Operating environment

LEADING THE WAY BY STAYING AHEAD OF CONSUMER AND INDUSTRY TRENDS

Global trends influence HKScan’s operating environment and business. For example economic, demographic and consumer trends impact both directly and indirectly HKScan’s and its customers’ businesses. Staying ahead of these trends and utilizing the gained insight is our strategy for maintaining a competitive edge.

Our task as an industry leader is to translate trends in the operating environment into new products and services, and to improve our current products. We also need to innovate to stay ahead of changes. We intend to be at the forefront in implementing new technologies. By foreseeing changes and proactively adapting to them, we can improve our performance, develop our operations sustainably, and bring value to our business as well as to consumers, customers, partners and other stakeholders.

We are proud of our long heritage in the meat industry, our expertise and our close cooperation with our producers. Our brands and products have been proven through the past ten decades to be reliable, trustworthy and compliant with consumers’ expectations. We adhere to a policy of continuous, transparent and open communication with our customers and consumers via all channels.

We develop and create local food cultures in the countries where our products are sold and consumed. Our industry-specific local knowledge of meat is something we are also proud of.

Our task as an industry leader is to translate trends in the operating environment into new products and services.

WORKING WITH CONSTANTLY EVOLVING TRENDS

ECONOMIC AND DEMOGRAPHIC TRENDS

We live in a global economy and the prevailing downturn in Europe may influence consumer behaviour and thereby impact our ability to achieve profitable growth. In some markets, we have seen polarization in consumer demand. The demand for affordable products has for example increased and at the same time the demand for expensive organic, premium-quality meat cuts has increased. In the emerging markets, where we are also establishing a footprint, meat consumption is increasing among the growing affluent middle-class segment of the population.

In the Western world, the ageing population and small households are creating new needs in the food offering, distribution and packaging solutions, for example.

MEAT INDUSTRY TRENDS

Demand for meat is increasing globally. Within the meat category, white meat consumption is increasing at the expense of red meat, and becoming the most popular meat type.

Meat is a wholesome food with great health benefits. HKScan sees it as a good source of protein and an essential part of a healthy diet. Together with vegetables, wholegrain products and vegetable fats, meat is a key part of meals corresponding to nutritional recommendations.

The consolidation of the meat industry is also resulting in polarization. You are either a major player with big volumes or a specialized local player with an artisanal approach. Big players, like HKScan, seek to optimize their operational footprint, productivity (e.g. by automatization) and supply chain, as well as reduce their environmental impact. Small players need to establish profitable sales channels, but nationwide distribution via retail is seldom an option for them. Cooperation with big players and other parts of the supply chain is crucial for their business.

FOOD RETAIL TRENDS

Food retail customers, even those with good purchasing power, are constantly seeking value for money, i.e. they look for a good mix in their shopping experience (retail location, size, products, parking) and a food assortment offering a good price-quality ratio.

Discounters are seizing an increasing share of the business and their assortment is becoming more varied. Instead of selling only basic products, discounters today offer more premium products, such as seasonal meats. Hypermarkets are struggling with their large retail space, as part of their offering (e.g. electronics) has moved online. Supermarkets and convenience stores typically focus on local, convenience and on-the-go food.

Online retail is still relatively small, being most advanced in the UK and France. Growth is expected to continue, but further investment in logistics is required and customer volumes remain modest for the time being. We at HKScan need to be ready to offer the best products also for our online retail customers.   

TRENDS IN THE AWAY FROM HOME MARKET

In away from home, consumption of on-the-go, i.e. street food and take away food, is continuously increasing. Many small new restaurants are opening. In Sweden and Finland, away from home customers emphasize local production and the traceability of food.

In Denmark and Sweden, organic food is popular. This trend is supported by public sector customers who want a certain proportion of organic food in their total food purchases. Away from home customers, like consumers, are also more and more interested in protein, as well as vegetarian and flexitarian diets.

Eating out is maintaining its position as a prevalent trend. This is thanks to small households, less time for cooking, urbanization and travelling. There are plenty of alternatives available from fast food to fine dining, and all the more ‘fast casual’ options in between. In Sweden, eating out grew four per cent in 2015, whereas in Finland, zero growth was recorded after a decrease in 2014.

A novelty in the food services segment is the ‘ready to heat’ offering; salad bars and convenience food counters inside stores. This offering lies between the traditional retail sector’s ‘ready to cook’ and restaurants’ ‘ready to eat’ options.

One good source for following trends in away from home business is collaboration and co creating new innovative recipes and ways to offer meat with our customers. Capability to offer and constantly develop online solutions for easier ordering and buying is becoming more and more important also for our away from home customers.

CONSUMER TRENDS

HEALTH AND PURITY

Consumers who prefer healthy and organic food also appreciate locally sourced ingredients. With meat, in particular, they additionally value products that are sourced in a responsible way.

Food is said to be at the core of the global health and wellness revolution; consumers have become conscious, curious and caring about everything they eat. Clean or pure are key new attributes connected with food, and this ‘free from’ thinking is a strengthening trend.

We at HKScan are constantly working with a diverse range of R&D projects in order to make products with less salt and other additives, with product safety aspects as a high priority. We are also actively involved in protein research projects.

ENVIRONMENTAL AND ETHICAL AWARENESS

Both environmental and ethical issues have found their way from activist meetings to board rooms. Consumers increasingly want to know if the brand they choose corresponds to their ethics and view of the world. Consumer awareness and discussions around key environmental topics – such as global warming – are forcing companies to delineate their stance.

HKScan has been focusing on corporate responsibility for decades, aiming to reduce the consumption of water, energy, waste water and packaging in our operations. Being a company serving society, reducing our environmental footprint is going to be increasingly important for our future.

DIGITALIZATION

As smart phones are continuously developing, mobile apps and services are leading to the convergence of online and offline shopping. Shoppers use mobile devices for guidance, navigation, convenience, payment, limited edition offerings, home deliveries, etc. Digitalization is visible both among HKScan’s customers and in its own business and service development. Enhancement of digital channels increases consumer- and customer-orientation.

PACKAGING AND LABELLING

Packaging and clear labelling of products play a vital role for consumers. Young people, in particular, emphasize the importance of packages and their impact on society and the environment. New packaging types, such as intelligent and active packages are on the way to the market. As single-person households are growing in number, more and more people are occasionally eating meals alone. These facts call for right-sized products and packings.

The importance of labelling is also growing; products need to be labelled clearly, as well as in an informative and transparent way. In addition, the visuals of end-products count; you eat also with your eyes.

TELLING AND SHARING STORIES

Our actions are in many ways targeted at “millennials”, i.e. people aged between 15 and 35. The millennials already represent one third of all consumers. Most of their basic needs are fulfilled, and they often now look for a deeper purpose and meaning. They prioritize “real and authentic” products and appreciate facts as well as narratives related to companies and the people behind the products they are using. We offer real and fact-based information about our products – especially more communication on meat origin. Social media plays a more important role, and we need to ask ourselves, for example: “Is our product good enough to tweet about it?”