At the beginning of 2013, it was surmised that overarching themes like greater health awareness, changing demographics and urbanisation would be influencing developments in the food industry.
With a growing middle class and ageing population, trends in the food industry were expected to revolve around convenience, functional food, ergonomic packaging, cultural influences, and corporate social responsibility. Now that the greater half of the year is gone, how have these expectations matched up?
Driven By Health
Armin Vogel, Brackenheim, Germany
By and large, the most pervasive factors driving trends in the industry are a combination of affluence and greater health awareness. With greater disposable incomes, consumers can afford to spend more on foods perceived as healthy, resulting in the clean label movement.
In part driven by food safety scares, consumers are displaying a greater interest and awareness in the origins of their food. Genetically modified (GM) food is a prime example, where increasing knowledge on such foods and their yet-as-ascertained effects have made consumers wary.
The uncertainties and lack of trust in modified food (be it genetically or chemically) have subsequently led to the demand for items that are perceived to be natural, without artificial and treated ingredients or preservatives. Consumers have started to value quality rather than just price alone.
The less adulterated and processed the food is, the better it is perceived to be. This includes functional foods, organic products, as well as items that are inherently beneficial to one’s health—high in fibre and nutrients, but low in calories, fat, sodium and sugar.
For instance, alternative grains like quinoa and millet are known as natural nutrient powerhouses and gaining popularity alongside brown rice as consumers learn more about their benefits. “There is more demand from China for quinoa. All the organic restaurants are using quinoa as their main ingredient,” said Spring Chan, international business manager at My Healthy Home.
A study by Singapore’s Health Promotion Board (HPB) has also revealed that Singaporeans are choosing to eat more wholegrain foods like wholemeal bread, brown rice and oats. The sales of wholegrain bread and brown rice doubled in 2012, accounting for 20 percent of all rice and bread sales.
There is also an evident increase in the preference for unsaturated fats, where consumers in Singapore are choosing to purchase healthier cooking oils. While healthier cooking oils occupied only 40 percent of oil sales in 2009, this figure has increased to 60 percent in 2012. Healthier cooking oils may include pure vegetable oils like canola and olive, or oils enhanced with beta carotene or oleic acid, such as high oleic soy bean oil.
They serve as an alternative to conventional soy bean oil that is not just trans-fat free, but also has lower levels of saturated fats. The oil also has a high resistance to oxidation, which makes it suitable for extended applications or in shelf life extension for baked goods.
Meanwhile, a greater consumer interest comes with a greater scrutiny of ingredient and nutrition labels. Nutritional information aside, consumers are checking for synthetic ingredients, which when given a choice, they will avoid in favour of a more natural alternative, or for options that offer it at reduced levels.
This has given rise to demand for products with natural attributes down to the ingredient level, including natural sweeteners, colourings, and improvers, among others.
Results of a Datamonitor study have shown that the bread and bakery segment is experiencing an increased use of stevia—a natural sweetener—in its formulations. This rise was facilitated by consumer demand, where more than half of global consumers said that having no artificial sweeteners influenced their product choices greatly.
Among the products tracked in the organisation’s Product Launch Analytics database in 2012, 11 percent were associated with low or no synthetic sweeteners claims. Yet, claims associated with low or no sugar made up for 89 percent of sweetener related claims. This shows that ultimately, people still prefer natural ingredients over synthetic ones.
Further contributing to this trend is that of the food colours market. With existing concerns over artificial food colouring, including their potential association with conditions like attention deficit hyperactivity disorder (ADHD) in children, consumers are turning to natural food colours.
In response, the food industry is spearheading a shift towards the use of natural food colourings, much more so than the beverage market. According to a joint report by Mintel and Leatherhead Food Research, twice the number of product launches in food and drinks are using natural colours rather than synthetic ones. It is a trend that is gaining significant traction, especially in premium food and drink segments as well as for items catered to children.
Clean ingredients are a vehicle that organisations can use to deliver trust and transparency. It also mitigates risk in a volatile climate where health concerns are easily influenced by mass media or health campaigns targeting specific types of ingredients. Although it makes logical sense to adopt this approach, technological and price restrictions exist.
Clean label ingredients tend to be more costly, and they might not confer the same textural benefits and experience as other ingredients. As a result of these challenges, there is a rise in companies seeking patent protection for their products. This includes Danisco’s microGARD preservation technology, Cargill’s Clear Valley oils and shortening, Givaudan’s TasteSolutions and Ingredion’s Novation line of clean label starches.
Further aligned with clean labels is the growing organic movement. According to Ms Chan, the movement has been growing in Hong Kong as people become more conscious of their health. Citing an example, she said that people are looking for organic wine because “they think that normal wine contains chemicals in the berries, so why not go for the organic alternative which tastes equally well?”
This phenomenon is seen in India as well, where the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has been promoting organic production in Madhya Pradesh to cater to increased demand. According to a study by the association, demand for organic food is going strong and currently stands at INR6 billion (US$101.36 million) despite it costing one-third more than traditional foods.
Derrick Coetzee, California, US
Growing at an annual rate of approximately 40 percent, organic farming in India is expected to be worth INR100 billion (US$1.69 billion) by 2015. Just as in Hong Kong, the most popular items in India are fresh produce like vegetables.
While organic products are largely viewed positively across Asia, it has to be noted that the term holds a different connotation in China. Sally-Anne Hawkins, sector lead, International Development, Food & Market Development Division from the Welsh government, has said that many Welsh companies have removed ‘organic’ from their packaging for the Chinese market.
“Things that the Asia buyers perceive as healthy and natural is good, but they see organic as potentially not clean,” she explained. As a result, while ‘natural’ is generally viewed favourably across markets, the same cannot be said for the ‘organic’ term, which should be used only after due consideration of cultural differences.
With increasing urbanisation, consumers in Asia Pacific are facing lifestyle changes characterised by living in smaller spaces, a faster pace of living, as well as the tendency to juggle multiple roles. The combination of these factors has made convenience an important factor for time-deprived individuals.
Saddled with multiple commitments, time scarce consumers in the region are seeking products that are quick and efficacy-driven. A part of this includes looking for ways to shorten meal preparation times, while some consumers do away with it altogether by eating out.
In light of these opportunities, fast food chain McDonald’s has announced that it will be setting up shop in Vietnam. Elsewhere in India, the growth of the frozen snack market remains strong. In a show of confidence, the Indian subsidiary of McCain Foods will be investing an additional US$69 million in a third manufacturing line at its potato processing plant.
The development of packaged rice in India has also doubled in the past two years, with a Mintel study reporting the increase in product launches, from 100 in 2011 to 200 in 2012. Packaged rice products are often pre-portioned and microwaveable, and may also be enhanced with additional nutrition. Tagged to deliver greater convenience together with health benefits, such products acquiesce to the modern consumers’ demand for products that can deliver on multiple levels.
The same rationale has also resulted in an increasing prevalence for prepared foods in North Asia. For instance, Yinlu Foods, in partnership with Nestlé, has built a CHF319 million factory in Anhui province, China, for items like ready-to-drink (RTD) peanut milk as well as ready-to-eat (RTE) rice, oat, and red bean congee.
In Japan, prepared meals are ranked six out of the 15 food sectors and have been seeing continual growth, with ready meals taking up the largest share.
Meanwhile, informal eating patterns have become a core aspect of modern day living. People are now eating only when time permits, rather than making time to do so. Unsurprisingly, on-the-go eating and drinking is on the rise as people are skipping core main meals and turning to snacking instead.
In the dairy sector, that trend is translating into demand for RTD flavoured ambient milk in portion packs. Research from Tetra Pak has highlighted the superior rate of growth that ambient RTD flavoured milk has over chilled and powdered milk. This is especially prevalent in developing countries where on-the-go consumption is rampant, as ambient milk allows long shelf life without refrigeration.
The research has also found that consumers in Asia are much more receptive to portion sized packs that are 200 ml and below. Such packs provide portability and ease-of-use, which resonates with consumers. For instance, the main consumers of ambient milk in Japan and China are working adults who drink it on the way to work, while in Indonesia, it is touted as a parent’s solution to providing their children with nutrition.
Besides influencing the types of products launched, the convenience trend has also driven the packaging used to house those items. This has a particular effect on flexible packaging, where pouches, bags and cartons are preferred as they confer greater portability than bottles, cans and jars. They are also easier to open, less susceptible to denting and breakage, and are lightweight.
Paired with closures like re-sealable zippers, line tears or screw-on spouts, these packaging not only facilitate on-the-go consumption but also aid urban consumers, who often have limited transportation and storage options. Considering the fact that people are eating smaller and lighter meals, the ability to keep and revisit unused portions becomes a boon.
With these developments, the packaging and specialty plastics division in Dow Chemical has reported improved sales in the Americas and Asia Pacific, with food and specialty packaging showing great strength across all geographical regions.
It can be said that the benefits of flexible packaging—functionality, convenience, sustainability, and cost efficiency—are largely brought on by advancements in film fabrication technology. Developments in this area have made it possible to balance function and cost, as it allows manufacturers to customise a matrix of layered materials so that they can achieve the best fit for a specific product.
Consequently, popular packaging materials in Asia are now starting to gravitate towards coextruded film technologies. “This technology (coextruded film) benefits customers as it has high production efficiency, uses less thickness in the material itself and offers high barrier protection, high puncture strength and good performance after sterilisation,” explained Wayne Jin, product manager & technical expert, Bemis China.
Besides keeping contaminants out, the layers help retain the food’s colour, texture and taste. In addition, flexible packaging doubles up as a more sustainable option. Using lesser material, it is lighter and less energy-intensive to transport. Its flexibility also means that more packages can be packed in each delivery run.
Also bringing businesses and consumers closer to their sustainability goals is the fact that most of these packages are recyclable. In terms of packaged meat for instance, Mr Jin has added that as customers become increasingly environmentally conscious, they “have started to see an increase in the use of nylon, EVOH, and PE coextruded film, which are easier to recycle and use again.”
Bucking the trend of increasing globalisation and internationalisation is the consumers’ attraction to items infused with local cultural influences. Another Datamonitor report has revealed that 50 percent of consumers worldwide attach importance to products that are made in their country of origin.
Perhaps this inclination could be explained by the consumers’ appreciation for nostalgia and good memories in the past, or trust for a brand that they have grown up with. Regardless of the reason, this penchant has inadvertently had an effect on the food and drink industry.
For starters, companies are rolling out products catered to local tastes by putting a twist on snacks and beverages like potato chips and milk. A prime example is Pepsico, which for years have been introducing localised flavours, like Peking Duck and Fresh Cucumber, to its line of potato chips in China.
Indonesian group Nutrifood has also introduced flavours like tiramisu, orange biscuit and mung bean flavours into its flavoured ambient milk line. Meanwhile in China, local flavours reign over common ones like chocolate, vanilla and coffee.
Flavours associated with traditional medicine, like walnut and red dates (jujube), are found in flavoured milk, which also helps to strengthen its identity and positioning in the market—a healthy option that is consumed for nutrition, energy and indulgence. The rise of such flavours further attests to the magnetic pull that heritage has in the region.
Philippe Chan, Asia account director at Canadean has shared that heritage not only influences flavours as well as packaging, but also helps to build and maintain brand identity. He illustrated this with the fact that rock sugar snow pear—a traditional Chinese dessert—was the fastest growing flavour in the world for 2012.
Other examples include the Binggrae Banana Milk that was launched in Korea in the 1970s. Shaped to resemble the Onggi (a large earthenware used to store kimchi), it reminded consumers of their childhood memories and traditions, while triggering associations of healthy, digestion-aiding bacteria at the same time. By drawing on associations, cultural reminders are useful for managing how products are perceived.
Affirming the predictions made earlier in the year, today’s urban consumers have, in their quest for greater convenience and health, driven trends in clean labels, functional foods and flexible packaging, while remaining connected to their roots. What this also means is that while the more sensible aspects of a product—functionality, health benefits, and taste—remain a product’s core appeal, engaging both the individual’s ethos and pathos is what sets a product apart from the rest.