Disruption still felt in supermarkets due to Covid-19

To navigate the world beyond COVID-19, innovation that improves life for all rather than playing by the rules to manage risk is imperative to growth in the food and beverage industry. Speaking at the Australian Institute of Food Science and Technology Convention, Kantar Australia’s head of sensory, Dr. Denise Hamblin says that “brand loyalty has been disrupted and there has never been a more important time to ensure our products are as good as they can be.”

In April, 93 per cent of Australians were unable to find their usual grocery brand or product in store. “This happened across an average of 13 grocery categories, and when it did, 9 out of 10 people chose a different brand. Where a home brand alternative was chosen, 78 per cent were ‘as satisfied’ or ‘more satisfied’.”

As product availability returns to pre-crisis levels, 3 in 10 Aussies continue to buy alternatives.

Thirty per cent of Australians surveyed as part of  Kantar’s Covid-19 barometer between May 22-26 plan to continue to buy the new brands they purchased during product shortages, with 27 per cent also continuing to shop at new stores they’ve discovered in the height of the pandemic. Over half are paying more attention to products on sale and on price.

“Ultimately, building value around the products and experiences we curate are vital in this climate.​ As concern around getting sick has reduced, the worry has increasingly turned towards the future, especially around an economic recession – and this brings more aversion to risk,” said Hamblin.

“For older Australians and those in a ‘conformity’ mindset, this may mean demand for the same brands and products for a lower price; but younger generations and those in a ‘rebellion’ mindset are more likely to try new and different things that provide better value for money.”

The coronavirus pandemic has provided an opportunity for brands to gain new consumers

“As we navigate our way towards a ‘new normal’ this is anticipated to continue, particularly in households with children,” says Hamblin. “In April, over half of Australians reduced their frequency in supermarket visits from an average of 2.5 to 1.7 times a week. At the same time, the propensity to shop online has increased for a third of us, with the purchase of food and beverages increasing the most of all categories.”

“This is a huge mass trial of a service,” said Hamblin. “Clearly unexpected in its widespread nature too as only just over a third of Aussies felt that grocery shopping online yielded an excellent user experience.”

Kantar’s qualitative studies also reveal the biggest pain points for online grocery shopping during the pandemic is the absence of sensorial stimulation as a motivator and for enjoyment. While an added cost at a time when price sensitivities prevail, doubt around product freshness and the inconvenience of imprecise delivery slots take strong reign. Price and provenance are also key to what brands should be thinking about to put the consumer at the heart of what they do.”

“With 57 per cent of Aussies paying more attention to homegrown products, if your product is owned, made or grown in Australia, then it’s a great time to ensure consumers know about it.”​

Forty-two per cent of Australians say they will maintain most lockdown behaviours – especially food and wellbeing

As lockdown measures began, Aussies began to cook more frequently and more often from scratch. Fresh ingredients, healthy meals and new recipes were key.​ As lockdown progressed – and has now eased – Aussies are still increasingly trying to gain consistency with eating habits.

“While the crisis has forced many to do more to look after physical and mental wellbeing, it has also beckoned us to snack more and seek out treats,” said Hamblin. “This creates new opportunities for the food and beverage industry, just in a different environment.”

Return-to-work trends also provide opportunities for the food industry to innovate

Only 57 per cent of Aussies have a return-to-work timeframe in mind given concerns about hygiene and social distancing, as well as the commute and public transport. For the food industry, this may mean less reliance on office-provided snacks and ‘on-the-go’ solutions but opens the opportunity for supporting workers to prepare their own lunches.​

“Safety is paramount, and this extends into buying products to protect ourselves – especially important to households with children. We’re seeing an increased propensity towards vitamins and supplements. This also indicates a real opportunity for food and beverage innovators to develop functional and fortified products,” said Hamblin.

“Considering the consumer’s need for more considered, purposeful activities and connections as we emerge out of isolation; along with a renewed focus on health, a desire for local, an eye for value and new confidence, shopping online will stand any brand in good stead. Brands should also pay heed to what Aussies increasingly want from them at this time – to guide the change, use their knowledge and inform. The new normal presents opportunity for brands innovating to leadership.”

Coles online celebrates 20 years

Coles has marked two decades of online shopping in Australia, starting from a single Melbourne warehouse to become a $1 billion business leading the market in adoption of game-changing retail and logistics technology.

Coles Online launched in 1999, just a few years after dial-up internet connections became widely available to Australian homes and almost a decade before the first smartphones hit the market.

At the time, online shopping was still in its infancy, with fewer than 5 per cent of all Australian adults using the internet to make a purchase or order goods or services that year*.

At launch in June 1999, Coles Online offered delivery services to just 23 postcodes in Melbourne, operating out of a single pick-and-pack warehouse in Clayton, with some items also sourced from Coles Springvale. A trial commenced in Sydney the following December.

Brian Donald, one of Coles Online’s longest serving team members, delivered customer orders in the program’s early days and said the platform has come a long way.

“The website was almost just a list and you had to tick the items you wanted,” he said.

“Everyone paid via eftpos on the doorstep because no one would pay online via the internet back then. So most people were sort of waiting with trepidation about what they were going to get and it was a really new and surprising experience.”

By 2002, Coles Online was delivering 1 million items per month to customers, and in 2003 the business doubled in size with the acquisition of Shopfast, which at the time was Australia’s largest online grocery site.

Coles Online also outsourced picking, packing and delivery to Australia Post in 2003 – a sharp contrast to today, with Coles team members handling all aspects of order fulfilment from stores across the country and using Coles Online’s own fleet of 650 delivery vans to bring orders direct to customers’ kitchen benchtops.

By 2008 Coles Online had expanded to Queensland, and the following year launched in Western Australia and South Australia – two more stepping-stones on the way to the current delivery service which covers 80 per cent of Australian homes.

The first Click&Collect lockers appeared in 2009. By 2015, Click&Collect was available at 120 sites, and has now grown to more than 1000 collection points including Coles supermarkets, Coles Express sites and Click & Collect lockers, accounting for around 30 per cent of customer orders.

With annualised revenue passing $1billion this financial year, Coles Online General Manager Karen Donaldson said the business was now setting the foundations for future growth through a partnership with the UK’s Ocado Group, the world’s leading online grocery platform.

“Coles Online has changed enormously over the past 20 years, and that pace is only going to accelerate,” she said.

“As part of our Smarter Selling strategy, Coles is increasing our use of technology to improve efficiency and enable us to keep pace with rapidly-evolving customer needs. Ocado’s automated fulfilment technology and home delivery solution will ensure that we deliver a best-in-class customer experience,” she said.

Ocado will construct two automated fulfilment centres in Sydney and Melbourne by FY2023, providing greater range and availability, improved freshness, more delivery slots for customers and the world’s leading online grocery website platform.

“Coles has been a great Australian retailer for 105 years, and our partnership with Ocado is part of ensuring the sustainability of our business so we continue to win together with our customers, team members and suppliers in our second century,” Ms Donaldson said.

Brian, now Coles Online’s Business Process and Improvement Manager, has moved from delivering orders himself to developing an efficiency program to minimise the distance travelled by Coles Online vans – allowing for quicker delivery, lower costs and fewer emissions.

The growth of Coles Online over the past 20 years has not just provided Brian with a career – it’s also played a role in his family.

Brian first met his wife Jasmin met while the pair both worked at the Clayton warehouse. Today, they have two children: Paige, 6, and Archer,1.

Coles Online celebrated their arrival of both children in the most fitting way possible, naming Coles Online vans after each of them.

Coles switches to recyclable and renewable meat packaging

Coles is introducing meat packaging made entirely from a combination of recycled and renewable material.

The new packaging will be used for a wide range of its Coles brand fresh meat and poultry products.

Coles bought about 121 million recyclable meat and poultry trays, in 2018, from Australian manufacturer Plantic Technologies.

Coles will use Plantic’s barrier trays, made from recycled polyethylene terephthalate (PET), along with a thin layer of Plantic’s renewable barrier material to help keep the meat fresh.

READ: Coles and Woolworths still lead fresh fruit and vegetable market

During the recycling process, the thin plant starch layer washes away, allowing the PET tray to be recycled.

Coles director of fresh produce, Alex Freudmann, said it was an important step in Coles’ goal to become more sustainable.

“For four years, our Coles brand beef, lamb and pork mince has been packaged in recyclable trays sourced from Plantic. We now want to take the next step by transitioning a wider range of our fresh meat and poultry trays to Plantic’s new packaging, so that it is not just recyclable but also made from recycled plastics and renewable plant materials including corn,” he said.

“We understand the important role that packaging plays in maintaining food safety, supporting product longevity and reducing food waste. At the same time, we are committed to reducing our impact on the environment and continue to look for opportunities to increase the content of recycled material in Coles brand packaging and improving recycling communication to customers on pack,” said Freudmann.

Plantic’s materials carry the Australian Recycling Label, which provides consumers with information on what packaging can be recycled and whether it can be recycled in kerbside recycling.

Plantic Technologies CEO Brendan Morris said the company saw the partnership with Coles as a defining opportunity to strengthen the local recycling industry.

“The problem in Australia is that there hasn’t been lot of processing of kerbside recycling done on-shore. Instead we’ve been sending it to China. As a result, there has been little investment to reprocess the waste within Australia and there’s not enough capacity here. At the same time, Australia is importing plastic into the country that can’t be recycled. These two factors combined means the waste is just piling up,” he said.

“Plantic decided that if we’re really committed to this and want to make a benefit to the environment and make a real difference then we need to start now, with Coles supporting us.”

Coles aims to make all Coles brand packaging recyclable by 2020.

Survey shows ALDI is the most trusted brand in Australia

A recent survey has bumped ALDI up the food chain as the most trusted supermarket brand in Australia.

In the latest Roy Morgan Net Trust Score survey, ALDI is ahead of big names such as Qantas and Bunnings.

The supermarket brand went from third place to first, in the July survey results.

About 4,000 Australian were asked which brands they trusted and distrusted. The previous survey was conducted in April 2018.

READ: ALDI to sell Australian-supplied products in China 

Conducted by Roy Morgan, the latest survey reveals ALDI has come in just ahead of insurer NRMA with Bendigo Bank, Qantas and Bunnings.

Qantas has fell from its number-one spot as Australia’s most trusted brand, to fourth position.

ALDI’s main supermarket rivals, Woolworths and Coles, are rated highly when considering trust but fell behind ALDI on net trust score.

Despite ALDI’s strong performance with the top net trust score of any brand, supermarkets as a category fall behind other industries such as automotive, consumer product brands, travel, and technology.

According to Roy Morgan CEO Michele Levine, the importance of trust to a brand’s sustainable future is increasingly recognised as a key metric.

“Nowhere is a high level of trust more important than when it comes to the provision of the food we eat,” said Levine.

“The success of ALDI’s entrance to the Australian market has been built not only on discount prices but also a reputation for reliability and meeting the needs of consumers. ALDI’s ability to excel at its core competencies has built a level of trust in the Australian market without at the same time attracting the degree of distrust seen by its rivals,” she said.

“Measuring trust alone is never enough – we need to measure distrust and then subtract if from trust to reveal the accurate health of a brand. Although ALDI’s larger rivals both have high levels of trust, it is the number of Australians who express distrust in the two market leaders that they should be worried about,” said Levine.

The top brands in Australia ranked by the positive net trust score are:

  • ALDI
  • NRMA
  • Bendigo Bank
  • Qantas
  • Bunnings
  • Kmart
  • ABC Network
  • IGA
  • Australian Post
  • ING

Roy Morgan indicated that important drivers of trust include reliability, customer focus, knowledgeable staff, ease of contact and previous good experiences with the company.

Drivers of brand distrust revolve around perceptions of self-centredness, greed, and dishonest and deceitful business practices.

New niche beverage category expands quickly

In mainstream grocery, strong sales performance is critical to hit hurdle rates and avoid deletion. In less than one year since launching in Woolworths, Mojo Crafted kombucha has achieved this, according to the company. Woolworths has also doubled the product range  with new flavours Passionfruit and Turmeric.

Mainstream grocery is not the only retailer expanding probiotic beverages for customers.  Independent grocery is also cashing in on the market in Australia, at a retail level pushing around $70 to $80 million a year.

Metcash Convenience recently selected Mojo Classic as the first kombucha nationally available through the independent network. IGA, Foodland, Super IGA, The Friendly Grocer and Foodworks stores will offer 13 Mojo kombucha flavours under the Classic and Mojo Crafted ranges, all in 330ml bottles.

The product is a fermented, sparkling tea containing active enzymes, organic acids and proven probiotics. According to the company, the certified organic, vegan friendly and gluten free beverage offers a range of health benefits, including gut health, vitamin B12 and immune support.

“Launching our full range of flavours in more channels means consumers win and we do too,” said Andrew Buttery, business development manager for Mojo Crafted.

“It’s a huge investment in refrigerated space in independent stores with a traditionally smaller footprint.”

Supply and demand: How Australia could solve China’s baby formula problem

Economic experts at Deakin University are highlighting the images of angry parents unable to buy baby formula for their children as a need to better regulate the impact of trading practices in Australia.

According to results of research conducted by Deakin Business School’s Department of Economics, products brought in one country and sold in another without the permission of the manufacturer by people travelling between the two countries is presenting a challenge not only for Australia but also other countries and territories such as Japan, Hong Kong and the United States.

Department of Economics senior lecturer Dr Xuan Nguyen says researchers considered the impact of parallel trade on the financial welfare of the home country (based on a combination of the financial benefits to consumers, producers and government revenue) and what actions could be taken to ensure no one was disadvantaged.

“In this situation there is a demand in China for high quality baby formula. This demand is being met by parallel traders who travel to Australia, buy large amounts of baby formula and then sell the product back in China. Here we see that the manufacturers of the baby formula benefit from the sales because of the increased demand and the parallel traders make a profit from selling the formula at a higher price back in China,” Dr Nguyen said.

The researchers found it was possible to get the balance right with parallel trade, rather than outright banning the practice.

“A key recommendation from our study is the implementation of good government policy measures to control the quality of product people can take out of Australia via the parallel trade channel. This would involve a change of policy for many players from the producers, to the pharmacies and supermarkets, as well as customs,” Dr Nguyen said.

The research paper Cross-border Travellers and Parallel Trade: Implications for Asian Economies is the first theoretical attempt in the economics literature that studies parallel trade by cross-border travellers. 

Will Coles crack under pressure to freeze their eggs?

Pressure is mounting for Coles to move eggs into refrigerated aisles in a move to protect consumers from salmonella, a practice currently rolling out at Woolworths.

Woolworths has pledged to keep eggs in refrigerated cabinets as it continues a nation-wide revamp of its stores.

In order to prevent the spread of the harmful salmonella bacteria, fresh eggs are now being chilled in new cabinets installed at dozens of Woolworths outlets in the past year.

Coles has come under some criticism across social media platforms as it would not disclose if any of its stores would keep eggs refrigerated in response to cases where egg-related incidents lead to hundreds of hospital admissions each year.

According to infectious diseases expert at Australian National University medical school, Professor Peter Collignon, eggs must be treated just like raw meat and kept in a refrigerator at all times.

“I’m always surprised by the lack of anxiety about this. We ought to make the product safer, and we do that by refrigerating it, even at the supermarket,” Collignon said.

Collignon stressed that poor practices at farms, where "dirty eggs" are graded and used when they shouldn't be, combined with poor food-handling practices, particularly in catering or at restaurants, have been the main culprits behind large outbreaks of the food-borne illness.

The salmonella bacteria is spread by birds, usually through faeces, with food safety laws requiring eggs to be washed, inspected for cracks, graded and then kept at cool temperatures at farms and during transport.

But there is no legal requirement to keep eggs in a cool environment at the retail level, and there is no scientific consensus about the need to do so.

Green and Gold-standard: Australian food products surge in popularity

Despite living in an age where foods are increasingly imported from overseas retailers alongside noticeable international brands, the latest findings from Roy Morgan Research show most consumers are still buying Australian-grown foods.

In the 12 months to September 2015, nearly 90 per cent of Australians aged 14+ said they’d be more likely to buy products made or grown in Australia –a noticeable increase over 85 per cent in 2013.

Although Australians’ renewed preference for ‘home-grown’ shopping is striking across the range of manufacturing industries, food ranked the highest amongst the population to be purchased if labelled ‘Made in Australia’.

In 2013, 84 per cent of the population were likely to buy food products made in Australia. By September 2015, that number had risen up to 88 per cent.

A two per cent increase also occurred in the wine sector, with 72 per cent of the popopulation willing to buy wines grown or made in Australia in 2015.

According to Roy Morgan Research CEO Michele Levine, “The love affair between Australians and Aussie-made products shows no sign of fading. In fact, it’s the healthiest it’s been for two years, with nine in every 10 Australians saying they’re more likely to buy products in Australia.”

In speaking with Food Magazine, a spokesman for Australian Made said consumers have the reassurance that food grown locally will meet high Australian standards.

By buying locally-grown goods, money is then given to support local jobs that can produce great products and produce throughout 2016.

Is the appointment of senior management at foodland a sign of panic

South Australian supermarket group Foodland has made a series of senior appointments as it gears up to meet increasing competition in the state’s supermarket sector and boost its market share.

Foodland has engaged Christopher Villani as Marketing Manager and Sarah Armstrong as Merchandising Manager, also appointing Adelaide-based brand agency kwp to ramp up its advertising and marketing strategy

Foodland’s Chief Executive Officer, Mr Con Sciacca, said the new appointments helped strengthen the group as it faced increased pressure from the established supermarket chains and the arrival of new competition from overseas.

Adding “We have a unique focus on South Australian growers and producers which differentiates us in the market place and has enabled us to build up a loyal customer base.

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