The Food Dive Outlook on 2021

After an unpredictable and turbulent 2020, many are hoping 2021 will bring more stability. But the pandemic is expected to still hold sway and influence some of the biggest food and beverage trends in the coming months.

One major theme that will continue in the new year reflects what many wish 2020 had more of: health. Companies will be looking to launch foods and beverages with immunity-boosting ingredients. The plant-based and alternative space will also see continued growth, but take different shapes with new ingredients, from algae to mushrooms.

Technology will also arise as a major trend as the calendar turns over. Since food and worker safety was in the spotlight this past year, new developments will promise to give consumers confidence in their food. Tech, like CRISPR, will also help create innovations in food that meet the growing demands of consumers as hot trends, like global flavors, dominate the space. 

After conversations with industry experts and analysts, here is a breakdown of the five biggest trends that Food Dive predicts will impact the food and beverage industry in 2021.

1. More companies jump on health and immunity bandwagon

Consumers spent most of last year focused on trying to stay healthy — and that desire seeped into their food choices. According to research from ADM, the pandemic made more people interested in foods that benefit their immunity, and experts are predicting that will continue in 2021. 

“A lot of companies will be jumping on this immunity bandwagon,” said Kara Nielsen, director of Food & Drink at WGSN, a trend forecasting company under Ascential.

In a report, WGSN identified immunity-supporting ingredients as a key theme for 2021. Product developers are learning from consumer demand in the past year. From elderberries and probiotics to turmeric and moringa, WGSN said the ingredients with immunity claims are among those poised for further growth. 

Nielsen said that companies are also looking to add benefits and claims to their products that prioritize health, like yogurt companies launching into probiotics, and highlighting other qualities such as sugar reduction.

Immunity-boosting ingredients have seen a sales bump already, and more companies are expanding their portfolios with those features. Chobani recently announced a line of yogurt that spotlights probiotics, and Uncle Matt’s launched an Ultimate Immune Orange Juice Beverage.

“Now once everyone has the vaccine, will people pull back from some of this? I think that remains to be seen, but I think people will stay concerned throughout next year,” Nielsen said.

According to the Innova Consumer Survey 2020, six out of 10 global consumers are increasingly looking for products that support their immune health, with one in three saying that their concerns increased in 2020. Innova identified immunity as a top trend for the next year. 

Lu Ann Williams, director of insights and innovation at Innova Market Insights, said immunity is an opportunity that can be broader than just taking Vitamin C or zinc. Williams pointed to botanicals as an example of an ingredient that brings an “active” health benefit, as well as color and flavor that tick the “natural” box.

"Consumers are interested in foods that are naturally high in nutrients to promote their immunity,” Williams said. “I think there is a big opportunity to combine ‘hero’ ingredients that bring nutritional benefits whose benefits are easy to communicate."

2. Tech-enabled transparency is clearly critical

Early in the pandemic, headlines across the country focused on outbreaks at food and meat manufacturing plants. As a result, more consumers have looked critically at where their food comes from and who makes it. Experts say that theme will continue in the next year, with technology working to make food and workers more safe. 

Innova Market Insights said that transparency throughout the supply chain will dominate as the top trend of the year, with six in 10 consumers interested in knowing more about their foods’ origin. The firm said that can be achieved with new packaging technologies such as invisible barcodes.

Williams said trends develop over years, and since Innova’s top trend last year was storytelling, “the extra layer this year is transparency.” 

“Transparency will be crucial in helping consumers understand and accept the products,” she said. 

Innovations are already debuting to spotlight this trend, like digital expiration date labels that offer real-time monitoring of food quality.

In addition to smart packaging, food producers are also increasingly using blockchain to track products from farm to table, including coffee and turkeys. Blockchain can help if there is a recall and can provide better traceability. 

Nielsen at WGSN said consumers are looking for more promises of safety, and food suppliers need to communicate more about their efforts. But there is movement in the space with big companies like Nestlé starting to adopt more blockchain. 

“It's still kind of high level — I don't think so much down on a consumer level — but I think it will get down there over the course of the year so that people understand a little bit better,” Nielsen said. 

Meat processors have also already started to expedite their plans to incorporate more automation and robotics to elevate food safety as the pandemic ravages their workforce. For example, inside the Tyson Manufacturing Automation Center, engineers are working to develop innovative technology like a robotic camera that could detect defects on products.

Keith Belk, head of Colorado State University’s animal sciences department, said there’s been a “huge increase” in the rate of development of those technologies, both in the U.S. and abroad.

Other technological innovations for food safety have arisen during the pandemic. For example, companies started to look at wastewater to catch coronavirus spikes. Belk said they learned they could use that same technology to look at foodborne pathogens such as salmonella or E. coli. 

"If you're looking for something good out of the pandemic, which there's not very much, that's a good thing that came out of it," Belk said. 

3. Next-generation plant-based options expand

Plant-based food has been a major trend in the last several years. And while sales numbers for 2020 have not yet been crunched, they are sure to be record-setting. In a study last month, Packaged Facts estimated plant-based dairy and egg sales would register at about $4.3 billion, and would continue to grow at an annual rate of 6%. And through Oct. 3, according to Nielsen, meat alternative sales were up 129% compared to the first nine months of 2019.

As the segment continues to hit its stride, both new and old players are bound to launch products and find success in 2021. But experts say they likely won't reuse the same old ingredients in different ways. Where the plant-based space is currently dominated by pea, soy and wheat protein, expect to see more products featuring ingredients made from different plants in 2021.

Phil Kafarakis, president emeritus of the Specialty Food Association and international food industry advisor, said this movement started in plant-based dairy. The soy milks and almond milks that dominated the plant-based dairy case in years past are now joined by dairy products sourced from a host of other plants, including oat, quinoa, hemp and macadamia nut. In other sections of the store, cauliflower has become a common substitute for many grains, including wheat and rice. And pulses ranging from chickpeas to fava beans are starting to appear as snacks and components of plant-based butters and creamers.

“It's been accelerating,” Kafarakis said. “...During this period of COVID, once they got past all the hoarding, people were into understanding that they can experiment with brands that traditionally they might not have tried before. So some of these products are out there and they're creating a lot of excitement, so I think you're gonna see that become more mainstream.”

Sabina Vyas, senior director of strategic initiatives and communications at the Plant Based Foods Association, sees three main categories of new plant-based and alternative ingredients coming into the fore in 2021: algae, fungi and mushrooms, and legumes and pulses. These ingredients have several advantages: They are sustainable, have vital nutrients, and have good taste and textures. They also are relatively inexpensive and easy to source.

Consumers "want these foods to taste good," Vyas said. "They want to see that these foods are also sustainable and better for them. ... So manufacturers are ... working accordingly. I think they're unleashing the possibilities of what's available in plants and the fungi kingdom.”

Michael Robbins, a spokesperson for the Plant Based Foods Association, added that alternative plant-based ingredients are getting to be more popular because stores have limited amounts of shelf space. New products need to offer something unique to get on the shelf, and new base ingredients can help differentiate products. 

4. Demand for flavors with global appeal and health cred intensifies

While demand for global flavors has been on the upswing in recent years, the pace is expected to intensify in 2021 as the effects of the pandemic linger and consumer interest in new and novel tastes continues to grow.

“Going into 2021, there seems to be heightened interest compared to the start of 2020 as consumers haven’t traveled as much as normal or dined out as much as normal — so they are looking for food at home to generate some of the novelty and interest they’d usually get from other sources,” said Neil Saunders, managing director of GlobalData's retail division.

Analysts who follow the food space said a growing interest in wellness — fueled by the pandemic — has elevated flavors that consumers view as healthy. This could bode well for ingredients such as traditional berries and fruits, butterfly-pea flower and moringa, Saunders said.   

At the same time, civil unrest across the country has focused attention on cultures and ethnic groups whose offerings may not have been as explored before. Consumers not only want to try something new but also support products that are authentic and come with a story.

Global flavors most likely to attract added consumer attention in 2021 include matcha and moringa in Asia and earthy offerings like elderberry, cinnamon and rhubarb. Those ingredients could eventually become more prominent in U.S. foods. In America, spicy offerings like hot sauces and peppers, as well as African fare, are expected to be more prominent. 

Companies that offer ready-to-eat meals, sauces, soups and meal kits with these flavors are poised to succeed, said Elly Truesdell, a partner at Almanac Insights who formerly oversaw local brands and product innovations for Whole Foods Market.  

“As insatiable as Americans are for global flavors, there is also still a real insecurity around getting it right and cooking for ourselves,” she said.

5. CRISPR and gene editing move from crops to consumers

Few technologies have transformed development of food production during the last few decades as much as genetic modification. Now, efforts to improve the taste, texture and production of fruits and vegetables are being spurred on by CRISPR and other gene-editing techniques that promise to do all these things faster and for a fraction of the cost.

Consumers will see food with a lot of different traits, such as fresher and tastier, "although they will not necessarily know they are gene edited,” said Jennifer Kuzma, a professor at North Carolina State University and co-director of its Genetic Engineering and Society Center. “I do think now we’re going to see gene editing and CRISPR-based crops enter the market in 2021.”

Early genetic engineering focused predominantly on crops such as soybeans and corn grown by farmers to boost yields and make them resistant to pests or able to withstand chemical treatments. But more work today is being done on consumer-centric foods like mushrooms, apples, potatoes and lettuce that can be tweaked to include attributes important to consumers.

Pairwise, for example, is tapping into CRISPR gene-editing technology to remove the bitterness from a nutrient-dense green, the seeds from the outside of a blackberry and the pit in a cherry. 

“Sure there is risk there, but what we’re saying is that we believe the technology is good enough and it can deliver things that are good enough for people,” said Ryan Rapp, who focuses on fruit as the head of product discovery at Pairwise. “As long as we stick to our values and transparency and being open with them, I think consumers are going to love this.”

Still, some people are concerned that companies using CRISPR and other technologies aren’t being transparent enough, and repeating the same mistakes as early pioneers of genetic engineered crops. They also worry USDA’s regulatory process isn’t robust enough.

Gregory Jaffe, director of the biotechnology project at the Center for Science in the Public Interest, said people want to know first if the technology used in their food is safe and then how it benefits them. “Transparency is going to be important,” he said. “Consumers want to know more and more about the food and where their food comes from, and so it will be critical to acceptance.”

After years of challenges, breakfast is experiencing a much-needed resurgence during the coronavirus pandemic that food manufacturers are optimistic could once again make it a standard part of the morning routine for more Americans.

"People are going to go back to work, but there will be residual behaviors that are going to stick. We believe that we have converted some folks for good," said Jeanine Bassett, vice president of consumer and market intelligence at General Mills, a maker of Total cereal, Bisquick pancake mix and Larabar. "This is really an unprecedented time to establish that beachhead you did not have before and build on it."

Before the pandemic, breakfast's iconic image as a time when families sat down together for what some consider the most important meal of the day had become an afterthought for many on-the-go consumers. Breakfast faced strong competition from fast-food chains, while healthy-eating people were clamoring for more nutrients and protein but less sugar. 

Increasingly, people turned to portable options as they rushed out the door, like a cup of oatmeal or cereal, bar, breakfast sandwich or bowl. And CPGs, eager to keep even more people from fleeing breakfast or consuming it elsewhere, doubled down on these offerings.

A 2019 survey of 2,000 Americans by OnePoll and Sabra found the average person ate breakfast just three times a week, while 13% rarely, if ever, ate the meal. And Mintel found the importance of the breakfast occasion was shrinking. In 2018, half of consumers agreed breakfast is more important than lunch or dinner, compared to 55% four years earlier, the market intelligence agency said.

But the coronavirus outbreak has forced more people to work from home and children to attend school remotely. While families still have a hectic morning getting ready for the day, there is more time to have a breakfast that is a bit more leisurely — a change that provides food makers with the opportunity to reengage with consumers who may have altered their consumption habits or abandoned the meal altogether.

Back to the future

Analysts and food manufacturers concede many people will eventually revert back to the fast-paced lifestyle — providing a boost to bars, drinks and other offerings that have struggled during the outbreak. But some consumers will continue the breakfast habits they adopted during the last year. Consumers will have gotten used to their new morning routine, while others will value the benefits that go with a less hectic morning, including more time to connect with their family.

"The fact that we are going to have more people working from home is going to mean that some of the change we've seen around breakfast will stay put," said Neil Saunders, managing director with GlobalData. "It's almost going back to perhaps how it was in 1950s America when people did sit down at the breakfast table and they did have something to eat before going about their day."

Saunders estimated breakfast across the board has seen strong growth during the pandemic. Home consumption of pancakes was estimated to grow in 2020 by 25%, waffles 20%, breakfast sausage 16%, bacon 15% and cereal 11% from 2019, according to GlobalData. He said going forward, long-term product winners are likely to align with the push toward healthier items including smoothies, sous vide egg bites and better-for-you cereals. 

Few categories have been benefited from the stay-at-home shift as much as cereal. After several down years, the $8.5 billion cold cereal category had started to rebound before the pandemic hit, and there is optimism the last 10 months could provide a further catalyst for future growth.

Millennials are consuming more cereal during the pandemic, with consumption up 13% from March to August 2020, outpacing the rest of the population, according to The NPD Group/National Eating Trends data.

At food giant General Mills, cereal revenue had flattened at roughly $2.3 billion for several years until a recent uptick before the pandemic. The resurgence picked up momentum during the outbreak as younger consumers pushed sales of Cocoa Puffs, Golden Grahams and Cinnamon Toast Crunch up more than 10%, while its top-selling cereal, Honey Nut Cheerios, jumped 8%. Kellogg reported in its third-quarter earnings in October that its net cereal sales in North America were up 9.4% for the 39 weeks ending Sept. 26. And Post Holdings said its legacy branded cereals such as Honey Bunches of Oats, Pebbles and Great Grains posted volume growth of 5% in its fourth quarter.

Children learning from home also are upping their cereal intake — oftentimes with their parents joining in — creating what the industry hopes is a lasting connection with the breakfast offering. Cereal makers like General Mills and Kellogg also are doing more to make their cereals more portable and conducive to on-the-go snacking, which should help as consumption patterns normalize. At the same time, manufacturers are churning out healthier products packed with vitamins, minerals, immune-boosting options and simpler ingredients that could attract shoppers keeping a closer watch on what they eat.

"It's going to be a resurgence in cereal," Bassett of General Mills said. "For some people it's coming back to cereal, for some people it's reinforcing their love of cereal, and so we think it's nothing but blue skies for the category." 

A chance to capitalize

Elly Truesdell, who oversaw local brands and product innovations at Whole Foods Market before leaving in 2017 to become a partner at Almanac Insights, said the health trend could be especially beneficial for smaller breakfast brands. These include Magic Spoon or Three Wishes cereals as well as waffle mixes and frozen pancakes from companies like Kodiak Cakes or Simple Mills.

Bigger companies also stand to benefit. General Mills made a move for health-conscious consumers who may have stopped eating cereal for breakfast through rollouts such as Morning Summit cereal, which lists almonds as the first ingredient, and its partnership with GoodBelly on a probiotic cereal. Kellogg has introduced a granola smoothie bowl loaded with nuts, fruits, seeds and berries that only needs milk or water, and Greek yogurt giant Chobani has moved into oats and probiotics.

At BellRing Brands' active nutrition line Premier Protein, executives noticed that consumers were using its 30-gram high-protein shake, which contains antioxidants and vitamins, during the pandemic as an addition to coffees and smoothies. Nick Stiritz, director of marketing with Premier Nutrition, said these trends and other emerging consumer habits could eventually lead Premier Protein to develop a product extension or new flavors.

"We're in a highly dynamic environment that this modern world has never seen and it's more important than ever to stay close to what is going on in it," Stiritz said.

Still, Truesdell said large food manufacturers as a whole need to move faster to capture the recent shifts taking place in breakfast brought on by the pandemic. "They are just, honestly, a bit slower to react and I'm just not sure that the larger innovation has quite been there yet," she said.

Conagra Brands has experienced strong growth in many of its breakfast brands during the outbreak, including Banquet Brown ‘N Serve sausages, Mrs. Butterworth's and Log Cabin syrups, Reddi-wip Barista Series coffee creamer alternatives and Gardein plant-based breakfast bowls.   

With in-home breakfast occasions on the rise and demand "remaining elevated," Conagra has spent more time and resources understanding why people are consuming different foods and what that could mean for the future of the segment, said Ashley Lind, director of demand sciences for the Chicago-based company. 

Lind pointed to evidence of a permanent shift in breakfast habits that gives manufacturers like Conagra optimism. People have invested in their kitchens during the coronavirus, buying small appliances such as waffle makers and single-serve brewing platforms they will want to continue to use.

At the same time, new buyers are repeat-purchasing Conagra's breakfast products at higher numbers, the company said. Mrs. Butterworth’s and Log Cabin syrups have experienced a 10% to 15% increase in repeat purchases among new buyers who tried the products for the first time during the pandemic, compared to new buyers during the same time period a year ago.

"We're certainly evaluating breakfast opportunities," Lind said. "We definitely believe there will be some degree of stickiness to a lot of these behaviors."

To position itself for this behavioral shift, HighKey, a producer of low-carb, low-sugar cereals, muffins, cookies and other products, has more than doubled its R&D budget during the pandemic and introduced a slew of new breakfast offerings. In March, HighKey entered the cereal space for the first time, just four months after introducing a pancake mix. Then in August and September, it introduced banana bread and mixed berry breakfast biscuits as portable snacking options.

Joe Ens, co-CEO at HighKey, admitted the pandemic "wasn't the perfect time to launch a portable on-the-go bar." But the three-year old company was able to collect feedback from consumers so it could tweak its packaging and messaging to highlight how the taste was similar to products loaded with sugar and carbohydrates. Ens said the strategy could pay off later as shoppers, who have turned to indulgent comfort foods during the pandemic, look to eat healthier without sacrificing taste. 

"We were ready to go and decided to take the risk. We're glad we did," Ens said, noting that despite slowness in the bar category overall, the product has done "pretty well" during its six months in the market. 

With the vaccine rollout, there is optimism that a larger wave of consumers will soon start returning to work and school. As this takes place, Saunders said food manufacturers will need to review their breakfast portfolio, which was heavily skewed toward on-the-go offerings before the pandemic, to ensure they now have enough in-home meal solutions.

"Breakfast was never in danger of disappearing but it has been on the wane for a number of years and I think this has brought it right back," Saunders said. "Over the long term, there has to be a reassessment as to where the areas of growth in the market are and what the different manufacturers want to push."

There were big expectations for the cannabis-infused food and beverage space leading up to the start of last year. Venture capital investment was increasing, seasoned executives were jumping into the trendy space and established players pledged to launch products. 

But 2020 was not the breakout year for cannabis that some had anticipated. 

Although the industry made progress, the pandemic slowed down product development as many companies shifted focus to the coronavirus. Federal regulation also stayed in a gray area, with no further guidance and many questions around the space unanswered.   

But now analysts and companies are saying that 2021 could in fact be cannabis' breakout year. More states legalized cannabis in the last election cycle and a new presidential administration is coming in with a Democratic-controlled Congress that could push the FDA to issue a federal regulatory framework. 

"We're seeing legalization spread to markets that were a challenge for cannabis activists in the past ... so I expect that to continue in the coming year," said Alex Esposito, research analyst at Euromonitor International. "As more recreational markets come online, we generally expect there to be more availability of edible and beverage formats."

With potential regulatory changes on the horizon, more companies are moving into the U.S. market with products that have CBD, the popular nonpsychoactive compound of the cannabis and hemp plants, and THC, the most well known psychoactive component. Several companies from Canada are entering the U.S. market through acquisitions and readying launch plans that could shake up the category — and push more big-name players to jump in. 

"The U.S. is expected to be the largest market opportunity globally and we will be ready and well positioned to compete in the U.S. when cannabis is federally permissible," said Irwin Simon, chairman of the board and CEO of Aphria, a Canadian cannabis company that is entering the U.S. market through a recent brewery acquisition. 

How regulation and elections are shaping up

There are a lot of moving pieces in the regulatory space when it comes to cannabis and CBD, from state legalization and legislation to FDA regulation. But analysts say those moving parts are taking small, positive steps for the industry. 

The passage of the 2018 Farm Bill, which allowed hemp and its derivatives to no longer be classified as controlled substances, was a significant move for CBD, which can be sourced from this relative of the cannabis plant. However, it is still federally illegal to add cannabis and its derivatives to food and drink. It's been nearly two years since the FDA's first public hearing on CBD, where manufacturers pushed for more clarity.

Although more states have developed their own regulations and voted to legalize cannabis, which has allowed more companies to market-test products, the FDA has continued to issue warning letters to businesses that are improperly advertising CBD with therapeutic and drug-like claims. 

"I hope that this is finally the year that the FDA creates some guidance," said Henry Baskerville of Fortis Law Partners. “In a way it's really harming the industry to have no guardrails because for a lot of reasons it makes it so that consumers are maybe more reluctant to try the products than they otherwise would if they were at least passively accepted by the FDA.”

Jeremy Kahn, a spokesperson for FDA, said in an email that they are "working toward a goal of providing additional guidance, and have made substantial progress." Kahn said the FDA is looking into potential pathways for various types of CBD products to be lawfully marketed and is working to get research, data and other safety input to inform its approach.

"The FDA recognizes that there is substantial public interest in marketing and accessing CBD for a variety of products," Kahn said. "There are many questions to explore regarding the science, safety, effectiveness and quality of products containing CBD, and we need to do our due diligence."

​One positive development happened in December, when the House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act. The bill sought to decriminalize marijuana nationally by removing it from the government’s Schedule I controlled substance list. With a new Congress, it would need to be reintroduced, pass again in the House and will still likely have challenges in the Senate. The FDA would still determine regulation for cannabis' inclusion in food and drink. 

At a recent BevNet forum, Rick Maturo, associate director of client services at Nielsen's cannabis practice, described the vote as "very ceremonial more than anything." That said, "it really just shows yet again that cannabis does not carry the stigma that it carried five years ago, and that's going to continue to barrel forward and garner more attention from conventional consumer packaged goods companies," he said. 

Mike Gruber, vice president of regulatory and government affairs at the Consumer Brands Association, agreed that the marketplace needs stability. CBA has been advocating for additional resources, research and a national regulatory framework around CBD for the last few years. 

"I think there's a pivot point here for 2021 for all stakeholders to get behind legislation that provides FDA additional authority and additional funding to create a durable, national standard for CBD and other hemp derivatives that may be used in food, beverages, topicals and other products," Gruber said. 

That pivot point could be closer to reality given the shift in politics at the executive and legislative branches. With President-elect Joe Biden headed to the White House and Democrats taking control of Congress, optimism around this issue is up. When Georgia turned blue this month in a run-off election, hopes of federal decriminalization helped push up cannabis stocks like Canopy Growth. 

"What we saw from the recent presidential election was positive momentum for the cannabis industry. We believe that Biden’s win will increase pressure on Congress to pass major federal marijuana reform in the near future," said Tara Rozalowsky, vice president of beverages and edibles at Canopy Growth.

A spokesperson for Biden directed Food Dive to his previously posted position: He wants to decriminalize cannabis use and supports the legalization for medical purposes, while leaving decisions regarding legalization for recreational use up to the states. Biden also supports rescheduling cannabis as a Schedule II drug so researchers can study it.

Baskerville said that although Biden has been "lukewarm, to put it lightly, about legalization," the Democratic Party in general is in favor of it. "I think the writing is on the wall that it's one of the few issues that has broad bipartisan support, and I think that it's only a matter of time until cannabis is descheduled," Baskerville said. 

In 2021, recreational use will be legal in 15 states and medical use will be legal in 35 states. Despite the patchwork of state regulations for cannabis, "it's only a matter of time before it gets federally legalized," said Tyler Williams, chief technical officer and founder at Cannabis Safety & Quality.

Williams expects FDA to be looking at state regulations and those in other countries, such as Canada. "If I was putting myself in the shoes of the FDA, I would look at regulations across the board, and pick and choose from the best ones, pick and choose what works and what doesn't work. Then obviously base everything off of science because the industry has had enough of arbitrary numbers," he said.

The waiting game on when to jump into the market

The pandemic has also bogged down some of the regulatory process and product introductions. As consumers cleared shelves in their rush to stockpile food, many companies focused on maintaining production of their existing products instead of developing new ones. 

Bolthouse Farms, a maker of smoothies and juices, previously said it would launch CBD-infused products in 2020. More than a year has passed since the announcement, and a spokesperson said in an email the company is “still working through the regulatory environment in order to introduce any CBD products.”

"Unfortunately, COVID has essentially stalled all state and federal momentum on the topic so there hasn’t been much movement on that front," the spokesperson said, declining to provide a timeline on the new product line launch. 

In 2019, Unilever’s Ben & Jerry's brand said it would create CBD-infused frozen treats once there are regulations in place from the FDA. Ben & Jerry's spokesman Sean Greenwood said in an email the company remains on hold on any new CBD product development, but to "stay tuned in 2021 for any updates."

"COVID operations have posed a challenge as we’re not able to work at our office and we’re making it a go remotely to ensure safety of our employees. We’re still interested in CBD products as it’s something that our fans expressed interest in," Greenwood said. 

Investors have also been wary of the space because there is some regulatory risk involved, and brands need to be careful to follow any state guidelines for advertising, transporting and manufacturing products. 

There has been some momentum in the past year, with brands securing an early-mover advantage by launching in states that have legal markets while awaiting more federal guidance.

Late last year, Pabst Labs announced the initial launch of Pabst Blue Ribbon Cannabis Infused Seltzer to customers in California. Although PBR is licensing its name to the brand, no money was involved in the agreement and Pabst Brewing doesn't have a stake in Pabst Labs, which helps it avoid any regulatory risk associated with the substance.

Mark Faicol, the brand manager of Pabst Labs, said that its seltzer, which contains 5 mg of THC per 12-ounce can, was in development for about two years before it became "worthy" of the PBR name. 

"A national brand heading into the space has never been done before. Let's not underscore the significance of that," Faicol said. "I think a lot of big brands ... bring their audience that they know how to talk to really well. And No. 2, they bring a level of trust."

Faicol, who previously worked for Pabst Brewing Co., said PBR is a classic brand, but is constantly reimagining itself as "more than just a beer company." Faicol said there was already demand for a cannabis-infused drink with PBR’s name on it before they developed it.

Pabst Labs has already seen success with the product and is planning to expand production this year. It sold out of its initial two production runs immediately, according to Faicol, who said the company plans to expand to selling in other states. Having a brand name that "transcends generations" carries weight, Faicol said, but there are still challenges with regulation and broader consumer education.  

"We have very high expectations, but I think at the same time we fully realize ... that it's going to be an uphill battle and challenge. But we're willing to take that challenge on and work with other key players in the space to try and grow it," Faicol said.

Many smaller brands have launched in states that have legalized. Recess, for example, has quickly become one of the most popular CBD beverage brands in the country. 

Recess’ CEO and Founder Ben Witte said the company focused on establishing the base of its business in 2020, growing in key markets, building out the supply chain and investing in innovation that will launch this year. 

Witte said the company spent the last year getting positioned for 2021, "which will be a big breakout year for us."

“I definitely think part of the business plan for Recess was to become really the category-defining and first-mover brand in this emerging category,” Witte said. 

The company has learned a lot about the usage occasion for Recess during the past year. Previously, consumers may have gotten drinks at a local bar after work, Witte said. But during the pandemic, many people are using Recess as a substitute for alcohol in the evening.

"Do you really want to drink at home by yourself at the end of the day? Take a Recess instead, and that idea is just exploding in popularity," Witte said. "We are well positioned to continue to drive [the market] forward but we welcome more entrants. We want this category to exist in a big way."

Part of what will enable this potential is federal regulations around cannabis-infused products. Witte said Recess' business plan from the beginning was oriented around regulation since he didn’t want to sell a controlled substance indefinitely. But he sees "a light at the end of the tunnel."

The exec, who also serves as executive vice president of the U.S. Hemp Roundtable, said this year the attention will be focused on driving FDA clarity, and he expects something to come from the agency in the next 12 months.

Big moves bring Canada's momentum to the U.S.

Over the last year, Canada — which now allows cannabis-infused products to be sold at retail — has served as a testing ground for the U.S. debut. Canadian companies are now entering the U.S. this year as many of their American counterparts wait on the sidelines. 

Canadian cannabis giant Aphria announced late last year it was expanding into the U.S. with its $300 million acquisition of SweetWater Brewing Co., one of the biggest independent craft brewers in the U.S. Aphria has several medical and recreational-use cannabis brands in Canada. 

"The beer and cannabis industry have been tied closely in recent years as both industries are ripe for a cross-over audience. We will continue to see mergers and acquisitions when it comes to cannabis companies purchasing beer brands and vice versa," said CEO Simon. "It’s only a matter of time before the U.S. moves closer towards federal legalization of cannabis and building out infrastructure in advance will continue to be a top priority."

Simon said that Aphria sees "a huge market for CBD and THC beverages in the future." Since SweetWater has distribution across 27 states and Washington, D.C., it provides a "recognizable foothold in the U.S. with long-term potential." With the acquisition, SweetWater will grow beyond those states and internationally, Simon said. The Aphria team is also preparing to introduce its Broken Coast, Good Supply, Riff and Solei brands to the U.S. by this winter.

Aphria also grew its foothold in the consumer packaged goods space with its recent merger with Tilray, a Canadian pharmaceutical and cannabis company that owns Manitoba Harvest, the world’s largest hemp foods manufacturer, and is a partner of AB InBev.

But Aphria is not the only Canadian company looking to take the early-mover advantage across North America. Last week, Truss CBD USA, a joint venture majority owned by Molson Coors Beverage Co. and operated with Canadian cannabis producer Hexo, launched Veryvell, a line of nonalcoholic sparkling CBD beverages in Colorado.

Canopy Growth will also be launching cannabis-infused beverages in legal-use markets in California and Illinois this summer through its partnership with Acreage Holdings. After a delayed launch in Canada, Canopy Growth, which is backed by U.S. alcohol giant Constellation Brands, has seen “great success to date” for its cannabis-infused beverages in Canada, and currently holds about 50% market share, Rozalowsky said.

“With almost a year’s worth of sales data available for the Canadian market, paired with Constellation’s experience in the beverage alcohol space, we know that summer is an ideal time to launch a beverage brand or product in order to capture consumer demand spikes during key summer months,” Rozalowsky said.

The cannabis-infused beverage category is fragmented, she noted, with numerous brands in the U.S. but no clear leader. This gives Canopy the opportunity to capture significant market share, she added.  

Euromonitor forecasts the market for adult-use cannabis, including in beverages and edibles, in the U.S. will grow from about $11.5 billion in 2020 to $53.6 billion in 2025. 

"From what we've seen so far in terms of consumer demand, we believe that the North American market potential for cannabis-infused beverages is extremely promising and has the potential to disrupt other traditional beverage formats including beverage alcohol, sports and energy drinks and sparkling waters," Rozalowsky said.

Jonathan McIntyre believes it's time to rethink how to talk to consumers about the science of food.

McIntyre has a long career in food research and development, with senior R&D positions at Indigo Ag and PepsiCo. Today, he serves as CEO of Motif FoodWorks, a biotechnology platform to develop plant-based ingredients that can mimic the nutrition, taste and texture of animal products. There's been a lot of industry excitement about Motif since its spinoff from Ginkgo Bioworks in 2019, and the company is preparing to launch its first ingredients this year.

With all of the science and technology focused on food innovation, McIntyre believes consumers deserve to know more about what these companies are doing and why.

"We need to start with defining what food science means," he said. 

"There is science in all of food, but we don't talk about it. ...The way it's cooked, the way it's harvested, the way it's cleaned, washed, combined with other ingredients, is all based on science,” he explained. “And in a time where sustainability and other social issues are driving us to a broader definition of what are the best foods to consume, and we are expanding our palate, there's an opportunity to figure out a way to make those foods tasty and nutritious, especially in the plant area."

By applying new technologies, companies and researchers are getting closer to making breakthroughs. These could lead to different types of food, or producing the same food in radically different ways. The landscape is already changing. The first cell-based chicken appeared on a Singapore restaurant menu in late 2020, and several companies say they are confident cell-based meat will be approved in the United States this year.

Companies are using technologies such as CRISPR to make crops more desirable to consumers through genetic modification. After decades of working toward approval, the first genetically modified animal product — AquAdvantage salmon — is slated to hit grocery store shelves this year. And a proposed rule change may modify the way most bioengineered meat gets regulatory approval, which many say would make it easier for these products to go forward.

As research and technology continue in 2021, the question remains: Will consumers want to try products that result from these developments? After all, the butterfly seal that shows a product is Non-GMO Project Verified is a coveted symbol to put on packages. And starting in 2022, much bioengineered food — the new label for food made through genetic changes, also known by the acronym GMO —​ will be required to be labeled as such. 

Some who work in food technology have seen their products and research passed over in the past because of purported consumer fear of GMOs. This includes Alison Van Eenennaam, an animal geneticist at University of California, Davis. 

However, Van Eenennaam believes that most consumers do not care whether a product has the Non-GMO seal; instead, other factors take precedence. 

"They want a product that they want for whatever reason. It tastes good, it's the right price. You know, the three things that normally drive consumers,” she said. 

And the popularity of products like the Impossible Burger, which makes its plant-based heme out of genetically modified soy, could also be changing attitudes.

“There's this kind of myth that, 'Oh, they'll never accept genetically engineered animals,'” Van Eenennaam said. "Well then, tell that to the Impossible Burger people.”

Michael Lavin is founder and managing partner of Germin8 Ventures, which funds companies using technology to bring food and agriculture to the next level. He believes that consumers often have many misconceptions about food and technology, and cited a 2015 study from the University of Oklahoma found that four in five consumers felt there should be mandatory labeling of food products containing DNA — which is in literally everything people eat.

"There is a problem that we need to fix as stakeholders," Lavin said. "We should take more responsibility to be the brokers who put to bed some of these misperceptions and myths, and really educate the consumer — in a respectful way, of course — to have a greater understanding of what is really in our food, and what should be there, what shouldn't be there, and what tools are really enabling the things that they want, such as sustainability and impact."

Literally sowing the seeds for next-generation food

One way to create this sense of trust is by highlighting technology’s potential to improve food for the better. Produce could be an example.

Haven Baker, co-founder and chief business officer of Pairwise, said he was struck by watching his children pack their lunches for school. He required them to include at least one produce item each day. 

"They don't want to take apple slices because they get brown. And they don't want to take grapes because they get squishy," Baker said. "And so what ends up going in day after day is baby carrots and occasionally blueberries. And they're not eating them, or they're tired of them."

Pairwise's central mission is to use gene editing technologies like CRISPR to create produce that meets distinct consumer needs. With small changes — making greens less bitter or getting rid of the pit in a cherry — consumers are more likely to eat more produce.

Baker said Pairwise is spending 2021 literally sowing the seeds for coming rollouts. It is planting what it hopes to be its first product launch: superfood greens with the nutrition of kale and the eating quality of romaine lettuce. Some limited trials of these products are slated for later this year, and Pairwise plans to officially launch them in 2022. The company is also cultivating some seedless fruit varieties, which should be available for limited trials next year.

"When we move to the next perimeter of the grocery store, we think [we are] at the very beginning of technology for improving fruits and vegetables, really getting this fundamental diet problem where ... almost none of us consume enough, and the consumer wants innovation and better performance," Baker said. "This next year, but I think also the whole coming decade, we're at the place now where plant-based milk was at 10 years ago."

About a decade ago, Baker said, plant-based milk was just starting to gain consumer attention. In 2019, plant-based alternatives made up 14% of the entire milk market, according to statistics from the Plant Based Foods Association. It had grown at a 5% clip in the year, compared to dairy milk's essentially flat growth.

Baker projects that, in a decade, new gene-edited produce could potentially make up 14% of what consumers are buying.

Germin8 Ventures is sowing a different kind of seed, but Lavin is hopeful for a similar result: technology that will make tomorrow's food better, with more nutrition, higher yields and improved sustainability. Many of Germin8's investments are in ag tech companies that aim to use data capabilities to help run farms better, as well as use high-tech platforms to identify how plants can be used and changed in order to meet consumer needs. 

Lavin said that Germin8 is investing in tech that will support future trends. Right now, consumers are starting to shift some of their purchases to plant-based alternatives — products like plant-based burgers, meat analogues and nut milks. Lavin said what's on the market now is like version 1.0 of what can be done with technology. Germin8 is investing in the companies that will be version 3.0 and higher.

"I think you'll see a lot more bioengineered products coming to market and end up in the animal protein space for sure," Lavin said.

The 'unpredictability' challenge of using tech to create desired animals  

Van Eenennaam has spent her career working with animal genetics. She described CRISPR as a technology that can do targeted alterations on DNA, making it a tool that can more easily let researchers create an animal with the desired genetic characteristics. CRISPR can help produce animals that meet many consumer and producer needs: resistance to common diseases, ability to withstand hotter temperatures and quicker growth.

Van Eenennaam worked with a team that in 2020 created a bull-calf that could sire 75% males, which tend to grow more efficiently than females. If this type of calf could be propagated, producers would be able to get more meat while using less land and water, and causing less pollution.

But while Van Eenennaam has spent much of her career using technology to improve food animals, she isn't particularly optimistic that they will get to market soon. Current regulation puts animals created through any sort of bioengineering technique up to the same scrutiny as new drugs through the FDA, which has made it difficult for any genetically modified food animal to get to market. 

Van Eenennaam noted that Genus, a British animal genetics firm, is currently undergoing that review process to bring a pig that is immune to the debilitating disease porcine reproductive and respiratory syndrome (PRRS) to market in the U.S. According to MIT Technology Review, U.S. pork farmers can lose $600 million in a year to PRRS. The magazine reported the company hopes this pig can come to market in the U.S. in 2025.

Proposed rulemaking currently under consideration could change the process by moving regulation of these animals to USDA, which would treat them more like other food animals, but it's not without controversy. The notice of rulemaking was published weeks before former President Donald Trump's administration ended, but then-FDA Commissioner Stephen Hahn refused to sign off on it, reportedly because he was unsure about its legality and potential health consequences. But then-Health and Human Services Assistant Secretary for Health Brett Giroir signed off in Hahn's place right before President Joe Biden's inauguration. Biden has yet to nominate an FDA commissioner, and it's unclear what will happen with this proposal under the current administration.

AquAdvantage salmon, the first bioengineered food animal, is an example of how much regulatory uncertainty can slow product approval. The salmon was first created 30 years ago. It was approved by FDA in 2015, but its path to market was slowed as the U.S. considered how to label genetically modified food. In 2019, an import alert for the salmon eggs — developed in Canada — was lifted. The salmon is currently being grown in tanks in Indiana and is finally on track to be sold in the U.S. later this year.

Van Eenennaam described AquAdvantage salmon as "a multi-decade, multimillion-dollar regulatory endeavor."

"No one wants to invest in a technology with that unpredictability," she said. "I mean, it was strangled in the cradle, basically." She continued. "It's been almost impossible in my career to get funding to do the research."

What Van Eenennaam described as perceived consumer hesitancy over bioengineered food has stopped a lot of potential development in its tracks. She said typically, grants for new technologies are often given to university researchers to see what works. After proof of concept is found, companies tend to adopt that technology and use it for new products.

That hasn't happened for bioengineered animals, even though Van Eenennaam said there has been quite a bit of proof of concept. Part of this is because this kind of work is expensive. But she said a bigger part is that companies don't want to take a chance on a product that has had obvious genetic work because they believe that consumers will be less likely to accept it. 

Van Eenennaam said she's had grants turned down for two decades because of this perceived consumer rejection. Basically, funders have told her she has a good idea, but it has no commercial potential. 

"It's like this self-fulfilling negative prophecy that the public will never accept it, therefore we're never going to fund that really good idea," Van Eenennaam said. "And so therefore the public never will, because they never have an opportunity to even see that idea.”

Emerging from the R&D phase

Motif FoodWorks hopes to avoid this tech trap. The company, which designs ingredients that make plant-based options a better and more craveable choice, is getting ready to put two of them on the market. 

One ingredient is a fiber that mimics bits of tendons and ligaments found in traditional meat. In a cut of meat, these are visible as small ribbons and mostly transparent bits of film. These are also present in ground meat and help give it a chewy texture. But they aren't present in plant-based meat, which can be more mushy than its animal-based counterpart.

The other ingredient is a protein that brings more traditional color and flavor to plant-based meat, and distributes more iron than current offers.

McIntyre said he has not seen much hesitation from manufacturers about using Motif's ingredients. In fact, he said a lot of companies are interested in Motif’s work and want to partner together. "Very few" have not been interested because they thought Motif is going too far into science, McIntyre said. Instead, other factors prevail: whether a product meets consumers’ needs, tastes good and is nutritious. 

"What we're focused on is how do we continue to improve on those experiences, because the consumer has said — especially the mainstream consumer — that, 'I want to eat more plant-based food, but I don't like the taste.' And so if we can help make the product taste significantly better and more nutritious, and do it in a transparent way, I think that's the biggest way we can touch the consumer."

But with so much tech-enabled food on its way, manufacturers also may have to change some consumers’ minds. McIntyre said it may be time to return to the basics.

"I think people get hung up on the terminologies a lot, and they've been triggered to be scared when somebody says 'food' and 'science,' because they want to think food is some artistic and or homegrown thing," McIntyre said. "There is science behind those things, and I think we need to start having a dialogue about what that looks like. ...We have to create language that allows the consumer to have a good understanding without being triggered or scared off based on words that are associated with very negative things."

For example, everything, when broken down, is a chemical, McIntyre said. However, consumers find themselves triggered, expecting that a "chemical" is something synthetic or artificial — not something like water or protein.

"It's almost like we've got to create a new Rosetta Stone to have this dialogue, but the No. 1 thing is to not act like it doesn't exist," McIntyre said.

Germin8 Ventures' Lavin said GMOs can start to lose their scary aura as consumers see them in a positive light. He cited Impossible Foods, which was one of the first CPG companies to start using the USDA's "Bioengineered" seal. As that seal becomes more prevalent on products, and as bioengineered ingredients come on the market, consumers will be less likely to object, he said. 

Demonstrating that technology creates desirable products will also help with consumer acceptance. Pairwise's Baker said it will be relatively easy for his company to demonstrate the utility of CRISPR to consumers. Imagine going to a peach orchard and happening upon the most delicious fruit, he said. It could take conventional breeders years to come up with the right cross to replicate that tree. With CRISPR, it can be done immediately.

Transparency about the process is also critical to drive acceptance, Baker said.

"In the past, some of the benefits were not obvious. But healthier vegetables, getting rid of seeds that get caught in your teeth, or maybe in some cases cause digestive issues, these are real problems that we can relate to. So transparency around both the problem and the solution will lead to better acceptance."

Van Eenennaam is skeptical this approach will work with gene-edited animals. After all, the last 20 years have brought big changes in animal agriculture — faster growth, larger muscles, more productivity. But all of these changes have come from traditional breeding. CRISPR can make the same types of changes in a more targeted way, but it's under the GMO umbrella.

"I am a big proponent of genetics," Van Eenennaam said. "It's this one breeding method that has been held up as evil, and it's all come around, in my opinion, due to misinformation from competing businesses. And I think we've been, as agriculturalists, stunned at this misinformation."

It also may be hard for consumers to easily see the utility and superiority of a genome-edited animal, Van Eenennaam said. While an animal that can resist diseases is extremely useful to a producer, a consumer would never see that aspect. Genome editing could be used to make animal products more nutrient-filled, but there are other ways to do that — giving chickens feed with more flaxseed leads them to produce eggs high in omega-3s, for example.

Manufacturers seeing how bioengineered animals impact sustainability could make a difference, Van Eenennaam said. Giving bioengineered animals a little bit of room to get into the food system truly could start something big. She hopes this happens with AquAdvantage salmon.

"People say they want low food miles and reduced environmental impact. And here's a product that's locally produced that does all of that, so what more could you want?" she said. "And it's not being fished from the ocean, so it helps protect wildlife. It's a really nice story."

Clarification: A previous version of this story was not specific about Haven Baker's projection for gene-edited produce in the future.