The end of the middle
A report by Kantar Consulting shows that “Mass markets are splintering… Differences of tastes, preferences, lifestyles and identities have exploded. In every market around the world, consumers are more fragmented than ever.”
In such a divergent market the task facing manufacturers is two-fold: first, they need to truly understand what needs and preferences drive these different consumer groups’ choices at different times. Second, they need to ensure their brands have a clear proposition that appeals to these specific needs.
The categories consistently in growth over the past five years are the ones that are either chosen for being healthy, or for being a treat. Consumers are also exhibiting this behaviour in soft drinks; both highly enjoyment-driven sectors such as cola and mixers and health-driven sectors such as smoothies and plain water show sales growth.
However, sectors like juice drinks and flavoured milk that do not appeal strongly to either health or enjoyment are in decline. Categories (and brands) that are neither healthy enough nor indulgent enough are struggling to prove their ‘value for calories.’
How we prepare food is also polarising; there is a long-term trend toward scratch cooking up 3% versus 2014 with more food being oven cooked - up 6% versus 2014.
However, consumption of convenience products is also in long term growth, up 6% since 2014. Occasions where consumers create a meal by assembling different products (such as frozen fish with frozen chips) have declined by 2% since 2014. As a result, the middle ground is being squeezed by consumers who now favour either recipe cards or ready meals.
Brands have also shown how appealing to consumers with more niche preferences can be lucrative. For example, Fever Tree has shaken up the mixers industry to become the fastest growing non-alcohol FMCG brand by using natural and premium cues to attract consumers. Shoppers prefer it because it is “more natural/less processed” and at £2.37 per in-home consumption occasion (versus Schweppes 57p) it is definitely not a mass market offering.
This phenomenon is not just happening within food and drink – personal care brands are also finding success by appealing to more niche consumer needs. LIVE Hair Colour offers hair colourants in unusual shades like lavender and silver and is specifically chosen by consumers looking to make a fashion statement. And in a market where many brands offering traditional colours are in decline LIVE is maintaining its user base
A key theme when looking for growth is finding new shoppers. But how manufacturers go about attracting these new shoppers is changing. Brands must fill specific needs in specific moments for specific consumers or risk being left behind.