Home: Issue 2 2009 › Cover Story › Value and values
Value and values
02/10/2009 | Channel: Ingredients, Information Technology, Packaging & Logistics, Hotels - Restaurants, Health, Drinks, Retail, Manufacturer, Frozen, Catering, Equipment, Human Resources
Lawrence Hutter, global head of food and beverage at Deloitte, talks to Libbie Hammond about meeting the changing needs of consumers
In today’s economic climate, food and beverage retailers are vying for the attention of the most sophisticated, demanding and particular customers the UK has ever seen. This means that manufacturers and suppliers have to create products of the highest quality, at the right price, which are then delivered on time, every time. The labelling has to catch the eye, the branding has to have the right message and the contents have to be perfect. Meeting these increasingly stringent needs requires not only the best team, and the correct strategy, but also the most up-to-date information – how else can you hope to predict what consumers are looking for?
This need for assistance can be addressed by the services of a consultant, such as Lawrence Hutter, global head of food and beverage at Deloitte. He began by explaining the benefits clients get from employing Deloitte. “First of all we know the industry extremely well, which means we understand the issues and can talk the right language. This understanding extends from the farmer to manufacturer and goes all the way through to the consumer and the shopper.”
He continued: “In addition to this, we channel a range of services that are important to businesses in the food and beverage sectors. This could be strategic advice around, for example, the changes in the economy that we are seeing, its impact on shopper behaviour and consumption patterns, predictions on where the market is going, what strategies might be appropriate to respond to these changes in the market and how to get the right product to the right customer at the right cost. We’re very strong in terms of providing both strategic and operational advice.”
Describing himself as a ‘lifetime consultant’, Lawrence started his career path straight from University, when he joined the consulting division of what was then Arthur Andersen. After working at the company for a number of years, he then branched out on his own, setting up The Customer Group, a consultancy focused on the food and beverage industry. “I ran that for eight or nine years and was then approached by Deloitte Consulting, which was looking to raise its game in the food and beverage industry, and was looking at the right acquisition in this area. After looking into it very carefully, we took the decision to merge the company into Deloitte Consulting in Europe. This was about 13 years ago.”
At the time The Customer Group joined Deloitte Consulting, the practice was somewhat separate from the rest of the Deloitte and Touche mothership. Lawrence explained: “Later came Enron, and there was a substantial restructuring of the professional services market. Some big accounting firms took the decision to sell off their consulting arms.
“However, Deloitte came to the conclusion that while you have to prevent conflict of interest, the synergies of having a world class consulting practice under the same umbrella as other types of services such as corporate finance, tax and accounting are actually very strong.”
As a result of this decision, Deloitte Consulting was brought much more closely into the overall Deloitte and Touche firm, the name was simplified to Deloitte and the company has been working with that business model for a number of years.
Lawrence explained that this offers clients further benefits. “The skills we have as accountants and consultants come together very well, and the combination means we are very strong in helping businesses in the food and beverage sector understand the true costs of serving their retail customers and linking that to their trading terms. We also find that big multinational businesses often consider the tax dimension to optimising the supply chain, and for example, we have just completed a piece of work with one of the largest multinational food manufacturers, where we restructured their European supply chain on tax efficient principles. We are also doing a lot in the merger and acquisitions arena, and some financial restructuring.”
One of the biggest benefits for Deloitte’s clients is access to its extensive research, as Lawrence explained: “We are very proactive in projects that give us insight into how the market is changing. One great example is a programme we have been working on with the World Economic Forum called Sustainability for Tomorrow’s Consumer. That is looking at long-term trends in the food and beverage manufacturing retail industry in relation to such areas as waste, environmental impact and long-term sustainable models.”
The first phase of this programme was launched in Davos, at the World Economic Forum summit in January 2009, and it is now moving into the second phase, looking at influences on consumer choice that are more sustainable in the long-term.
Lawrence continued: “We also launched a new piece of research on the 5th June at ECR Europe in Barcelona, and this is a study programme we have done on behalf of an organisation called the Coca Cola Retailing Research Council. Called Empowering Shopper Choice, this research is looking at the way in which individual shoppers use information to make decisions about where they shop and what they buy. It has produced some really interesting insights into some of the real drivers of choice, and I think it will reveal some surprises for some of the leading retailers and manufacturers in Europe.
“These are insights we’ll be able to use with our clients to help them understand how the market is moving and how consumers and shoppers are using different information sources, to make choices. More importantly, it provides new insights into the changing drivers behind shopper choice.
Food and Beverage 2012 was a report released by Deloitte in March 2009, and Lawrence pointed out that this research also revealed some very important insights into today’s shoppers and consumers. “We’re in a more challenged economy, consumer confidence is at, if anything, an all time low, and there is evidence that consumers are trading down,” he said. “They are buying more value lines and in some cases shopping in different places, perhaps trying hard discounters for the first time.”
But there is more to it than this. “What has emerged, particularly in grocery, is that while consumers (both better off and less well off) are being more value centric on price or cost, other drivers of choice such as good nutrition and ethical sourcing – what we might call the ‘values’ of the shopper - are very much holding up, which is encouraging.”
An example that perfectly illustrates this value/values proposition is Sainsbury’s ‘Feed the Family for a Fiver’ campaign. “They have combined a ‘value’ message with the £5 cost, and a very strong ‘values’ point with the Freedom Food and healthy eating angle. It has been extremely successful and I think this is a great example of how if you get these beliefs joined up in the right way, you get a fantastic opportunity in the market.”
He continued: “Fundamentally food and beverage businesses don’t succeed by simply making and shipping product - the key is understanding the consumer/ shopper and putting something on the shelf that individual wants, recognises its value and quality, and the brand resonates with them. My core advice to suppliers and manufacturers is that they must focus on the consumer/shopper and understand their needs, understand what drives the choices they make, and respond to that. The hardest element of this approach is that the further you go back up the supply chain from the retail shelf, then the more remote the business becomes from the consumer. Let’s help our primary producers get closer to what is happening at the consumer level.”
With access to the latest research findings and an ear to the ground in the market place, Lawrence is ideally placed to spot a trend approaching on the horizon. “I think the issue of specific dietary needs driving choice will really grow in importance,” he said. “Some of the work we have done has revealed that when a UK shopper goes to buy food as part of a weekly shop, 40 per cent of those people are shopping with a specific dietary need in mind, either for themselves or for someone in their family.
“That is a much higher percentage than either retailers or food manufacturers have been sensitive to and I think it’s going to point to a much greater focus on dietary needs, such as intolerances and allergies. This provides a strong sign for the industry on where it needs to raise its game, especially when you consider that the percentage of the population who have, or who believe they have, dietary intolerances or allergic reactions, is growing.”
He continued: “This is also an important opportunity to address the need for much more consistent and meaningful labelling. This is relevant to the dietary needs trend, and also to the wider challenge for food and drink companies to correctly position their products, and get their messages across in an environment where shoppers are bombarded with information. The combination of dietary challenges and how you communicate that you have a product and a proposition that meets those needs, are two core strategic issues facing the industry.”
Lawrence’s closing thoughts were also looking into the future. “I would recommend businesses look at the programme that the World Economic Forum is driving around sustainability for tomorrow’s consumer.
“The changes in the economy have already made consumers more value centric, so they are trading down and wasting less, and the future will bring a greater focus on sustainability, and more sensible use of resources. I think the combination of what is happening in the economy in the short term, and the wider issues such as sustainability in the longer term, plus the growing importance of specific dietary needs, will cause permanent changes in consumer and shopper behaviour.”
He continued: “Its really important for the industry to understand what that means, because those businesses that can anticipate, and respond to, what maybe permanent shifts in behaviours, will potentially gain a strategic advantage in the future. I think that we will see a new frugality of consumption behaviour, and a new generation growing up that consumes much more carefully than the previous generation.
Lawrence concluded: “I’d like to end with a quote from Paul Polman, the new chief executive of Unilver. Speaking at the World Economic Forum he said: ‘don’t underestimate the way we touch people’s lives daily…and our ability to influence the choices they make positively’. I think that was enormously insightful. As an industry we need to anticipate changing consumer behaviours, but it’s also within our grasp to positively influence those behaviours. The businesses that do that and make their brand relevant to the context of those changing behaviours are going to be the businesses that lead the industry in the future.”
This need for assistance can be addressed by the services of a consultant, such as Lawrence Hutter, global head of food and beverage at Deloitte. He began by explaining the benefits clients get from employing Deloitte. “First of all we know the industry extremely well, which means we understand the issues and can talk the right language. This understanding extends from the farmer to manufacturer and goes all the way through to the consumer and the shopper.”
He continued: “In addition to this, we channel a range of services that are important to businesses in the food and beverage sectors. This could be strategic advice around, for example, the changes in the economy that we are seeing, its impact on shopper behaviour and consumption patterns, predictions on where the market is going, what strategies might be appropriate to respond to these changes in the market and how to get the right product to the right customer at the right cost. We’re very strong in terms of providing both strategic and operational advice.”
Describing himself as a ‘lifetime consultant’, Lawrence started his career path straight from University, when he joined the consulting division of what was then Arthur Andersen. After working at the company for a number of years, he then branched out on his own, setting up The Customer Group, a consultancy focused on the food and beverage industry. “I ran that for eight or nine years and was then approached by Deloitte Consulting, which was looking to raise its game in the food and beverage industry, and was looking at the right acquisition in this area. After looking into it very carefully, we took the decision to merge the company into Deloitte Consulting in Europe. This was about 13 years ago.”
At the time The Customer Group joined Deloitte Consulting, the practice was somewhat separate from the rest of the Deloitte and Touche mothership. Lawrence explained: “Later came Enron, and there was a substantial restructuring of the professional services market. Some big accounting firms took the decision to sell off their consulting arms.
“However, Deloitte came to the conclusion that while you have to prevent conflict of interest, the synergies of having a world class consulting practice under the same umbrella as other types of services such as corporate finance, tax and accounting are actually very strong.”
As a result of this decision, Deloitte Consulting was brought much more closely into the overall Deloitte and Touche firm, the name was simplified to Deloitte and the company has been working with that business model for a number of years.
Lawrence explained that this offers clients further benefits. “The skills we have as accountants and consultants come together very well, and the combination means we are very strong in helping businesses in the food and beverage sector understand the true costs of serving their retail customers and linking that to their trading terms. We also find that big multinational businesses often consider the tax dimension to optimising the supply chain, and for example, we have just completed a piece of work with one of the largest multinational food manufacturers, where we restructured their European supply chain on tax efficient principles. We are also doing a lot in the merger and acquisitions arena, and some financial restructuring.”
One of the biggest benefits for Deloitte’s clients is access to its extensive research, as Lawrence explained: “We are very proactive in projects that give us insight into how the market is changing. One great example is a programme we have been working on with the World Economic Forum called Sustainability for Tomorrow’s Consumer. That is looking at long-term trends in the food and beverage manufacturing retail industry in relation to such areas as waste, environmental impact and long-term sustainable models.”
The first phase of this programme was launched in Davos, at the World Economic Forum summit in January 2009, and it is now moving into the second phase, looking at influences on consumer choice that are more sustainable in the long-term.
Lawrence continued: “We also launched a new piece of research on the 5th June at ECR Europe in Barcelona, and this is a study programme we have done on behalf of an organisation called the Coca Cola Retailing Research Council. Called Empowering Shopper Choice, this research is looking at the way in which individual shoppers use information to make decisions about where they shop and what they buy. It has produced some really interesting insights into some of the real drivers of choice, and I think it will reveal some surprises for some of the leading retailers and manufacturers in Europe.
“These are insights we’ll be able to use with our clients to help them understand how the market is moving and how consumers and shoppers are using different information sources, to make choices. More importantly, it provides new insights into the changing drivers behind shopper choice.
Food and Beverage 2012 was a report released by Deloitte in March 2009, and Lawrence pointed out that this research also revealed some very important insights into today’s shoppers and consumers. “We’re in a more challenged economy, consumer confidence is at, if anything, an all time low, and there is evidence that consumers are trading down,” he said. “They are buying more value lines and in some cases shopping in different places, perhaps trying hard discounters for the first time.”
But there is more to it than this. “What has emerged, particularly in grocery, is that while consumers (both better off and less well off) are being more value centric on price or cost, other drivers of choice such as good nutrition and ethical sourcing – what we might call the ‘values’ of the shopper - are very much holding up, which is encouraging.”
An example that perfectly illustrates this value/values proposition is Sainsbury’s ‘Feed the Family for a Fiver’ campaign. “They have combined a ‘value’ message with the £5 cost, and a very strong ‘values’ point with the Freedom Food and healthy eating angle. It has been extremely successful and I think this is a great example of how if you get these beliefs joined up in the right way, you get a fantastic opportunity in the market.”
He continued: “Fundamentally food and beverage businesses don’t succeed by simply making and shipping product - the key is understanding the consumer/ shopper and putting something on the shelf that individual wants, recognises its value and quality, and the brand resonates with them. My core advice to suppliers and manufacturers is that they must focus on the consumer/shopper and understand their needs, understand what drives the choices they make, and respond to that. The hardest element of this approach is that the further you go back up the supply chain from the retail shelf, then the more remote the business becomes from the consumer. Let’s help our primary producers get closer to what is happening at the consumer level.”
With access to the latest research findings and an ear to the ground in the market place, Lawrence is ideally placed to spot a trend approaching on the horizon. “I think the issue of specific dietary needs driving choice will really grow in importance,” he said. “Some of the work we have done has revealed that when a UK shopper goes to buy food as part of a weekly shop, 40 per cent of those people are shopping with a specific dietary need in mind, either for themselves or for someone in their family.
“That is a much higher percentage than either retailers or food manufacturers have been sensitive to and I think it’s going to point to a much greater focus on dietary needs, such as intolerances and allergies. This provides a strong sign for the industry on where it needs to raise its game, especially when you consider that the percentage of the population who have, or who believe they have, dietary intolerances or allergic reactions, is growing.”
He continued: “This is also an important opportunity to address the need for much more consistent and meaningful labelling. This is relevant to the dietary needs trend, and also to the wider challenge for food and drink companies to correctly position their products, and get their messages across in an environment where shoppers are bombarded with information. The combination of dietary challenges and how you communicate that you have a product and a proposition that meets those needs, are two core strategic issues facing the industry.”
Lawrence’s closing thoughts were also looking into the future. “I would recommend businesses look at the programme that the World Economic Forum is driving around sustainability for tomorrow’s consumer.
“The changes in the economy have already made consumers more value centric, so they are trading down and wasting less, and the future will bring a greater focus on sustainability, and more sensible use of resources. I think the combination of what is happening in the economy in the short term, and the wider issues such as sustainability in the longer term, plus the growing importance of specific dietary needs, will cause permanent changes in consumer and shopper behaviour.”
He continued: “Its really important for the industry to understand what that means, because those businesses that can anticipate, and respond to, what maybe permanent shifts in behaviours, will potentially gain a strategic advantage in the future. I think that we will see a new frugality of consumption behaviour, and a new generation growing up that consumes much more carefully than the previous generation.
Lawrence concluded: “I’d like to end with a quote from Paul Polman, the new chief executive of Unilver. Speaking at the World Economic Forum he said: ‘don’t underestimate the way we touch people’s lives daily…and our ability to influence the choices they make positively’. I think that was enormously insightful. As an industry we need to anticipate changing consumer behaviours, but it’s also within our grasp to positively influence those behaviours. The businesses that do that and make their brand relevant to the context of those changing behaviours are going to be the businesses that lead the industry in the future.”
