Worldwide consumption: four points of view

"The Global Tomato Processing Industry in 2016: Production, Consumption and Ongoing Challenges": this is the topic of the much appreciated and well-established Tomato Day, organized by the AMITOM in the context of the CibusTec, which will be held 25-28 October in Parma (Italy). It will provide the opportunity for the worldwide industry to consult and update information, thanks to talks by industry experts and to the latest census commissioned by the WPTC regarding the recent shifts in production and in the global consumption of tomato products.
While we wait for the conclusions of those talks, we need to become aware of a number of important facts that reveal – or confirm – new or original trends in the behaviors of consumers in different regions of the world. Several markets have indeed been noticed in recent years or months for potentially sustainable changes that express the profound shift that our industry must take into account.

This has been verified in the UK, where a recent study has shown that British consumers are progressively moving away from traditional ketchup toward more spicy sauces. This trend has not only hit ketchup, but also brown sauce and mayonnaise, whose sales have slowed to the advantage of "chili" or "barbecue" sauces, which are more specific and are clearly more popular with consumers at the moment. 
According to a report from market analysis agency Kantar Worldpanel, sales of spicy sauces underwent growth of more than 7% between September 2015 and August 2016, whereas other segments have all seen a decrease: sales of ketchup and brown sauce have dropped by almost 4% over the past twelve months, while mayonnaise has dropped 3% and salad sauces have nose-dived by almost 9%! At the same time as this disaffection from consumers, the report showed that private label products currently perform better than some of the big brands like Heinz and HP, which nonetheless remain popular in the UK. "Own label has become more affordable. Families have particularly made the most of savings by buying own-label alternatives – especially in core sectors like ketchup," explains Amelia Hewitt.

Cause or effect? According to the Kantar study, hypermarkets are giving more and more shelf-space to more specific or exotic sauces. Of the 171 new products offered this year by the big-name retail chains in the UK, more than half are stated as "bold choices", like chili or barbecue sauce. The hottest spicy sauce in the world (the Carolina Reaper) is now available in Tesco stores, while ASDA, which is convinced that this is a basic long-term shift destined to take off, actually sent a team to Mexico to "harvest" hot sauces. Finally, according to the head of brand development for the Hellmann's company, who has recently launched a range inspired by the strongest flavors found in the USA, Japan and Australia, "People are eating out more and exposing themselves to more exciting and innovative dishes, which is seeing them get more creative and experimental whilst cooking at home." 

The British situation is not an exception: in recent years, the huge US market has had trouble recovering in the domestic context, which is why local processors are increasingly turning towards foreign markets to find outlets for further expansion.  According to local sources, the national market is stagnating and sales are leveling out, even for emblematic types and brands of tomato products.
According to Euromonitor, the US market for tomato products also recorded a slowdown of 0.1% in volume for ketchup sales last year, and a slowdown of 3.6% for sales of pasta sauces. This data is confirmed by Nielsen statistics, which indicate a 4% contraction in recent months (in terms of units sold) for ketchup and a noticeable weakening in the sales of sauces over the past year.
According to analysts, this trend could be linked to the growing attraction of "fresh" products more than to a real disaffection of consumers for processed products. However, "while there has been a recent shift of consumers opting for fresh tomatoes rather than processed tomato-based products, there are growth opportunities for manufacturers," points out Jordan Rost, Vice-President of Nielsen's "Consumer Insights" department. "These opportunities are reflected in the rise of multicultural cuisines and gluten-free flours that enable greater consumption of foods like pizza, to the growing, renewed popularity of pasta."
(See also our special report on the US market in the March 2016 issue.)
 

The emergence of new purchasing behaviors has not only affected "westernized" regions and consumption patterns. The Italian market is the oldest and most deeply-rooted in traditional agricultural methods and Mediterranean dietary habits, yet it has also borne the brunt of population shifts and new consumer aspirations.
The ISMEA (Italian Institute of Food Industry Markets) recently announced that the changes occurring both in the composition of the population and in their eating habits have led to a drop in retail sales of tomato products. Between July 2015 and June 2016, sauce sales dropped by 3.3%, apparently due to a slight increase (+0.5%) in the average price of these products, among other reasons. According to this report, the variations are considerable. Retail sales for the peeled tomato category have dropped by close on 8% in volume and 12% in value. Sales of pulped tomato have recorded a smaller drop, which nonetheless amounted to 6% in quantity and in value. Over this period, the only product to have improved its performance was long-life UHT "ready to use" tomato sauce, whose sales increased by more than 5% in volume and more than 6% in turnover. This progression propelled the category into second place in the sector's ranking, with a 26% market share, right behind classic tomato sauces that still hold 35% of the Italian market.
According to Marco Serafini, speaking on behalf of the ANICAV (the National Association of Vegetable Canning Industries), two factors account for this sharp downward trend: the increasing number of migrants being welcomed in Italy and the new eating habits of the young generation, who are less attached to traditional cooking and more open to international culinary experiments. “This is a well-known trend from the industry," explained the operator, who added that the slowdown was for the time-being not big enough to become a real worry for industry players.
Indeed, despite this drop in national consumption, Italian processors can count on very solid foreign business outlets. The Italian industry is well established on the worldwide market for pastes and sauces, and, even more importantly, occupies a choice position on the market for canned tomatoes. Last year, the world leader for this category exported close on 1.23 million tonnes of canned tomatoes, which is a progression of 3.3% compared to 2014.
 

Development opportunities can nonetheless be found, but they require an objective regulatory context, a fine understanding of the markets and of buying habits, as well as a clear vision and a strong investment capacity. In 2013, the Japanese government decided to set up a new category of health claims in order to increase the number of products labeled with functional claims, and to promote "a healthier society that is able to improve the lifespan" of the population.
Last February, Japanese vegetable and fruit juice producer Kagome took advantage of the government’s “Food with Functional Claims” labeling system (FFC) to revamp its packaging and highlight the cholesterol-lowering benefits of lycopene in its core Kagome Tomato Juice line. Unit shipments of this product rocketed 3.3-fold within just three weeks. This reversed a downward spiral in sales after the domestic market for tomato juice peaked in 2012 on the strength of the perceived powers of this juice in the fight against metabolic syndrome. That year, one Japanese consumer in five bought Kagome brand tomato juice, and the market peaked at approximately USD 240 million, before falling back to about USD 157 million, with a buy-back level of only 17%. But the Japanese processor remained convinced that this proportion could easily climb back to more than 20%.
The essential feature driving this recovery of consumption was the age range of the main purchasing sector of the population interested in tomato juice, which was the 50 to 70-year-olds. 50-year-old women seem particularly sensitive to the new "FFC" claims offered on products, and consumers in their 40s are increasingly interested in products that contain lycopene. Finally, research has showed that raising the awareness of consumers in their 50s and 60s still has some room for improvement and progress.
The message addressed to consumers by Kagome insisted on the presence of lycopene in the processed tomato juice, and on the positive effect of this substance on healthy cholesterol: “We started trying to highlight these advantages in-house, and we found that the best way to do that was by augmenting text explanations with illustrations and videos.” After a communications campaign that included the processor helping each retailer by supplying materials and advice on an almost daily basis, the success of sales – which tripled over a few weeks – confirmed the wisdom of this approach. Today, even if the question remains open as to whether this growth in sales of tomato juice is sustainable, Kagome's fact-based approach, which consists in using health claims printed on packaging, seems to have allowed the juice manufacturer to progress in the esteem of retailers but also and more importantly in the esteem of consumers.