24th April 2018 – Bracknell, UK Dan Finke, Managing Director IRI UK, the leading provider of big data and predictive analytics for FMCG suppliers and retailers, explains why the war on obesity cannot be won without investment in data and analytics technology.
Fighting Britain’s obesity crisis moved up a gear this month when Public Health England’s sugar tax came into force for soft drinks.
Although many soft drinks brands reformulated and shrunk sizes, a surprising number boldly ventured forth with price increases. Coca Cola even launched a new marketing campaign to talk up the uniqueness of its classic product in a two for one bid to justify its new pricing as well as remind people about its great tasting brand that hasn’t changed since it was first launched more than 100 years ago.
So what will happen when PHE turns to the 18 food categories – from cooking sauces to pizza - that it says will need to cut calories or reduce portion sizes by 20% in the next six years? It would be a mistake to think that product reformulation with new ingredient solutions or smaller sizing will be the end of it. It’s just the tip of the iceberg.
In back offices and head offices around the world, complex analysis of millions of terabytes of data will be behind any major strategies that take place over the next few years as manufacturers collaborate with retailers on reformulating entire product ranges, not just individual items.
Whichever route suppliers choose, ‘unhealthy’ food and drink will undoubtedly become more expensive for shoppers and there will be less choice available to them.
IRI’s analysis shows that changes to ranges stocked by retailers had already begun when the war was just about sugar. While high sugar products are still a major contributor to new product development, there has been a notable reduction in overall ‘share of sugar’ sold by retailers as fewer SKUs with high content sugar have been placed on shelves in the last year. Other factors such as consumer demand for healthier food options are also behind these changes. Diet drinks gained share over the past two years for example and sales of bottled mineral water volumes are now growing ahead of colas across all countries in Europe. We have also seen growth in organic, vegetarian and gluten-free product ranges.
It is clear that way that all food and drink is marketed and sold will undergo radical change over the next year.
More variables – including key consumer facing product attributes such as flavor and taste – will have to be introduced before pricing and promotional strategies can be agreed and retailers agree to stock products.
Our data experts are already re-coding millions of individual products sold in supermarkets so that more detailed nutritional information, including calories, sugar, fat, saturated fat and salt can be modelled in order to provide better and more accurate information about the relative healthiness and success of individual SKUs.
Manufacturers will now need to analyze how changes to product size, price and other product reformulation will impact shopping baskets before they can agree whether to make changes to their own products.
This will require more sophisticated econometric modelling as well as access to more data sources sales such as supply chain, shopper trip mission, loyalty data and digital activity for example if demand is to be accurately assessed and money to be made.
Analytics technology with in-built machine learning will be a must for interrogating such large volumes of data.
The outcome will ensure that Governments and manufacturers alike will be able to track how successful they have been in reducing the amount of sugar consumed in whole categories, and benchmark their own performance against competitors.
This is vital information for anyone wanting to understand how best to formulate products, price them, promote them and distribute them in the most appropriate channels, in this new world of precision and health-data-driven decision making.
Still the challenge of how to get an industry hooked on generating volume sales to focus on improving profits remains. In the case of calories, the devil is definitely in the data detail.
IRI is a leading provider of big data, predictive analytics and forward-looking insights that help FMCG, OTC health care, retailers and media companies to grow. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand cloud-based technology platform, IRI guides over 5,000 clients globally in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver growth. www.IRIworldwide.com. Follow IRI on Twitter.
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