DTC or Direct-to-consumer refers to a business model where a food company sells its products directly to consumers without relying on any third-party retailers, wholesalers, or other intermediaries (E-commerce websites). In the context of the food market, DTC food refers to food products that are sold directly to consumers by the manufacturers/producers themselves, typically through online platforms and physical stores owned by the food producers. Thus, they can communicate directly with consumers, gather feedback, build brand loyalty, and develop products according to their preferences.
Growing Demand for Premium & Personalized Food Products
Consumers are increasingly preferring unique, high-quality, and customized food products. DTC food brands are well-positioned to cater to the demand for premium and personalized food products. DTC food brands can customize products to meet consumers’ specific preferences. Personalization can include factors such as flavors, ingredients, portion sizes, dietary requirements, ethical sourcing, sustainability, and packaging design. DTC food brands also offer subscriptions, providing subscribers with benefits such as product discount coupons, free delivery, and access to exclusive products.
The demand for limited edition or exclusive products is another factor contributing to the adoption of premium and personalized food products. Several DTC brands offer food products with new flavors and packaging variations during special occasions such as Christmas, New Year’s Eve, and corporate events. According to the National Confectioners Association (U.S.), in 2020, the sales of premium products increased by 13% compared to the previous year. In addition, Mondelēz International, Inc. (U.S.) has expanded its business in the premium products segment through acquisitions and new product launches. In March 2021, Mondelēz International, Inc. (U.S.) acquired Grenade (UK) Limited (U.K.), which offers protein bars in the U.K., North America, and Asia-Pacific. In January 2021, Mondelēz International, Inc. (U.S.) acquired Hu Master Holdings, LLC (U.S.), a manufacturer of premium chocolates. This acquisition strengthened the company’s position in the premium category.
Furthermore, growing urbanization, increasing disposable incomes, and the growing number of working professionals are also boosting the demand for premium and personalized food products. According to the United Nations Population Fund, as cities are expanding and rural areas continue to urbanize, it is expected that about 5 billion people will live in urban households by 2030. These new urban consumers are likely to seek quality, new, and even premium products. Also, urban lifestyles have led to the wider availability of convenience foods and snacks.
The demand for plant-based and wellness-oriented solutions, such as non-GMO soy, probiotics, sugar reduction, and personalized nutrition, is on the rise. Plant-based food has started generating interest among consumers. According to The Vegan Society, in 2020, 40% of millennials, 21% of Baby Boomers & Generation X, and 2% of seniors identified themselves as vegan. The vegetarian population is also increasing its consumption of products containing ingredients or components derived from plant sources. According to the Plant Based Foods Association and The Good Food Institute, in 2022, the sales of plant-based foods in the U.S. were valued at USD 8 billion, an increase of 6.6% compared to the previous year. Thus, the increasing demand for premium and personalized food products is generating market growth opportunities.
Meticulous Research®, in its latest publication on the DTC Food Market, states that the global DTC Food Market is expected to reach $195.39 billion by 2031 at a CAGR of 18.7% during the forecast period of 2024 to 2031. The growth of the global DTC food market is primarily driven by the rising adoption of convenience foods, growing online purchases of food products, and the increasing number of DTC food brands.
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