New eating habits: which opportunities for cooperatives?
Published on 20 March 2018
New consumption habits together with the world’s food crises create new challenges for the distribution sector. Forced to reinvent themselves in order to attract consumers who are increasingly concerned with quality, traceability and the environment, food cooperatives must accelerate their digital transformation if they want to stay in the race. They have serious advantages to bring to the table... Generix Group gives a rundown of the situation.
Food consumption habits arouse the appetite of distributors
Three new types of behavior
Consumers demand affordable prices and ethical commercial practices, seek quality, traceability and short supply chains and are worried by certain agricultural practices. Recent studies carried out in France have brought to light 3 common habits:
- Eating better and healthier. A study conducted by B2B Intelligence for LSA and Fleury Michon in September and October 2017 revealed that 75% of individuals and 81% of professionals are more likely to associate eating better with “healthy” rather than with the notion of enjoyment. Eating healthy has become a priority for 87% of individuals, a trend that is confirmed by 82% of professionals.
- Buying organic and local products. Today, consumers are opting more for organic and local products. According to the same study, 45% of consumers have increased their consumption of organic products this year and 43% have purchased more regional products. Distribution professionals confirm that they have recorded a significant growth in the sale of organic (87% of respondents) and local (45% of respondents) food.
- Giving preference to regional and socially committed distributors. Health scandals in the food industry have rattled consumers’ trust in large distribution companies. In fact, these same consumers are now seeking local producers and short Supply Chains. Philippe Moati from the Observatory of food ethics (Obsoco) asserts this trend by stating, “The larger we are, the more mistrust we evoke and this goes for both a brand and a distributor”.
A new eldorado?
The land of all things organic is the place to be. Organic, local, traceable and vegan food concerns now account for 20% of the turnover of the world’s food industry. Twenty-nine specialist brands such as Biocoop, Naturalia and La Vie Claire recorded more than 25% growth and record store openings in 2017.
After having abandoned these niche markets for a long time, large distributors, in search of new territory, have decided to exploit their potential: new organic and local product references, new product ranges, even the creation of specialized stores such as Carrefour Bio are all in the making. Without a doubt, these new modes of consumption have created a new eldorado.
With the genuineness of local products and the likeability of small farmers, cooperatives should have been propelled to the forefront to reap the benefits of new food consumption habits. However, this is not the case: despite their excellent reputation, co-ops remain in the shadows...
Accelerate digitization and play upon advantages
Cooperatives: a powerful yet unrecognized market
Far from being marginalized, the food cooperatives sector currently represents a network of 2,600 units in France, composed of 90% VSB and SME. Despite their small size, they play a large economic role in the sector: with a turnover around 86 billion euros, cooperatives represent 40% of profits in the French food industry.
Candia, Florette, Soignon, Paysan Breton, Frais d’Ici… Cooperative food brands are ingrained in French daily life so much so that one out of every 3 food brands belongs to a co-op. However, none of them figure among France’s top 20 preferred brands published by Kantar Worldpanel (March 2017).
“The world of cooperatives unfortunately remains fairly unknown to the public at large”, affirms Olivier Athimon, CEO of Eurial, in LSA Magazine. “However, the model is a powerful one: it relies on short, integrated Supply Chains. We must better showcase our strengths. Our brand Soignon is an excellent example: for the first time, it will systematically bear the label ‘milk produced in our cooperative’.”
Working the land and consumer proximity
On the distribution side of things, who actually knows that producers are the ones that weave a network in a country and have a presence of more than 2,000 points of sale? Organized into networks such as InVivo (Gamm Vert) or Apex (Point Vert), cooperatives should have been able to take advantage of their potential on the field. Some have even opened restaurants (Unicor and its "Les Halles de l’Aveyron").
Despite Coop de France’s campaigns, open houses, the new digital platform lacooperationagricole.coop, and values such as solidarity, democracy, producer-processor direct relationship, cooperatives have not been able to explain their philosophy. This is a paradox because their founding ideals have once again become all the rage today.
A lot of work needs to be done in order to pump up the customer base and digitize the purchasing process. As this transformation is easily implemented by large mass retailers, cooperatives have not been able to take their credit for it! Result: the privileged relationship with small farmers is often used as a marketing argument by... industrial food and distribution companies!
Torn between farmers-members who work with the cycles of the land and fickle consumers, cooperatives must make more efforts to implement techniques from the world of retail.
Short Supply Chain: more product responsiveness
Distribution based on short supply chains is flexible and responsive, and allows us to pick up products in store and adapt local inventory in real time. Once again, this transformation has already been implemented by large mass retailers, but is something cooperatives are still struggling with.
However, examples are popping up. The InVivo group (Gamm Vert) decided to create the brand Frais d’ici aimed at offering fresh and local food produced within a radius of 50km. This brand was placed on shelves in Gamm Vert stores in October 2016 and since has generated a 40% increase in visits to this gardening supply store. This partnership is expected to bring about the opening of Frais d’ici shop-in-shops in 250 points of sale of the brand Gamm Vert.
The power of gaining speed
Although cooperatives have made efforts in terms of organization and standardization in order to consolidate themselves in the eyes of consumers, they still have not been able to streamline their operations.
Partnering with cooperatives for many years, Generix Group works alongside them to guide them through their digital transformation. Backed by extensive experience, the group offers tools to help speed up transformations in terms of products and consumers:
● adapt logistics to the obligations of a short Supply Chain;
● develop local and omnichannel purchasing habits;
● have contact with end customers by selling organic and/or local products online so they can place their order at any stage in the distribution cycle;
● optimize the delivery of organic and fresh products with last-mile delivery solutions;
● digitize points of sale.