Speaking at the 2016 NZ Primary Industries Summit, Lockhart cited a Deloitte study, Capitalising on the Shifting Food Value Equation, that showed consumers were now spilt 50-50 into two groups – a traditional value group and an evolving value group.
The traditional drivers of the consumer value equation – price, taste and convenience – remained intact.
But half of all consumers now said their buying decisions were significantly influenced by evolving drivers – health and wellness, safety, social impact and experience.
In short, the evolving drivers no longer reflected a niche portion of the market, though that didn’t mean traditional drivers were no longer important.
The Deloitte report said traditional values continued to be among the most important drivers of behaviour and likely would be for the foreseeable future.
Rather, the evolving drivers joined the traditional drivers as part of the full plate of influence when considering the drivers of consumer purchase decisions and took a greater share than in the past.
“This is big, so big we can’t ignore it,” Lockhart said of the change.
“Who are these evolving people? They’re not driven by a certain region, age range or income group. They can’t be defined. This is huge.”
Evolving consumers were more likely to use social media, mobile apps and devices and digital sources to get information about products.
And they were more likely to distrust the food industry in general.
Lockhart said food producers, processors, manufacturers and retailers needed to determine what side of the new consumer value equation they want to serve.
“I think it’s an active choice,” Lockhart said.
“I suspect most new, small companies will want to play in the evolving space.”
Lockhart said solving the agribusiness challenge started with the consumer, as opposed to historically, the producer.
He talked about businesses that had pursued operational excellence, like AFFCO, product leadership, like Ovation, or consumer intimacy, like Coastal Spring Lamb, with success.
“Choices have to be made and the worst thing to do is be stuck in the middle.
“We’ve got to have alignment, starting with the consumer and working back to the producer.
“The other piece of the puzzle is that we’re not convinced that both consumer value drivers can be met by one business. You’re either cost-focused or make some other choices.”
Lockhart said it would be important for businesses to align their core business type – operational excellence, product leadership or customer intimacy – with one of the consumer value drivers.
The Deloitte report said to capitalise on shifting consumer value drivers and the new normal, retailers and manufacturers should consider making meaningful changes to the way they operate.
“Real transformative change – far more than typical attempts at dabbling with new initiatives – is needed, which in turn will require companies to make difficult choices and significant investments.
“Given the ongoing nature and trajectory of consumers’ evolution, it’s eminently clear that for retailers and manufacturers seeking growth, doing nothing is simply not an option.”
Maximising returns through export research was the topic of Caroline Saunders, who heads up the Agricultural Economics Research Unit (AERU) at Lincoln University. She spoke about the importance of credence attributes.
In the language of marketing, qualities like cultural history, animal welfare, environmental quality and safe and healthy food were called credence attributes.
A credence attribute was something consumers were willing to pay for – but they had to trust that it was there because they couldn’t see, taste or feel it for themselves.
When AERU started researching the topic a common response was that New Zealand didn’t need to worry about marketing credence attributes because its future was to supply an expanding middle class in India and China.
Consumer surveys were done in China, India, Japan, Indonesia and the United Kingdom and assessed consumer attitudes and preference towards key attributes in food and beverage.
They found developing countries valued credence attributes more than developed countries.
They also found consumers in developing countries had a higher use of digital media and smart technology to buy or find more information about food.
