Top trends

Top 10 food and beverage industry trends — and why they matter

The food and beverage industry is on the brink of a major shift, with consumers worldwide watching…and participating. This is why the industry desires — and needs — to garner and maintain interest in products amid spurring health studies, economic ebbs and flows, safety updates, and regulatory developments. [American in focus, but still relevant. Ed]

Here are the top 10 trends that reflect what’s relevant and crucial in food and beverage today:

1. Manufacturers and producers shifting to natural ingredients from artificial colours and flavours because of health concerns

Day in, day out, companies are pledging to remove artificial ingredients from products. Consumers are asking for healthy ingredients and companies, intent on improving the bottom line, are listening. What’s not yet clear is whether the trend can translate to boosts in cereal, candy, and frozen pizza markets, particularly as many of these changes are happening over the next few years. What is clear is that not all problems are easily solved, as different ingredients require different reformulations.

2. Mergers and acquisitions continuing to flood the industry

The Kraft-Heinz merger is the biggest industry story of the year. Two behemoth companies coming together, with big-wig Warren Buffett and zero-based budgeting-proponent 3G Capital playing puppet masters. But this is just one of many merger and acqusition announcements; Hormel and Applegate, Mondelez and Enjoy Life Foods, Hershey and Krave. But with acquisitions, maintaining independence is often a point of negotiation for smaller companies.

Acquiring nimble companies which have built health conscious images is a clear strategy for large food and beverage companies to reap the benefits of healthy products without reformulating ones of their own.

3. To counter falling sales of sugary beverages, major players investing in RTD teas and sparkling water

It’s no secret — soda is struggling, with US consumption falling for the tenth year in a row. Companies are offering a slew of options to keep consumers interested, including taking away ingredients (i.e. Pepsi with Diet Pepsi). Meanwhile, the RTD tea and sparkling water markets are proving viable, and growing. RTD tea hit $5.3 billion in US sales across the world last year. Meanwhile, in the five years ending in 2013, seltzer sales rose 29%.

4. Heightened awareness making recalls more prevalent across a variety of products

Recalls are an industry constant, though prominent ones have included Blue Bell’s entire product line and Kraft Heinz’s turkey bacon recall. Though, it’s not that products are less safe, according to the GMA, but that now the industry can be more vigilant. With better safety technology innovation, the industry is becoming better equipped to handle recalls.

Additionally, social media has helped consumers alert companies to product issues, positioning them to get out ahead of potentially reputation-ruining news.

5. Companies battling consumers, government for accurate, transparent labels

Food labeling has always been a contentious issue, but food battles are reaching the start of a fever pitch. GMO labeling and COOL regulations in particular are putting the industry on the defensive.

The Safe and Accurate Food Labeling Act of 2015 recently passed the House, though its hurdles still include making it through both the Senate and the president. As for COOL legislation, the United States Trade Representative recently said the methodology behind Canada and Mexico’s requested tariffs was “flawed.”

6. Companies pointing R&D and marketing efforts towards better-for-you snacks

Diamond Foods, Nestle, and others are investing in R&D centers to create products that meet consumer needs — similarly, consumers are pushing their non-GMO, organic, and natural products to the forefront of consumer minds through packaging and labeling.

7. Breakfast cereal losing market share

Earnings reports show that traditional breakfast cereal hasn’t been performing well, with Greek yogurt in particular rising in the ranks. Both Kellogg and General Mills have seen disappointing results — Kellogg a 24% earnings drop and General Mills sinking 54% on an impairment charge — which has led to brand innovation. But whether retooling brands in-house by removing ingredients or seeking to acquire ready-and-able companies that have already mastered the latest consumer trends is better for a company remains contentious.

8. The emphasis on protein, and protein alternatives from more outlandish sources (i.e. seaweed, insects, etc.) showing up in product lines and overhauls

Between talking to representatives at two industry conferences — the Summer Fancy Food Show and the Institute of Food Technologists annual meeting and expo — it was clear that alternative proteins, ranging from more commonplace like chickpeas and quinoa to the exotic, like seaweed and insects, have the industry’s attention.

9. Industry embracing new marketing tactics to reach the elusive, but viable millennial market

From virtual reality to web series to corporate sponsorship, marketing techniques range far and wide, in particular to attract the coveted millennial demographic. These can include playing with nostalgia or offering a “cool” factor that sparks interest.

10. Shelf life increasing with technological innovations

The potential to make processed food healthier often involves removing ingredients — but what about a process that wouldn’t require certain chemicals to be there in the first place? Read more here