Affordability and Health: Key Factors for New Product Success

1. MODULE 2 - Affordability and Healthy Foods

2. AFFORDABILITY A KEY FEATURE IN NEW PRODUCT SUCCESS There are numerous research reports that emphasise that consumers want food products that are affordable, healthy, convenient and environmentally friendly. Did you know that AFFORDABILITYis the top new product purchase drivers and needs/desires as defined by Nielsen as ?

3. WHY WE BUY? (1 of 2) The cues behind new product purchases are very insightful.. ... Nielsen

4. WHY WE BUY? (2 of 2)

5. WHAT WE WANT? (1 of 2) According to Nielsen, affordability tops the consumer rating in terms of new products that consumers wish were on the market, but are not

6. WHAT WE WANT? (2 of 2)

7. MAKING IT AFFORDABLE – WHY ?

8. THE HEADLINE SOCIETAL CHALLENGE 2013 statistics show that 116 million Europeans were at risk of poverty or social exclusion and 40 million are suffering from severe material deprivation.

9. It is acknowledged that the cheapest food is the unhealthiest food. • Without getting into the politics of food economics, there are key reasons for this :- • Access: healthier foods are less available • Cost: healthier foods cost more • Skills: healthier foods require preparation and cooking • Equipment: cooking healthier foods requires kitchen facilities, pots, and pans • Transportation: low income consumers are less mobile, hence have less choice • Quality: even if stores sell fruits and vegetables, they might not be fresh • Marketing: fast foods and snacks are heavily marketed • Peer pressure: eating high-calorie foods is considered the norm

10. Adam Drewnowski, University of Washington in his paper ‘Obesity, Diets, and Social inequalities’ says: ‘if you want to understand obesity, take a look at what poverty makes people eat’. The Seattle Group calculates the cost of food per calorie.  By this measure, the price of fruits and vegetables is exceedingly high compared to the cost of junk food. 

11. MAKING IT AFFORDABLE – WAYS TO REDUCE YOUR COSTS

12. “HEALTHY DOWNSIZING!”    • Based on the premise that the easiest way to cut costs and calories is smaller packages! • Option to downsize product size. However food producers need to be careful – if price is not reduced accordingly, the New York Times cynically calls this “stealthy downsizing.” • The smaller versions are • “cheaper” (if the producer uses this strategy to pass on cost savings) • “greener” (packages good for the environment) • “portable” (little carry bags for the takeout lifestyle) • “healthier” (fewer calories)

13. ADD VALUE TO WASTE According to the Food & Agriculture Organisation of the United Nations up to one third of all food is spoiled or squandered before it is consumed by people. https://www.youtube.com/watch?v=IoCVrkcaH6Q PDF download infographic http://www.fao.org/save-food/resources/infographic/en/ Manufacturers have invested in new technologies which add value to raw materials that would have previously been wasted.

14. VERY VALUABLE BEST PRACTICE IS AVAILABLE FROM THE FOOD WASTE REDUCTION ALLIANCE TOOLKITON BEST PRACTICES & EMERGING SOLUTIONS A joint project by Food Marketing Institute, Grocery Manufacturers Association & the National Restaurant Association. http://www.foodwastealliance.org/wp-content/uploads/2014/04/FWRA_Toolkit_FINAL_0415141.pdf

15. ENCOURAGE CONSUMERS NOT TO WASTE Your marketing messages could encourage consumers to adopt a ‘no waste’ strategy. Food is lost or wasted throughout the supply chain, from initial production down to final household consumption. This may be because of rigid or misunderstood date marking, improper storage, buying or cooking practices. Clear instructions, demonstration videos can be used to communicate better consumer usage of your product. .

16. Monitor Waste • There are a number of ways to monitor waste including: • Implementing a waste log • Waste bin audits • Waste collection and measurement • A balance between reasonable controls and controls that apply excessive overhead is required. It is often useful to implement controls as required (when food costs are out of control) and/or spot checks. • For more information, PLEASE REFER TO MODULE 3, How to ‘lean and green’ food services

17. PACKAGING Packaging represents a significant cost in food production. Often a change to shape, size or design of the packaging can result in significant savings. Light weighting for example, is an option which should be considered. The aim of light weighting is to reduce the mass of the packaging materials either by trays thinner or reducing the gauge of cardboard. VISIT - The Innovationparc Packaging and the topic Save Food http://video.messe-duesseldorf.de/media/inovationpark_packaging_en.mp4

18. INCREASE SHELF LIFE of PRODUCTS The shelf life of food depends on four factors: formulation, processing, packaging and storage conditions Change any one of these conditions and you can change the shelf life — for better or worse. Shelf life has many attributes: bacterial control, colour stability, yeast and mould inhibition, flavour stability, textural stability and aroma stability. The appearance of shelf-life problems can be wide ranging, as well, including oxidative browning, oxidation of flavour compounds (especially in a lipid phase), syneresis (weeping and watering) or deliquescence (stickiness and unusual patterns of crystallization).

19. INCREASE SHELF LIFE To increase the shelf life of more unstable foods (such as low-sugar jam, low-salt condiments, low-oil salad dressings, prepared fresh produce and deli meats), food companies may take steps to reduce bacterial load from ingredients before they process the final food. To grow, thrive and survive, microbes need a friendly environment. This usually (although not always) includes moisture. Lowering moisture (decreasing water activity) creates a hostile environment for bacteria by decreasing the available medium for them to grow in. There are a number of new ingredients to help regulate water activity in foods with a reduced fat phase. Consult your food technologist

20. Improve efficiency within supply chains. By decreasing the costs of distribution, you can achieve savings that can be passed on to the consumer. For many companies, this has involved setting up a direct sales opportunity, BUT this is not suitable for everybody. Direct distribution can be a major distraction away from the core business activity. Pooled/collaborative transport can a cost and time efficient way of small companies to share the burden of transport, based on the same destination and sharing the same customers. CASE STUDY .. SALES AND DISTRIBUTION COLLABORATION OF FARMERS AND PRODUCERS ... http://www.southeastfoodhub.org/

21. The South East Food Hub is an Australian choose-your-own food box delivery service. They deliver fresh, locally-grown food at an affordable price that’s ‘fair’ to the consumer and the producers.They help small & medium producers to sell their produce locally, and in turn pass on competitive prices and a freshness ‘that will blow you away’. The Hub is operated as a social enterprise, so any profit is reinvested into the local system. Food access is prioritised and at times subsidised for people living in identified 'food deserts' (neighbourhoods lacking convenient access to fresh food options) or low socio-economic areas..

22. THEIR BUSINESS MODEL IS BASED ON FOOD CLUBSFood Clubs allow friends, work colleagues, schools, neighbours or community groups to band together and gain access to good food at more affordable prices. Orders are placed online between 12pm Tuesday - 12pm Friday and deliveries are made on Tuesday afternoon.

23. MAKING IT AFFORDABLE – SOME MORE STRATEGIES FOR FOOD PRODUCERS

24. In-House Preparation • In Food Service businesses can reduce cost by preparing food in-house rather than purchasing pre-prepared ingredients. There are a wide variety of pre-prepared ingredients available, from pre-cut vegetables to pre-made sauces. Typically pre-prepared ingredients are substantially more expensive than their raw ingredients. • There are a number of considerations when comparing pre-prepared with in-house preparation including: • Labour cost • Availability of suitably skilled staff • Quality • Balance the cost, convenience of each option for your business.

25. Portion Control • Food portions vary for a number of reasons including differences in staff practices and raw ingredient size fluctuations. • Portion size variation can be minimised by employing tactics such as documenting standard recipes and measuring out portions prior to service.

26. Stock Rotation • Rotating stock not only improves the quality and consistency of your end product but also reduces waste, reducing food cost. • Effective planning can be used to purchase wisely and reduce waste. • Sales estimates based on previous periods, same time last year sales, future bookings and special events can provide a basis to purchase adequate amounts, but not excessive stock.

27. Go Seasonal • The cost of vegetables varies greatly depending on seasons. Typically when produce is “in-season” there is a greater supply, so that demand is easily met, and the price decreases. • Fresh seasonal produce also lasts longer. • The quality of produce that is in-season is usually better as it has not been stored for long periods or travelled great distances

28. Reduce Direct Costs • Payroll and staffing (are you over-staffed? - do you plan your staff requirements on the basis of known demand? If not, an opportunity exists to improve your productivity