Joining together to discuss the changes in customer-driven expectations are Chris DuBois and Melissa Rodriguez, both with IRI, a leading provider of big data and analytics.
Guests: Chris DuBois and Melissa Rodriguez (IRI)
Joining together to discuss the changes in customer-driven expectations are Chris DuBois and Melissa Rodriguez, both with IRI, a leading provider of big data and analytics.
Rodriguez led the conversation, describing IRI’s integration into data and technology innovation. She shared that IRI not only integrates retainer and media data, but also consumer and manufacturer data. 4:21
As inflation continues trending upward, Rodriguez added IRI is watching customer trends closely and finding shopping habits decreasing as prices continue to rise. 9:30
Multiple shifts have caused a change in spending habits for food consumption. From the changes of COVID-19 to an increase in the work-from-home community, DuBois said food consumption at restaurants has decreased. He went on to say that many restaurants sit empty as locations added drive through and to-go options. 13:25
Scott Sorrell, podcast host and director of global marketing for Balchem, asked if the IRI team had seen any shifts in protein consumption and what cuts of protein consumers are now consuming. 17:32
DuBois said ultimately, each protein is serving a different category of consumers, adding trends are shifting towards creativity for all kinds. Rodriguez then went on to say she’s seen a large shift to chicken thighs and chicken wings because of the consumer's option to smoke, grill or even use the air fryer for the cuts. 18:02
One of the largest innovations to the protein sector has been boneless thighs, DuBois mentioned, adding they are now one of the biggest products in the supermarket. 22:54
Without a doubt, the Ukrainian war has had a significant impact on both consumers and suppliers in the U.S. The largest impact came from the cost of feed for the west coast, DuBois said. He added that when grain comes from overseas, unless there is a form of vertical integration, managing the cost on the wholesale side becomes a large factor. 27:30
Shifting the conversation, Sorrell asked the IRI team what they believed the five biggest trends for the future might be. 28:45
For consumers, there isn’t a one size fits all approach. Rodriguez added that no two consumer generations are alike - the boomers, millennials, Gen Z, etc. She went on to say that 2030 looks to be a turning point for the U.S. population. The next ten years anticipate trend shifts towards product innovation, digital engagement, sustainability, consumer engagement and generational exposure. 32:10
As IRI continues to focus on the generational impact of food consumption and trends, DuBois said they had found generational trends to cycle, and now they are seeing some of the same items reoccur. For example, he mentioned that Asian cooking oils are on the rise versus vegetable oils and others, adding the focus is now on the buyer groups. 38:15
Trends are on the rise in the U.S., but are there the same trends and changes globally?
DuBois said if he were to walk the supermarkets in Europe, he would see the same merchandising tactics and product marketing. He went on to say there seems to be a more open door in product communication between the processors, market and customers as the U.S. often lacks in the producer-to-consumer relationship. 48:21
Wrapping up the conversation, Rodriguez said she encourages the industry to focus on studying the response rate for key categories and how each generation responds to those changes. She added that these statistics would ultimately give direction as to what to expect for the next few years. 50:30
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Scott Sorrell (00:08):
Good evening everyone, and welcome to the Real Science Exchange, the podcast we're leading scientists and industry professionals meet over a few drinks to discuss the latest ideas and trends in animal agriculture. Hi, I'm Scott Sorrell, one of your hosts here at the Real Science Exchange. Animal Agriculture has endured many challenges in recent years including the Covid Pandemic supply chain disruptions, the Ukrainian war inflation, and changes in consumer spending, power, and food preferences related to the rise of the millennial generation and the decline of the more dominant boomer generation with us today to help us understand the impact of all of this is Melissa Rodriguez and Chris Dubois from I r i I r I is one of the original innovator innovators in Big Data, and now integrates the world's largest set of consumer data points to help our customers make a sound business decision. Back on October 12th. Melissa Rodriguez explored consumer expectations and consumer trends as part of the Real Science Lecture series. You can do her full webinar at bache.com/real science. So first of all, like to welcome Melissa and Chris to the Real Science Exchange. Good to see you here tonight.
Chris DuBois (01:24):
Thanks for having us here. Yeah, it's a thrill to be here, a real honor. Yeah, so thank you.
Scott Sorrell (01:30):
Excellent. Melissa, since you were, our featured lecture, would you mind giving us an overview of yourself?
Melissa Rodriguez (01:39):
Yeah.
Scott Sorrell (02:05):
Alright. Very well. And Chris welcome. You and I met down in San Antonio back, that must have been in July. It did a very interesting presentation down there, and I thought it would be an appropriate forum, for our audience to hear this kind of information as well. So, welcome you to the Real Sense Exchange. Would you mind kind of give us an overview of your background and your role arise?
Chris DuBois (02:29):
Oh, sure. Here atIrisi, I lead what we call our protein practice, and Melissa's a very key and important part of that. I, I lead all of our manufacturer accounts, so I'm responsible for client delivery, our data services, et cetera, and all of the teams. So if something goes wrong, I'm the one that, you know, is ultimately accountable. And at the end of the day, I get to work with fabulous sets of teams and clients kind of day in, day out.
Scott Sorrell (02:54):
All right. Very good. Thank you for that. Finally, I'd like to introduce Dr. Zack Loman back to the pub. Zack, it's been a while since you joined us here. Do you have anything in your glass tonight? Anything exciting? I don't, I'm drinking die,t Dr. Peppe,r tonight. All right. It's a shame you guys are, is making me drink alone, but it's not the first time
Scott Sorrell (03:46):
They, they cool it down mix look like mm-hmm.
Melissa Rodriguez (04:17):
Sure. Happy to. So I r I if you've, you've been around for a long time. We've had different naming conventions over the past30-oddd years that we've, we've been around, but currently known as i r i worldwide. Information Resources Incorporated was probably one of our long, longest-standing descriptors, from a branding perspective. So I r i at the core you know, is all about the data and all about retailer data. So you know, we're one of the original innovators in Big Data. We integrate not only retailer data, loyalty data, media data, and shopper and consumer data altogether, sort of under that big umbrella to help retailers and manufacturers within C P G drive their business forward. So we've got the data that runs the gamut, and we've got the technology to back it up. So we are kind of on the forefront of helping as I said, retailers and manufacturers understand the nuances of their business, especially you know, in the times that we've had in the last couple of years.
Scott Sorrell (05:21):
All right. Very well, thank you for that. Chris, maybe you can tell us a little bit about what, what's the geographic reach that you guys have? Do you look at, are you kind of NorthAmerica-centricc? Are you a global company?
Chris DuBois (05:32):
We are glue, we have global reach, but we're very North America-centric, so we're very strong here in us. That's where we're, we, we've been headquartered for a lot of years, but we have strong operations and strong teams out in Europe, Asia Pacific,c and all around the world. So from that side, we can bring in insights and data if you want it from the Netherlands, or we could bring it in from New Zealand. But yeah, at the end of the day, most of the heritage here started in us So, and that's kind of where, honestly, the US has the best data too, from a global side. Okay. At least in terms of what's selling from a food, foo,d, and retail piece. Yeah, I mean, at any point in time we can be on calls with clients who span and I, and Melissa works for one as well. It has global operations. So those, the way our data kind of flows and touches makes a big difference in clients' business
Scott Sorrell (06:27):
Very well. So Sam, you know, when I hear data, data is kind of backward-looking, it's history, right? And I'm, I'm curious about how you take that data and then how far into the future do you look and project with that?
Chris DuBois (06:43):
And that's a good question. For Mo the most part, for people who aren't as familiar with i r i, we see every item that's sold in each store every day here in us, you know, so if you think of everything you went into a Walmart and wanted to buy, we, we, we see it for on, on the food side, and then we have 60 million frequent shopper carts that we track as well. So if you ever wanted to know, does someone know kind of what you bought the answers? Yeah, yeah, we do in great detail. But, you know, the big, the big side of this, I think is, you know, trying to make sure we can drive it in a useful way with manufacturers and retailers. So this is all about driving growth, how drive pricing and assortment helping them make big marketing and sales changes as well.
Chris DuBois (07:29):
But it also helps drive some of the future decisions so we can forecast data five years out for sales. You know, on that side, it becomes something that if people wanna know where, where are sales going, we can do that. On the other hand, there are big changes from a generational side that are happening. Demographics happen slowly. In other words, it's not a secret. Millennials have been around for a while, you know, this is a verywell-definedd age group. But on the other hand, they're, as you look at their changes in how they roll forward, it gives you some real predictive capability in terms of what likes are,ise likely to be. And you can begin to pick up on what I call the big three tofive-yearr changes. So these are the things that matter. In other words, you could play day-to-day and wonder about what items are gonna go on circulars.
Chris DuBois (08:18):
And sure, every week a retailer has an item on promotion, there might be displays, there's gonna be price changes and all that moves, volume and all, it's all that's important. But thensome big changes happenn a little bit more slowly. But when you get in front of those, they decide which companies win, and which ones lose. And that goes all the way through the chicken world, but it happens in every category. And, some of those big changes, that's what you'll hear Melissa and I talk about often in terms of the big trend because the manufacturers that win those big battles are the ones that wind up five years from now feeling much better about life. And then some kinda are gonna struggle, and they're wondering like, wow, what happened? And doing that day in, day out, biting the fighters thing, isn't, isn't the best way to capture the big wins long term.
Scott Sorrell (09:11):
Very well. I'm, I'm looking forward to, to exploring some of those, those big trends that you guys have identified before we kind of get into that. And Melissa, one of the things that you covered during your webinar was some things that haves happened in the recent past that are still impacting us today, and, and that's covid and inflation. And kind of wanted to give you an opportunity to kind of talk about what are some of the things that that, that changed and how's that gonna impact us going forward.
Melissa Rodriguez (09:40):
Yeah, so I think, you know, we're currently still in the midst of high inflationary times. So some categories are seeing some differences in how you know, pricing is working and, and how how consumers they're, they're spending habits. But in general, right, when we're seeing price increases still well above double digit increases over the past year, and you combine that with different things you know, avian influenza, supply chain issues that are still plaguing certain categories or certain industries you know, it's still remaining, quote unquote, the perfect storm of, of consumers having to make trade-offs and tough decisions around what they're going to be spending their, their dollars on. Especially as cost of living across the board continues to increase. So we're noticing that at the shelves, right? We're noticing that as prices continue to rise or remain elevated people aren't buying as much right?
Melissa Rodriguez (10:37):
In certain areas, or they're maybe switching to smaller pack sizes or to club pack sizes to maybe stretch that dollar further. Or we're seeing people trading down from a brand perspective. So they might have in the past bought that national brand, and today they're maybe looking or comparing prices across a store brand alternative. So just really a lot of scrutiny happens you know, at the shelf and, and all the way to that purchase more so than we've seen during Covid. Right? During, during the pandemic, it was very much, I'm gonna buy what I can find because that, that flip that we've seen continues to sort of play out and will, you know, at least through 2023.
Scott Sorrell (11:22):
Well, Melissa, one of the things I found interesting from your presentation was that during, during covid people began to eat more at home as opposed to going out more. And I'm just kind of curious if, if that, did that impact not only where they ate, but, but what they ate as well? Would you mind kind of maybe expounding on that just a bit?
Melissa Rodriguez (11:46):
Sure. So you know, prior to the pandemic about 53% of the wallet share of food was purchased was food at home, right? So just a little over half of food was purchased for the home at that row significantly during the pandemic, and is actually remained elevated. So that share of wallet for food at home is sitting, is still sitting at about 78%. So what's interesting though is that when we look at, from an inflationary perspective, risen at a greater rate than the cost of inflation or cost of eating out, the difference though is still that eating out costs more, right? On like a per plate type base.
Scott Sorrell (12:31):
Yeah. I'm curious if, if, if the, the, the change in the fact that it's enduring, that we're eating more at home, is that due to the fact that a lot of us are still working from home or at least a higher percent of the time than we were prior to covid?
Chris DuBois (12:44):
Sure, but work from home has been one of the biggest, I think, lifestyle changes if that we've seen in, in generations. So the, if you go back to 2017 about 7% of the US population, working population worked at home. So very, very few. And at most of us in intermittent, now you're gonna see levels of close to 30%. That's sort of a good floor to think about. So basically we've seen a, a almost a quadrupling, if not more, of people working at home. Well, what does that mean? Outside of like, cute jokes about Zoom calls and teams and blah, blah, blah. All that's, it's less about the work style than it is about from an eating side, and more about the fact that people have time to plan meals, all of a sudden the whole idea of snacking work at home, breakfast becomes a big deal.
Chris DuBois (13:32):
That whole idea of, I'm gonna drive, hit a drive through on my way to the office, it's a little bit harder now, and you can begin to see that from the food service marketing side that they're trying to pull that traffic in or get people out of their homes to come back in. The same thing for a work from home lunch, all the downtown cafeterias, a lot of the downtown restaurants, you're seeing empty storefronts, not because business is horrible and we're in some kind of recession, it's simply because people are working in different locations. So suburban locations now are adding 2, 3, 4 drive-throughs and a lot of restaurants trying to get people to come through, drive through and take homes, so that the whole idea that work from home is a temporary thing is really mistaken. And I think it's gonna be one of the biggest changes we'll see going forward that'll reset everything from office properties to, to drive times, but also more importantly is to my world, the eating side, because it changes meal prep, meal location, and that's gonna drive all the economics between supermarkets and food service.
Scott Sorrell (14:34):
You know, related to that, I'm, I'm kind of curious what role maybe some of the delivery services have had and will have. Kinda like DoorDash, right? I, I don't, I don't partake, but I know my kids do. That's part of what they do. What do you think about that?
Chris DuBois (14:50):
Yeah, I think that's been one of the big, yeah, that's been coming for a, a lot of years. So that's, that was even pre covid in terms of the growth. And it's been hundreds of percent over over time. So it's, it's become a big industry on its own. I think the big pushback is gonna be whether restaurants can take over their own delivery service or manage in a different way, because it is a big march and drain at restaurants. But nonetheless, the whole idea that food can be convenient and it's gonna be at a different location. You don't have to go sit down in a restaurant or sit down at your house. The fact that food is mobile now is a really big idea because that changes products all of a sudden. If you're in food service, your product might have to be packaged and be portable and not just plated to look great.
Chris DuBois (15:38):
So that whole idea of keeping sauces consistent, you know, trying to keep things like french fries from not getting bad between the restaurant and the house, like that's a big deal. Or the fact that you could even have food delivered to a third location, not your house or not your restaurant. All that's possible. So I think what it does is just takes place out of the whole idea of, of where you eat food. In other words, you could eat at any place. You don't have to go to a restaurant or eat it at your house.
Scott Sorrell (16:10):
And, and what has the impact, has that, if any, had on the the source of the protein that's being consumed? By that, and I'm talking about the chicken, pork, beef aqua fish.
Chris DuBois (16:25):
Yeah, I'd say fish will always kind of struggle on that environment, but it changes it changes a little bit of the format. So if you think of tacos, like where did that come from? One, it was a flavor, flavor piece and, and, and a lot of different pieces, but it's portable, it's movable, and you can put it in a lot of different locations, including popups. So all of a sudden that experimentation changes dramatically. I think what, what's really gonna matter is that the creativity, so chicken, chicken has a different benefit than beef in terms of you know, of the groups if it serves and, and whatnot. But chicken takes flavors extremely well. So in other words, you can, you can do an awful lot with it. The question becomes where do you do it in the formulation? Do you do it right, you know, in advance or is it something that you're doing right at you as you plate, as you plate plate a protein? But I think in the food service side, the big piece, the big question's gonna be portability and, and how you can cook it and make it last through that trip to the house, whether it's a consumer taking it away or being delivered to them, or simply that they're gonna go make it at their own house. So mm-hmm.
Scott Sorrell (17:36):
Melissa, during your presentation, you talked a little bit about the fact that consumers are now buying different ways to prepare the food, be it a, a smoker or an air fryer or, or one of these Insta pots. I'm curious what, what, if any impact that's had on the source of the protein and maybe even the cuts of the of the meats that, that consumers are consuming?
Melissa Rodriguez (18:02):
Yeah, so I would say you know, we've seen a lot of uptick in chicken thighs and chicken wings for, for one example, right? So people are able to smoke them, grill the air fryer. And so just the ability to have some of those items that you maybe weren't comfortable cooking before, like chicken wings out of the home, and now having the ability to cre, you know, create recipes around those some of those cuts. Pork tenderloin is another one, right? Throw that on the smoker. And that's another one that we've seen really, really take off due to some of those you know, kitchen tools.
Scott Sorrell (18:48):
Zach, I don't wanna, I don't wanna hog all this. Do you have anything you'd like to ask?
Dr. Zach Lowman (18:52):
Yeah, I've got a question. So we're just coming out of the holiday season and with AI and shortages and cost of turkeys is my main question. Did did you see a, a change in the amount of turkeys purchased or how many were available?
Chris DuBois (19:06):
The availability was actually pretty good. We found turkeys to be a little bit smaller this year. Part of that, they just producers harvested them a little sooner. So instead of seeing the big, big birds, there's a little bit fewer of those and a lot more of the mid-size coming through. And some of that was just trying to make sure it was all there. But there was plenty of Turkey out there. In fact, this was a record year again big, big time purchases overall, and I think what was a little different this year than last year was just the fact that a lot of the big specials in pricing held off till the week or two before. So if you, if you, well, if you're like me, I walked in about a, a month before, cause I was gonna buy a frozen Turkey, but I needed about a 24 pound Turkey.
Chris DuBois (19:51):
And I knew if I wanted a big Turkey and I wanted it set, I'm just not gonna play the drum, you know, try to be, you know, riding the edge right down a few days before Thanksgiving. So I picked it up early and bought some other stuff out there as well. But if you waited, you know, you could save an awful lot on that Turkey. It, it could be, you know, almost half price by that time, by the time they got it down. So we saw the same promotions, they were just in different windows. But still a very big year from a tur Thanksgiving side. And you know, we saw similar things coming in Christmas and around New Year's too. So I guess the net net is from a consumer side, things were still really strong despite, you know, some of the headlines and all that other kind of stuff.
Dr. Zach Lowman (20:37):
Yep. I was wondering if the headlines kind of made people rush out and get 'em sooner because they're afraid they wouldn't be able to get one.
Chris DuBois (20:43):
No, there was a lot of that. And I think retailers were pretty savvy. I mean, I wish I'd know, I think I bought the Turkey just before I had a discussion at an industry conference about what the pricing of turkeys was gonna be at a few retailers. I'm like, darn it, I missed it cuz I wound up paying like a buck, you know, a buck 49. I could have got that for 79 later if I'd waited. But, you know, that's the break. So, you know but you know, at the end of the day, I think what retailers are trying to do is just figure out who, who are the people who are gonna wait and, and hope something went on deal. Those people got their deals. And if you wanted someone like me who just wanted some peace of mind that, you know, we'd be able to serve 14 people and not have a ton of drama outside of the usual whatever, family drama. You know, that part made it a lot easier for me to kind of prep it. So, no, it's okay. So we, we did see sales kind of grow, you know, sides were fairly strong this year and consumer. But you know, in, as Melissa mentioned, inflation is taking its toll, but we're seeing as people are stomach and the, the time spent cooking, you know, is still paying off that people despite high higher prices are still cooking at home.
Scott Sorrell (21:52):
Has the, the inflation changed again what kind of protein we are consuming, whether that be poultry, pork, beef how's that changed? And then also the cuts more or less whole chickens. Just kind of curious, that's a broad question I know, but
Chris DuBois (22:12):
I'd say there's kind of three big drivers. That chicken had a fabulous year last year. It was up, up big on dollars and very strong on volume. I think chicken had the, the benefit of being a lower price product overall. So in other words, relative to beef and pork and, and some of the others, even if it's higher priced, it's still relatively lower on that bit. But there's, there's been three big areas of chicken that have really mattered. So one is dark meat if you look at white meat versus dark meat and kind of separate that out, going five years back dark meat's grown just enormously. And part of that's due, I think, to taste preferences. You see a lot of recipes out now for the, for legs. Thighs. And, and one of the biggest innovations has been boneless thighs. That's a 700 million growth over 2017 in terms of dollars like that, that's one of the biggest new products in inside the entire supermarket, if you think about it that way.
Chris DuBois (23:12):
And you say, well, boneless thighs, what thighs were there, Chris? Like, it's not a surprise, it's not new, right? But the whole idea that you could carve it and make it boneless through processing and make it very easy to prepare, but also take all kinds of flavors and add into a bunch of dishes, like that's a really big deal. Like, that's one of the coolest new products that's come out in the supermarket and it's worth that, you know, 700 million in the swing so that that white meat to dark meat is, is a really big deal. And Melissa mentioned wings. I mean, shoot, we almost had a national security concern last year cause we couldn't find enough wings. I think there was, at some point I was talking about trying to figure out how we get four wings on a bird, you know, because we just can't find it, find enough. But but that ro the, the power of dark meat along with organic and value add have just been three huge drivers that have made a big difference in the chicken business.
Scott Sorrell (24:10):
Hmm. Now those wings being consumed at home, I typically think of those being consumed outside at the, you know, the, the Buffalo Wild Wings or whatever. But
Chris DuBois (24:19):
It's funny in industry conferences, cuz if you run into food service procurement professionals and you run into retail buyers, I mean, there's sort of the elbows up thing. They know, they know they're battling for those in many cases. They're just, there weren't enough. But, you know, a lot of the wings came out of what Melissa talked about on air fryers. Like if you run back 10 years ago, it, those weren't there. But now it's become, especially if you have teenage boys, that's, that's a very preferred afternoon snack. And it's easy for people to put together. It's become an easy way to prep meals. In fact, there's whole product sets that are built around it. If you don't have an air fryer recipe in a lot of your stuff in frozen, you're probably missing an awful lot of sales.
Scott Sorrell (25:03):
Well, you talk about the, the air fryers here at my household, my wife's got an Insta Pot and we have made a switch from some of the white meat to dark meat. Because of that, she's able to put those thighs in that Insta pot and you know, it kind of melts away that cartilage. And that's pretty good eating. So one data point, right?
Chris DuBois (25:23):
Scott Sorrell (26:06):
You know, another area I kind of wanted to dig into to see to get your thoughts on it, is the, the the Ukrainian war and the impact that may have on consumers and suppliers here in the States. Right. you know, I think the Ukraine is kind of considered the bread basket of Europe. A lot of the fertilizers are coming out of Russia and Ukraine that, that we use here domestically to, to make grains to that, that, that we consume, that our animals consume. And just kind of curious, you know, as you put that kind of data and information into your models, what's some of the answers you're getting back?
Chris DuBois (26:45):
It was probably one of the big concerns last year, and even going into this year. I mean, if you look at some of the West Coast producers, they bought grain from overseas. So all of a sudden when that avenue gets shut off, there is an awful lot of grain that needs to move east to west here in the US to feed the chickens. And that's, that's one of the biggest costs when you look at, you know, all the different things that go into making it chicken, it's chicken feed, you know, not to belabor it, but you know, that the economics behind that are a big, big deal. That's, that's kind of what's driving the processors crazy at this point. Just because prices are coming down a little bit now on the chicken side. In fact, I think from the wholesale side, they're cut in half. But chicken feet continues to be fairly high priced. So that, that is probably one of the biggest stories, I think for 23 is for re for processors to manage, be able to manage the costs, whether they can do it on the inside side, if they're vertically integrated or if they have to take the prices from the outside to feed the
Scott Sorrell (27:46):
Animals. You know, kind of related to that you know, if you listen to some economists, they're, they're predicting perhaps a recession in our future. And what impact do you see that having and have you considered that in, in some of your calculations in modeling?
Chris DuBois (28:05):
I'd say for next year we're looking at, you know, still dollar sales, growing volume with some softness, but a lot of it comes down to scenario based. I don't think anything that I've seen predicts major, major recessions at least that I have, you know, would have a lot of confidence. I think it feels more like a softer, softer type pullback for the most part. And that's kind of where we've been working with clients on in terms of, you know, we see dollar growth, dollar growth sort of mid, mid single digit range depending on the category items. But probably some, some low single digit loss and volume.
Scott Sorrell (28:43):
Very well, you know, I'd kinda like to change gears and, and, and talk a little bit about the future, right? We've got these younger generations coming up they're buying powers, increasing boomers, most of them are retiring now. They're buying patterns or, and spending patterns are changing. Would you mind talking a little bit about that and some of the, I think you mentioned five big trends coming out of all that, and maybe talk a little bit about that.
Melissa Rodriguez (29:10):
You know, when we think of what's coming, and it's, and it's not on the horizon tomorrow, but it's, but it's coming and it's going to be building up to the year 2030, right? So in the year 2030, that's when the turning point for our US population has a, has the biggest shift. So half of all Americans will be millennials, gen Z, or even younger. So when we're thinking about what does that mean for consumers, right? What does that, what does that entail for how people shop and how we're going to engage with them? So when you think about it today, boomers buy what they buy, right? Millennials buy what they buy, and Gen Zs as their spending power increases, they buy what they buy. None of those, like if you're thinking of those three, you know, three things as columns, none of those columns are alike.
Melissa Rodriguez (29:57):
And so if you're a retailer or a manufacturer, you have to now cater to every single one of those columns or every single one of those generational cohorts, right? You have to have product availability for all of them. You have to know and understand what drives their household, what, what things they're interested in, right? From whether it's economic social responsibility, right? They're all different. And so having to play this game over the next decade is going to get really interesting because that's what we're gonna see shifting, is that if today your consumers are primarily, you know, sitting in boomer camp or you know, even a little bit of Gen X camp, that won't look the same for you as the manufacturer five plus years down the road, or even starting, you know, next year because you cannot have the same offerings today, a decade from now, right?
Melissa Rodriguez (30:51):
So that's sort of, that's what we're really looking at. And so that's a big driver of those trends that, you know, Chris has coined it sort of the changing of the guard. And so that shift of what we'll see coming over the next, you know, year to nine, 10 years out, is what's going to be important for everyone to sort of get a, get an understanding of. And so that changing of the guard isn't just the products that are on the shelves, right? They, they like different items, they like different spice levels, they like different ethnic foods. So that's one thing, you know, at the very, at the very sort of core of it. But it's more how do you talk to them? How do you engage with them? What's important to those different groups? So product innovation is, is a big trend of that, especially coming out of a pandemic where that sort of, you know, staed out or stalled out a little bit.
Melissa Rodriguez (31:42):
So that will continue to be of importance to drive variety especially as you're fighting for dollars. Another thing that we see very important is digital engagement. For the first time, we're going to be hitting a generation that you know, from the term digital natives, they don't know anything but having a world with digital capabilities at their fingertips or at the ready, right? This is the first non dialup generation. And so what does that mean? And it means a lot because there's instant knowledge, there's instant gratification and just in instant, instant sharing. And so that, that also changes what, what, you know, access they have. And so if you're a retailer or a manufacturer, you have to think about then how you engage with those consumers and what you're going to share with them. And then the last thing I'll say, it is not five trends, but this is another one that kind of fits into, you know, what I would call our top three is this, this is around sustainability.
Melissa Rodriguez (32:37):
So I mentioned earlier, right? What's important to them, that's important and it's important to all generations, but the definition of what sustainability is and what is important varies greatly generation by generation. So that's just another way that we'll have to be thinking about the consumers that will drive the next 10 to 30 years of purchasing, right? And their children. I think that that's further right. It's gonna continue to evolve with future generations, but it's this millennial and gen Z pocket that that we have to really pay attention to for the next decade at least.
Scott Sorrell (33:14):
Very interesting so much to unpack there, the, if you will help me get a handle on how's that gonna impact the animal agriculture some of these differences. What impact's that gonna have? Do you have some insight into that?
Melissa Rodriguez (33:32):
We do. So, you know, when we think about, so let's, I think millennials is probably where, where where I'd start with that. But when we look at what's in a basket, right? In a shopping basket of a millennial versus a boomer, that varies in, in certain items at a higher level, right? Oat milk skews for younger consumers, soup skews for older consumers. When we dig into the protein level of that though, this is where we're seeing meat alternatives having a larger role or a larger presence in a basket for those younger consumers and millennials. You know something like ground Turkey is another one that skews to a younger generation whether it's for health, halo, other you know, lots of reasons, but they're cooking with it a lot more than, than the boomer cohort is. On that flip side, right?
Melissa Rodriguez (34:22):
Today, the items that skew from a protein perspective to boomers, pork tenderloin, veal, raw Turkey breast, right? So those are some key items. So it doesn't mean that those younger generations don't buy them, but they're buying a lot less. So when you're thinking if you're in any of those industries or even other ones, right? From a protein perspective, if your share of wallet for millennials is lower, you're gonna have to pay attention to how to bring them in. If you're a pr, if you're a Turkey producer and they're only potentially buying your ground Turkey, you have to educate them on, on raw Turkey breast and what to do with that and how to bring that maybe into their basket for consideration.
Dr. Zach Lowman (35:02):
I actually just bought a smoker and I play on the TikTok a lot, and they have a lot of people that are out there smoking all these different recipes. So I actually just bought a whole bunch of pork tenderloins. So I'm actually making one of those tonight, but I've never cooked one before until I started seeing it on the internet or on different places.
Chris DuBois (35:21):
Oh. But it's funny how that picks up, right? I mean, TikTok becomes sort of that platform of choice. If you think about what really rocked the world in the last three years, I mean, it was, it was really that platform. I mean, that's where ideas go viral. And honestly, we've got so many different examples of just TikTok itself because it's so popular, knocked out, knocked items outta supply chains and that happens all across the store, not just in food. It's like it becomes so popular, everybody wants it, and then it's outta stock
Chris DuBois (36:14):
If, if you're millennial, you're buying 28% less than the average US household, that balance says if I'm a veal processor, I've got a lot of work to do just to break even and, and, and breaking even with today, I mean, so forget about trying to grow it. There's a lot of ketchup to do over the course of the year, and that, that's exactly what Melissa was talking about in terms of some of those changes. But chicken's pretty well advantaged. Chickens had the benefit of pretty good sales leaning from that side. Both chicken breasts, but also dark meat on that bit has been a big driver of it.
Scott Sorrell (36:56):
You know, one thing I was wondering is, so we, we, we understand that the buying habits and preferences of these different generational groups today, how much do we know about how their preferences change over time? Will, will the will the millennials be buying like the, the boomers someday? Or, or will they, will they keep, keep that with them? Those preferences?
Chris DuBois (37:22):
I think you're gonna see some of those change a little bit over time, but they may not, they're not gonna go all the way to where boomers or Gen X. So if you follow Gen X and you take, roll some of that back 10, 20 years, you find that Gen X tended to follow the boomer path pretty well. In other words, a lot of the same items are coming out. What you see from millennials and Gen Z is, there's very hard decisions that that kind of take some products totally out of the mix. That's, and that's just not picking on proteins. That's like picking on condiments. Like ketchup probably gonna get smaller beer, probably gonna get smaller over time space-wise on that side of the store. But it doesn't mean that people don't buy any products. It just means they're buying different ones. So some categories are gonna expand Asian cooking oils.
Chris DuBois (38:10):
If you look in cooking oils, vegetable oil gets smaller, Asian cooking oil and other ones get larger just because people, millennials are buying more. So if you're a marketer of products that are advantaged towards millennials, or you have a brand that millennials really like, it's gonna feel like you're the best marketer in the world because like, wow, sales just keep going up. I'm just magical and I can do all this stuff. But know you may take the best marketer in the world, and if you're in a boomer driven product, in a boomer driven category, it's gonna feel like, man, I'm running into this 50 mile headwind and I just can't make any progress. It is so hard doing what I'm doing. Less about the talent than just more about the buyer groups that are out there pulling the products.
Scott Sorrell (38:54):
Mm-Hmm.
Melissa Rodriguez (39:16):
Yeah, so what we've noticed recently you know, and, and part of it I think is there's an availability play, and then there's also just some different experiments that retailers have done. So from a price perspective you know, some of them have also incurred some of those double digit price increases. And so when everything is rising, we've seen some folks kind of go back to some of the staple protein items. The other thing that we've seen is that some retailers were, were playing around putting some of those items more in the refrigerated sets, and that's actually been backed off a little bit. So I was part of a different conversation a couple weeks ago with some retailers, and they had noted that, that they had experimented with putting it in the refrigerated set next to other burger patties, next to other items like that.
Melissa Rodriguez (40:06):
And it didn't belong, it didn't necessarily fit there, so they bumped it back on the frozen side. So it's not necessarily playing with fresh meat as much as I think it maybe was off the bat, and I think it's been relegated or maybe, you know, for some consumers is being relegated back to that, that sort of frozen aisle standpoint. So if you're looking for a fresh protein item that's not necessarily at the top of your list right now, because you've maybe moved that to the, to the other area of the store or your other consideration for meals. But that's what we, that's what we heard from retailers recently. And I think it just, again, the, the pricing piece continues to make people wonder if that's where they're gonna put their dollars, especially right now when dollars continue to have to be stretched and, and kind of vetted against one another.
Scott Sorrell (41:01):
Very well, you know maybe a similar discussion, but I, I hear younger people or people on, on the internet talk about factory farms and the fact that, you know our, our our industry the larger farms tends to be outta favor with some of the younger generations. And maybe can you talk a little bit about that and how that may relate to the phenomena of, of buying locally and, and some of those dynamics? Who would like to take that?
Chris DuBois (41:38):
Yeah, I'd say in, in general, yeah, if you look at the American population today you know, less than 1% really farms. So the, and the distance between today's consumers and, and real farmers and just even how animals are raised, you know, the care that's taken with all the dollars and, and science behind veterinary care, animal care, et cetera, all the way through, it's just not known. And, and part of that is, you know, it, it's easy to think about, well, gee, maybe we should go educate people, but good lord, trying to educate people in the middle of all this content that's out there. If you think of all the movies, all the shows, all the other stuff that absorbs people's time, like that's hard. So the hard part is that stigma of factory farms is sort of in people's minds. So the, to me, the, the challenge is trying to break through and, and make, make the packages and make the marketing just work a lot more to be able to tell the story.
Chris DuBois (42:36):
And some, some companies are doing a great job on that in terms of, you know, of how they talk about it. So Farmer Focus is one of those smaller kind of high-end organic ones, but they, they tie pictures of farmers, they tie the stories of where the farms are coming from to that. But you can do that at scale, you can do that in a big beef, in a beef ranching side. You can do that in chicken farming. There's really nothing kind of holding that back except the data points and that willingness to go do it. But I think it's changing the consumer's mindset without telling them all the stuff we're doing, if you know what I mean. Like, in other words the industry is doing an awful lot of good things from how it manages animals and, and the carrot goes in and, and everything else, but we're just not getting the credit.
Chris DuBois (43:21):
So to me, it's changing how the companies talk and market about that is a big deal because you can put, you know QR codes on packages to take people back to where, where the farm is, and that, that alone breaks the paradigm of where this animal was raised or where these animals came from, et cetera, et cetera. And that can be done at scale as well as you know, on a local side. But at the end of the day, I think people will kind of drive for local as a proxy to get closer because they believe that transparency increases, you know, the more you know about a product.
Dr. Zach Lowman (43:59):
Okay. Have you seen a shift with I guess overall inflation and just everything costing more, more of a shift from store brand to organic to conventional or, I know eggs, for example, I, I've always, well, I always have eggs cuz I, you know, have animals. But I mean they've just even store brand ones of more than doubled when you could normally get a dozen eggs for a dollar 50 or so. I think last time I looked they were like over $4 and the organic eggs were up in eight, $9 a dozen. It's just I didn't know if the trend keeps going once things hit a certain certain threshold or if people are still as committed as they were, or if there's kind of been some hesitation there.
Chris DuBois (44:40):
Yeah, if you have access to eggs, you are a rich man, indeed.
Chris DuBois (45:34):
But I think, you know, that said, at some point there's the exhaustion factor, and I think that's where you're starting to see the organic ones start to hit. Like I've noticed the premium dropping quite a bit between conventional organic, and I think that that begins to kind of focus people's changes in trade-offs as well. Yeah. In other words, if, if it's four 50 for conventional and gee, the retailer forgot to change their pricing, so it's only 4 85 for the, you know, organic, I'll pick the organic at that point. But you know, I think the big thing is just, I think people just really kind of wanted to get back to something normal, and I think we're all sort of hoping, yeah, hypo, aian flu goes away, you know, at some point or at least mitigates.
Dr. Zach Lowman (46:21):
So as we get kinda wind down here, are there any big trends or discussions that that our audience needs to hear about that we haven't covered yet?
Chris DuBois (46:30):
Well, I, I'd say Melissa hit, hit a lot of those big topics. Yeah, I think sustainability from, yeah, the consumer, what's the con getting the consumer ROI and sustainability will be one of the big topics over the next five years. So if I look at all the wonderful things, every, you know, almost every meat company is lining up, if you talk to their heads of sustainability, you talk to their leadership teams, there's endless forms and excel trackers and project trackers of all the different things that are used to kind of save money, save water and help the environment. But what, what, to me, and I think what I found out just talking about like 24 different chief marketing officers a couple years ago was if you ask 'em, are you getting a return up, do the consumers value what you're doing?
Chris DuBois (47:21):
In other words, they believe it's real, but will they give you more money because of what you're doing? Or will you take share from other other products? The answer so far has come back, they're not seeing it. So I think what you're gonna see at some point over the next five years is people as, as companies, begin to change their business models all in to make sustainability part of what they're doing, but also to get credit from the consumer side. And, and that means changing packaging, you know, communicating differently and probably going to market in different ways, but I think ultimately it's, there's gonna be that demand for ROI that's gonna be a big deal. So that looking at it through the consumer's eyes, I think will be probably one of the most important parts. And taking it out of sort of the, I call it the random acts of good citizenship approach.
Scott Sorrell (48:10):
Mm-Hmm.
Chris DuBois (48:27):
Yeah, actually I think Europe and for the most part, lead C us yeah. Mm-Hmm.
Scott Sorrell (49:15):
Yep. Makes sense. All right. I don't know if you guys noticed, but they just flickered the lights, which means it is last call and I am out bourbon, so that means last call
Chris DuBois (49:30):
Ice going strong, right?
Scott Sorrell (49:31):
It
Dr. Zach Lowman (49:32):
Is
Scott Sorrell (49:32):
Dr. Zach Lowman (50:03):
Yeah, so I think, I guess my overall is I think that food is very important to everybody now and for the future. And for a company be to be successful, they need to start looking towards the future, seeing what people are wanting and not just keep going on the path that they've been on for years.
Scott Sorrell (50:23):
Mm-Hmm.
Melissa Rodriguez (50:27):
Yeah, I think my my biggest thing that I would focus on is as inflation continues or starts to, you know, potentially come down, I would look at that response rate for key categories and especially within protein of how each generation responds to those changes. Because I think that will give us good indicators for what we can expect for the, the coming years, right? The last few years have been an anomaly, to say the least. But as things maybe get to some level of quote unquote normalcy, those could be really good indicators for the future of how generational differences could drive purchases or purchasing behavior.
Scott Sorrell (51:12):
All right. Thank you Melissa for that. And Chris any final comments?
Chris DuBois (51:17):
Yeah, well, Melissa nailed the consumer side. So Va, that's, that's kind of what I was gonna say on that one, but, okay. But if I had to think about it from Mar from a marketer's side, this is gonna be one of the more pivotal years coming up in a long time. So what we saw for the last few years is people raise prices very specifically cuz they had to cover costs. It's not, you know, no one's evil or whatever else, but nonetheless, we're at a point where prices are high, but I think you can, it's fair to expect a lot of the transportation costs and other ones to start coming down over time. And you can feel it from the big retailers, start to look for discounts and savings saying, Hey, I know it doesn't cost that much to move a truck from here to there.
Chris DuBois (51:57):
Don't charge me that much. So quietly you'll hear it through the manufacturer community that retailers are really starting to pull on that. So to me, I think you're at a sea, a big chance for share shifts in the next year in terms of which manufacturers can manage the costs well enough, and also who are smart enough to manage price on the side. Because as prices go from high to lower, not everybody needs to give back that profit, but you're gonna see a pretty big difference in terms of who, who's got the tools and who's, who's looking through the the data really closely and, and who's not because mm-hmm. Someone's, yeah, people are gonna start, you're gonna see a big separation go over the next year in terms of people who are on top of it.
Scott Sorrell (52:43):
Yeah. Yeah. Good. Well, Melissa, Chris, Zach want to thank you guys for the insightful conversation tonight and the insights into consumers. It's been a departure from our typical topics and I've really enjoyed it. I find this kind of information fascinating, which is why after hearing you, Chris down there in San Antonio, I invited you to do a webinar for us. I, I think this is information that we all can really appreciate and I think our, our, our listeners will enjoy it as well. And to our loyal listeners once again, thank you for joining us at the pub table tonight and taking a deeper dive in tonight's topic. As always hope you learn something. I hope you had some fun and I hope to see you next time here at the Real Science Exchange, where it's always happy hour and you're always among friends.
Speaker 5 (53:33):
We'd love to hear your comments or ideas for topics and guests. So please reach out via email to a and h.marketing at bache.com with any suggestions, and we'll work hard to add them to the schedule. Don't forget to leave a five-star rating on your way out. You can request your Real Science Exchange t-shirt in just a few easy steps, just like or subscribe to the Real Science Exchange. And send us a screenshot along with your address and t-shirt size to anh.marketing@balchem.com. Balchems real science lecture series of webinars continues with ruminant-focused topics on the first Tuesday of every month. Monogastric focused topics on the second Tuesday of each month, and quarterly topics for the companion animal segment. Visit balchem.com/realscience to see the latest schedule and to register for upcoming ours.