Food – An industry growth engine
In 2021, Nestlé International Travel Retail (NITR) set out ambitious targets to make Food the #1 most purchased category in global travel retail.
The company’s aim is to have food in 50% of baskets by 2030 (according to the latest m1nd-set data, beauty is most purchased at 48%), +20% higher than the pre-COVID average. This mission seeks to drive incremental growth through conversion and increase basket spend to reignite the growth in the food category, which is trailing behind the current strong growth in the domestic market.
Since introducing the mission as the subject of another Moodie Davitt Spotlight Series eZine, Nestlé has been on target in terms of growing both its confectionery and non-confectionery portfolio without any cannibalisation.
The feasibility of this ambition was informed by the fact that food, including confectionery, was stagnating in travel retail but enjoying double-digit growth in the domestic market. This was especially true in key categories that could be sold in travel retail.
The ambition was also confirmed by recent travel retail-specific research by m1nd-set that showed how the food category has the highest level of appeal. This, according to NITR, shows the untapped potential of the food category to accelerate the industry’s post-COVID recovery and address the long-term decline in conversion by broadening its appeal to a changing audience. We give you further updates on the strategy below.
The power of food beyond confectionery
NITR’s strategy is built on changing the industry’s mindset about the overall food category, exploring its potential beyond confectionery. The strategy considers food a key category, which also consists of local food and packaged food such as biscuits, coffee, tea and vitamins, mineral and health supplements (VMHS).
m1nd-set revealed that food and confectionery, when grouped together, are among the most appealing categories in travel retail, with 69% of correspondents saying it is the most appealing to buy in duty free.
75% of these correspondents were Millennials, who showed a higher than average interest in buying food products at airports. Within this position, non-confectionery and in particular coffee, food and vitamins, were the fastest-growing categories.
Importantly, the m1nd-set survey confirmed NITR’s strategic push on coffee and VMHS. The survey revealed that travellers had a 1.5x likelihood to buy coffee compared to confectionery alone, with 84% of respondents saying they would buy coffee in travel retail.
Meanwhile, 41% of respondents said that they would purchase VMHS in the channel, underlining the sub-category’s growth potential.
Food and Vitamins gained +6% in the first quarter of this year and is now the 6th most purchased category in travel retail according to m1nd-set.
As the world’s largest food company, NITR is specially positioned to tap into non-confectionery growth areas with over 60 billion-dollar brands in its portfolio. Coffee and VMHS are two developmental priorities. To address this, the company is tailoring its offer to the needs of the travel retail consumer rather than simply transplanting brands from the domestic channel.
Coffee and vitamins present plenty of growth opportunities in travel retail, particularly for Nestlé, which has synergies within its portfolio
The Coffee Opportunity
m1nd-set revealed that coffee was a highly appealing product category within the hot drinks category, highlighting uniqueness and local flavour as key drivers to purchase. Travellers expect high-quality local brands and international premium brands which offer limited-edition ground coffee and beans in travel retail, with expressions linked to the countries of origin.
Travellers expressed an interest in tasting the coffee on the shop floor and highlighted the importance of staff interaction. Coffee, according to m1nd-set, is purchased for both self-consumption and gifting, therefore addressing two major purchase occasions for travellers.
NITR is increasing focus on coffee products, including its Azera Americano range, which targets younger consumers. The Nescafé Gold Roastery Collection – which includes Light and Dark Roast – is key to NITR’s growth strategy, as is its Cup of Respect approach to ensure products are grown, made, packaged and enjoyed respectfully.
Another addition to the portfolio is the Nescafé Azera Americano collection: Americano, Americano Decaff and Americano Intense.
NITR launched the Nescafé Roastery collection with two high-profile gondolas in Changi Airport Terminal 2
VMHS: The new food frontier
Health and Wellness, particularly in the post-pandemic era, is a growing consumer need. m1ndset research shows that travellers have a holistic view of wellness with VMHS becoming an essential part of their daily lives to meet overall health, beauty, fitness and nutrition needs.
Furthermore, the latest m1ndset data confirmed that there is an exciting opportunity for VMHS in travel retail with nearly 50% of travellers interested in buying these products. The research uncovered key consumer need states so a tailor-made global travel retail proposition could be developed.
To unlock this opportunity, NITR recently partnered with Nestlé Health Science (NHSc) to deliver a global travel retail first with the trial of health and wellness brand Solgar in Dufry’s new shop-in-shop retail concept, Mind. Body. Soul.
Solgar offers a range of VMHS to travellers. Its travel retail trial is the result of m1nd-set research from 2022 that identified the growth opportunity offered by health and wellness products, appealing to almost 50% of travellers across all key demographics. The six-month trial kicked-off on 11 April of this year at Zürich Airport and on 30 April in the Extra-Schengen area at Athens International Airport. These airports feature two of Dufry’s 20 global innovation stores used to test-run new projects.
Amid its forays into other categories, confectionery will remain NITR’s beating heart as the company underlines the resilience of the category and its consistent growth compared to other sectors.
Spotlight Series – September 2023