The future is now: The critical food industry trends heading into 2016
With 2015 coming to a close, it’s time to look ahead at trends affecting the food and beverage industries in 2016, many of which emerged or became more established throughout the world this year.
In its report "Global Food & Drink Trends 2016," Mintel outlined 12 key trends in the food and beverage industries for 2016 and how established they are in different regions of the world. Here are the most relevant trends for the industry:
Artificial: Public Enemy No. 1
Artificial ingredients have become more taboo than ever among the surging demographic of health-conscious consumers today. In response, more major food companies have announced plans to remove artificial ingredients, from General Mills, Kellogg, and Campbell to Hershey and Nestle.
"It’s really become more of an expectation that a product is going to be natural versus something that’s just nice to have," said Jenny Zegler, global food and drink analyst at Mintel.
Companies have already followed through, with Hershey releasing its Kisses and milk chocolate bars without artificial flavors in time for the holiday push. Others have self-imposed deadlines over the next few years. These changes are likely to take time, particularly when reformulating products can impact the flavors consumers have come to expect. Being proactive is key.
"That announcement in itself is really good to showcase to consumers that [manufacturers] are responding to the things that [consumers] want and understand their sentiments," said Zegler. "But just that announcement, that you’re being proactive, really does go a long way with consumers."
While this trend is mainstreaming in North America, it is already well established in Europe and Australia, while Latin America, Africa, and Southeast Asia are still seeing this trend emerge.
Eco Is the New Reality
The California drought, food waste, and other natural phenomena that have affected crops from chocolate to pumpkins have given rise to consumers’ concerns about how their food and beverage products impact the environment. Manufacturers are embracing sustainability efforts throughout their supply chain, from the sustainable sourcing of cocoa and palm oil to reducing the use of water during processing. Renewable packaging, including recyclable and plant-based, has also become more popular in the industry.
Earlier this year, PepsiCo announced more than $375 million in savings since the company established its sustainability goals in 2010.
These moves also include those dealing with the treatment of animals for food. General Mills recently announced a 10-year timeline for its goal to source only cage-free eggs, and Kellogg made a similar announcement last month.
From the Inside-Out
In addition to functional sports nutrition-related foods and beverages, "Consumers are looking more toward how you eat and how that connects with the way you look and feel—thinking of food also as a medicine," said Zegler.
These types of products include foods and beverages supplemented with ingredients like collagen, probiotics, or other vitamins and minerals that promote health, wellness, and beauty.
Probiotics, including products like kefir and kombucha, are trending for health-conscious consumers in particular, and the global probiotics market is expected to reach $52.34 billion by 2020. Lifeway Foods, Inc., the U.S. leader in kefir cultured dairy products, announced in August that it would begin production in its new Wisconsin plant, which the company acquired in 2013 to more than quintuple its kefir manufacturing capacity.
No longer relegated to substitutes for vegan and vegetarian diets, products like non-dairy milks and plant-based foods have become alternatives as they increase in popularity among a broader base of consumers. Nut-based dairy products and plant-based proteins are particularly noteworthy to food and beverage manufacturers looking to appeal to health-conscious consumers.
WhiteWave Foods has embraced the plant-based alternatives craze, having announced $3 billion of additional plant-based product potential in creamers, ice cream, yogurts, and other future innovations, moving the company well into plant-based foods beyond the category staple, almond milk. The company acquired Vega Foods, maker of plant-based products like RTD beverages and bars, earlier this year — an acquisition that contributed to a 17% jump in revenue for the company last quarter.
For Every Body
Sports nutrition foods and beverages are an already established trend in North America, particularly the U.S., while most other parts of the world are still catching up. Products specifically geared toward hydration, energy, protein, and other supplements that consumers need when being more active are becoming increasingly common, according to Mintel’s findings.
These products are also diversifying in terms of tiers of activity levels, so that manufacturers offer products not just for the dedicated athlete but also for consumers looking for sustenance when doing a light workout or otherwise being active. These products are not just foods that satiate and taste good, but they are functional as well.
More major manufacturers are seeing the potential in sports nutrition. Last year, Post beefed up its sports nutrition business by acquiring PowerBar and Musashi from Nestle. Also in 2014, Hormel purchased protein nutrition shake maker Muscle Milk for $450 million.
Earlier this month, Gatorade wrapped up its 50th anniversary marketing campaign with a spot packed with star-power athletes and sports personalities and that referred to the brand as a "sports fuel company." Gatorade is expanding beyond hydration drinks and into energy and recovery products like their chews and protein bars.
Based on a True Story
Consumers are more interested than ever in the backstory behind a product, whether that means transparency about ingredients or the story behind how a product is made. Smaller companies, particularly those that make craft products like craft beer, soda, spirits, or artisanal cheeses and chocolate, have readily embraced this trend, but major food and beverage manufacturers may not be far behind.
This is particularly true with the Grocery Manufacturers Association’s introduction of the SmartLabel, created with the assistance of Hershey, the first company to adopt the label on its new Kisses and milk chocolate bars. The SmartLabel is a scannable QR code that goes beyond the ingredients list and nutrition facts already printed on the label to offer consumers access to more information about a product. About 90 companies have already signed on for the SmartLabel, and more products will be rolled out with the QR code on their packaging in the coming months.
Eat With Your Eyes and Good Enough to Tweet
These two trends go hand in hand as more companies are creating foods that are more visually appealing rather than just in terms of flavor. From bright colors to novel shapes and eye-grabbing packaging, manufacturers are starting to embrace the fact that many consumers, particularly foodies, share photos of their foods on social media.
"So many consumers are excited to take pictures of their food and share them, and that should also be an element of packaged food—that [consumers] are just as excited about what they bought or how they put it together," said Zegler.
The world has and will see other trends emerge over the next year, but these are the most visible and potentially most impactful as 2016 approaches. If companies are looking to keep their market share, following these trends and seeing where they can adapt within their own product portfolios in the coming year could be one way to do it.