Food is in relatively limited supply as droughts in the U.S. and South America caused significant shortages of ingredients like wheat and soybeans. There has been a drop in sugar supply due to shifted resources in countries that produce sugar, leading to news about possible shortages. Aluminum is in short supply due to slowed production around the world and may affect the availability of canned goods in the near future.
According to The New York Times, supply chains will not be “normal” any time soon. There are a variety of reasons for these disruptions, such as unexpected surges in consumer demand due to changes from the pandemic, massive shipping delays, reduced labor forces, and even climate changes. The war with Russia and Ukraine has further reduced access to specific ingredients, as well as fuels and fertilizers needed to grow crops, which will cause this shortage to continue in the coming years.
These shortages force the hands of food and beverage companies to find substitutes or replacements that are still accepted by consumers so they can keep their products on the shelves. In order to do so successfully, consumer and behavioral market researchers in partnership with food scientists will play a significant role in navigating the changes which are ahead of us. It will be up to those researchers to look at human behavior and the science of food to determine the best path forward for ingredient replacements or product changes brought about by supply chain issues.
Possible reactions to supply chain shortage
When products must be reformulated due to supply chain issues for ingredients, companies have three scenarios to follow:
- Match a currently unavailable ingredient with a comparable alternative from a new supplier or another available source, with little or no change noticed by the consumer;
- Undergo a forced change away from the currently unavailable ingredient to a replacement that will be perceived as noticeably different by the consumer;
- Use this as an opportunity to improve the product by enhancing its sensory and/or nutritional value.
For each scenario, different market research approaches ensure you make the right decision when faced with a supply chain shortage requiring a product change or ingredient replacement.
1. Match a current product
If the goal is to match a product such that people will not be able to tell the difference from the current product, then the focus of product development and consumer research is to create a new formula that requires no changes in labeling or in the sensory experience. Through sensory difference or similarity testing, you verify if there is a small enough difference to launch the reformulation with no concerns of consumer impact. Where there are differences, further investigation will show if the change will alienate core users or force trade-offs – and will show to what extent the change will impact the brand and sales.
2. Undergo a forced change
When supply chain issues force a change that consumers will likely notice, brands must understand how the change will impact consumer perception and behaviors. First, identify what specific trade-offs consumers will make. Next, determine how this will impact their perception of the brand – including trust, pricing, and value. And then, research what product messaging and product innovations allow for the needed change while mitigating risk to the brand.
3. Leverage a product improvement opportunity
Supply chain issues don’t have to be all bad. Some companies choose shortages as an opportunity to provide new excitement and interest in the brand through improvements to their products. When doing this, decide whether the goal is to increase use with current consumers, or to bring new consumers into the brand. One approach is to dive into the moment-of-use with consumers. This will help you understand how to trigger more frequent use or how to disrupt non-users to gain awareness and trial.
Using market research to navigate shortages
One thing is for sure, the crystal ball is showing more supply shortages – sometimes in categories where we may least expect it. Whether shortages and supply chain issues cause a search for a match to keep a product the same, force a change to your product, or provide an opportunity for improvements or enhancements, there are market research approaches to help ensure success. By measuring consumer behavior, and applying those metrics and insights to your supply chain reformulation decisions, you will ensure the success of your products and the health of your brand.
