06 Jan 2013 Naturality “super-trend” is set to remain dominant in 2013
NNB’s Julian Mellentin comments: “Several of the trends in this year’s report appeared in our top 10 last year, and we make no apology for that. Some trend lists change significantly from year to year, with new subjects appearing one year and disappearing the next. This is not the case with our list. We focus only on those trends that are underlying key drivers for our industry – not fads with no long-term meaning. This enables companies to formulate their innovation strategy around our trends analysis – as many companies tell us they do.”
The new report highlights consumer research conducted by Kampffmeyer Food Innovation, a Germany-based supplier of grain ingredients. The research findings show that 74% of people surveyed thought that ‘natural’ meant ‘healthier’, illustrating clearly just how strongly the idea of naturalness is connected to healthier products in the minds of consumers.
Meanwhile, several product categories go from strength to strength off the back of the naturality platform, including:
- Sweeteners – The power of the “Naturality” trend can be seen at work most clearly in the sweeteners market, where consumers’ preference is for sweeteners that are both low/zero calorie and natural – in preference to the long-established zero-calorie products such as aspartame.
- Stevia – derived from the leaves of the stevia plant – has seen a surge in demand and has become the third-biggest table-top sweetener in the US, with sales of $100 million (€78 million), within three years of launch. But stevia had barely got started when new natural competitors began to emerge, such as monkfruit. It heralds a massive fragmentation of the sweetener market as more companies vie to bring forward new sweeteners with natural credentials.
- Coconut water – Sales are rocketing, powered by coconut water’s advantage – that it delivers ‘all-natural’ benefits. Germany-based Green Coco, Europe’s largest coconut water brand, experienced 60% sales growth in 2012 “without any marketing investment, no advertising”. In the US sales of coconut water jumped by more than 100% to at least $200 million (€155m) in the year to September 2012.
- Snacking nuts – The Wonderful Pistachios brand has become one of the most successful healthy snack launches of the last decade. Retail sales grew from zero to more than $400 million (€308m) from 2008 to 2012.
- Greek yogurt – The explosive growth of Greek yogurt in the US has been powered by the Chobani brand, with annual sales of over $1 billion (€770m) only four years after launch. Chobani’s success comes from many factors – one being its natural message. Advertising for Chobani carries the tagline: “Nothing but good”.
Mellentin comments: “Naturality was the top trend in 2012 and will remain so in 2013. Quite simply, it’s the direction people want to go in. Naturality resonates positively with consumers in multiple ways and it provides food and beverage companies with opportunities to market products that command a premium. Although its exact definition can be debated, naturality does not fall foul of health claims legislation – but still manages to convey wellbeing-related messages. ‘Natural’ is something defined in the mind of the consumer, not by technical or regulatory definitions – and natural for many people also means healthy.”
He adds: “Naturality has, in effect, also become a ‘super-trend’ because its influence can be seen not just in its own right but across a whole host of food and beverage categories. It now affects the direction of several other key trends we have identified in our new report, including energy, dairy and digestive health.”
What “natural” means to consumers
There are two broad categories—different, yet entirely complementary—of “natural” as defined by consumer perceptions:
1. Natural meaning fewer and simpler ingredients: Foods that are “free-from” artificial colours, preservatives or additives. It can also be used to encompass foods that are free-from other ingredients that your target consumers object to. So, if regulators prevent the use of the word “natural” on labels or in advertising, it doesn’t matter. That is because, as smart marketers know, there are many other words and phrases – and ingredients – that the consumer interprets as signifying naturalness.
If your marketers say they can’t make progress without using the term “natural”, then it’s time to get some new marketers with better communications skills. In fact, perhaps you should never use the word “natural” – it will give you the discipline to use one of the many other ways of communicating the idea.
2. Natural meaning “naturally functional”: Rule number one in our market: 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.
“Naturally functional” needs no health claims
Understandably, companies worry about what health claims they can make for their products— and if they can’t make a claim, how to get the health benefit message to the consumer. But the good news is they don’t need to.
Perceived health benefits from “naturally healthy” ingredients is an easy concept for both consumers and the media to understand. “Naturally functional” needs no health claims, for when consumers can draw their own conclusions, no health claim is needed. In a restrictive health claims environment, such as now exists in Europe, this makes the marketer’s life much easier.
Oats, almonds, coconut water, cranberries, blueberries and many other foods have already benefited from this key consumer preference. This trend can only strengthen, thanks to constant positive media attention to foods with natural and intrinsic health benefits.
As Professor David Hughes, Emeritus Professor of Food Marketing at Imperial College London, observes: “If you are pushing in the direction people want to go in, it’s much easier.” It’s a reality which points manufacturers in the direction of choosing signature ingredients for their products which can credibly be seen as naturally connected with a product’s claimed benefit – even if it’s another ingredient that’s actually delivering the benefit.
The 10 Key Trends in Food, Nutrition & Health 2013 report identifies and analyses the ten major forces that will define the food and beverage industry in the coming year. Apart from naturality, the other nine key trends are:
Energy – a new golden era?
- Feel the benefit advantage: Energy drinks deliver a benefit that is immediately effective and detectable and this benefit explains much of their global success.
- Category defined by beverages: The energy drinks market is one of the biggest success stories of the functionalfood revolution that began in Japan in the 1950s – even today, Japan’s the biggest functional brand is an energy drink.
- Top-5 consumer need: “Lack of energy” is a key consumer interest for stressed executives, for harassed mothers, for older people who want to stay active, or for anyone struggling to get through a sleepy afternoon in the office.
- New opportunities with fruit, dairy and “naturalness”: Because of the focus – in the West at least – of the brands in the established energy drink category on males aged 18-24, there remains a wealth of untapped opportunities to develop new product formats, use new ingredients with a higher “natural and healthy” score than found in the current energy drinks and use new carriers – something other than caffeinated beverages – with better health credentials, such as dairy and fruit juices.
- Super-premium, super-convenient concentrated dose: “Shots” are creating a new category in the US and the UK, with the US market alone soaring to perhaps $1.2 billion (€920 million) in retail sales between 2004 and 2009. The shot format has still a huge potential to be fulfilled, primarily from creating brands and concepts with better appeal to older consumers – and particularly women.
Fruits & vegetables
One of the biggest winners from the naturality trend has been products based on fruits – and now also, increasingly, vegetables – or using fruit as a signifier of health. Fruit ingredients such as cranberries and blueberries and even pomegranate – unknown in most Western markets a decade ago – have become the first choice of product developers looking to add a health halo to snacks, dairy, bakery, cereals and a host of other categories.
New fruit-and-vegetable-based brands usually sell at premium prices. When fruit is available as a convenient snack or drink, consumers perceive it as something valuable.
- Fruit and vegetables offer a wealth of opportunities to overlap with other trends, lending their strong “naturally healthy” image to products.
- In a world in which health claims are becoming fewer and the demand for substantiation is increasing, fruit and vegetables have the advantage of an existing strong association with health in the mind of the consumer.
- Science is increasingly uncovering benefi ts in relation to digestive health, immunity, satiety, sports recovery, glucose uptake and insulin response, energy and mood. This research will only add to the appeal of fruit – and the main beneficiaries will be the companies who get in on the ground fl oor and establish their place in fruit.
For 20 years the dairy industry in Europe, Asia and South America has been at the cutting edge of food industry activity in health. Dairy has been more effective than any other aisle in the supermarket at creating new categories and innovative products. The most successful of these has been probiotic yoghurts for digestive health, of which Danone’s Activia (Key Trend 8) is the world’s biggest brand, growing from zero in the mid-1990s to retail sales of $3.5 billion (€1.9 billion) today.
Dairy has become a carrier of health benefits of all kinds – a fact that has helped make dairy a credible category for health messages. The health opportunity for dairy is still huge – particularly in the many markets, such as the US, Latin America, India and parts of Asia, where per capita consumption is low compared to Europe.
The US is one of the biggest opportunity markets for dairy – as was shown first by Danone Activia from 2006 and then by Chobani, creating the Greek yoghurt category from 2007. It is today a $1.5 billion (€1.2 billion) business, of which Chobani has nearly 70% market share. Yet American dairy marketers and senior management clearly lack both creativity and marketing skills – it was a French company (Danone) and then a Turkish entrepreneur (the founder of Chobani) who transformed and now dominate the US high-value yoghurt category, with a combined market share of over 50%. American companies seem to focus on mediocre me-too strategies. Their failure is a warning to dairies everywhere that in this category you can never sit back.
The world is full of hungry and clever dairyplus-health innovators who will come and create a new nutritional category and their new ideas are usually eagerly embraced by consumers.
Strong natural image: Dairy enjoys a strong “naturally healthy” image in consumers’ minds and has become a credible category for health messages.
Ingredient potential: Dairy proteins are accumulating a growing body of science behind their benefi ts. Protein is emerging as an essential ingredient to support “healthy ageing”.
- Science bringing new opportunities: Emerging science is improving dairy’s image even further, and changing the bad image of dairy fat. Could the next decade bring the realisation that low- or no-fat dairy products have been a huge mistake?
- Greek yoghurt phenomenon: The massive success of the Greek yoghurt category in the US, which has quickly boomed to $1.5 billion (€1.2 billion) in annual sales, illustrates how there are still a wealth of untapped opportunities to create new dairy propositions, even in developed markets.
- Opportunity: There’s a strong case for saying that senior nutrition is in fact the biggest trend after naturality. Of all the trends, targeting the needs of older consumers presents by far the most opportunities to create new products and generate sales growth – and may in particular offer opportunities for smaller companies. The opportunities for innovation for seniors can be found in:
- Ingredients that provide better nutrition and/or solve problems
- Ingredients and technologies that make good nutrition more available
- New formats, tastes and textures that improve patient compliance
- New benefi t platforms
- New ways of branding and positioning
- Advantages: As a demographic, older consumers have many advantages, including surging numbers, brand loyalty, and willingness to pay premium prices for products that work.
- New channels: Medical nutrition companies are increasingly marketing their science-based medicalised products not only to hospitals but also through the drugstores and pharmacies channel – a channel with several advantages.
Snacking is an over-arching trend in food and health, affecting every category, every type of food and creating a blurring of boundaries between categories as consumers evaluate multiple choices in the supermarket from a starting point of their suitability as a convenient snack.
- Innovation: A focus on building markets for new snack concepts rather than simply following on with predictable products has already led to the creation of some innovative snacking concepts.
- Convenient fruit: Fruit in particular benefits from being delivered in a more convenient form – a snack or drink – than its natural form, something marketers are beginning to flag up for consumers.
- Natural snacks: There is a marked trend for snacks to be marketed for their intrinsic, natural healthfulness.
- Breakfast opportunities: Healthy snack products targeting breakfast have promise because this is one time of day when consumers remember to eat healthily – yet are under time pressure.
- Think out of your “silo”: In snacks you are not just competing in your own category e.g. bars; in the mind of consumers you are competing with every other category in the supermarket that they could use as a snack. You cannot think in the “silo” of your own category, because consumers don’t. Therefore innovating in packaging, merchandising, ingredients, formulation and delivery system are all essential to success.
Packaging and premiumisation
There is a very good reason why you should focus on how to create a premium for your health product. And that is very simply that health is a series of niches, with products selling on a low volume basis to the 25% – 30% of the population who have a lifestyle of health and wellness.
You need to get a premium to make the low volume worthwhile – and luckily these consumers are willing to pay a premium for products that match their lifestyle. Even more fortunately, they are very receptive to interesting and eye-catching packaging, and good packaging is one of the best ways to command a premium price.
If you think this simple rule doesn’t apply to you, you are either Kraft (in which case the mass market is the market for you) or you are fooling yourself.
Twenty years ago it was possible to create a mass market brand; today, whether you are in health or indulgence, it is difficult, expensive and rare to create a mass brand (and when companies do, it is usually over a 15-year period). And if you do make it to the mass market you will find yourself under such strong, price-driven competition from other brands and from supermarket own label that you will wonder why you bothered.
The mass market was reluctant to pay high price premiums for health even in economic good times, and is more price-sensitive than ever now.
Good packaging, particularly innovative packaging, is crucial to creating successful health propositions in increasingly over-crowded markets. At its best, packaging supports the brand in asserting its difference from the competition. It’s the best way to catch the consumer’s eye and earn premium prices and better-than-average profit margins.
The emergence of many, many brands creating many new premium-priced, growing categories – from coconut water to kombucha to probiotic dairy – underscores the strength of the trend.
Innovative packaging performs several important functions:
It signals to consumers that “this is something very different”.
Innovative packaging conceals a price premium – using packaging, companies can create new price points and achieve much higher selling prices for their products.
If you use packaging innovation to create a new category then you are defining the direction in which many of your competitors must go and defining the packaging format they must adopt – in effect, establishing your credentials as a market leader and innovator.
The market for products for digestive health has developed into an enduring success story. But with maturity comes new challenges – it’s now at a point where, in order for their products to stand out and succeed, companies will need to be much more innovative and creative than many have shown themselves willing to be.
Dairy well-established: In probiotic products, dairy is dominant and it will likely remain so – it’s well established in consumers’ minds as the most credible format for probiotic benefits. Companies trying to push probiotics into solid food forms are largely wasting their time and resources.
In Europe restrictions on probiotic health claims are no barrier to success. Arla Dairy has demonstrated what creativity is possible – and in Europe and the US the market is ripe for a wealth of new entrepreneurial brands with local/regional/trendy identities targeting the healthy lifestyle consumers.
- Probiotic or fibre-fortified fruit juice is still an under-developed opportunity for entrepreneurial brands in most markets. This is particularly the case where used in conjunction with a fruit with a strong association with digestive health, such as fig, rhubarb, kiwifruit or plum.
- Fibre is still an under-developed opportunity in most markets. While there are successful probiotic “expert brands” – such as Activia and Yakult – there is only one similar brand in fibre, General Mills’ Fiber One.
Weight management is an underlying, even subliminal, aspect of most consumers’ daily eating decisions. Consumers’ interest in products with less sugar, their use of low-calorific sweeteners, the proliferation of salad bars, frozen yoghurt shops and health-oriented quick service restaurant chains in major cities are all driven to an extent by people’s concern not to add weight, or to stay the shape and weight they are, or to shed 2 or 3 kilos.
Weight management influences the decisions that product developers make every day, even when products are not sold with any stated weight management benefit – from makers of fruit snacks seeking to boast “no added sugar”, or deliver their snack in 100 calorie packs, to beverage makers trying to lower the calorific value of juices.
Everyone in our industry is constantly involved in decisions that will result in products that have as few negatives as possible for a weight-conscious consumer.
- Weight management is still a wide-open opportunity: Worldwide, just one brand has become a major success – Kellogg’s Special K breakfast cereal. Weight management remains an embryonic market that is still new enough for companies to create opportunities and carve out new businesses. However, don’t expect to replicate the success of Special K.
- A tough market to succeed in: Success in weight management is about offering product and service – or using messages that signify weight management in the mind of the target consumer, such as “high in protein”. Overt weight management positioning may be a turn-off for many consumers – it’s a benefit that might best be communicated as a secondary benefit, rather than a primary one.
- A “feel the benefit” market: consumers must be able to see or feel a difference in their body shape or weight. Special K Drop a Jeans Size is a perfect example of marketing with a measurable benefit.
- Higher protein, lower GI diets are already gaining traction among the most informed health-conscious consumers, and thanks to high quality science supporting their benefits this will be an enduring trend.
- Driving sports nutrition: Weight management is now the main driver of growth for sports nutrition products, which is the only place people can go who are looking for more high-quality protein in a convenient form in their diets.
- Service please: Putting a weight-management product on the shelf may not be enough – you have to actually provide a service. The success of concepts such as Special K shows how much people value support and service in reaching their weight management goals.
A top consumer need: Immune health – in the sense of better defences against colds and flu – is high on consumers’ list of health concerns, worldwide. As a result immune products represent a significant part of the dietary supplement and OTC markets, while probiotic dairy is the biggest food and beverage category. A wealth of fruits and fruit juices benefit from the consumer association of fruit with immunity, even when immunity is not used as a primary selling message.
Difficult to prove: However, demonstrating an immune health effect from an ingredient or a food is not easy and the science of immunity is an area of doubt and controversy.
Creative approach to claims: In Europe the regulators’ ruling against immune health claims made by probiotic products is proving to be no problem – companies are simply switching to using the permitted immune health claims of vitamins C and D and making sure that their products contain sufficient of these vitamins. As a result, immunity health claims are likely to proliferate in Europe and elsewhere.
10 Key Trends in Food, Nutrition & Health 2013 is available to purchase online now at http://www.new-nutrition.com.
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