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For food giants, rising tide of e-commerce means sink or swim

Greg Trotter, Chicago Tribune on

Published in Science & Technology News

That's in part because grocery retailers have yet to crack the code on delivery of fresh food, which can be costly and labor intensive. Some retailers have found more success so far with in-store pickup options.

"People are just not sure how to make money on grocery delivery," said Randy Hofbauer, digital and technology editor for Progressive Grocer, an industry trade publication.

Perhaps it should come as no surprise then that food manufacturers are still trying navigate their own digital strategies. The Grocery Manufacturers Association, an industry trade group, published a report this year -- after interviewing 22 executives -- that concluded the industry is still playing catch-up.

"Not that long ago, large consumer packaged goods companies in developed markets had little to worry about. Their products dominated retail shelves. ... In the 'new normal,' however, everything has changed. Consumers want more," said Laura Gurski, senior managing director of customer and channels for Accenture, in an email. Accenture partnered with the grocery trade group on the research.

While 23 percent of Americans are buying groceries online today, that's expected to more than triple in less than 10 years, according to a Nielsen report published last week.

Mondelez, parent company of brands like Oreo cookies and Ritz crackers, has invested heavily in e-commerce, partnering with bricks-and-mortar retailers as well as online giants such as Amazon and Alibaba. Mondelez plans to grow its e-commerce business to more than $1 billion by 2020.

Both Kraft Heinz and Mondelez also sell some products directly to consumers, cutting out retailers altogether.

Iconic American brands like Oreo cookies and Heinz ketchup have survived numerous tidal waves of change in the food industry over the decades. They're still standing.

"So I don't think this is radically different. I do think the speed of the changes is perhaps more pronounced than we might have seen in the past," Mondelez CEO Irene Rosenfeld told investors last week.

Rosenfeld said the winners will adapt to the changes accordingly.

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