Challenges and Opportunities in the Table Olive Sector The case study of the USA specialty food retail sector Constantinos Constantinidis PELOPAC Mediterranean Food Specialties
Changing Retail Environment
Traditional Planned, rational utilitarian Changing Culture As American culture is changing experiential, self-expressing lifestyle-based, creativity-focused, authentic Food Culture is also changing From cooks.to eaters Shopped for staples & ingredients Planning Pantry stocking Familiar foods Shop for meals & snacks Spontaneity Small trips & fill-in shopping New & unique foods Source: Hartman Group
Changing Food Habits Snacking is a key driver of consumption, and American consumers are demanding more healthy, convenient & inspirational snacks Snacks represent over 50% of all meal occasions. Eating is more fluid, consumers eat whenever and wherever they want. Snacks break the culturally defined rules of meals and reflect the kind of flexibility that consumers are seeking. Consumers expect snacks to offer physical, emotional, social & cultural experiences. Cooking is becoming meal assembly 77% of meal occasions involve at least some prepared foods 42% of meal occasions involve ALL prepared foods Sources: Hartman Group, Nielsen 2016
Changing Value Drivers Purchasing decisions are based on a mix of traditional & evolving value drivers. Price, Taste, Convenience continue to be most important. Evolving drivers Health & Wellness, Safety, Social Impact, Experience are gaining importance and are no longer niche. Transparency is an overarching driver Source: Deloitte: Food Value Equation Survey 2015
Shoppers loyalty: a myth despite time-pressure, consumers DO NOT want a one-stop shop Source: The Hartman Group, Food Shopping in America 2017 report
Changing Channel Engagement Channel Shopped in past year Stock-up Fill-in Hard-tofind items Today s meal Has become important to meet needs of household Supermarkets 90% 51% 22% 18% 7% 47% Mass merch. (eg Wal-Mart) 85% 34% 42% 14% 6% 41% Club Stores (eg COSTCO) Drug Stores (eg Walgreens) Convenience (eg 7-Eleven) 47% 56% 19% 19% 3% 50% 42% 7% 48% 26% 10% 31% 24% 2% 34% 11% 20% 20% On line 18% 17% 20% 49% 4% 49% Specialty 15% 11% 12% 64% 9% 39% Source: Deloitte, The 2014 American Pantry Survey
Changing Channel Engagement Grocery remains the most used channel, but its dominance is steadily decreasing Limited assortment (Club, Aldi, TJ) channels are growing in importance and have a significant cost advantage Convenience and alternative channels provide a higher level of accessibility Online shopping shows significant growth and threatens brick and mortar establishments Sources: The Hartman Group, Food Shopping in America 2017 report, FMI U.S. Grocery Shopper Trends, 2017.
The US Table Olive Market: Challenges
Consumption (1.000 tons) Overall table olive consumption is declining -5% 214,6 204,4 210 203 240 210 210 210.5 185 215 206 206 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Source: IOC 11.17
Imports (1.000 tons) Table Olive imports remain essentially stable +1% 144,8 146,7 126 185 138 132 143 135.5 152 154 146 146 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Source: IOC 11.17
Low Overall Household Penetration 30-40% of American consumers will not eat an olive under any circumstance because they dislike the taste. This leaves a potential consumer base of 60-70% of consumers. At the same time, olives have a household penetration of only 23%. This means that a large segment of potential consumers are not currently purchasing olives. Those who do buy olives (the 23%), exhibit a purchase frequency of about 5 shopping trips per year which is the second highest, after salad dressings. Source: Nielsen, 2016
Limited Demographic Penetration Current Core Consumer Underpenetrated Ages 35-64 HH with 2 to 5+ members Annual HH income of >$70k White/Caucasian, Hispanic/Latin Consumers with cultural ties to olive growing regions Ages <35 (Millennials) Single-person HH HH income <$70k African American, Asian Source: Nielsen, 2016
Are There Opportunities?
Yes Despite these challenges or perhaps because of them there are unprecedented opportunities
Consumption in US dollars Source: Nielsen - Total US Food 8.17 Sweet Spot: The U.S. Specialty Food Market 120000 Total Sales of Specialty Olives +33% 100000 80000 60000 40000 20000 0 2012 2013 2014 2015 2016 upt to 8.2017
There is an opportunity: Specialty table olive sales continue to grow How can we take advantage of this trend? Who is the specialty food consumer?
Πηγή: Today s Specialty Food Consumer 2016 Core Specialty Food Consumers Age Main Shopping Channels Use & Purchase Drivers Baby Boomers 54-70 + Supermarkets Use in everyday meals and as treats. Driven by excitement and health claims Generation X 40-53 Farmers Markets Use in everyday meals, snacking, as treats and on special occasions Driven by health claims & recommendations Millennials 22-39 Natural Stores, Mass. Merchandisers, Club Stores, Specialty Food Stores, Online, Convenience Stores Specialty foods are part of their lives so they shop wherever is more convenient Use in everyday meals, snacking, as gifts and treats, to share at work, to serve guests and on special occasions Driven by impulse, convenience, desire to share, entertain, impress
The Key We need to understand the reality of the new retail environment, who our new target consumers should be & how to talk to them about what makes our products special
Unlocking the opportunities Engaging the consumer
The Story Consumers need to hear the story of the product. They want to feel connected and engaged Hercules, Athena & olive tree Red figure kylix, 480 470 B.C. Life in the Mediterranean basin has always been intertwined with the olive tree and it still continues to nourish the body and spirits of people. 3.000 year-old olive tree Vouves, Crete We are blessed with a product that has a beautiful story
The Origins Consumers have social and environmental concerns. We need to provide information that matters to them about our products: Show them where olives come from and how we harvest them, and promote the unique natural way of curing them.
The Benefits Health & Wellness is one of the strongest value drivers for all consumer segments. Table olives especially naturally cured olives have been associated with a variety of health benefits which may be attributed to specific nutritional or bioactive components including: Monounsaturated fatty acids including oleic acid Polyphenols, including hydroxytyrosol and oleuropein Triterpenoids including maslinic and oleanolic acid Probiotic microorganisms
Relate to the needs of the consumer Consumers across all generational cohorts are using an increasing number of channels. They expect to have food choices available to them wherever they decide to shop. We have to develop product offerings that are convenient, easy to snack on and that allow them to share and engage socially with others.
The Table Olive Industry needs a change in mindset from producing a commodity to creating an engaging, relevant and accessible product
Midday July Even if there were no olive groves, I would dream them up - Odysseas Elytis