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Success on today's retail shelf requires more than a great product
Consumer behaviour is shifting as GLP-1 medications influence purchasing and consumption patterns, while AI is transforming how categories are analysed and managed.
Maura O’Callaghan, our Food and Agribusiness Director, takes a closer look at two of the many forces reshaping the local and international retail shelves and markets, Glucagon-Like Peptide-1 (GLP-1) and Artificial Intelligence (AI) and shares some practical strategies for food and drink SME’s.
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New product development
New Product Development is central to how Irish food and drink businesses are responding to changing markets. 63% name launching new products as a key growth opportunity over the next 12 months, ahead of exporting to new markets at 42%.
NPD is also being used to protect margins. 61% of food businesses are using product development, including reformulation, new formats and other product changes, to manage rising costs rather than relying solely on price increases.
As the NPD landscape continues to evolve, Irish food and drink companies will need to continue looking for category development opportunities in response to changing consumer demands, both within the island of Ireland and for our export markets.
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Artificial intelligence
The use of Artificial Intelligence by our food manufacturing respondents highlights that marketing, social media and content creation at 56% is the clear front runner of AI usage, followed by 32% using AI to support financial analysis and reporting functions. 29% of respondents are using it for everyday productivity, 27% in market analysis and research and 22% in the R&D process. This suggests that AI integration still has a way to go within the sector.
The role of Glucagon-Like Peptide-1 In New Product Development
GLP-1 medications such as Ozempic, Rybelsus, Wegovy and Mounjaro work by mimicking glucagon-like peptide-1, a hormone released in the gut after eating that slows digestion and signals fullness to the brain. They are accelerating major changes across the food and drinks sector globally, creating demand for nutrient dense products. The consumer is seeking products that deliver essential nutrients in smaller portions. 11% of United States adults are estimated to be taking GLP-1 medication for weight loss purposes. One in ten UK adults are estimated to be taking, or are considering taking, a GLP-1 medication, with a similar trend emerging in Irish adults. If the Irish shopper patterns follow the US, this is going to cause a shift in the Irish retail shelf and export markets. Just how big this shift is going to be is yet to be determined.
Practical tools to unlock the opportunity
Many Irish SMEs can use this to play to their strengths. GLP-1 medication is amplifying consumer trends such as high protein, gut friendly, functional ingredients and clean labels.
Research the NPD opportunity and understand the potential implications of GLP-1 on the category or categories that you trade in.
Understand if there is an opportunity to introduce smaller portions or different pack formats for the shopper who no longer wants large formats but does not want to stop buying the product.
Understand whether there is an opportunity for a call to action on your packaging that outlines the key functional benefits of your products.
Analyse how larger multinationals are behaving in your category. Is there an opportunity for you to capture more share of shelf, as they potentially reposition their focus and budget on alternative categories and strategies?
Artificial intelligence in category development & management
Category work has always been dominated by pulling data, matching product codes, harmonising retailer hierarchies, store visits and calculating return on shelf space. For any SME food producer preparing for growth or trying to improve efficiency, AI allows for a leaner commercial SME team to operate and behave like a larger team. Many SMEs do not have the luxury of sharing resources across multiple brands and categories. AI’s best contribution can be to automate the groundwork in your category management. While larger food companies can push ahead with sophisticated AI tools and strong data purchasing and analytical ability, it is key that SMEs develop practical
AI tools that save time and allow them to become valuable relationship partners to their retail and food service customers.
Practical tools to unlock the opportunity
Get your data in order. Pull any EPOS, volume, value, promotional pricing, rate of sale data into one place. Use an existing AI tool to design the format easiest for you and keep it clean and consolidated. This can be updated on a daily/weekly basis for reporting.
Use an AI tool for competitor analysis to scan pricing, launches, promotions in store and with competitor products. Reduce the time involved in researching on individual websites.
Photograph the category in store and analyse it with an AI tool, your number of facings versus competitors, share of shelf and shelf positioning. Pair it with your sales data to build your range review case.