In the face of a changing consumer landscape, food and beverage brands marketing “indulgent” products must grapple with new challenges where consumers are planning their indulgence occasions, governments are increasing regulations, and innovation crossovers are blurring the lines between not just categories but whole industries.
Speaking in a webinar this afternoon, titled Permission to Indulge, Euromonitor global lead for food and beverage Michael Schaefer said “indulgence is becoming more planned than ever” as new technologies like smartphones give consumers more control over their spending habits and create more regulated daily schedules. Today’s consumers, he said, have a broader choice of product offerings, are more health-conscious, and are able to replace their need for indulgence with technology — forcing brands to find new ways to “meet consumers where they’re at.”
According to Schaefer, indulgent products need to compete not just with each other but within the broader attention economy, an issue he linked to the psychological effects of consumers being constantly connected through their smartphones. Consumers who in the past may have given themselves a “reward” through an alcoholic beverage, a soda, or a chocolate bar are now finding the same satisfaction through social media. Increased access to information on health and wellness has also led consumers to be more selective in their food and beverage indulgences, leading to additional planning where consumers may choose an experiential option (such as going to a brewery) over the traditional indulgence (having a beer while watching TV).
The public nature of social media has also made younger consumers — both millennials and Gen Z — more cautious of indulgences, Schaefer said. These groups are more likely to avoid public intoxication, knowing that pictures from social outings can live online forever and potentially lead to social and professional blowback.
The rise of ecommerce has also led to a reduction in impulse purchases. A survey of 3,000 consumers conducted by Euromonitor last year found that only 23% of consumers said they “often” make impulse purchases, down from 28% in 2013.
“The fact that our lives are increasingly public certainly plays a role,” he said. “And it will continue to play a role.”
While consumer habits are changing, brands also need to be prepared for the increased role government regulations will play in indulgent products. Schaefer said food and beverage companies should look for lessons from the tobacco industry, noting that it is now acceptable for governments to question whether certain industries (such as tobacco, or sugary soft drinks) have a right to make a profit off of products that pose health risks.
Soda taxes in the U.S. have been controversial and confined to select cities, but since January 2018 nationwide sugar taxes have been enacted in the Philippines, the U.K., France, and South Africa. According to Schaefer, companies should look to emerging markets such as Brazil — which has initiated tighter regulations on food and drinks in the past several years by targeting processed foods and CSDs — as indicators of where regulation in North America may go in the near future.
But while the market for traditional indulgent products is becoming more difficult to navigate, the solution may lie in innovation. According to Schaefer, the lines between categories are increasingly blurred as companies introduce products that defy standard segmentation or embrace cross-category extensions.
One example Schaefer noted was Brew Dr. kombucha maker Townshend’s Tea, which began as a tea shop before branching into the CPG retail market with Brew Dr. Using the excess alcohol produced through the kombucha fermentation process, the company also operates a spirits division, giving it cross-channel plays in foodservice, RTD beverage, and alcohol.
Cannabis, he added, will give indulgent product makers even more freedom to innovate across categories. The global market for legal cannabis — expected to grow 40% annually and reach $166 billion by 2025, Schaefer said — is being driven by integration into multiple categories and delivery systems including edibles and beverages alongside flower, oils, and vapes.
Finally, brands need to do more to “meet consumers where they’re at,” Schaefer said. This includes cross-channel strategies that include partnerships with businesses in the ridesharing, shared rental, meal kit, food hall, and next-generation vending spaces where brands can better get their products in front of consumers. While ecommerce continues to play a significant role in reshaping the CPG space, companies like Uber and AirBnB provide brands with new opportunities to drive trial and find consumers when they’re most likely to be willing to indulge.
“The idea of indulgence still exists,” Schaefer said. “It’s simply moving. It’s on the go.”