Asked to identify features dominating the grocery landscape, Coveney told FoodManufacture.co.uk at the event, which was held at the offices of law firm DWF in London: “There are four or five things that jump out at me. First, if you look at publicly quoted businesses, there has been a haemorrhaging of profitability over the past few years.”
This “catastrophic collapse” of profits would have a huge impact on the wider food industry in 2015, he claimed. The emphasis would be on adding as much value to products as possible, increasing scale and efficiency and cost cutting, he said.
The blurring of lines between foodservice and convenience outlets was another consumer trend he picked out. “If you go out to lunch, you have Marks & Spencer Simply Food competing with Prêt à Manger and Greggs.”
Fuelled growth
Greggs had latched on to that and this had greatly fuelled its successful sales growth in the past year, said Coveney.
Greencore was also capitalising on the development with its major focus on food-to-go production, he added.
This trend ran alongside the increasing proliferation of retail channels and formats, from online retail to the success of convenience stores and discount outlets, he said.
The continued growth and appeal of the limited range discounters was the third characteristic of the current grocery landscape he singled out. However, he stressed that this meant more than just the growth of Aldi and Lidl. “That includes retailers such as Poundland and B&M Retail.”
The challenge now was how the more traditional retailers, which still held almost 90% of the market, would respond to the pressure this was putting on them.
Massive shift
Coveney agreed with commentators that there had been a massive shift in the retail and consumer landscape and that there would be no going back. “Consumers have built habits of multiple kinds through the recession – these will remain, independent of retail circumstances.”
If retailers and manufacturers were to adapt, changes such as the rise in popularity of discount chains should not be seen as negative – firms needed to ride the wave, he said.
Other changes were very positive, he said. For example, there had been a growing interest in healthy eating and a reduction in domestic food waste as consumers sought to make the most out of their shop to cut costs.
Food Manufacture’s Business Leaders’ Forum was sponsored by DWF, Lloyds Bank and food testing company ALcontrol Laboratories.
The free to attend, half-day event is open to senior executives in food and drink manufacturing firms. To register for next year’s event, email felicite.burke@wrbm.com.