deli case
Consumers continue to appreciate the in-person experience of purchasing deli and bakery items.

CHICAGO – The International Dairy-Deli-Bakery Association (IDDBA) Madison, Wis., has released its What’s in Store 2016 report, the 30th installment of the association’s annual review that contains data on retail/market trends, growth and category changes shaping the food industry. The secondary research report is developed through interviews with people in the industry and by sourcing of third-party data and trends.

Food Business News, a sister publication of MEAT+POULTRY, spoke with Eric Richard, education coordinator at IDDBA, about this year’s edition.

How have the dairy, deli and bakery industries changed in the 30 years since the first edition of the report was published?

Eric Richard: When I look back at the first report that was prepared on an electric typewriter and photocopied for distribution, the first thing to come to mind is how much easier it is to publish a report. That first report was 32 pages with three tables and 23 references.

Over the years the book’s complexion changed as we added more insight and data. The current report has 150-plus tables and graphs, and includes insight beyond the dairy, deli and bakery departments. The report has also been available on-line with downloadable charts and graphs for the past eight years. There are chapters on consumer trends, economics and technology. It’s a one-stop resource for our professional members to reference when writing marketing plans and sales presentations.

As far as how the industries have changed, I think the trends identified in the first edition say it all: consumers more diet/health conscious; more emphasis on quality, less on price; expanded ethnic foods; more competition among food purveyors for consumer dollars; and interest in single-serve portions.

How has the retail food landscape changed from the last edition and even further back?

Richard: Many of the drivers and motivators are the same, but we now know so much more to enable retailers to fine-tune their business. This knowledge is communicated in the report. For example, our research identified the top hurdles facing retailers in the near future. These will be slow economic growth; rising labor costs; privacy and security threats; and vulnerability to social and mass media.

Traditional food retailers will be the most challenged. It is predicted that they will experience a 9 percent drop in market share (from 71 percent to 62 percent) over the next 10 years as non-traditional channels like fresh formats and on-line retailers gain 38 percent of the food market. Traditional supermarkets are responding to the changing retail channel landscape by featuring full-service restaurants, smaller formats, additional services from store staff, and millennial-focused products and services. Chef-inspired meal solutions and recipes, both on-line and in-store, is a critical perspective millennials want from the places they shop. By understanding consumer shopping and eating trends, food retailers can better connect and engage with their customers.

How have consumers changed the way they shop the dairy, deli and bakery departments?

Richard: As in all retail sectors, technology is playing a big role in how consumers interact with food retailers. In 2014, e-commerce sales for consumables were $24.4 billion, an increase of 13.5 percent from 2013. On-line purchases of foods and beverages are projected to almost quadruple between 2015 and 2020 to $49 billion, representing 4.5 percent of all food retail sales. Eleven percent of global consumers are using smartphones and 8 percent are using tablets when grocery shopping. This is how food shopping has changed.

However, when it comes to dairy, deli and bakery, as well as prepared foods, specialty cheese and specialty meats — the six fresh perimeter departments we address in the report — consumers continue to appreciate the in-person experience. Stores that focus on fresh foods, in particular single-serve options and convenience, invite consumers inside. And once inside, they often buy more than they really intended.

You mean even millennials are getting off their smartphones and tablets and going into stores?

Richard: Yes, they are. In fact, boomers and millennials stand out for their collective purchasing strength across the six fresh categories. What’s unique to millennials is that they tend to make the majority of their food purchases in retail outlets other than traditional grocery stores. Effective communication with millennials needs to start outside the store and be as personal as possible. Once they get inside, they are hooked.

Other than the opportunity with getting millennials into the store, what other consumer opportunities exist?

Richard: Thirty years ago, single-serve portions were an opportunity. Now they are a requirement. Today, 28 percent of all households are single-person homes. Overall, top food trends include the shift to fresh and refrigerated foods, rather than processed foods; new snacking and mini-meal options; increased breakfast consumption; and more natural, local-sourced, organic, and non-GMO products and ingredients.

What were some of the key findings reported in What’s in Store 2016?

Richard: Bakery departments can better connect with shoppers through specialty items and ingredients; single-serve and snacking options; breakfast bakery; personalization and customization, such as take-and-bake bread and dessert kits; new flavors, including ethnic; product merchandising; and upscale products. An emerging bakery concept is Chinese bakeries, which focus on single-serve pastries such as small tarts and buns with fillings, such as red bean, roast pork, taro, cream and salted egg yolks.

bread and cheese deli case
Per capita cheese consumption in the U.S. is at an all-time high.

Cheese sales continue to impress. Per capita cheese consumption in the US is at an all-time high, with nearly 34 lbs. per person, which is an increase of 37 percent since 2008. A remarkable 98 percent of American households purchase cheese. What is trending is that more consumers are visiting a specialty store or natural/health food store — instead of their preferred store — to make a cheese purchase. Millennials are an important cheese consumer, given their desire to try new flavors and textures, as well as belief that specialty/craft and imported cheeses are worth paying more for.

The dairy department is well situated to capitalize on the “health halo” of dairy products and their inherent protein content. Positive nutrition and wellness attributes are prioritized by dairy department shoppers.

Culinary Concierge prepared foods case
Millennials are more likely to shop in the deli department than Baby Boomers or Gen Xers.

Millennials are “super users” that shop the deli department more than boomers and Gen Xers. They seek quick grab-and-go options; in-store chef perspectives on recipe ideas; local, healthy and fresh prepared foods; and transparency in the food they buy and consume. Deli departments can better connect with shoppers through smaller meals/snacking options; creative and new products, such as ethnic-inspired breakfast items, non-wheat pasta and ancient grains; clean and “free-from” labels with more transparency, authenticity and locally sourced claims; adventurous food and flavors; greater digital engagement; and new and popular meat trends and flavors.

Consumers are seeking salads that feature herbs, yogurt and flavorful oils and vinegars instead of mayo; bigger pieces of leafy greens, vegetables and meats; chopped salads; bean salads; grain-based salads and grain medleys served hot or cold, such as quinoa; and Asian and Hispanic flavors.

Learn more about What’s in Store 2016 at the IDDBA’s website.