L.E.K.: 80% of consumers purchase specialty foods

21 September 2015 Consultancy.uk 4 min. read
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Specialty foods have gone mainstream, a recent survey by L.E.K. Consulting shows. As many as 80% of consumers are committed buyers of at least one specialty food category. According to the firm, this has great implications for Big Food, which must change to meet consumer demand or risk losing out.

In its recently released report ‘Beyond Organic: The Revolution in Consumer Food Expectations’, L.E.K. Consulting explores the speciality foods* market to find out what influences consumers’ food choices. The overall conclusion of the research, for which the consulting firm surveyed more than 1,500 consumers, is that “consumers don’t want processed foods heavy on sugar, salt and other unhealthy ingredients; they do want more foods that are natural, fresh and enriched with protein.”

Purchasing frequency by food category

According to the researchers, the specialty food movement goes beyond the buzz and represents a sustained shift in consumer food preferences. Consumers are increasingly interested in sustainable and healthy food that are produce free of unneeded chemicals, antibiotics and other unwanted ingredients as they feel that organic and non-GMO foods are healthier and will make them feel better.

More than 80% of consumers indicate to buy from at least one specialty food category. The most popular specialty food choices are the ‘enhanced’ category (foods with added proteins, omega-3 fatty acids, etc.) which is bought by 36% of the committed** consumers and 26% of the casual** consumers, and the ‘less of …’ category (low-calorie, low-salt, sugar-free), at 35% and 27% respectively. All specialty foods have become mainstream and are bought by 50% of consumers at least on a casual basis, with the exception of ‘alternative diet’ foods that are only bought by 32% of consumers.

Willingness of committed consumers to pay

Of the consumers surveyed, 61% of those are willing to pay a premium for this kind of food. One in five (19%) is even willing to always pay more. Natural foods are the most popular, followed by ethical and enhanced foods. Food that fits into alternative dietary lifestyles is, for now, the least popular choice.

The research shows that speciality foods are not a thing of this time; it is not a mere ‘Millennial thing’. The commitment cuts across age, gender, income, education and geography. Although more Millennials are committed to purchasing specialty foods, and outpace the other generations in all categories, the Gen Xers and Boomers+ generations also find appeal in the specialty food market. There are however differences in preferences. While both Millennials and Gen Xers prefer ‘natural’ and ‘enhanced’ foods, Boomers+ tend to choose for the ‘less of …’ products.

Commitment prevalence by food category and generation

For food businesses the changing consumer preferences will have profound consequences and, according to L.E.K. Consulting, Big Food must change to meet these consumer demands in order to compete in the growing specialty food segment. “The movement in consumer food buying preferences has significant long-term ramifications,” explains Manny Picciola, Managing Director and Leader of L.E.K.’s Food & Beverage practice. “More than half of those surveyed said they would be willing to pay a premium for specialty foods, and companies that quickly figure out how to meet consumer demand for more specialty food options will outperform those that are slow to react.”

“As our study shows, Big Food and agribusiness must change to meet consumer demand, but change won’t be easy, as major food producers have built their businesses around conventional ingredient supply chains with scale economics,” adds Peter Walter, Managing Director and Leader of L.E.K.’s Agribusiness practice. “Moving into specialty markets, such as organic, cage free or non-GMO will require overhauling or rebuilding supply chains, launching or acquiring new brands, and determining how to optimise the economics of both conventional and specialty food supply chains.” The report concludes that those companies that quickly figure out how to meet consumer demand for more specialty food options will outperform those that are slow to react.

* Specialty foods are natural, non-GMO (non-genetically modified), gluten-free or enhanced foods.

** Committed consumers always or frequently purchase specialty foods, whereas casual consumers do so occasionally.