In today’s fast-paced world where no one ever stops,
consumers strive for convenient solutions for every aspect of their lives.
Drastic changes in consumer behavior have led to widespread retail disruption
along the food industry value chain. Demand for pre-packaged ready-made meals,
prepared meal kits, chilled and frozen dishes, and ready-made microwave meals
has increased significantly in the past few years as consumers increasingly
rely on convenience foods. Hence, food producers are facing the challenge of
offering new services and products to stay relevant and accommodate the growing
demands of customers. The packaged food trend is here to stay and gain further
traction due to factors like busy lifestyles, high personal disposable incomes,
decreasing household size, urbanization, and the rising geriatric population.
According to the Euromonitor report, the global retail
value of packaged foods reached approx. USD2.5 trillion in 2020. Staple foods
accounted for 37% of the packaged food sales in 2020 as more people had
to eat at home and make their food during the pandemic. The rapid adjustments
made at the start of the pandemic led to stockpiling and food shortages, which
increased the sudden demand for packaged foods. During the pandemic, consumers
shifted to purchasing fresh fruits, vegetables, meat, poultry, dairy, and
gourmet foods online, which boosted packaged food sales online. Moving forward,
consumers are projected to increase their reliance on e-commerce for their
grocery purchases due to the rise in disposable income and digital lifestyle. However,
supermarkets and convenience stores still account for the majority of packaged
food sales, accounting for 31% and 21% of the global market share,
as per TechSci report analysis.
Developed Regions Dominate the Global Packaged Food
Industry Market
Developed regions including most of western Europe and
North America are major consumers of packaged foods. As working hours have
increased and more women have entered the workplace, reliance on packaged foods
has increased in the past decade. Moreover, increasing innovations in food
packaging, plant-based products, new flavors, and healthy ingredients are
contributing to the growth of packaged foods in developed countries. Consumers
in the regions are willing to pay a premium price for high-quality convenience
food to save time and effort for preparing meals. Moreover, developed markets
like the United States and Europe have well-established players like Nestle,
Coca-Cola, Pepsi, Tyson Foods, Mars, Cargill, Kellogg, Kraft Heinz, etc., that
continuously innovate their products and expand retail platforms to enhance
customer experience.
In developing economies, people spend on food suited
to their local palate rather than relying on “global” cuisine. Thus, global
food brands are offering varieties that serve the local taste to win over
consumers. For instance, Nestlé offers Maggi in masala flavor in India, a huge
hit among consumers. Besides, some food brands offer the same item at lesser
prices in developing countries than in developed countries. As emerging
economies are becoming more urbanized, more women are entering paid labor and
thus are unable to prepare fresh food for themselves or their families, which
is also increasing the share of packaged foods. Witnessing
India's rising trend of westernization, General Mills introduced the Pillsbury
range of flour and cake mixes, which rewarded an annual growth rate of 25% in
recent years.
Work-From-Home Boosting Snacking Habits
The rising work from home culture prompted by the
pandemic has increased the demand for snacks and beverages. Savory snacks,
confectionery products, frozen snacks, meal replacement drinks, roasted nuts,
and seeds are some of the most consumable snacks. The snacking culture trend is
at an all-time high as people are increasingly reaching for something
comforting to boost energy and overcome boredom. The 2020 Food & Healthy
Survey found that 25% of Americans resort to snacking several times throughout
the day while 40% confessed to occasionally replacing meals by snacking. With
snacking taking on satiety and nutritional role, the meal replacement products
market is anticipated to register a CAGR of 7.64% by 2026. Some food brands are
coming up with snacks that induce sleep, boost mood, and relieve anxiety to tap
new markets.
Millennials and Gen Z form a large part of the
workforce, and they are highly oriented towards snacking to manage alertness,
cope with stress, and enhance focus. Parents are choosing healthy snacks made
with high-quality ingredients for their children to promote nutrition, which is
boosting the sales of organic packaged snacks. Therefore, snacks like chocolate
quinoa bars, collagen cookies, granola, probiotic cheese, ice creams blended
with vegetables are gaining much traction since they taste great and are filled
with nutrition. Manufacturers are focused on rolling out healthy and nutritious
snacks that can meet customers’ demands amidst emerging concepts like organic
food and veganism.
Organic Food Demands Accelerates Packaged Food
Adoption
The COVID-19 pandemic has made consumers realize that
the only way to stay safe and improve immunity is to enhance their immunity.
Hence, consumers have started looking for healthy foods and beverages, which
has led to the growth of nutrition-focused brands. Claims like low-calorie,
low-fat, gluten-free, sugar-free, and organic on the food packaging have become
more common to attract the health-conscious populations. Despite greater
inclination towards immunity-boosting foods, the food industry has observed
that taste remains the No.1 priority for consumers. Hence, major players are
adopting an innovative approach with flavors for world-class quality and taste
without compromising on the health factor. Even some food brands are trying to
raise awareness regarding the need for better nutrition with their marketing
campaigns to enable the healthy food transition.
In the UK, potato milk offered by DUG has become the
most suitable alternative to dairy milk since it is free from lactose, soy,
gluten, and nuts. Companies offering plant-based substitutes to meat like
Beyond Meat (US), Impossible Foods (US), Maple Leaf Foods (Canada), The
Vegetarian Butcher (Netherlands), Morningstar Farms (US), and more are gaining
much traction for their innovative food products. Giant retail channels like
Trader Joe’s, Sprouts, Whole Foods, Raley’s, Aldi, Costco, Walmart, among
others, have the majority of their section filled with healthy food options.
Besides, online retailers like Amazon, Nature Basket, Conscious Food,
Bigbasket, Grocers, etc., offer various natural and organic food options.
Quick Turnaround and Ease of Preparation
Convenience foods are in high demand as they can be
quickly prepared in a single pan, in the microwave, or just eaten right out of
the box. Manufacturers and meal kit providers are willing to play the role of
sous-chef so that consumers enjoy their meal on-the-go. People who lack cooking skills look for “almost
homemade” food options and pay extra money to save their precious time. In the
past few years, foods of all kinds, from salad mixes to veggie side dishes,
rotisserie chicken to poached salmon, have been available in supermarkets.
Consumers’ desire to eat wholesome and healthy food has led to the rise of meal
kits with pre-portioned ingredients needed to make a meal with the step-by-step
recipe. The meal-kit market is currently largely dominated by online retail
channels, but supermarkets are catching up, offering more choices in the near
future.
Established supermarket players are growing
convenience store formats in urban areas to attract customers and respond to
the trend of shopping at retail locations close to home. Supermarkets,
discounters, drugstores, gas stations, bakeries, and food deliverers are
competing for convenience lovers and thus are adapting business models, further
fueling the competition.
Smart and Sustainable Packaging Drives Packaged Foods
Food packaging enhances the visual appeal of the
product to consumers from the marketing perspective and ensures a safe and
secure reach to end-user. Active, intelligent, and smart packaging interact
internally and externally with the environment while also easing the process of
bulk transportation. The food industry is the primary driver of smart packaging
to control gas and moisture. Advanced packaging solutions include
time-temperature monitors, antimicrobial packaging, smartphone-enabled
interactive packaging products to reduce food safety concerns and maintain the
freshness and nutritional value of the products at competitive prices.
Currently, ambient food packaging is the modern trend in the food packaging industry
since it increases product shelf-life, even without a refrigerator.
Alter Eco released the first ever packaging material
made of plants for their quinoa products. The food brand uses non-toxic ink on
its packaging. Boss Food’s vegan superfood bars use compostable wrappers, which
have all the normal plastic properties, ensuring the same shelf life as
conventional packaging. Kellogg's has one of the smallest plastic footprints as
the company uses recycled cardboard, which makes 76% of packaging compostable.
According to
TechSci Research report on “Global Packaged Food Market By Product Type (Non-alcoholic Beverages,
Dairy products, Confectionery, Ready Meals, Snacks, Breakfast Cereals, and
Others (Nuts, Ice Cream, Baby Food, Sauce, Oil and Fats)), By Distribution
Channel (Hypermarkets/Supermarket, Departmental Store, Convenience Store,
Online Retail Store, and Others (Counter Shops, etc.)), By Region, Competition
Forecast & Opportunities, 2026”, the global packaged food market is anticipated to
grow at a formidable CAGR during the forecast period. The growth can be
attributed to the increasing consumption of convenience and on-the-go foods and
rising personal disposable income.
According to another TechSci Research report on “Vietnam Frozen Food Market By Category, ((Ready-to-Eat, Ready-to-Cook
& Others (Raw Meat, Raw Vegetables, Raw Fruit, etc.)), By Product Type
(Frozen Meat, Poultry, & Seafood, Frozen Snacks, Frozen Fruits &
Vegetables, Frozen Desserts, Frozen Cooked Ready Meals, & Others), By
Distribution Channel (Departmental Stores, Specialty Stores,
Supermarket/Hypermarket, Online & Others (Convenience Stores, Direct Sales,
etc.)), By Region, Competition, Forecast Opportunities, 2026F”, Vietnam Frozen food
market is expected to grow at a CAGR of 7.26% during the forecast period. The
growth can be attributed to the increasing per capita income and surge in sales
through e-commerce.