Digital media key for food and beverage brands

19 July 2010

NEW YORK: Innovation, e-commerce and the mobile web are set to be among the main growth drivers of the US food and beverage industry, a study has found.

KPMG, the consultancy, partnered with Clarion Research, the survey firm, to interview 61 ceos and senior executives representing manufacturers headquartered in America.

Almost two-thirds said their sales and profitability had improved in the last year, compared with around half that number agreed with this statement in a similar poll in 2009.

Despite this, respondents believed the US economy could take at least than two years to recover, although 59% expected the F&B category to be ahead of this curve.

When asked to predict which areas would fuel the sector's expansion in the next three years, new product development received a score of 89%, with merchandising strategies on 82%.

More broadly, 39% of the panel forecast that the heightened uptake of the mobile internet by shoppers was likely to aid this process, with the rise of online retail on 34%.

When identifying potential challenges, 46% cited discounts resulting from intense competition, with reacting to the latest trends on 11%, the same total as the threat posed by private label.

However, 67% of the sample said "perceived value" was the most important issue shaping what customers will buy, followed by price, on 20%.

Major obstacles due to play a role in the near future include unemployment on 64%, low consumer confidence on 49%, and "overcapacity of store space" on 30%.

In a bid to strengthen their position, 61% of companies featured in the analysis were hoping to boost investment levels this year, while cutting costs was an objective of just 39%.

Some 43% of corporations were active in emerging nations, with 25% having established a presence in Latin America, with 18% in Brazil, and 23% in China.

Elsewhere, 39% of participants asserted there would be greater demand for talent, a lift of 7% from the previous assessment conducted by KPMG.

A clear majority of contributors were planning to increase their headcount and 26% will maintain staffing.

"The executives tell us they are ... focusing on innovation – in products, in services and in branding and promotions – to drive growth," said Patrick Dolan, KPMG business leader, consumer markets.

"A clear illustration of this is the skyrocketing use of mobile internet and online shopping. Food and beverage executives will need to meet the challenge of marketing to a consumer base growing more technologically savvy every day."

Data sourced from KPMG; additional content by Warc staff