggs are the perfect product, since they offer:

• High growth

• High margins

• High sales response

• Appeal to the best customers

• Create true incremental sales

• Build store brand equity

• Maximize promotion efficiency

• Leverage consumer trends

• Generate related item sales

• Enhance store traffic patterns

In his view, eggs did not get the shelf space they deserved, and in the USA, refrigerated space was increasingly being given to other products that could eventually significantly reduce retailers’ profits.