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All natural trend

Choose your trend carefully

When trying to identify which trends your company should connect to its essential to distinguish between those that are big and have no growth potential and those which are small and have high growth potential.

First published in New Nutrition Business, June 2010 Newsletter

Consumer research often identifies consumer insights which are then used as guides to strategy that are in fact only descriptions of trends that have already reached maturity and have no more upside potential. What it doesn’t do often enough is help you find the issues which matter to only a small group of people. Counter-intuitively, it is these insights which are often the key trends that will drive your business.

Let’s take two trends as an example digestive health and all natural. In one sense, it is true that consumers desire for foods to be as natural as possible is the biggest trend. In detail it means that consumers want foods to be free-from everything they think is bad – usually interpreted as free-from artificial preservatives, colours or flavours.

As the chart below shows, it’s a mass-market trend with every brand that can do so now reformulated to deliver the free-from bad ingredients promise. And, in fact, it’s a trend of no commercial value by which we mean that it has become a standard for the food and beverage industry, something that almost every brand must do if it can, but it is no longer a point of difference (as it was seven or more years ago). Delivering a free-from product will not give you any extra sales volume or a higher price, it’s just what consumers expect you to do.

 Nutritional product life cycle

Many products start out on the left, selling in low volumes at premium prices. Over time their appeal increases and they move down the price curve to the right, eventually becoming mass-market products. The stages of the life cycle are:

Technology consumers: Early adopters, people who have a near-medical need for a product. They will pay a substantial premium for something that addresses their condition.
Lifestyle consumers: Interested in maintaining their wellness, not fighting illness. They will adopt new brands and will pay a premium if it supports their lifestyle.
Mass-market consumers: Motivated when a benefit becomes a standard and is available in products with low or no premiums, ideally from well-known and trusted brands. 

So if your consumer research agency delivers up consumers desire for naturalness as a consumer insight, a key desire for a large number of people, mark that down as one of limited use to you in growing your business.

Unlike most consumer research agencies, our annual New Nutrition Business Ten Key Trends report has long identified digestive health as the biggest trend the trend which has the biggest growth potential. That is the important distinction you are better off following trends that are embryonic, which appeal only to a small group of people, but which have growth potential, than following a trend that is so well established that there’s no more growth potential.

If you are following a trend that is in an embryonic phase, that means that is also likely to be a high-value, low-volume trend meaning that you can get better margins than from bigger trends. It also means that though your senior management might be averse to entering low volume markets, you can at least hold out the promise of the trend evolving into the volume market, with the higher margins providing compensation in the short term for the lower volume.

The response of many marketers when faced with the digestive health opportunity is to fortify a wide swath of products with fibre (20% of the RDA per serve being the chosen target). That’s a pity, because it takes digestive health from fibre from being a point of difference to an everyday ingredient found in a wide array of foods and thus an ingredient that delivers no extra margin and no particular extra volume.

Luckily for companies with better marketing teams, what consumers want in digestive health as in so many areas of health are expert brands, brands which have a high dose of an effective ingredient and are the brands which can be most trusted to deliver the health benefit. In fibre, that means a brand delivering 35% of the RDA of fibre per serve a level which, as one fibre supplier says, gives many people a satisfying whoosh feeling when they go to the toilet they really feel the benefit!

That’s a need that we have heard consumer researchers steer companies away from even though the actual consumer buying behaviour shows that is a benefit that many people actually want.

General Mills and Danone are two companies that understand this very well which is why both companies have been pioneers in the digestive health market and both companies have created successful expert brands, as the chart below shows. The reward for creating an expert digestive health brand is that people continue to buy it, even when it sells at a premium price (as all expert brands do) even during a recession. Look at the sales growth of Activia and Fiber One and you would never believe that America has had a deep recession.

Success of Activia 

Another interesting aspect of the digestive health trend is its international, cross-cultural appeal. Activia is already the world’s biggest digestive health brand, sold in 32 countries with annual sales of $3.5 billion2.86 billion). General Mills clearly has ambitions to achieve the same global success with Fiber One  launching in the fast-growing Indian market earlier in 2010.

The desire for naturalness might often be identified as the biggest consumer insight, but there are no natural expert brands around of the scale and success of Activia or Fiber One (or any of the many, many other digestive health expert brands there are in the world) and nor could you create one. That is a key lesson for anyone trying to understand what trends they should connect to.

Just because your consumer insights agency has run focus groups, affinity groups, natural habitat analysis, consumer brain-sensing or whatever they choose to call it, and a majority of consumers have expressed an interest in a particular health benefit, that’s not the same as any of those insights actually representing a trend with growth potential.

A trend without the potential for growth through differentiation, to achieve higher volume or higher value is not a trend, it’s just an observation. And if many of those observations were as useful as is claimed, our industry wouldn’t have an 80% failure rate for new products.

About New Nutrition Business

ImageNew Nutrition Business is a London-based research, publishing and consulting company which specialises in researching, analysing and forecasting developments in the business of food, nutrition and health around the world.

The strategies and success factors it  has identified in the 1990s have become the benchmarks for strategy development and brand positioning in the worldwide nutrition business. It works with companies all around the world, from the United States to Australia and from Sweden to South Africa.

New Nutrition Business is headed by executive director Julian Mellentin, one of the world’s very few global specialists in the business of food, nutrition and health.

He is the editor-in-chief of New Nutrition Business and Kids Nutrition Report, the only industry journal in the world on the rapidly developing kids nutritional marketplace.


Julian is co-author of both The Functional Foods Revolution: Healthy people, healthy profits?, the first-ever book on the business of functional foods, now translated into Japanese, and Commercialising Innovation: The Food & Health Marketing Handbook.

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