PotatoPro Newsletter

Services for the Potato Processing Industry

July 30, 2009   The Real Food Fight.

In this issue:

Kiremko

On PotatoPro:

 


If you follow the news around food - potato products or otherwise - you come across plenty of conflicts, several attracting considerable attention in the media.

However, what I see as the "Real Food Fight" is largely hidden.

In my view, the real food fight is NOT the conflict highly profiled in the social media: the fight against "Big Food" or "The Industrial Food system", consisting of Farmers, Agricultural suppliers, Food Processors, Retail and QSR all lumped together.

The real food fight is NOT the farmers versus the food manufacturers, although there is a fight there for sure. E.g. we just saw this fight heating up in the Idaho potato sector: the Southern Idaho Potato cooperative are seeking an investigation into allegations that ConAgra violated anti-trust laws.

No, what I see as the "Real Food Fight" is the fight between retail chains  and the manufacturers of branded products. The outcome of this fight - that 's likely to stretch out over decades -  will determine which type of brands will dominate in future: "store brands" or "manufacturer brands".

This fight is also a major factor in the price the consumer pays for food at the checkout and what products are available in the first place. The conflict is taken up to the next level by the rising price of (food) commodities in 2008 and the subsequent economic downturn, leaving consumers much more aware of their food spending.

The main weapon in this fight: private label products. In the US the percentage of private label food and drink products increased from 18% in 1999 to 24% in 2009. If you exclude beverages, the percentage is even higher: 30%

And if the statistics are any indication, this fight is only beginning: According to Mintel's Global New Products Database, of the 1800 newly introduced products in the United States in 2009, 27% was private label. In 2005, this percentage was only 13%. Furthermore, where in the past private label products were mostly "me-too" products, now  private label lines are establishing themselves as trend leaders.

Manufacturers of branded products have noticed and are fighting back.

Lays omruil caravanWhat to think of this action of Frito-Lay in the Netherlands: they posted a van outside retail chains and offer to exchange private label ("huismerk") potato chips for the branded product!

And who is the winner of this fight between retail and food processors?

The consumer! With both Retail and Manufacturers going the extra mile to cater to the need of the consumer, there has never been a better time for consumers to get what they want. Whether it is Organic, sustainable (Walmart!), ethical, local, healthy, convenient, I bet consumers can get it all.

As long as they vote for it with their wallet.

Enjoy reading,

Paul van Eijck

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New Companies

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