2016 is here — and if it's anything like 2015, that means the food and beverage industry is in for a storm of changes. With billions of dollars at stake, companies continue to look for ways to improve bottom lines and retain market share.
But when the clouds clear, what trends are actually going to shine through?
The biggest battle of 2016 will be how CPG companies can keep consumers interested in products that have waned in popularity, like soda and cereal, to alleviate declines. The most important industry events coming this year are whether Vermont's GMO labeling law slated for July will go into effect, ConAgra Foods' impending split, the AB InBev-SABMiller merger progress, and inevitable Kraft-Heinz brand shedding. Also, if the consolidation trend indeed slows, as predicted by Moody's, what consolidation does happen will signal that much more of where the industry is heading.
We asked the industry to provide insight. Have a prediction to share? Shoot an email to: [email protected].
1. Consumer trust efforts will supercede traditional marketing approaches.
Jesse Reif, Partner, Aha Marketing: Trust will be the new marketing currency. Metrics including reach, impressions, likes, engagement will all take a back seat when food brands tackle the challenge of building trust with consumers. Campbell Soup CEO Denise Morrison could not be more direct than when she told the Consumer Analyst Group of New York: "We are well aware of the mounting distrust of Big Food."
Consumer ad avoidance — think ad blockers — will force brands to shift budgets away from traditional marketing tactics in favor of credible messages through influencers, such as food bloggers and nutrition professionals. These increased budgets will create a demand for measurement tools that can capture, in real time, lifts in consumer trust and brand credibility.
2. Bold flavors will only be so bold.
Mike Adair, Founder and CEO, Red's Natural Foods: We predict that flavors won't get too adventurous in the frozen category, but we do expect that small improvements on classic flavors will be the most popular way to go in 2016.
3. Supply chain transparency and food safety commitments will grow stronger.
Marion Nestle, Paulette Goddard Professor, Nutrition and Food Studies, New York University: This may be the triumph of hope over experience but I'm looking toward greater commitments to food safety and to transparency about supply chains.
4. Kraft Heinz will keep on trend with the industry, with focuses on innovation and expansion.
Michael Mullen, Senior Vice President, Corporate & Government Affairs, The Kraft Heinz Company: We will reinvest intelligently in our business to support innovation that responds to customer needs, marketing that supports the health of our brands, and product launches in new markets to expand the presence of our brands around the world.
Consumer tastes and preferences are also constantly changing and we must be ready to respond. We are innovating across our portfolio, which includes prioritizing trends in health & wellness, flavor & varieties, convenience and authenticity.
5. Expect the link between food safety and food security to become more clear to the public.
Dave Crean, Vice President of Corporate R&D, Mars: 2016 is shaping up to be a remarkable year in terms of food safety. I think we're going to see a significant shift in public perception as people recognize the critical link between food safety and food security. There will be a burgeoning focus on collaboration, and industry will drive harder in shaping stronger, more effective regulation and radical new breakthroughs in detection methods.
6. Craft is more than just coffee and beer.
Matt Tolnick, Founder, Lawless Jerky: In the coming year, and especially in the meat snacks category, we will increasingly see large corporate players mimicking the offerings of craft brands, just as we've seen in artisanal coffee and craft beer. The distinguishing features of craft brands, internationally inspired flavors, meats sourced with a heightened consciousness, and non-glossy packaging, will be co-opted by entrenched players.
7. Transparency will be paramount.
Donald Reed, Managing Director, Sustainable Business Solutions Practice, PwC: It's all about trust. Value chain transparency will increase in priority for branded food companies of all kinds to improve food safety, sustainability, consumer desires, and value chain resilience while reducing fraud. However, many companies will be challenged by the lack of good means to see their value chains to the point of origin, assess the risks in those value chains, and manage the full chain for improved business value and consumer trust. Additionally, many more market participants will realize the potential for technology to transform food production, logistics and transparency.
8. Beverages will still move toward functionality as opposed to refreshment. Plus, the innovation won’t come from the large consumer product companies.
Lance Leonard, CEO, True Drinks: I think that the current trend, which is moving beverages more away from refreshment and into functionality is going to continue, and I think the functionality is going to become much more specific … Things like digestion and better gut health are going to be growing and more prevalent within the functional drink category.
… I do think it’ll be important for [the major consumer product companies] to find the companies that are doing some unique development and bringing them into their portfolio. They have to. Carbonated soft drinks and sugary drinks are dying.
… Non-traditional CPG companies, ones that you wouldn’t necessarily think of in the beverage space, are going to start bringing in beverages into their umbrella of portfolio companies. You saw companies who are buying protein drinks that aren’t necessarily in the beverage space.
9. 2016 will be the year of collaboration.
Martin Neumann, Vice President of Sales and Marketing, Gaslamp Popcorn: As the snack food category evolves, it will put a large focus on collaboration in 2016. Non-direct competitors will likely innovate to produce products that introduce consumers to a new way to experience their favorite food. This will also be beneficial for food brands that are searching for ways to influence a new, oftentimes untapped, market. Collaboration invites consumers to a form closer relationship to the brand, connecting them to the people behind the product. Hyper-local foods will inspire shoppers to support their community and the artisans that crafted it just for them.
10. High pressure processing tech will be the key to shelf life extension.
Mike Ryan, Vice President of Sales and Marketing, Tandoor Chef: Refrigerated items that enlist the innovative high pressure processing (HPP) technology will inevitably allow for greater food quality, destroy pathogens, extend product shelf life and avoid the need for food preservatives. Shoppers who need to feed a household will benefit. Without the addition of additives, preservatives, GMOs or gluten, brands can harness the power of refrigeration and HPP technology to better serve today’s consumer.
11. Cage-free eggs will be critical to consumer trust.
Jasen Urena, Director, Specialty Eggs: One of the biggest challenges facing the food industry as a whole continues to be the need for simple ingredients, and eggs are one that provides just that. Consumers are drawn to companies that meet their demands while remaining transparent and maintaining high standards of sustainability and humane treatment of animals. A commitment to cage-free eggs helps to build trust between the consumer and the brand, something that will define 2016’s most popular products.
12. Preserved and fermented foods are in.
Heather Stouffer, CEO, Mom Made Foods: Preserved and fermented foods, as well as the addition of nutrient-dense ingredients, such as sprouted grains and ancient grains, will become more prevalent. Because shoppers are beginning to look for foods that are both healthy and flavorful, foods free from artificial colors and flavors, preservatives and antibiotics will likely usher in the "live" food movement, which includes fermented products. This category will grow in 2016 as consumers become more knowledgeable about the health benefits of probiotics.