It was a year of great changes, new trends, sweeping legislation, and new ideas. And as 2016 comes to a close, we're looking back at our food industry stories that attracted the most readers throughout the year.
January: Trends for 2016
In January, we asked industry players to provide insight on food trends that would define the year. Projections included brand efforts to combat distrust of Big Food, increased transparency and whole chain traceability, the rise of fermented foods, animal welfare improvements and the pursuit of high-end offerings.
Transparency is by and large the biggest changemaker of the list. Consumer interest in ingredient sourcing and sustainable harvesting methods has pushed brand transparency from an attractive bonus to a necessity. The federal GMO labeling law, signed in July, is further evidence of the culmination of consumer health trends and desire to know more about what is in food.
This demand for whole, simple ingredients and products also fueled consumer desire for foods from the past, such as ancient grains. Fermented drinks also saw a surge in the beverage sector as the benefits of probiotics became top of mind for consumers.
February: Challenges for cereal and soda
Two of the segments that have struggled the most with maintaining profitability and growth are soda and cereal. We started February by taking a look at challenges each segment faces, as well as their strategies for success.
Cereal's decline was starting to be notable, with a CAGR drop of 1.5% each year from 2009 to 2014. Brands and analysts were rather upbeat about the possibilities, regardless of the poor numbers. Innovation — such as creative or better-for-you varieties, or marketing the perception that cereal can be a snack, and not necessarily eaten from a bowl with milk — was seen as key to the category's rebound. Analysts also believed that the older generation, which grew up with a bowl of cereal in the morning, were important to strengthening the category.
Soda's major concern is its traditionally high sugar content — though diet versions have also done poorly and have been linked to unhealthy eating habits. Smaller cans have helped reinvigorate the category, and marketing campaigns showing soda as an important part of everyday life also were starting to appear. But major manufacturers were also beginning to invest in other types of beverages, like bottled water and RTD tea and coffee.
March: Coca-Cola vs. PepsiCo
The importance of brand loyalty took center stage in 2016. As more and more young startups crowded the food and beverage space, established brands began to realize longevity was not enough to retain consumers, which resulted in a wave of social media campaigns and other initiatives to convey company voice and ethics.
Beverage giants Coca-Cola and PepsiCo were two such companies competing for dominance in this space, with each utilizing different tactics to entice consumers and communicate company ethos. This was especially challenging given shrinking interest in the soda category as a whole.
While Coca-Cola leaned into the nostalgia factor of its classic products and packaging, PepsiCo sought innovation, creating a "Pepsimojis" marketing campaign that targeted younger demographics by including different emojis on bottles, cups and cans to promote social media presence and shareability.
Ultimately, this project and other hefty PepsiCo marketing investments, such as their sponsorship of the Superbowl's halftime show, brought the brand visibility and relevance that helped it earn the top spot in Brand Key's 21st annual Consumer Loyalty Engagement Index, bringing Coca-Cola's four-year winning streak to an end.
April: Plant closures rock the industry
Cost-cutting has been one of the ways food companies have sought to increase their profit margins. Employees tend to be one of the largest line items for any business, and that has led to factories closing, downsizing, relocating outside of the U.S., or all of the above.
In April, private label manufacturer TreeHouse Foods, food service company US Foods, and ingredients manufacturer Sensient all closed plants at roughly the same time. At TreeHouse, nearly 100 workers lost jobs as a Massachusetts spoonable dressing plant shuttered. US Foods' Maryland distribution center closed following a protracted union battle, eliminating about 350 jobs. And Sensient's Indiana plant closure led to the loss of 86 jobs.
Each company had different a reason for closing its plant. All three illustrated motivations common in the industry today. TreeHouse was hoping to cut back on expenses after buying ConAgra's private label business. US Foods had finally won its fight with its union and needed larger profit margins as it went public. Sensient's closure was part of a massive restructuring effort.
May: Cargill exec talks millennials in the food business
The food industry's aging workforce became a deeper concern this year as food science undergraduate enrollment numbers continued to fall, resulting in a three-year dip from 2014 to 2016. As millennials and younger generations are the most sought-after consumer target for food and beverage companies, this was cause for concern. How could the industry stay relevant if its players were so far removed from this age group?
Food Dive sat down with Mike Robach, vice president of corporate food safety and regulatory affairs for Cargill, to discuss the pivotal role that millennials play in the future of food science.
Robach cited the "unsexiness" of food science compared to startups in the food and beverage industry and in other business spheres as a major problem. He also said food science is often associated with processed foods — a category millennials are generally wary about.
Negative sentiment toward Big Food could also be fueling millennial disinterest in the job space, but Robach said the best way to incite change to meet the demands of this age group is to have them be involved in the process.
June: Dealing with the new Nutrition Facts panel
The long-awaited overhaul of the Nutrition Facts panel was announced in May. While many consumer groups and health advocates were thrilled with the changes -- which should be on products in mid-2018 -- Food Dive looked at four food and beverage categories that could have a rougher time: low fat or fat-free dairy products, soda, salty foods and foods that depend on fiber as a health benefit.
The low fat foods and soda face a similar issue: their traditionally high sugar content will be on full display. Some of those products will need either a reformulation to show fewer added sugars, or a thorough explanation of their high sugar content. Soda faces a unique challenge because the current label gives the consumer information about what is contained in a single "serving size" — often a small portion of a container.
Manufacturers of salty products are also trying to reduce how much goes into products. This is a tough balance because consumers are so used to the way salt makes their favorite foods taste. As for fiber, the Food and Drug Administration is recommending average Americans get less of it. This means that foods whose claim to fame was being high in fiber might need to find another aspect to tout.
July: Hershey rejects Mondelez
While 2016 saw massive mergers, there were some that didn’t happen. In June, food giant Mondelez offered to take over chocolate titan Hershey — a move that the candy maker's board of directors unanimously declined. We looked at the pros and cons of Hershey's rejection of Mondelez's proposed $23 billion deal.
While the takeover rejection meant the Hershey Trust retained control of the company, the trust had issues and board members and execs ended up announcing they were leaving before the year was out. From Mondelez's standpoint, it could show investors real effort to improve its bottom line — even though the deal didn't happen and the company remained without a chance to get a stronger foothold in the U.S. candy market.
August: Mysterious sugar recall
There were several large and seemingly unending food recalls in 2016. One stood out because of what wasn’t known about it. Usually, the FDA publicizes the company that is responsible for the recall, as well as products that might be impacted. The agency remained secretive on a large-scale sugar recall, which impacted products such as frozen P.F. Chang's entrees and grocery store baked goods.
To date, the name of the supplier, which produced sugar with bits of metal in it, has not been released. The FDA told Food Safety News it was "prohibited by law from releasing publicly certain information about supply chains, which may constitute confidential commercial information." The lack of transparency raised concerns about what other safety problems might not be publicized.
September: Allergen-free food community takes on EpiPen
As children nationwide started returning to school, one of the biggest news stories was the skyrocketing price of the EpiPen, an epinephrine-injecting device that can be a lifesaver for people with life-threatening allergic reactions. Nearly lost in the outrage over prices that increased more than 400% in less than a decade were the people who first sounded the alarm: the allergen-free food community.
In the five days after complaints against EpiPen manufacturer Mylan went viral, the company lost $3 billion in stock value — a drop that manufacturers and consumers of free-from foods attributed to their efforts. According to estimates from Food Allergy Research and Education, about 15 million Americans — 1 in every 13 children — have a food allergy and could depend on a device like an EpiPen to save their lives.
The media attention to the EpiPen price not only provoked pressure from lawmakers to make regulatory changes, but it also drew more attention to the challenges, choices and opportunities in the free-from foods space.
October: Vegan Progresso soup launches
New product launches with plant-based label claims saw a 63% CAGR growth from 2011 to 2015, cementing the vegan food trend's presence in the mainstream food and beverage space this year. The rise of "flexitarian" consumer diets fueled an uptick in plant-based milk and meat products, and major manufacturers began to reformulate products and introduce new offerings to cater to consumer health concerns and preferences.
The launch of General Mills's new Progesso vegan soup line acknowledged vegan offerings as the future of the industry rather than just a trend, catching consumer and manufacturer attention. Rather than simply offer an expanded variety of vegetable-based soups, Progresso Good Natured Soups looked at the root of consumer concerns driving this movement and ensured that flavors were dairy, GMO and preservative-free.
This innovation is changing the face of the canned soup category, with brands like Campbell launching its Garden Fresh refrigerated soup line earlier this year.
November: NOSB recommends elimination of carrageenan
One of the most controversial food additives is carrageenan. The algae-derived emulsifier is well suited to thicken liquids and keep particles in suspension, and can be found everywhere from ice cream to baby formula. However, controversial (and much disputed) scientific studies have found that the ingredient can cause digestive distress. In November, the National Organic Standards Board recommended that the ingredient no longer be allowed in organic food, giving the ingredient its first regulatory blow.
The board, which advises the U.S. Department of Agriculture on behalf of the National Organic Program, listened to hours of testimony from advocates, scientists and manufacturers about the ingredient. In the end, the recommendation to get rid of carrageenan had nothing to do with whether it causes GI upset. In light of consumer backlash, several manufacturers had replaced carrageenan with other emulsifiers — and therefore is not a vital and irreplaceable ingredient.
The recommendation to remove the ingredient from organic food will be ultimately decided upon by the USDA in 2017.
December: Nestle reformulates sugar
Consumer avoidance and overall distrust of sugar is at an all-time high, and more and more brands are seeking innovative ways to reduce or eliminate sugar from their portfolio offerings. For many, this involved the incorporation of alternative natural sweeteners like stevia in sugary beverages and confectionery products. Due to stevia extract's aftertaste, it cannot replace sugar entirely without compromising product flavor.
In December, Nestle made an announcement that could radically change the future of sugar. The company had engineered a natural way to restructure sugar so that the inside is hollow, giving consumers the same sweet taste they crave but significantly decreasing the volume of sugar absorbed during consumption. This method will allow manufacturers to cut product sugar content by up to 40%, without compromising on sugary taste or flavor.
Whether the newly restructured sugar will deliver on its promises remains to be seen. Nestle is still seeking a patent on the ingredient, and plans now to roll it out in products starting in 2018.