Trefor Griffith
05 Feb 2018
Businesses in the sector have always raced to keep up with ever-changing consumer tastes and preferences.
This has proven a challenge for some. For others, these emerging trends have created opportunities for growth. Such brands have been able to adapt their offerings to suit changing consumer tastes, or even rebrand their products entirely.
So what were the key consumer trends to emerge in 2017 which we should have front of mind as we progress through 2018?
British consumers are increasingly time poor, as longer working hours and an always-on culture have become commonplace. While not new, this has driven a constantly evolving demand for convenience and 'food-on-the-go.'
As a result, food shopping habits have changed, with many consumers now preferring to do either standalone daily shops, or using them to top up a bigger weekly shop. The benefit of this is that they can adapt consumption to their lifestyle, whilst reducing the likelihood of food going to waste. However, for F&B manufacturers, this has required the development of new products, often in more convenient, easier to cook portions.
The emphasis on matching consumption to lifestyle has also led to a blurring of lines between meal times and snacks, with consumers increasingly seeking snacks that can be eaten on the go. Breakfast is the mealtime where this trend is most prevalent, with the global ‘on the go breakfast’ market forecast to grow by 46% by 2026, primarily driven by western consumers.
Healthy snacking, in particular, has been fuelled in part by the rise of bloggers and social media influencers who focus on diet, nutrition and wellbeing. Consumers now expect more from their snacks, requiring them to provide a range of health benefits, from increasing energy and strength to promoting regular sleep patterns.
This draws upon a preference towards products that promote ‘wellness’ rather than weight management. Mainstream consumers are becoming less motivated by dieting and counting calories. For many consumers, products that claim to build strength and provide a better sense of wellbeing now resonate far better than those which claim to be low-calorie. Special K is one business that has had to completely transition their branding away from weight-loss to wellbeing and empowerment.
Another area of the snacks sector is the rising popularity of ‘raw’ products. Such foods avoid affecting their ingredients’ nutritional value through the manufacturing process to maintain their purest form. Snack brands like Nakd are tapping into this trend by highlighting ‘raw cacao’ and other natural ingredients on the packaging of their products.
While increasingly time-poor and looking for convenient food and drink choices, consumers are also wary of ensure they choose brands that match their values.
Because of this, many firms are making their ethical and environmental values more visible. When tea and supplement company Pukka Herbs was bought by Unilever in 2017, they continually stressed their commitment to organic, sustainable products to reassure dedicated customers. Meanwhile, brands including HUEL, Divine Chocolate and Origin Coffee have all benefited from wearing their purpose proudly on their sleeves.
For manufacturers and grocers alike, the pressure now isn’t to just have an ethical end product on the shelf, but to ensure these standards are met throughout the manufacturing process and product lifecycle as well. The introduction of the Modern Slavery Act and the plastic bag levy have gone some way to ensure greater transparency and responsibility within the supply chain. Meanwhile, consumer awareness has been raised by the popularity of programmes such as Blue Planet II, which gave a very tangible portrayal of the impact of sea plastic on the environment. With attention now turning to the impact of disposable coffee cups, plastic straws and food packaging, the challenge for F&B companies in 2018 will be to ensure that packaging becomes more environmentally friendly without compromising the quality and safety of the product.
Modern consumers are looking towards plant-based nutrition as a lifestyle choice as opposed to being driven by a specific diet. Alongside the growing demand for alternative sources of protein, the rise of social media and a growing awareness of the impact of meat production on the environment have driven this trend. Celebrities such as Jamie Oliver advocating ‘meat-free Monday’, is a great example of this. While mainstream consumers may not adopt a meat-free diet on a full time or permanent basis, they are aware of the impact of their choices and are keen to turn to plant-based foods where it fits into their lifestyle. As a result of this demand, there is a current boom in the number of products hitting the shelves being labelled as suitable for vegan diets.
Meat substitute brand Quorn has felt the benefit of the rise in those embracing the concept of 'flexitarianism'. Sales at the company rose 19% in 2017 as more shoppers turn to their products to cook meat-free meals.
The countertrend to an increase in healthier, more wellness focused food and drink, is an increase in products of a more indulgent nature. While many will choose plant-based, high protein options, the same shoppers may also choose an indulgent and high-sugar product such as a Gü dessert, as an occasional treat. It stems from a change in mentality around these kinds of foods. Those who focus on a healthier lifestyle and food choices may, on occasion, choose snacks that are considered to be a ‘guilty pleasure’, enjoying these foods in moderation. With continued uncertainty in the UK economy and a widely anticipated squeeze on household budgets expected in 2018, this “affordable treat” segment of the market may do well.
A number of brands have adapted their product ranges to cater to this growing demand. The rise of ‘Thins’ amongst biscuit and bread manufacturers, offering a slimmer version of an indulgent treat, appeals to consumers who wish to eat healthier but enjoy treats in smaller or leaner portions.
Despite Brexit looming, the European market presents an attractive opportunity for businesses looking to grow. For the F&B sector, there is ample demand for new brands and products.
Take Spain, for example. The country’s GDP is growing at a rate of 3%, with less reliance on credit in the market leading to a more stable and controlled economy. Along with an estimated growth of capital goods in 2018 of 6.7%, the country presents fertile ground and an eager market for British brands that can offer something new.
We recently invited a number of health and wellbeing-focused UK F&B companies on a trade mission to Madrid. The two-day initiative – which we led alongside Santander and the Department of International Trade – focused on connecting British brands with some of Spain’s largest supermarkets and distributors, who are experiencing rising demand for healthier products from purpose-led brands. Sales of organic products have been growing at 25% per year, well above the European average of 12%.
One business that joined us was Nutrisure, owner of superfoods brand Naturya and Supernutrients. The Naturya brand has a strong presence in the UK and recognised the Spanish market as an opportunity for further growth. However, compared to its growth in Germany, France and Italy, Nutrisure found Spain a challenging market to crack. It is a complex sector split across different players in separate regions, making it difficult to build relationships with prospective partners. Nutrisure joined our trade mission to establish a better foothold in the space.
The company found a very interested market in Spain. With their range of healthy, organic superfoods, they engaged in a number of positive conversations with key Spanish distributors to great effect.
As a result of the mission, Nutrisure has some fantastic prospects lined up for its Naturya products. It has entered into talks with a number of the largest distributors in the region, and is currently refining its options to decide on its preferred partner. These are dramatic steps forward against the challenges the brand faced previously.
As Claudio Stein, international sales manager at Naturya, put it: “The recent trade mission to Madrid has saved our sales teams around two years’ worth of work. Grant Thornton’s invitation came at the perfect time for us as we were focused on establishing our business across mainland Europe and tapping into the global trend towards health and wellbeing products. The outcomes so far have been fantastic and we look forward to progressing in the region well into 2018.”
There have been a number of changes to take place in the past twelve months for F&B businesses, driven as always by shifting consumer preferences. The long standing interest in convenience has combined with a desire for healthier options, as well as adopting more plant-based foods on a flexible basis. Meanwhile, at the other end of the scale, growth in indulgent products with smaller portions has become a key current trend for the industry.
We have no doubt that behavioural shifts will continue to challenge F&B producers throughout 2018. Those who can spot them early and adapt accordingly will come out on top.
If you would like any further information about the emerging trends in the food and beverage sector, please contact Trefor Griffith.
Report on unlocking working capital and unclaimed R&D tax relief in food and beverage businesses
Find out more
