By Peter Wennström
Natural and Organic foods and beverages have 10 times the growth rate compared to normal processed foods and beverages.
But as these “alternatives” are moving to mainstream the volumes are growing but the growth trajectory is flattening and the price competition is increasing as could be expected. E-Commerce is adding to this but from a still very small percentage (2% of foods and beverages and 7% of supplement sales).
The key trends reported from the US market by New Hope (with my comments) were:
1. Plant revolution (Yes and it just continues as it combines both health and environmental concerns )
2. Regeneration (Heal the earth and restore what we have destroyed with industrial methods and watch out since this idea is coming to your gut and your skin…)
3. World Traveller (Global inspiration and ideas travel fast in todays world )
4. Waste not (The new “organic” )
5. Have it Your Way (Of course, personalisation )
6. Buzzing for CBD (Hemp and cannabis derived products. Legal or not it’s spreading like weed! )
Internet and specialty channels growing
A New Hope brand survey among CPG companies revealed that the majority of new companies (0-3 years old) chose to launch on internet. Other growing channels are food service, practitioner and natural and specialty foods and MLM. The latter especially for supplements. Traditional retail is still the driver of sales volumes, so nothing new there except for that the role of traditional retail is changing.
The consumer is the point of purchase
The growth in alternative channels is driven by millennials and natural channel shoppers and they are contributing to the transformation of retail from the one place to one of the places where you can pick up your products. The consumer is today the point of purchase and the home is more often where you do the shopping from. The shop, the phone, the web are parts of your shopping ecosystem and a shop that isn’t connected to the web and where you cannot use your phone to find and select may find it increasingly difficult to find its future.
Consumers are overwhelmed
And rightly so because if Expo West is a reflection of what’s going on then as a consumer you are faced with an ever growing number of new brands, health benefits and nutritional messages. So in this flood of information, how does consumers orientate? Well the simple answer is that there is not one consumer.
The early adopter consumer is leading the way
The natural and organic foods and beverages market has roughly a 25% of the total market and that matches perfectly the numbers of the Wellbeing Consumer segment, reported by NMI. These are the early adopter consumers and they are 50% millenials and they spend more (want to) and they are 1/3 of all internet shoppers. They are also more brand loyal, which means that they also demand more from their brands, which is the reason they tirh their back on the big brands who they don’t trust to bring them healthy, ethical and trendy products.
Big brands are not meeting the demands of the future consumer
In a recent study by HealthFocus International Big Brands underscored on all critical points compared with Small Brands. The difference was strongest in the perception of the ability to deliver Ethical (-37% vs Small Brands) Healthy (-32%) Quality Ingredients (-28%) Sustainability (-25%) Innovative (-24%) and the list goes on. But there is one criteria that goes to the heart of Big Brands problems: they are not seen to “believe in the products they are offering” (-27%).
The mechanisms of branding has changed
Our own cultural research among millennials proves that the old branding models don’t work among future consumers. Forget rational ideas like the USP or the “benefit” for tomorrow’s consumer will not be rational in their choices. The new branding principle is Bonding and it means a relationship rather than a transaction. (We are currently exploring this in a new cultural research project named “The Church of Health Eating”. Report to be produced later this spring.)
The game is changing, how do you change your game?
This years ExpoWest was a manifestation of the change that we are seeing in the global food and beverage industry, a change that can best be described as a paradigm shift where we go from the world of processed foods to natural foods. It also means to go from chemical solutions to natural biological methods. This also means that the personal care industry is the next one to be challenged by the consumer. Many good examples of this was displayed at the Expo!
Six Global Game Changers and a Trend Report if you like
To understand the trends we see and to monitor the paradigm shift we have identified six game changers that will impact the nutrition industry. And when I say industry I mean foods, beverages, dietary supplements and increasingly personal care. Yesterday we had foods for sustenance and pharma for health. Tomorrow we have nutrition for preventive health and wellness and pharma for acute illnesses.
If you want to know more about the Six Gamechangers and how they were represented at Expo West then just send an email to Amanda@thehmt.com, and she will make sure that you recieve our upcoming trend report from Expo West.