16 Jan 2012 ‘Naturality’ will be the top trend in 2012, says New Nutrition Business

‘Naturality’ is set to be the leading driver of innovation in the food and beverage market in 2012, according to the latest edition of New Nutrition Business’s eagerly anticipated annual trend-spotting report. 10 Key Trends in Food, Nutrition & Health 2012 says naturality has become the biggest single trend in the market to the point that it is now a “basic consumer requirement for any brand” – even those without an overt health position.

However, the report also points out that naturality is increasingly becoming a highly successful “innovation strategy” in its own right. This is proving to be true both for new concepts – such as coconut water – and old favourites like Greek yoghurt, almonds and pistachios. It has also opened the door to a growing number of successful launches of fruit and vegetable-based products.

A number of key developments in 2011 illustrate this trend, including:

• 100% sales growth for coconut water in the US plus 90% growth in Germany for Dr Antonio Martins Green Coco, Europe’s biggest coconut water brand.

• The emergence of Nature Addict’s pure fruit snacks in France as a €30m brand.

• The explosion in sales of Greek yoghurt in the US, where leading brand Chobani is now worth $700m-a-year despite being launched just four years ago.

• Huge increases in sales of nut snacks in the US, with the Wonderful Pistachios brand now worth an estimated $200m a year and sales of Blue Diamond almonds having grown 78% between 2007 and 2011.

Julian Mellentin, director of New Nutrition Business and author of 10 Key Trends, says that one reason naturality is now so important is that it enables companies to tap into the concept of ‘naturally functional’ products which do not require health claims – a real plus-point in today’s tough regulatory environment.

“We’re seeing the authorities clamping down hard on companies making health claims, particularly in Europe,” Julian explains. “This means it’s going to become much harder for companies to create innovative functional foods and beverages that offer active health benefits.

“However, foods which are understood by consumers to have intrinsic health benefits – such as fruit, veg, nuts and some dairy products – don’t need health claims at all, because consumers already see them as nutritious and wholesome. In addition, as last year’s success stories have shown [see bullet points above], products in this prized position are able to command a significant price premium, even in the midst of an economic downturn, adding huge value to foods previously seen as basic commodities.”

He adds: “In short, the message that a food or food ingredient has a natural and intrinsic health benefit is one of the most persuasive that people can hear. This means that, in a restrictive regulatory environment, ‘naturally functional’ is the way forward for companies wishing to market products with a credible health proposition.”

As its title suggests, 10 Key Trends identifies and analyses the ten major forces that will define the food and beverage industry this year. In full, the key trends are:

1. Naturality

“Naturality” – or “natural functionality” – is the biggest trend. In most Western markets the descriptor “natural” is becoming a basic consumer requirement for the ingredients on the label of any brand, even those without an overt health position.

“Natural” is something defined in the mind of the consumer, not by technical or regulatory definitions.

Importantly naturality is also an innovation strategy – the biggest successes have come not from simply attaching the word natural to existing products and brands but from creating new brands and new product formats. The naturality trend has been most successful for beverages and snacks.

The “naturality” trend is behind successes in Greek yoghurt in the US, coconut water, almonds and pistachios – and has opened the door to a growing number of successful fruit and vegetable-based products, which like dairy are a credible all-natural food form.

The naturality trend does not mean that consumers are looking only for “traditional” foods – in fact they seem very willing to accept new ingredients and new formats and new benefits, provided that the products overall meet consumers’ definition of naturalness.

As the biggest trend, naturality also overlaps with – and influences – most other trends. The growing consumer and industry interest in Fruit & Vegetables
(Key Trend 8) – as ingredients, in convenient formats and as carriers of health benefits – is a by-product of the naturality trend.

“Naturally functional” needs no health claims – when consumers can draw their own conclusions (thanks to constant positive media attention to foods with natural and intrinsic health benefits) no health claim is needed.

To be successful with the naturality trend isn’t simply a question of choosing ingredients with a health halo. While that’s a sensible thing to do, in fact it
won’t by itself do a lot for your sales. Your naturality strategy must perform across these four aspects: Marketing, Processing technology, Science and Convenience.

2. Energy
Energy has long been among the biggest trends, and a number of forces have come together to keep it so. Energy continues to be one of the world’s fastest-growing – and most-profitable – markets. And it still presents a wealth of opportunities, one of the biggest being how to harness the “naturality” trend.

“Natural energy” ranks on many companies’ new product development agendas, resulting in product launches this year from Nestlé, Campbell’s and others that use fruit and vegetables as a basis for a natural energy drink.

Here’s a short-list of the opportunities:
• New consumer groups: women and older (35+) consumers.
• New ingredients: to create brands with a higher “natural and healthy” score than the current energy drinks.
• New carriers: a core ingredient with better health credentials, such as Nestlé Jamba Juice’s 70% fruit content or Campbell’s V8’s fruit and
vegetable juices. Note how these brands are making a crossover with the key trend of fruits and vegetables (see Key Trend 8), another
important area of opportunity.

And after years chasing an alternative, many companies have decided to stick with caffeine and deliver it at an effective dose – but in a carrier with a good natural image, such as fruit-plus-vegetable juice.

Incredibly, energy drinks will also be the category that benefits most from tougher health claim regulation. Soon the energy drink category will be the only one in Europe in which every single brand will be able to carry an approved health claim, thanks to their caffeine content. The significant body of research behind caffeine’s effects has been enough to meet the exacting requirements of the EFSA review panel. This good fortune will lead many companies to rethink caffeine and we can expect to see a proliferation of products – many based on coffee – in the years ahead.

3. Digestive health
Products for digestive health have recently proven themselves to be almost recession-proof, even when selling at premium prices. This is a testament to the power of “feel the benefit” (see Key Trend 4).

Despite the economic downturn, premium brands such as General Mills’ Fiber One and Danone Activia have achieved 10% + annual growth. Given that the probiotic dairy category is now well-established and in many countries there are few – or no – opportunities for new probiotic dairy brands, the growth opportunity lies with fibre.

4. Feel the benefit
Offering a benefit the consumer can feel has become even more important – and effective – in a tough economic environment. When people can feel the benefit being offered to them, they see that they are getting value-for-money.

A “feel the benefit” effect is the underpinning of the success of energy drinks and products for digestive health – two areas that are among the top consumer health concerns. In fact, all consumers’ top concerns relate to problems where delivering a tangible effect is critical for product credibility.

5. Weight management
Still a wide-open area worldwide with a wealth of opportunities, such as those emerging for protein and low-GI diets in the wake of new science from the Diogenes study. Just one brand has become a major success – Kellogg’s Special K breakfast cereal. It’s a “feel the benefit” market (see Key Trend 4) – consumers must be able to see or feel a difference in their body shape or weight.

But what is clear is that putting a weight-management product on the shelf may not be enough – you also have to provide a service component. The success of Weight Watchers and Jenny Craig – and Special K, with its eating programme – shows how much people value support and service in reaching their weight management goals.

6. Movement
An opportunity particularly for science-based companies with products that address bone health, joint health and the problem of muscle-wasting – all health issues for seniors in particular.

7. Seniors
The most important need group this year because seniors are over-represented among buyers of all products with health benefits. In recent financial statements, for example, Danone revealed that its Actimel dairy drink brand, the world’s biggest immunity brand, was bought mostly by people over the age of 60. Their numbers are growing – seniors are as important in China as in the West – and they are the single-biggest opportunity, both in the supermarket and in medical foods. But seniors are not one group. They need to be carefully segmented since needs and attitudes are different at each stage.

8. Fruit and vegetables
New fruit-and-vegetable-based brands are emerging and growing rapidly – such as the Nature Addicts! brand, the most successful snack launch in Europe of the last three years – and usually selling at premium prices. Consumers perceive convenient fruit – as a snack or drink, for example – as valuable. Fruit and vegetables offer a wealth of opportunities to overlap with other trends, lending their “naturally healthy” image to products. One dairy brand is raising its fruit content to use fruits as a basis for making an immunity health claim not allowed for its probiotic ingredients.

Science is increasingly uncovering benefits in relation to fruit and the main beneficiaries will be the companies who get in on the ground fl oor and establish their place in fruit.

9. Dairy
Dairy enjoys a strong “naturally healthy” image in consumers’ minds and has become a credible category for health messages, while dairy proteins are accumulating a growing body of science behind their benefits. Protein is emerging as an essential ingredient to support “healthy ageing”.

The massive success of the Greek yoghurt category in the US, which has quickly boomed to $700 million (€519 million) in annual sales, illustrates how there are still a wealth of untapped opportunities to create new dairy propositions, even in developed markets.

10. Good grains
Grains benefit from a consumer perception of being “all-natural” and least-processed. In terms of innovation there’s been a steady increase in the numbers of products launched based on new types of grains and “ancient grains” – people appear to be open to new grains, just as they are open to new fruits and vegetables. Meanwhile the Diogenes weight management study has given renewed life to the concepts of Low GI and “sustained energy” – which is likely to accelerate the trend to use whole grains in product formulation.

MICRO-TRENDS FOR 2012

The Micro-Trends often make the most interesting reading since they offer the possibility of a new area of business, a new avenue for technology, or a different way of thinking about consumers.

Micro-Trends are the secondary growth opportunities. They are developments that are not yet significant but could be, in some cases because the technology does not yet deliver the benefi t the consumer needs, in other cases because the most effective type of branding or marketing has not yet been worked out, or because there are regulatory barriers.

This year we have introduced a grouping called “systems” – the elements around a product that make it successful. So far we have identified three – packaging, services, and direct-to-consumer – where there is embryonic activity and which we have categorised as Micro-Trends, since few companies are prioritising them, despite their transformative potential.

Packaging technology, for example, has already proven itself key to the creation of new brands and new markets – but the focus of 95% of companies is solely on the product. It’s a hugely under-developed innovation opportunity.

Service is proving a key success factor in weight management – and may be an essential element in other benefi ts areas.

Direct-to-consumer is establishing itself as a valuable way of getting around the stranglehold of supermarkets, whose power in many countries and short-term focus kills many innovations even before they start. We show how some innovative companies are already making direct-to-consumer work.

As for the other Micro-Trends, some of these have had a lot of attention and huge growth forecasts have been made for them. But as these two examples show, they have for the time being not met those growth expectations and are therefore “Micro” trends:

• Sports nutrition has been a focus for over a decade. It has been the ambition of sports nutrition companies to “mainstream” their products; dairy companies too hope to bring high-protein dairy products for sports into the mass market. Everyone is targeting health conscious younger women – but no one has been particularly successful yet. This may partly be because if you want to succeed in sports nutrition you also have to overlap with two of the Key Trends, Naturality and Fruit & Vegetables, which only a few brands are doing at the moment.

• Kids’ nutrition was the big hope but with the possible exception of dairy products for bone health, fortifi ed products have relatively little appeal and in fact most have failed, such as omega-3 dairy products for kids. Naturality – Key Trend 1 – is in fact the key requirement for success in this marketplace, and there are overlaps with Fruit & Vegetables, and Immunity. For now kids’ nutrition remains a niche, although a healthy one.

About New Nutrition Business

New 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 (right), 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. See www.new-nutrition.com

Julian Mellentin can be reached at [email protected]