"Less room for free trade in coming years"

During his military service, Jan-Willem Grievink of FoodService Instituut (FSIN) worked as a ‘pilot-officer-observer.’ His job was to simply observe changes on the ground from his plane, and to report those changes to the ground troops. “I’m still doing that, but for retail,” he says during the AGF Kennis(sen)dag. From his ‘plane’ he describes the changes on the market.

“In the past two years, I’ve seen more changes than in the 38 years before that,” he says, before he starts describing the changes, and more importantly, their consequences. The traditional market is characterised by a predictable and uniform brand product. Preparing the meal is still the core business, and the power in the supply chain lies with retail. Consumers don’t have much influence on this model, and the supply chain is a transaction chain. “Each player tries to buy as cheaply as possible, and sell as expensively as possible,” Jan-Willem explains.

However, the market is changing. Products have to be more distinctive, and consumers are becoming more aware of custom work and craft, preferably at the time of purchasing. Cooking becomes discovering and food becomes fashion. “It’s becoming a market driven by demand, and consumers are the ones deciding. The market is changing to personalised products and portion packaging.”

These differences are already visible, especially now that the Netherlands has left the economic crisis behind. The various catering channels are shooting up. Culinary restaurants with Michelin stars have seen the market growing by 2.7 per cent. System catering, the formulas and convenience retail are also showing signs of growth by 3.4 and 4.1 per cent respectively. In that regard, food retail is falling behind, even though it has a grown by 1.8 per cent. “This year, everything is growing, but the distribution remains the same,” Jan-Willem continues. These growth figures, however, pale in comparison to the increase of online sales this year: 20 per cent more is sold online now.

Keeping that knowledge in mind, Jan-Willem mentions the innovation funnel. This starts at a social level and eventually results in new concepts and products. Changes on a social level include: local, sustainability and health. To find out how the Netherlands will look in a few years, Jan-Willem turns to other countries. Dutch culture is part of the Anglo-Saxon culture, of which the US, the UK and Canada are other examples. Events on that market will, with a cultural correction, become part of the Dutch market. “Eighty per cent of products is originally from the US.”

These developments require trade to move along with them. “Many people here probably don’t care what they’re trading, as long as there’s trade,” Jan-Willem says. “But you have to focus more on flavour, and the story behind the product is important.”

Other factors influencing the market are the rising number of single households, increasing urbanisation, the large number of baby boomers, increasing health costs and technological developments, including robotisation. The values of consumers are also changing, fresh, treating yourself, transparency and health, for example, are becoming more important. The growing importance of fresh and health is “to your benefit,” Jan-Willem says.

In 1940, a household in the US spent 150 minutes on average cooking a meal, in 2015, that has decreased to about 30 minutes. “Eighty per cent of people don’t know what they’ll eat for dinner at noon. By four o’clock, 68 per cent of people still don’t know. That means meals are planned shortly before eating them, and that will also happen in the Netherlands.”

Despite the various generations, consumers can be divided into two groups. The older consumer, of roughly 50 years of age and older, mostly consumes in their own home. The younger generation mostly consumes elsewhere. When food shopping changes, the market also changes. Statistics show there’s one simple principle. “If consumer confidence increases, consumption out of home also increases.”

In recent years, various shop chains collapsed even though they operated in the middle of the market. “How safe is food?” Jan-Willem asks himself. Research shows that 72 per cent of the food market consists of everyman’s friends, or to say it differently, this part of the market is in the danger zone. Convenience, premium products, online and discounters are taking market share from this group. “It’s not for nothing that all supermarkets operating in the middle are working on online or convenience.” This is becoming visible in various ways. Eataly is one example of how the top of the market comes together. Catering can become supermarket and supermarket can become catering. The only limiting factor in this movement is the law, which is behind the times.

For trade, this means that room on the open market will become smaller, and the closed market will play a more important role. Permanent suppliers of supermarkets, among others, are part of the closed market. On that market, a supplier can make an effort to supply added value to the retailer, thus increasing his position.