DECEMBER 2014MARKET INSIGHTS

2

HA

VI G

lob

al S

olu

tio

ns:

Mark

etI

nsi

gh

ts

SUPPLY CHAIN

DIGITIZED Supply ChainGartner, Inc., recently released its view on the top 10 technology trends that will

impact organizations in 2015,1 with possible outcomes ranging from business

disruptions to significant investments and unexpected risk for late technology

adopters. Three trends with interesting applications to supply chain management

include invisible analytics, 3D printing, and smart machines.

CALLING ALL CARGOPurfresh is tapping into deeply embedded, invisible analytics with its cloud-based cargo monitoring software, Intellipur.2 Intellipur provides real-time visibility into and control over the conditions of the fresh food, flowers, and other temperature-sensitive cargo that is shipped worldwide, helping minimize product loss. Data provided by Intellipur enables Purfresh to resolve damaging conditions, such as unplanned power events or incorrect temperature settings, to protect and preserve the integrity of the cargo.

ON-DEMAND PART SUPPLYWidespread availability and use of 3D printers have grown in correlation with the introduction of low-cost printers, and the possibilities for application outside the manufacturing sector of supply chain seem limited only by one’s imagination. Shipping giant, Maersk, is experimenting with 3D printing on its vessels as a cost reduction strategy.3 Using company-supplied blueprints, Maersk hopes to enable the crew to print replacement spare parts within mere hours of being needed, requiring only the simple push of the “print” button.

HANDS-FREE DRIVINGSmart machines, programmed with advanced algorithms that allow systems to understand their environment, learn independently, and act autonomously, are expected to dominate the next decade. Mercedes-Benz hopes to lead this charge, having developed a self-driving semi-truck concept that could reduce the number of highway accidents triggered by sleep-deprived drivers.4 Mercedes Future Truck 2025 uses its “Highway Pilot” system, a combination of advanced dual cameras, radar sensors, and blind-spot technology, to continually analyze the truck’s surroundings. Driver participation is still required to steer the truck onto the interstate, but once the truck is on the highway, the system takes over. Though not expected to become commercially viable in the short term, the concept signals just how disruptive smart machines could be to the future of supply chain.

1

1 2 3

3

2

3

PACKAGING

A NEW ERA of DesignIn today’s digital era, business moves at a speed and pace that was unheard

of less than a decade ago. With new materials, substrates, and technologies

becoming commercially viable—and more economically feasible—every day,

packaging design has become a veritable playground for brands to maintain

relevance and attract new audiences.

HUMAN TOUCHSocial media has created accessibility to brands like never before. Brands with relaxed, approachable personas are leveraging handwritten or hand drawn design elements to bring their online personalities to life at the shelf. Frozen dessert brand, Nutty Bunny, reiterates its handcrafted, organic brand positioning through package design. The whimsical, hand written label also hints at the personal story behind the birth of the brand.5

FUTURE FUNCTIONPackaging form and function will be taken to a new level in 2015, with brands using packaging as an added way to surprise and delight consumers. Italian olive oil brand, Typuglia, is known for its desire to unite a love for design with good food. The latest package design innovation? A multifunctional olive oil kit with an unexpected twist--the layered cardboard cutout that houses the oil bottle can also be used as a light fixture!6

SUSTAINABLE KRAFTKraft paper packaging is growing in popularity due to its high elasticity, tear resistance, and highly recyclable properties. Brands looking to promote a message of environmental responsibility while conveying the depth of their sustainability commitment are gravitating towards the ethically conscious material. Hnina, a new gourmet vegan chocolate brand, considers packaging an extension of eco-friendly business practices. The brand uses packaging to convey the “purity and wholesomeness of the confections while imparting a luxury feel.”7 The resulting box is made with 100% recycled, biodegradable kraft paperboard that is manufactured with wind energy.

3

4

HA

VI G

lob

al S

olu

tio

ns:

Mark

etI

nsi

gh

ts

FOODSERVICE

FRESH TAKES on FoodAccording to food research firm, Technomic, technology, consumer and menu

trends will continue revolutionizing foodservice in 2015.8 Emerging trends—

fueled by tech-savvy Gen Y consumers and the now-teenaged digital natives

of Gen Z—as well as “sticky” carryover concepts from this year promise to keep

foodservice industry players on their toes.

TWEET-WORTHY, INSTA-MEALS

Experts suggest that more restaurants will lean into customers’ use of social media to generate real-time buzz for

their brands. Customers will become part of “a staged event

that imparts bragging rights,” with food plating and restaurant

lighting designed to be highlighted in smartphone pictures and social media shares.

After a year of fast food mash-ups like KFC’s Chicken Corsage9 or Taco Bell’s Waffle Taco10 stealing center stage, it will be a race to see which foods consumers choose to promote from their social soapboxes.

GOOD FOOD ANYTIME, ANYWHEREGrowth of new, alternative forms of foodservice is skyrocketing—from pop-up restaurants to healthy vending and ingredient-delivery services—customers have more choices than ever when it comes to dining, even in their homes. A recent pop-up concept that merged the appeal of fast, gourmet food with social interaction, Hallo Hello challenged travelers at Copenhagen Airport to share a three-course meal with a complete stranger.11 Capitalizing on the fact that more

than 50% of airline passengers travel alone, Hallo Hello diners enjoyed their gourmet meal experience over a shared tabletop tray.12 The month-long social dining experiment even extended beyond the restaurant experience, with travelers being given a surprise dessert goodie bag to share with fellow passengers on their flights.

Blending consumer interest in healthy dining with the growing desire for a similar, cost-effective, at-home meal experience, Blue Apron is a grocery-delivery service company that helps customers become expert chefs in their own kitchens.13 Subscribers receive packaged meal kits with fresh, pre-measured ingredients and associated recipe cards, promising “fun and easy” do-it-yourself cooking and delicious meals. New meal kit brands, Plated and Hello Fresh, have also entered the fray to capture their share of the emerging segment.

5

FOODSERVICE

BEVERAGE REMIXAs drink structures are reimagined, classics become “retro-chic,” and traditional liquors add a little flavor to their mix, signature beverages take on new life in 2015. Non-alcoholic beverages are now fair game, with restaurant operators introducing craft sodas, pressed juices, and healthy-halo options. Starbucks recently ventured into soft-drink territory with the

launch of Fizzio Handcrafted Sodas, touting “premium ingredients, no high-fructose corn syrup, no preservatives, and no artificial flavors”14 in each handmade-when-ordered drink.

ASIAN INFLUENCESEast meets West as Korean, Vietnamese, and upscaled ramen noodles break out of major cities and into mainstream markets. Yum Brands recently established a Dallas, Texas, pilot of the Bahn Shop, a Vietnamese restaurant concept featuring a focused menu of eight bánh mì (a Vietnamese-style sandwich made of meat or tofu with spices, vegetables, and herbs on a baguette), wok bowls, soups, salads, and side dishes.15 Yum hopes the made-to-order Vietnamese street food concept whets customer appetites the way burritos did several years ago.

BETTING ON BITTERCustomer taste buds are evolving, gravitating towards bold flavors like darker chocolates and coffees, hoppy beers, and cocktails infused with bitters. Dunkin’ Donuts just delivered on this trend with its hot dark-roast coffee, Dunkin’ Dark Roast, a first for the company.16 The company states that years of product development have resulted in a flavor that is “bittersweet, full-bodied, rich and aromatic, leaving guests with a bold start and smooth finish.”

A HEALTHY CHOICEWith more restaurants offering gluten-free, vegan, and Paleo-diet options on their menus, customers are free to pick and choose which options meet their dietary needs. This year, Chipotle Mexican Grill expanded the availability of Sofritas, a braised tofu option for burritos and bowls, in an effort to attract more vegetarian and vegan customers.17 Chipotle’s first new menu addition since 2005, Sofritas were designed to have cross-over appeal, a concept that appears to be delivering. The menu item has been added permanently to Chipotle’s South and Southeast region stores and will be rolled out across all remaining U.S. restaurants by year-end.

INTRODUCING GEN ZWhile companies are still trying to crack the code on marketing to Millennials, 2015 brings a new customer to the table: Generation Z. These tech-savvy teenagers create a new challenge for the foodservice industry because they require a different, more heightened experience—louder music, moving visuals, and speedy, high tech service—that may not mesh well with the traditional needs of older consumers. With the foodservice industry busy contending with how to appeal to all customers between the Boomer and Millennial life stages, the potential impact of Gen Z is still a relative unknown.

6

HA

VI G

lob

al S

olu

tio

ns:

Mark

etI

nsi

gh

ts

PACKAGING

BAGGING the BottleBag-in-box (BIB) wines are making a comeback in the UK, with smaller sized

formats leading the way. Within the £292 million18 BIB category, Nielsen

figures showed an increase of 8.7% in volume in the smaller 2.25L box

segment.19 Momentum is expected to continue as Mintel research suggests

that consumer perceptions of the quality of boxed wine have also improved.

Wine brands and retailers alike are moving quickly to capitalize on the

opportunity, exploring smaller sizes and innovative design approaches to

drive segment trial and interest.

TEMPTING TRIALMultinational grocer, Tesco, is launching six of the most popular bottled wines from its Finest brand portfolio in a 1.5L BIB format.20 The company expects the brand credentials and premium associations of Finest, along with the BIB benefit of keeping wine fresh for up to six weeks, will help drive increased trial and expand the consumer base for the category.

RETHINKING THE BOXMilan-based design agency, Reverse Innovation, developed a unique wine pouch design to help reduce the negative, low-quality perceptions associated with BIB brands. The innovative pouch design reinterprets the structure of a classic wine bottle, utilizing a contemporary

design aesthetic and premium print techniques to add high visual impact. Though the commercial future of the concept is unknown, it won second place in the Wine and Champagne category of the 2014 packaging Dieline Awards for its “pioneering approach to a very traditional packaging sector.”21

7

RECYCLING

E-WASTE EpidemicElectronic waste (e-waste) is exploding in response to the technology boom.

As more of the world gains access to electronic products, shorter product

lifecycles and built-in obsolescence result in an accumulation of e-waste that

cannot be erased by pressing the “Delete” key.

According to the Marketsandmarkets.com research report, Global E-Waste Management Market (2011 – 2016),22 the global volume of e-waste is expected to reach 93.5 million tons in 2016, up 17.6% from 2011. Revenue generated from the e-waste management market is expected to keep a similar pace, growing at a CAGR of 17.22% to reach $20.25 billion in 2016.

E-CYCLING IS NOT ENOUGHThere is growing recognition worldwide of the need for proper e-waste solutions that not only recycle and reuse viable electronic components, but also address the environmental toxicity issues associated with improper handling and disposal of the remaining components. However, historically low recycling rates have challenged companies to focus on becoming “zero-waste” and “zero emissions” businesses as well.

REVERSING THE SUPPLY CHAINLeading this movement are suppliers who provide reverse supply chain management — solutions that offer original equipment manufacturers (OEMs) an integrated “one-stop shop” for re-manufacturing, as well as reusing and recycling their products, components, and raw materials.23 By enabling OEMs to move beyond conventional reuse and recycling concepts, these suppliers help companies optimize their after-market supply chain to capture additional value, comply with environmental regulations, and enhance the legitimacy and credibility of their sustainability strategies. More importantly, increased adoption of reverse supply chain management services and other zero-waste solutions should help reverse the negative trend in e-waste.

USA: 10.317

MEXICO: 1.138

BRAZIL: 1.530

EUROPE: 1O.933

RUSSIA: 1.556

CHINA: 7.995

JAPAN: 3.022

INDIA: 3.033

E-WASTE GENERATED BY COUNTRY (2012 total, in millions of tons)

Source: www.StEP-Initiative.org

8

HA

VI G

lob

al S

olu

tio

ns:

Mark

etI

nsi

gh

ts

www.havigs.com

Credits1Gartner, Inc. (2014) Gartner Identifies the Top 10 Strategic Technology Trends for 2015 [Press release]. Retrieved from http://www.gartner.com/newsroom/id/28679172Cargo Monitoring, Real-Time Visibility and Control, www.purfresh.com, n.d3The Impact of 3D Printing on Supply Chains, Len Calderone, www.roboticstomorrow.com, 7/24/20144Mercedes Built a Self Driving Truck that Could Save Thousands of Lives Each Year, Chris Welch, http://www.theverge.com, 10/7/20145Nutty Bunny, www.nutty-bunny.com, n.d.6Typuglia Olive Oil, www.thedieline.com, 10/3/20147Box For Vegan Truffles Conveys Purity, Luxury, Anne Marie Mohan, www.packworld.com, 11/11/20148Technomic. (2014) Technomic’s Take: 2015 Food Trends [Press release]. Retrieved from https://www.technomic.com/Pressroom/Releases/dynRelease_Detail.php?rUID=3299KFC’s Chicken Corsage is Selling Out Fast, Valerie Chinn, www.wdrb.com, 4/23/201410Taco Bell Creates Quite a Brand Buzz with ‘Breakfast Phones,’ Alicia Kelso, www.qsrweb.com, 3/25/201411Pop-up Restaurant Gets Passengers Talking at Copenhagen Airport, Gavin Lipsith, www.moodiereport.com, 8/22/201412Innovative Pop Up Restaurant Opens at Copenhagen Airport, www.airport-world.com, 9/26/201413Blue Apron Raises $50M to Deliver Do-It-Yourself Meal Kits, Recipes, Lora Kolodny, blogs.wsj.com, 4/30/2014

14Fact Sheet: Fizzio™ Handcrafted Sodas | Starbucks Newsroom. (2014). Retrieved from http://news.starbucks.com/facts/fact-sheet-fizzio-handcrafted-sodas15Taco Bell Owner’s Next Big Thing is Vietnamese Fast Food, Alexander C. Kaufman, www.huffingtonpost.com, 9/13/201416Dunkin Donuts to Launch First Hot Dark-Roast Coffee, Julie Jargon, online.wsj.com, 8/28/201417Chipotle to Roll Out Sofritas in 9 More States, Ron Ruggless, www.nrn.com, 9/26/201418Tesco And Accolade to Launch Finest Bag-In-Box Wines, Arabella Mileham, www.thegrocer.co.uk, 6/8/201419Smaller Format Bag-in-Box Wines Lead Revival in Category, Gemma McKenna, www.harpers.co.uk, 10/9/201420Tesco Moves Five of Finest Wine Range to 1.5 Litre Bag-In-Box, Gemma McKenna, www.harpers.co.uk, 9/30/2014 21Milan Agency Reinvents the Wine Pouch, Lucy Shaw, www.thedrinksbusiness.com, 9/29/201422Global E-Waste Management Market (2011 – 2016), www.marketsandmarkets.com, 8/201123Reverse Supply Chain Management ‘Closes the Loop’ on Waste, Andrew Burger, www.triplepundit.com, 11/17/2014

Mohawk Everyday Digital uncoated items are manufactured with windpower by offsetting emissions from purchased electricity with Renewable Energy Certificates (RECs) from Green-e certified windpower projects.

Copyright © 2014 HAVI Global Solutions. All rights reserved. All content, products, and images not owned by HAVI Global Solutions are trademarks and copyrighted properties of their respective owners.