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Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Coffee talk: Research shows Gen Z craves RTD beverages

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Shutterstock

With people working (and going to school) from home, it’s changing how people consumer coffee: Think less take out and more at-home creations.

New research from Mintel suggests that the at-home coffee market is set to grow by 4.9% this year to reach $15.6 billion (in the United States), compared to a total of 3.9% growth experienced between 2015 – 2019.

Mintel’s consumer research shows that as many as two in five (39%) people are willing to pay more for premium coffee at home and, in turn, finding their inner barista.

Caleb Bryant, associate director, food and drink, Mintel, said that many are buying coffee shop branded coffee to recreate that authentic coffee shop experience: “Despite the fact that many Americans are facing economic uncertainty, premium and foodservice-branded coffees have an opportunity to market themselves as affordable luxuries. The purse strings may need to tighten but a premium home-brewed coffee is still less expensive than drinks from a coffee shop.”

For those without the patience or know-how to satisfy their caffeine cravings at home, ready-to-drink (RTD) coffees are a favoured alternative. Leading the way in this at-home craze is Gen Z, with 46% opting for RTD coffees. Only 45% of Gen Z consumers drink ground coffee compared to 63% of millennials.

Mintel research shows that not only are Gen Zs not brewing their own coffee, they have yet to develop brand loyalty when it comes to coffee: only 33% say they typically stick to the same brand of coffee, compared to 44% of Gen X and 50% of boomers.

“Gen Zs in particular are set to adopt the trend for enjoying specialty coffee at home. Before COVID-19, many Gen Z consumers bought their coffees out, treating themselves to cold coffees from their preferred coffee chain. But with these younger consumers experiencing the sharpest rise in unemployment and already on lower incomes, they are the most price-sensitive to coffee drinks. We’re likely to see Gen Zs reduce their coffee shop purchases, possibly dramatically depending on the severity of the recession, giving retail coffee brands a golden opportunity to connect with this next generation of coffee lovers,” Bryant said in a release.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Case in point is the photogenic Dalgona frothy coffee craze so popular on social media. From March 1, 2020 through June 15, 2020, there were more than 440,000 posts mentioning Dalgona coffee on Instagram, Pinterest and Twitter. As a result, sales of instant coffee – the primary ingredient for Dalgona – are poised to experience  a 5% rise in sales growth this year.

“Consumers are discovering it is safer and more cost-effective to have their own coffee at home and this trend is likely to continue even once the virus is under relative control,” said Bryant. “This shift opens up a real opportunity for products, machines and gadgets that will help people create their favourite coffeehouse drinks at home.”

Key takeaway: Coffee brands (both retail and RTD) have the opportunity to build long-lasting loyalty among Gen Z consumers and can use flavoured coffee varieties to appeal to these consumers (42% of them are interested in unique flavours of coffee). C-stores can capitalize on this trend with the right product assortment.


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It’s crunch time for salty snacks as new options help expand the market

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Shutterstock

Who needs sugary snacks when you can have salty ones? That seems to be the thinking of many Canadian consumers opting for savoury munchies these days.

Mintel research shows the salty snack market is poised for more growth this year and that has attracted new players to the Canadian market, such as Kellogg’s Cheez-It Crackers introduced early this year. Revenue from potato chips alone in 2020 is expected to edge upward by 1.4%, according to Statista. That is good news for c-stores when it comes to ‘crunching’ sales figures.

The numbers are no surprise to Ajay Handa, business head, Canada, Future Enterprises Pte Ltd./Food Empire, who brought Singapore-made Kracks stackable potato chips to this country almost three years ago. He says Canadians are voracious consumers—the highest in the world. “The shelf space devoted to potato chips is larger than that devoted to them anywhere in Europe,” he notes. “A large percentage of sales in Canada comes from convenience stores so they are important channels.”

The brand supports sales through consumer promotions and social media campaigns to build awareness. He suggests c-stores can maximize sales by having Kracks available next to big players in the potato chip sector so clients can access a competitively priced alternative. In April, Kracks, available in resealable canisters, adds two new flavours—cheese and hot and spicy—to its top-selling roster, including original, sour cream and onion, wasabi, and barbecue.

The focus on daring flavours is an unstoppable trend—one that Bigs roasted sunflower seeds has embraced wholeheartedly. “We are known for developing products that deliver on big, bold flavour,” says Andrea Stodart, marketing director, snacks, Conagra Brands Canada.  “Partnering with unique brands like Taco Bell has given Bigs a point of differentiation in the market. The latest flavour from BigsSmokey Bar-B-Q, in partnership with Stubb’s Bar-B-Q saucehas launched in Canada and is rolling out in stores throughout April.”

Offering a unique taste is just one part of the strategy to stand out in a competitive market. This spring, Conagra is launching a promotion with Toronto Blue Jays third baseman, Vladimir Guerrero Jr.  In-store displays, digital ads, and a strong presence on Instagram and Facebook will be a home run for fans of Guerrero’s and Bigs sunflower seeds.  

Salty snack enthusiasts are also health-conscious, opening the door for innovation and new players. You could say that Saskatoon-based Three Farmers is feeling the ‘pulse’ of these consumers. Its latest introduction, Crunchy Little Lentils, offers crunchiness, fibre, iron and a protein kick (18 g per 28 g serving) in four flavours, including barbecue, garlic and herb. It joins chickpea and pea SKUs.

“Three Farmers Foods is focused on nutrient-dense, whole foods that taste good and satisfy, not only those salty cravings but the desired crunch and nutrition that consumers are looking for,” says co-owner Elysia Vandenhurk. “Many ‘pulse’ snacks are highly refined into puffs, chips or other snack types. Our snack lines are minimally processed, and keep the quality and integrity of each ingredient intact.”

With more, better-for-you salty snacks launching, what can c-stores do to capture the attention of consumers and boost sales? Brandon Whitehead, marketing and social media manager, On The Go (owned by Stanmar International), offers a suggestion: “Create a healthy/natural section or premium snack section with focused signage to highlight healthier snack options.”

Among them should be salty-sweet snacks, the latest global trend. On The Go Fusion Snacks satisfies both preferences with a trail mix made from roasted, salted edamame beans and sulphite-free dried fruit, like goji berries and cranberries. A granola-based snack mix is coming soon. “Consumers want healthier snack options with low sugar, low, fat, lower sodium and high protein. This is why On The Go is such a great product. It ticks all those boxes.”

 

 


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Cause for concern

Even in these times, barely a day goes by where there’s not a dire warning about the environmental predicament the planet faces. Climate change, for many, is no longer about what might happen, but rather what is happening. Extreme events ranging from hurricanes to rampant bush fires are becoming the norm. For Canadians, this raises the question of how their food purchases impact the environment.

Mintel’s recent report on Sustainability in Food looks at how Canadians view the connection between what they eat and the impact of that on the environment. The research also looks at what specific issues matter most to consumers, why they matter, what consumers expect from companies in the context of sustainability, and what actions they are willing to take.

Canadians do, indeed, say the environment matters to them when it comes to the food and drinks they purchase, and they are particularly motivated by a sense of personal responsibility and a pervasive concern about climate change. That said, Canadians don’t always make a clear connection between climate change and the food they eat; instead, waste ranks as their top concern—this includes both packaging waste and food waste. Fewer Canadians, however, consider carbon output when purchasing food. This makes sense because waste, of course, is visibly evident in one’s day-to-day life. It can be seen in one’s trash, recycling or compost bin, and also translates, in the consumer’s mind, to wasted money. Carbon generated through food production, by contrast, is invisible.

Younger Canadians are, however, more likely to make the connection between how their food is produced and the carbon footprint it generates, and they are more apt to express concerns over these categories. For instance, the younger generations—gen Zs and millennials—are more likely to be concerned about the impact of meat and dairy on the environment; we can presume this relates to the carbon emissions associated with the production of these products. Such concerns have undoubtedly underpinned the growth of plant-based foods and drinks.

More broadly, companies are in a quandary when it comes to their efforts to support the environment. On one hand, four in five Canadians agree that food and beverage companies are not doing enough for the environment. On the other hand, the same number of Canadians believe many companies engage in “greenwashing” and believe them to be untruthful regarding environmental claims. There’s also an element of confusion, with 80% of Canadians also claiming they’re confused when it comes to knowing which products are better or worse for the environment. The question is how to win consumers’ trust?

While there’s no easy answer to this question, initiatives that are visible and engaging can help build their level of trust. One practical way is to ensure shoppers can easily recycle the packaging from the products they purchase. This can include making them compostable or communicating a plan to extend the lifecycle of a package through “upcycling” initiatives. Other initiatives can involve using foods that would have otherwise been discarded in new packaged goods (for example, misshapen potato chips) or focusing on foods produced locally, which offers the dual benefit of supporting the environment and local economies.

When it comes to promoting sustainability in food, there are no shortcuts. But what is evident is that despite some skepticism, shoppers do view sustainability as an issue influencing their food and drink purchase decisions.

Joel Gregoire is a food and beverage industry analyst. Follow him on Twitter 

This article appeared in Canadian Grocer‘s May 2020 issue.


Shutterstock Multicultural foods

New Canadians shape the future of food in Canada

In 2018, Canada admitted more immigrants than at any point over the past 100 years. As Canada’s population ages, immigration is central to infusing youth and vitality into the economy. This, of course, has a wide-ranging impact—not only in terms of how Canada “looks,” but also in terms of what Canadians buy, which includes food and drink.

Shutterstock Multicultural foods

Shutterstock Multicultural foods

While new Canadians bring with them varied preferences in terms of the foods they eat, they also have an impact on the broader population. According to new Mintel research on ethnic food, more than half of Canadians say they view themselves as being “more open to eating international foods than (they were) a few years ago,” with three-quarters (77%) also viewing international foods as being “more mainstream now than they used to be.”

While this demonstrates that Canadians see themselves as being more open to trying a broader range of cuisines, the perceived mainstreaming of international foods also means it’s likely becoming more difficult for grocers to find new products that appeal to those interested in new foods and more adventurous eating experiences. Both these facets rank as the top two reasons why Canadians turn to international foods in the first place.

To appeal to Canadians’ desire for new culinary experiences, grocers can look to what’s less commonly eaten by Canadians. While Chinese and Italian foods rank as the most commonly eaten international cuisines, according to Mintel research, a sizeable swath of consumers is showing interest in exploring a diverse range of other cuisines. In this regard, Caribbean, African and Korean fare represent interesting opportunities for development. With the vast majority of Canadians viewing international foods as a bridge to experiencing other cultures, focusing on cuisines that are less commonly eaten yet garner interest can help grocers stand out.

Having a concerted international foods strategy is critical for today’s grocers. When asked, more than half (56%) of Canadians agree that “grocery stores that don’t offer internationally-inspired foods are not keeping up with the times,” with nearly half also agreeing that they’re “more likely to shop at grocery stores that offer internationally-inspired foods” and two in five claiming they will “go out of their way to travel to stores that offer specific internationally-inspired foods/ingredients.” Chinese Canadians and South Asians are more likely to hold these views.

In terms of product assortments, by their own account South Asians are more likely to want to try internationally- inspired versions of desserts, baked goods, snacks and breakfast foods relative to Canadians overall. This points to the importance of looking beyond the core supper and lunch occasion when considering how to develop or expand offerings that are inspired by other countries.

With immigration contributing greatly to Canada’s population growth, it’s critical for grocers to have a strategy that considers internationally-inspired offerings throughout their stores to appeal to newer (and even not so new) Canadians. It will set them up for success in an evolving consumer landscape.

This column appeared in Canadian Grocer’September/October issue.


Riding the wave of convenience: Amazon Go reflects broader market forces

When Amazon purchased Whole Foods, a collective shudder could be felt from grocers across North America. The online behemoth was making its intentions known by entering the grocery space. While the acquisition received a great deal of media attention at the time, the greater disruption may end up being the launch of its Amazon Go concept store in Seattle at the beginning of 2018.

Amazon Go’s cashierless model showcases a revolutionary shopping experience. No need to wait in line to pay; shoppers can grab what they want from the shelf and just walk out. The purchase is recorded on the Amazon Go app by syncing with sensors located throughout the store. Those who have shopped there have reported that it’s so seamless it feels as though they are shoplifting. Amazon is reported to have plans to expand Amazon Go’s presence, scaling up the number of locations to 3,000 by 2021.

Amazon Go’s arrival is a reflection of broader market forces that will increasingly impact the grocery space as the expectation for easier and more curated in-store experiences grow. As Netflix changed the media landscape making traditional television seem increasingly like a relic, grocers need to be wary of experiencing a similar fate.

The integration of technology with the shopping experience proves particularly important to Generation Z. Representing the emerging shopper base, consumer feedback collected for Mintel’s recently published Grocery Retailing in Canada report shows young adults are more likely to cite interest in a shopping experience that is quicker and easier. Furthermore, technology is shown to play a particularly important role in achieving these outcomes for younger consumers according to earlier Mintel reports.

An added benefit of greater integration of personal technology can be found in either reducing labour costs or by reallocating labour to more value-added functions within the store. This can include giving shoppers more personalized attention when they have questions or staffing-up in other departments to provide more fresh, prepared items—an area where grocers often realize higher margins on a per-purchase basis.

U.S. grocery chain Albertsons’ recent agreement with Microsoft to leverage its cloud-based expertise shows that the race is on to create more technologically-integrated, in-store shopping experiences. In the Albertsons example, the grocer has been testing “Amazon Go-like” technology providing cashier-free shopping. The partnership with Microsoft could provide critical expertise in scaling up such technology. Other retailers, such as Walmart here in Canada and Marks & Spencer in the United Kingdom, are also investing using scan-and-go technology that allows consumers to make purchases in under a minute.

So, what’s next? While difficult to predict, it may involve the grocery store becoming more mobile. U.S.-based startup Robomart plans to bring groceries, baked goods and prepared foods to the customer’s door via self-driving vehicles. This envisions a future where the phone is at the centre of more streamlined shopping experience, both in and out of the grocery store.

Despite online shopping’s rise, brick and mortar grocery stores aren’t going away. That said, a growing reliance on personal technology means grocers will need to invest in evolving the tools they offer to provide shoppers with a more convenient, informed experience.

Originally published in Canadian Grocer’s March/April 2019 issue.