Predictions for foodservice in 2020

Many readers will be aware that leading trade publication, The Grocer, is a b2b brand stablemate of MCA. Given the sheer scale and importance of the grocery market as the biggest rival to eating out of home, it is essential for foodservice professionals to maintain a watching brief on key developments, trends and predictions within the supermarket sector. Recently, The Grocer collated a series of future forecasts from executives from across the grocery market, and these have been distilled into five key look-outs that should be on the foodservice radar too.

1. Supermarkets will target takeaway

The leading supermarket chains are already offering online ordering and delivery. Many already have cafés, restaurants and hot food counters. Expectations are for the foodservice delivery market to continue growing strongly over the next three to five years. A coming together with existing and possibly new delivery specialists, either via strategic partnerships or acquisitions, appears a natural fit and one that could serve to form an ‘extended life intermediary service’ to help fulfil a wider spectrum of food & beverage requirements of busy householders. It is also not too much of a leap for this to potentially encompass some form of dark kitchen/virtual brands too as supermarkets look to reconfigure excess, under-utilised superstore space.

2. Meat-free will be the default option

The relentless rise of growing consumer responsibility around more personal health, animal and planetary welfare will catalyse further growth in meat-reduction dietary preferences. Vegetarianism and veganism will potentially become sufficiently popular normal practices that a tipping point will be reached whereby the tables are turned and meat dishes will be the versions consumers have to ‘opt-in’ for.

The implications for the farming industry will clearly be immense, but the strong likelihood is that meat consumption will decrease, and will migrate towards lower quantity, but higher quality, more premiumised product with even higher provenance and sustainability credentials. While eating out will always remain a more treat and indulgent-based activity, and become a more important market for meat suppliers, foodservice will not be immune to these wider consumer trends. Particularly among restaurant brands with more youthful customer profiles, there will be the need to step up plant-based NPD and engage in additional rebalancing of protein groups on menus.

3. Arrival of targeted health specialist products and services

Thinking about how healthier eating is going to evolve, a logical next step is with more personalised and prescriptive food & beverage intake. In many ways this will a second coming of ‘functional foods’, but with improved timing through more engaged and better-informed consumer audiences. Younger customers will be more knowledgeable via more widely accessible nutritional and allergy-related information and because of greater understanding of the advantages and disadvantages of plant-based diets. In addition, scientific advances will open-up more prescriptive benefits for more niche consumer segments with specific conditions, along with targeted advantages for older consumers.

Food and drink products specifically developed to improve energy levels, sleep quality, gut health, mental functionality and mobility, and to provide pain relief, will all become more popular. New product categories will emerge in supermarkets, and there will be growing numbers of dedicated health food shops and of more specialised cafés. In particular, leading coffee shop chains will keep a close eye on potential acquisition opportunities.

4. Discounter expansion drives further grocery consolidation and diversification

Over the past decade, one of the most seismic events within grocery retailing has been the rise of the discounters. After significant physical expansion, Aldi and Lidl now have a combined grocery market share of 14%, up from just 5% in 2010. A figure of 20% is by no means an unrealistic expectation by 2030. This growth forecast has several implications. It is going to require further physical expansion, particularly within London and the South-East, but also more focus upon high street sites nationally. This is going to entail new attention on Food to Go ranges and provide increasing competition for nearby practitioners.

Growing discounter penetration will inevitably further impact sales growth and profit margins at the superstore giants. With its scale and leadership position, Tesco is most insulated, but trading pressures will intensify on at least one of Asda, Morrison or Sainsbury’s. At some point, the big four will become three – despite the best conservational efforts of the Competition & Markets Authority. In addition, this will mean the attractiveness of diversification outside of core grocery retailing will increase further. Strategy departments will be busy running (and re-running) their slide rules over opportunities in non-food, wholesaling, delivery and/or foodservice. Sainsbury’s might have tried and failed in the past with its Fresh Kitchen, but it would be wrong to think there might not be a more appropriate time and place.

5. Sustainability considerations acquire business critical importance

For many, Greta Thunberg is already an early contender to be the person of the decade, and if that sounds a tad premature, it surely is difficult not to agree that in ten years, more of us will be more worried about climate change than is currently already the case. Already, we are in the midst of a consumer-led revolution about the use of plastic, and grocery industry stakeholders are having to become increasingly mindful about their environmental impacts to not only avoid a consumer backlash, but also to better position themselves to capitalise on the gathering momentum behind more responsible consumerism.

The 2020s will increasingly see consumers demand values alongside value, meaning that sustainability will increasingly guide business decision-making as companies look to reaffirm their various commitments to the environment, community and to investors. Sustainability audits and reporting will become more commonplace, and Foodservice operators will be advised to ensure they are not left behind regarding best practices.

In summary, distilling grocery market predictions into a short-list of just five key developments is inevitably open to debate. No reference has been made to the consequences of Brexit, new trade deals or possible supply chain disruption. No inclusion either about the prospect of/need for growing internationalisation, to the rise of CBD or of an insect-led revolution. Come what may, the 2020s are not going to be dull and are only likely to see the pace of change accelerating. Dyed in the wool traditionalists need not apply.