The growth of out-of-home

The growth of out-of-home

Kantar identified 6 out-of-home consumption considerations for retailers.

Out-of-home consumption (OOH) growth is everywhere. And that means winning here is necessary for brands playing in the snacking foods and non-alcoholic beverages categories—in fact, those not succeeding here are losing share. Whichever lens we look through, OOH growth is the norm and decline is the exception. There’s only one market—Brazil—and one category—Juice Drinks—seeing a fall in spend, and all channels are experiencing an increase in spend.

Given the importance of OOH, we will look in particular at what is driving this growth. As we will see, categories that are ‘habitual’—both highly penetrated and with high frequency—are more likely to be in growth, with more than 70% seeing an increase in spend. Increasing spend per trip was the biggest driver of performance in 2018, as the number of occasions remained flat.

Again, there were differences by market and channel, and we will show examples of value engineering in different categories around the world. We’ll discuss the increasing importance of food technology and how this is driving spend for home delivery and takeaways. Perhaps most importantly, this trend is driving incremental growth for both restaurants and the technology aggregators—capturing occasions from cooking at home.

However, as we will see, retailers are not taking this lying down and are coming up with innovative solutions to increase on-the-go food consumption spend in stores.

Data for Winning food & drink occasions Out-of-Home report was gathered using Kantar’s unique mobile app which records every snack and non-alcoholic drink bought for consumption outside the home—whether that’s on the go, at the place of purchase, in the workplace, or otherwise. To create a comprehensive view of the OOH market, the study looked not only at what products are purchased—and where—but when the purchase was made and whether it was for sharing or for individual consumption. Information for the report covered ten markets globally: Brazil, China, France, Indonesia, Mexico, Portugal, Spain, Thailand, the UK and Vietnam.

 A global market

As the chart shows, OOH is growing faster than in-home across five markets. Portugal and the UK have seen particularly strong growth across both channels, as has Spain—although in the latter OOH has grown more than twice as quickly. In Indonesia we’ve seen the most dramatic gap in performance, with the main driver being Ice Cream (+8% OOH versus -12% in-home). It’s clear, however, that economic uncertainty in several regions is the major factor holding back the total OOH market. Brazil, for example, saw the slowest economic growth—and spend declined across both in-home and OOH. This, combined with minimal growth in Mexico, makes Latin America the region struggling the most globally.

Category growth

Biscuits and Coffee are the biggest categories globally, accounting for 26% of combined in-and out-of-home spend (for snacking foods and non-alcoholic beverages). The importance of OOH differs significantly across all categories, but these two are perhaps the most perfect examples. Worldwide, OOH accounts for just one third of Biscuits sales but 70% of those for Coffee. Almost all major categories are seeing overall value growth, with Juice Drinks the exception. The biggest three—Carbonated Soft Drinks, Biscuits and Coffee—experienced solid growth. Yoghurt and Packaged Water were the categories with the strongest overall growth, and saw good performance across both in-and out-of-home. Chocolate, Salty Snacks and Ice Creams – arguably the most enjoyable categories – saw growth driven solely by OOH, while in-home sales declined across the board. This link to enjoyment, particularly on the go, is key to category growth.

The trade landscape

With the value of OOH growing across most markets and categories, it’s clear that on-the-go occasions remain attractive to shoppers. But what’s driving this rise? Here, we analyze the top-line OOH growth by channel—and through the consumer lens—before we explore how value has been engineered across the different sectors. In 2018, all channels contributed to the continued importance of OOH. Achieving +3.5% growth and accounting for 44% of spend, the Horeca (hotels, restaurants and cafés) channel was the biggest driver of OOH success, contributing more than half the overall growth.

Traditional Trade—such as street vendors and markets—was the next strongest channels at +3%, but its low share means its contribution made up just 10% of OOH’s total growth, behind that of Modern Trade, which grew at +2.9% but contributed a quarter of the total. The Impulse channel—vending machines and food trucks, for example—grew the slowest at 1.3%.

Creatures of habit

Another key driver of OOH growth is ‘habitual’ categories—those that come from high-penetration or high-frequency sectors. In 2018, 72% of habitual categories were in growth. For brands and retailers, their immediate focus should be on winning in the regular, everyday moments of OOH shopping before they consider more niche categories.

And, of all the categories in growth globally, two thirds are growing thanks to penetration. As with in-home shopping, the best way to find growth is to focus on penetration within these more established categories.

Full report by Kantar WorldPanel here.

2020-02-19T16:13:17+00:00

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