Hog Outlook 2017: The Age of Activism

We live in the age of activism, said Dallas Hockman, Vice-President of Industry Relations for the National Pork Producers Council, and it's driven by a number of factors within three primary areas.

First are the foodie influencers, whether it be Dr. Oz or members of the media, Hockman said. Second are the major brands that are differentiating themselves in the "competitive, turbulent marketplace," and third are the activists.

The world of social media is changing how people feel about food, and there is turbulence in the food-service arena. Geographic expansion is no longer the only factor that ensures marketplace profitability, so retailers and food-service companies are looking for ways to differentiate themselves.

"We live in an era of activism dominated by books," Hockman said. "We have lots of activities taking place with key players in the media world and with activist groups surrounding antibiotics, sow housing and other issues. There are either attacks on brands or it's driven through the political side of the equation, and it's all resulting in what we consider to be nervousness."

Everyone Wants Brand Differentiation
The retail market and foodservice are distinctly different, Hockman explained. In general, retail deals with large volume, and foodservice has niches.

"The reason you don't see large retailers caving to [activists'] demands as much as foodservice is predominantly because it's driven by volume," he said. "What drives most retail sales is what we call the 'golden horseshoe.' The center aisle of the retail store consists of branded items and these same items can be found at all of the stores. Where they differentiate themselves is on the perimeter, which is primarily with the commodities: milk, dairy, produce and meat."

Feature activities drive traffic and drive sales. People look at the featured items, and volume is key on the retail side. Food service is uniquely different.

"McDonald's isn't the same as Walmart," Hockman said. "They each have distinctly different business structures. Both are trying to meet the expectations of a changing marketplace and they're all trying to figure out what's different because there's no longer a captive marketplace as there once was."

Messaging Over Marketing
Consumers want to know where the product comes from, how it's raised, and much more. These key attributes are driving the pole position.

"The bigger the letters, the more they show up in feature activities: clean, fresh, wholesome, 'never ever,' local and other terms are driving more of the decisions, especially in the food-service world.

Extreme food consumption is another key trend, particularly among millennials, according to Hockman. It's the pendulum between indulgence and abstaining.

"All week long they'll work out, try to be healthy and not eat much but on the weekends they'll overconsume," Hockman said. "Especially in foodservice, companies are attempting to define "good" on their own terms and trying to figure out how they can differentiate themselves as better than the competition. It's kind of like the Wild West out there."

This push for differentiation can have unintended consequences, however. Take Chipotle, for example.

"Don't let it be lost on anybody - food safety trumps everything," Hockman stressed. "Chipotle just got downgraded again in October with a $9.25 billion loss in market capitalization as a result of the challenges they faced within their system.