The desire for niche, artisanal, natural and organic products is widespread and growing quickly, Joanna Clifton, client development/market analyst, Innova Market Insights, told attendees of the 100th Annual NAFFS Convention. That means some mainstream brands’ market shares are losing out because there’s a growing disinterest in mainstream processed food brands, particularly among Millennials. This, she said, creates an opportunity for niche brands and gives smaller brands, such as Kind, the edge on transparent, “clean”, green products.
Innova, a food and beverage market research company, tracks food and beverage products and all their characteristics communicated to the consumer by the manufacturers on the packages: brand name, claims, flavors, ingredients, texture etc. from over 80 countries globally. It’s led to the creation of what Clifton said is the largest database of its kind.
The database, she said, show that globally, consumers continue to gravitate toward smaller artisan and craft labels with appealing health and wellness claims. American consumers, she added, are more interested in healthier foods and authentic brands than they were 15 years ago.
Clifton said the shift away from large brands is being primarily driven by Millennials, who have little interest in processed foods. That’s left large packaged food companies scrambling to serve them. She said that according to IRI, smaller artisanal brands have officially taken a bite out of the retail food and beverage market. Between 2011 and 2015, smaller brands shifted $18 billion away from larger players, and now account for almost half of all retail grocery trade dollars.
The impact of the Millennials is far from over, she said. “Millennials are approaching their prime buying years when they feed their growing families. For food consumption, the sweet spot is between ages 35 and 44 years old and the oldest millennials are turning 35 this year.”
Clifton also noted the last five years have seen small- and medium-sized manufacturers gain increased distribution across regions, translating to more shelf space at stores and a wider array of products on the shelves. Larger food and beverage companies used to have a few major competitors, she said. But now they have hundreds of small ones. “Many of these small players only do one thing but they do it well, which appeals to the discerning millennial consumers who look for more authentic, diversified and less-traditional flavor experiences. Because small companies have a more agile, less bureaucratic R&D process, they are able to get their ideas out much quicker,” Clifton said.
She said data from 2015 through 2017 year-to-date statistics shows small to medium size enterprises (SMEs) had four-times as many launches of salty snacks than larger companies. Both small-to-medium and large companies each had approximately 10 percent unflavored product launches. When it comes to flavors, SMEs top flavor was sea salt. For larger companies, cheddar/sour cream was the leader.
Innova’s analysts identified key flavor platform trends for 2018. These macro flavor trends are observed across the majority of market categories and flavors within them may be interchangeable or even overlap depending on variations in consumer / manufacturer practices, usage, culture and perception. Flavor trend platforms included: alcoholic beverages, confectionery, meat-fish & eggs, snacks, dairy, soft drinks, bakery, desserts, soup, ready meals, sauces & seasonings, cereals and hot drinks.
Clifton outlined how it’s determined whether or not a flavor is trending. “It’s considered an emerging trend when a flavor has increased every year since 2013 and features a compound annual growth rate (12-16) higher than 20 percent. A trend is when flavor has increased in the last two years (15-16 and 16-17 YTD) plus has a CAGR higher than 20 percent.”
Pointing to a slide depicting trending flavor categories, she noted the ethnic flavor category is the most prevalent. Twenty-four percent of Millennials in the U.S. are of Hispanic heritage and in 2015 more than 50 percent of all new births in the U.S. were from people of minority descent, creating a logical path to the continued growth of overseas influence in flavor diversity. Pan Asian comfort foods, which are led by small chains and independently-owned operators, are offering a more culturally diverse selection of foods. Soup-y bowls, Southeast Asian congee, Korean bibimbap, Vietnamese pho and the craze for all things ramen are among the top searched food items. Citing a private label example, Clifton noted Wegman’s recently introduced an entire line of refrigerated grab-and-go power meals, many featuring contemporary Asian flavors and styles like tataki.
Clifton said the healthy trend, which has been a constant in the U.S. for decades, is likely to remain for the foreseeable future. Vegetables prepared in innovative forms — such cauliflower steaks and jalapeño hush puppies — have been gaining importance on various menus in restaurants and even at home. And unlike the French fries, they’ve graduated from side-dish status to main dish status.
As plant-based meat and dairy alternatives and vegan options rapidly move into mainstream food and beverage products, the plant-based trend is becoming an international movement, Clifton said. Consumers are looking for innovative options to take the inherent benefits of plants into their daily lives and food manufacturers are responding.
“For any trend or movement to gain traction and become impactful, it needs to have ‘drivers’ that connect to consumer values,” said Clifton. “Plant-based foods can reach a very diverse set of values — including but not limited to environmental, health, cruelty-free, seasonal and local. This creates a greater customer base, compared to more-niche vegan or vegetarian foods. Innova has seen a huge increase in the notion of plant-based food, especially over the last five years,” Clifton said. “The term ‘plant-based’ is inclusive of vegetarian and vegan but plant-based is not indicative of any particular lifestyle. It is as simple as it sounds and has mass appeal among flexitarians, reducetarians, vegans, vegetarians and just health-conscious consumers, including meat-lovers.”
Flavors that suggest they come from plants are more easily perceived as better-for-you, Clifton said. “The options of plant-based flavors to choose from are broad, offering a huge opportunity for manufacturers and flavor suppliers to apply them across categories with plant-based claims. From ready meals to snacks, soft drinks, spreads, desserts – the opportunities for enhancing plant-based product launches are considerable.”
Clifton said consumers are opting to eat less meat in favor of plant-based protein sources such as nuts, beans and jackfruit. Dubbed as “flexitarians” or the flexitarian diet, this has sparked a new trend in the market for products that feature meaty texture and flavors minus the meat. Approximately 38 percent of Americans claim that they have at least one meatless day in a week. There is an increasing number of people whose diets lean towards plant-based foods. In the U.S. alone, more than 120 million people claim that they follow the flexitarian diet, Clifton said. “This is a tremendous market opportunity that is twice as large as the domestic vegan and vegetarian markets. Also called ‘part-time vegetarians,’ flexitarians have influenced many food manufacturing companies to develop new products that will appeal not only for the flexitarians but also to vegetarians and vegans.”
Plant milks, meat substitutes and vegan offerings have moved rapidly into the mainstream, she added. Consumers are looking for innovative options to take the inherent benefits of plants into their daily lives. Soy still remains the No. 1 ingredient for a meat substitute; one in five meat substitutes contains soy, Clifton said.
Alcohol flavors are being included in a diverse range of categories, from beer cheese to whiskey pickles, Clifton said. Alcohol is not only added for its flavor; it’s added to give the product an indulgent twist.
Smoked products are increasing their footprint as well. No longer confined to meat and fish, they’re appearing in dairy, fruits, vegetables, desserts and cocktails. Smoked flavors add texture and dimension to food and beverages, Clifton said.
Colors are making their way into restaurants, Clifton said. Purple vegetables are a favorite for chefs to use on their plates due to their vibrant color and link to nutrient density and antioxidants. This trend has spilled over to the food industry, opening up the possibility of “purple flavors” to accompany such ingredients in a wide variety of products. Chocolate is no longer black, white or “blond”. Clifton said Barry Callebaut launched a ruby chocolate – the flavor is described as between berry-fruitiness and luscious smoothness – but no extra colors or flavors are added to create the pink hue which comes from a powder extracted during the processing of ruby cacao beans. “Colors in beverages are also evolving,” Clifton said. “Pepsi launched a blue cola.”
Looking to the future, Clifton said coffee is trending among Millennial and Generation Z consumers, while tea seeks to reinvent itself among these younger generations. “Tapping into the positive taste and experiential associations of coffee and the health benefits of tea, we are seeing their application as ingredients and flavors popping up across many categories from energy bars to yogurt and even jam,” Clifton said. “Teas have gone way further than a cup, being increasingly observed in categories that range from beer, to desserts and confectionery.”
Clean label has become so relevant to the industry that it has stabilized and is now mainstream, Clifton said. “Mindful eating” is the new catch phrase. In terms of clean eating, she said large companies such as Unilever, Kellogg’s and Cargill have set major sustainability goals to accomplish in 2020. These include a range of things from sugar or fat reduction to the use of more clean energy, to more recyclability.
Clifton said it’s important to explain what Clean and Clear Label imply. “Clean and clear claims have merged and are evolving into “clean supreme” where other issues such as animal welfare take more relevance. In 2017 year-to-date there have already been 37 percent more food and beverage launches tracked with natural flavor claims than in all of 2012. Concentrates and extracts are clean ingredients, with the potential to be easily perceived as ‘more natural’ by consumers. The goodness of concentrates and extracts relies in that they can be used not only to impart flavor but also as food colorings and even as healthy elements (e.g. turmeric).”
She cited Nordic cuisine as one that emphasizes clean ingredients. Since 2005, she said, the Nordic Council has actively promoted “purity, simplicity, and freshness” and usage of local, seasonal ingredients through the new Nordic Food Program. “IKEA is considering opening up stand-alone restaurants. Thirty percent of customers already come to stores just to eat,” she said.
As for the future, Clifton offered these insights:
● Overseas influence will remain in the spotlight with variety and growth in choices of authentic culinary flavors from around the world.
● Opportunities for plant-based flavor application across market categories are endless due to its versatility and will remain on the rise.
● nnovation relying on decadent flavor application – from desserts to alcohol or flavors that evoke indulgence – will remain paramount in the industry. Indulgence is being redefined, combining health aspects.
● Cross-category fusion of flavors is observed in a huge range of flavors and blends across all sorts of F&B. More out-of-the-box flavor innovation is expected.
From ready meals to snacks, more culinary concepts with sophisticated flavors are being introduced to F&B products.