Food Review spoke to Bryn Thomas, key account director at Tetra Pak South Africa at the Propak Africa event about some of the challenges and solutions facing the food and beverage industry today.
Q: Why is online grocery retail growing faster than other physical retail?
A: The trend differs, to some extent, in different global markets. People in Brazil, India and Russia favour physical stores so the online grocery retail opportunity is growing slower there. But, opposing that are the online grocery retail pioneers such as South Korea. That country already experiences sales of 11,3 per cent of all groceries online. Regardless of the market specifics, our research shows that online grocery retail is outpacing all other forms worldwide. There are four reasons: convenience, technology, personalisation and sustainability. And they will impact the food and beverage value chain in several significant ways.
Q: How will these drivers change the industry?
A: It will be more important to optimise the supply chain considering there will be more direct-to-consumer channels, the process will be more automated, and robotics will increasingly become a factor enabled by smart packages.
Greater differentiation will be increasingly important for personalisation. Brands will need to be more agile to get to market faster, using partnerships where they lack in-house expertise, and they will need to apply their resources to experimenting with products, solutions, and new business models.
Sustainability will play a greater role because consumers are finding it more important as they choose to buy or not. Packages that are recyclable, renewable, and help to create lower carbon footprints play a big role in that process.
Q: How are e-grocery and omnichannel changing the supply chain?
A: The food and beverage value chain has traditionally moved in a linear fashion. It essentially went from raw producers to processors, retailers then consumers
Omnichannel that includes online grocery retail changes it and simultaneously introduces a lot more competition. There are already examples of how some raw materials producers are communicating directly with consumers, some are opening channels for direct retail, and some are working with aggregators.
Q: How can digital packaging technologies impact this trend?
A: Smart, digital technologies enable packages to each carry a unique identifier. It creates opportunities for conversations directly with consumers and they also help to improve efficiencies across the supply chain.
Q: What are some of the challenges that food and beverage manufacturers face in this new world?
A: One of the major challenges is home deliveries increasing costs and environmental impact. A great many more delivery vehicles will potentially travel with many smaller packages to delivery locations as opposed to the full pallets they traditionally delivered to retail outlets. That could increase the carbon footprint. But, on the flipside, consumers will potentially undertake fewer journeys to retail outlets to offset the rising carbon footprint. Producers and brands may, as a result, opt for specialist fulfilment centres.
Consumers may also be less loyal to brands as they encounter more products and potential suppliers to meet their needs and desires.
Q: How can food and beverage manufacturers deal with the challenges this trend introduces?
A: Food and beverage producers can deal with the challenges in various ways, including using the same advanced technologies to their benefit. They could offer same-day deliveries. They can ensure they supply robust, leak-free packaging to maintain their brand promise. They can offer easy replenishment options for consumers. They can use unique, digital packaging identifiers to engage consumers and connect them to the digital world where they can share their experiences with other consumers. And they can use packaging optimised for arrival directly in consumer homes as well for handling by robots in the supply chain. Overall, they must prioritise frictionless consumer experiences and sustainability.
Q: What are some of the opportunities for the food and beverage manufacturers in this new era?
A: Consumers won’t necessarily interact with products before they buy them so communications must be carefully designed on the packages to cater for that experience. Consumers will also receive packages in their homes, beyond the control of the manufacturer, processor, or retailer, and they will interact with other consumers. That necessitates careful consideration from package suppliers to ensure the optimal experience.
Q: What are the 8 omnichannel trends and how do they impact future packaging design?
- Offline and online are merging – The result is that there’s fiercer competition from more channels and products giving consumers more power since they have more choice. That means producers, processors and manufacturers must maximise the opportunities that packaging offers them to differentiate from their competitors. Packages must also be stronger to withstand the different rigours of these different routes to market. They will be subjected to handling by robots and people, must arrive leak-free to maintain the brand image, must deliver the goods for shelf-edge consumer engagement as well as home delivery engagement, must bridge the divide between the digital and physical worlds to improve consumer engagement, and more. You should be able to personalise the packaging, support frictionless consumer experiences, and also offer easy replenishment options for consumers.
- Convenience is the main driver of online grocery – Consumers are already turning to online commerce to buy products so their loyalties may be tested since they have more suppliers available to them. That makes brand engagement essential and the packaging offers an indispensable opportunity for that. The packs become an ideal fuel for engagement since they can provide a tactile reference that links consumers to the digital world.
- Mobile is the device of choice – Packs can be used to link the consumers in their digital journey to the physical journey, by using mobile devices with cameras and on-pack codes. It allows consumers to engage on-the-go, in stores, or at home. The packs enable these direct, one-to-one conversations.
- Delivery is getting faster – This requires robust packaging that doesn’t leak, packs that can be efficiently handled by robots as well as people of all ages, and packs that link consumers to one another via the social channels they like to use.
- Personalisation is crucial – Thanks to smart technology, every package sold can now carry a unique digital identifier, creating the opportunity for direct conversations with consumers.
- Direct to consumer models are increasing – It’s important to remember that online consumers won’t necessarily interact with the product before they buy it. Communications must be carefully designed on the packaging to cater for this. The consumer experience when the package arrives in the home must also be considered and so too the consumer’s physical use of the product – it must be attractive but still deliver on the brand promise, impacted by the quality of the product and ease of use. And consumers increasingly engage with one another so how they do that with regard to the product must also be considered. There will also be the need to factor in same-day deliveries.
- Packaging specific to survive e-commerce is vital – That means packs must be robust, not leak, easily replenished, carry unique identifiers to help engage consumers, and be optimised packaging for both physical and online stores. Packaging can be personalised for those businesses pursuing direct retail opportunities, optimised for handling by both robots and people, for creating frictionless consumer experiences, and by becoming more sustainable.
- Smart packaging can unlock opportunities – There are already examples of raw materials producers communicating directly, and in some cases selling directly, to consumers. Some are also opening channels for direct retail or to aggregators.