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FOCUS-Packaged food giants push direct online sales to gauge consumer tastes

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Siddharth Cavale and Nivedita Balu
·4 min read
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* Kellogg, Kraft Heinz among cos investing in direct onlinesales

* Direct sites enable companies to mine customer data better

* Sales via U.S. retail companies' own websites expected totop$20 billion in 2021 -eMarketer

By Siddharth Cavale and Nivedita Balu

Feb 19 (Reuters) - Packaged food giants including KraftHeinz, General Mills and Kellogg arepushing sales of their products to consumers directly via theirown online channels, in a quest to gather more data aboutshoppers' purchasing habits.

Velveeta-cheese maker Kraft Heinz saw its e-commerce salesdouble in 2020, now representing more than 5% of its globalsales, Chief Executive Miguel Patricio said at the virtualConsumer Analyst Group of New York (CAGNY) conference this week.

The company sells Heinz baked beans and tomato soup bysubscription or in bundles directly to consumers on a "Heinz ToHome" website in the United Kingdom, Australia and Europe.

Sales on the site are "giving us valuable insights intoconsumer behavior, enabling us to quickly test and learn frominnovations," Kraft's head of international business, Rafael deOliveira, said at the conference.

Kraft would continue to use the site as a channel togenerate strong sales in developed markets, he said.

The company also counts sales of its products throughmarketplaces such as on Amazon.com and Walmart.comas part of its e-commerce sales.

U.S. shoppers spent on average $1,271 buying groceriesonline last year, 45% more than they did in 2019 as the pandemicspurred shopping online, according to market research firmEarnest Research. In contrast, the average dollars spent instores rose only about 7% to $3,849.

PepsiCo sells products including Doritos, Quakeroats and Gatorade directly to consumers through two websites,pantryshop.com and snacks.com, both launched in 2020.

Chief Financial Officer Hugh Johnston said that more than45% of the company's capital investments over the next few yearswould be dedicated toward manufacturing capacity, automation,and a "ramping up of investments in our e-commerce channel."

As major online retailers including Amazon.com andWalmart.com continue to gather valuable data on shoppers, manypackaged food manufacturers are keen to gather their own data onshoppers, too.

"COVID (has) simply accelerated our digital growth and hasprovided us with yet another source of data and insight," MonicaMcGurk, chief growth officer at breakfast cereal maker KelloggCo., told the conference.

Kellogg, producer of Corn Flakes as well as Pringles chips,said on Wednesday it had launched a direct-to-consumer websitefocused on digestive wellness. The group plans to sell its newMwell Microbiome Powder for gut health via the site to gatherdata on customer interest before it launches the product morewidely.

E-commerce sales have doubled in the past year and nowrepresent about 8.5% of the group's $13.77 billion in annualsales, Kellogg said.

Pillsbury dough-maker General Mills also sees thebenefits of tracking consumer habits more closely.

"We're aggressively investing in data and analytics. We aregathering unparalleled insights from the first-party data wecollect through our brand websites,” General Mills' ChiefExecutive Jeffrey Harmening said at the conference.

On its Bettycrocker.com website, General Mills provideshundreds of recipes using Betty Crocker cake mixes and frosting.The site leads people to the closest store or an online retailerwhere they can purchase the products, thereby generating datafor General Mills on what a particular customer from a certainzip code is buying. The company does not sell the food productsdirectly on its website.

Consumers, however, may have to shell out more if they shopdirectly from brand websites.

Prices on the two PepsiCo sites, for example, were generallyhigher than those on Walmart.com or Amazon.com, Reuters checksshow. On Walmart.com, for example, a 10 oz pack of Doritos NachoCheese was on sale for $2.50 compared to $4.29 on Pepsico’swebsite.

Kraft Heinz offers tins of soup, beans, pasta and baby foodbundled into packs ranging from six to 25 items and costingbetween 10 and 20 pounds ($14.01-$28.03) on its UK website. Ittold Reuters the relatively higher prices of items and bundlingof packs than on some other online marketplaces was to be ableto eke out a margin after including delivery costs.

"Longer term, we see real value in this channel to be aninsight and data channel for us," Jean-Philippe Nier, head ofe-commerce for Kraft Heinz's business in the UK and Ireland,told Reuters. People are more prepared to order directly frommanufacturers than they were before. The time is now."($1 = 0.7137 pounds)

(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru;Editing by Vanessa O'Connell and Susan Fenton)