Before I set out for CAGNY, I kept track of reader questions in my now almost-filled reporter’s notebook. These included questions regarding high-pressure processing, natural and organic foods, and e-commerce. Here are key takeaways from industry topics addressed, and don’t worry if I didn’t answer your question or get to your topic this time around; I still have my list and will seek out opportunities to keep you informed:
Ingredient traceability & transparency
Consumer trends obviously permeated the presentations at CAGNY, with "clean label" and "transparency" as no exception. Ingredion wants to increase its specialty portfolio to approximately 30% of its net sales by 2019, up from 25% in 2015, with "clean label" a strategic focus.
What’s important to keep in mind is the state of today’s marketplace. Ingredion is in a strong position to capitalize on consumer trends right now. Its greater risk, though, lies in all the acquisitions it’s making and trends it’s following growing stale.
If ConAgra’s acquisition of Ralcorp Holdings (and eventual sell-off) is any indication, it’s that not all purchases sing — and can prove embarrassing.
Natural and organic foods
As expected, natural and organic foods are still important for the industry. WhiteWave’s presentation highlighted its efforts in the space, which are notable:
But WhiteWave’s positioning is making it a possible acquisition target. Whether a company’s succeeding or struggling, another company will target if it thinks it can make a profit. Natural and organic foods remain attractive to companies right now as these prove more trendy options to processed food fare; this is especially true of companies that would rather spend money on an established company than developing products internally.
E-commerce
Executives remained generally cagey regarding e-commerce. Given its little food and beverage penetration so far, this makes sense. According to eMarketer, food and beverage is only projected to hit 2.4% of the overall e-commerce market this year, inching up to 2.5% by 2016 and through 2018. Food and beverage e-commerce sales are expected to reach $12 billion by 2018.
Still, a notable exception — and one I didn’t expect — was Tyson Foods, going after the meal kit consumer and working with Amazon. The company announced at CAGNY an extended partnership with AmazonFresh, in addition to new brand Tyson Tastemakers in the coming months (meal kit-driven, aimed at more pricing power and brand loyalty) that the company will pilot later this year.
Kellogg teased a DTC e-commerce business and Campbell Soup said it would be focusing on its e-commerce efforts in China. Snee didn’t divulge details on Hormel’s e-commerce strategy, noting it’s still in development — much like others in the industry. He said it will tie in nicely with where they want to go digitally, a component Mondelez has taken advantage of with its buy buttons.
High-pressure processing
High-pressure processing is a way manufacturers can use high pressure instead of heat to maintain foods’ nutrient levels over time while ensuring chemicals don’t enter the food. There are only about 114 high-pressure processing machines in the world.
Hormel Foods started high-pressure pasteurization in its food service area, and recent acquisition Applegate was already using the process. "When we talk about innovation, it’s not just product innovation sometimes it’s process innovation," COO Jim Snee said in an interview with Food Dive and other media. As shelf life innovations proliferate, expect more and more manufacturers to investigate and employ solutions to better position products.
Earnings coming up
- SunOpta (March 1 before market open)
- Brown Forman (March 2 before market open)
Buzz-worthy story of the week
The New York Times ran a piece about cereal this week that had a puzzling statistic: "Almost 40 percent of the millennials surveyed by Mintel for its 2015 report said cereal was an inconvenient breakfast choice because they had to clean up after eating it." I’ve never heard anyone complain about this before, but it does align with millennial tendencies for convenience.
But that wasn't the only millennial head-scratcher this week. Business Insider chewed over Dunkin' Donuts' new menu that features cursive font. It also discussed the marketing trends resulting from the "perceived bias" millennials have against cursive, like a Whole Foods buyer's opposition to High Road Craft Ice Cream's packaging.