Millennials and technology disrupting the grocery supply chain
Speaking at an event organised by ABC Córdoba in collaboration with CajaSur Bank, Ebro Foods president Antonio Hernández Callejas presented a picture of an evolving retail landscape for food manufacturers, both in Spain and globally.
"Millennials and new technologies have played an indisputable role of accelerator in the promotion of e-commerce both for its capacity to transform society and for the speed with which it has adopted them,” Callejas told the conference audience.
“We are no longer in a linear value chain, in which all the elements were placed horizontally, but in a model in which all the elements are related to each other and the consumer is at the centre of all the strategies,” the executive continued.
The Amazon effect
Callejas highlighted two developments from e-tail giant Amazon – Amazon Echo Alexa and Amazon Go – as having the potential to fast-track further disruption in traditional bricks-and-mortar retail channels.
Amazon Go is a store concept that eliminates checkouts: consumers using the Amazon Go app can enter the store, take what they want and exit. According to Amazon, its “just walk out” technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart via computer vision, sensor fusion and “deep learning”.
Amazon created further waves in the grocery space with its recent acquisition of US-based natural and organic supermarket group Whole Foods Market.
E-commerce gaining ground
Online sales continue to expand apace as consumers increasingly adopt a mix-and-match attitude to grocery shopping.
According to data provided by Ebro, the percentage of Spanish consumers already buying online “at least once a week” has increased from 19% in 2016 to 27% in 2017. Those who purchase products online at least once a month has grown from 48% to 58% in the same period. In the country, the market share of online food sales exceeded 2% of total food sales “for the first time”.
Globally, the opportunity in e-commerce is greater still. Research from Kantar Worldpanel shows that online sales accounted for 4.6% of all FMCG revenue generated in the 12 months to March 2017. Asia is the largest e-commerce region, followed by Europe.
“Whilst the e-commerce channel is growing, the FMCG market as a whole is sluggish, increasing just 1.3% during the same period. Our projections show that in 2025, online FMCG will be a US$170bn (€144.8bn) business and hold a 10% market share,” Stéphane Roger, global shopper and retail director at Kantar Worldpanel, commented.
Within Europe, the UK and France are the most developed grocery e-commerce markets, with online sales accounting for 7.5% and 5.6% of total grocery sales respectively. Markets like Germany, the Netherlands and Spain trail the trend somewhat.
Suppliers must also evolve
Food manufacturers must respond to this more inter-connected value chain, Callejas argued.
Ebro, which is the global leader of the rice sector and second-largest pasta maker worldwide, is working to adapt to this “new scenario” and address “where our consumers are now and what they demand”.
The company, which operates in more than 25 countries in Europe, North America, Asia and Africa, is working to meet consumption needs based on the four main pillars of health, premiumisation, convenience and sustainability. Today, for instance, 14% of Ebro’s innovation coming to the market is focused on delivering a more convenient product or experience.
In order to support future innovation, Callejas stressed, food makers will need to combine technologies and solutions that bring together data from bricks-and-mortar and online channels to generate a “comprehensive” shopping experience. Artificial intelligence and “efficient” management of big data will be the industry’s “great allies” in this endeavour, he predicted.
The basis of this strategy, Callejas concluded, will be three priorities: orientation towards the market, internationalisation of consumer behaviour and “constant innovation”.
