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Consumers Drive a Revolution in the Food Industry, Demanding Fresher, More Natural Foods, Creating both Pain and Opportunities for Companies, Business and Industry Trends Analysis

As younger generations such as Generation Y (Millennials) become more important segments in the consumer base, evolving consumer attitudes are having a very profound effect on the food products industry, driving change, making new demands and creating new opportunities for those companies that are nimble enough to take advantage of them.  Consumers are worried about nutrition, the source of ingredients, the effects of chemical ingredients on their bodies, and in particular, the safety or health values of the food they give to their children.  In nations and regions containing middle to upper-income consumers, this is nothing less than a food industry revolution in the making.
Many new companies have arisen to take advantage of these trends, and they have often seen tremendous growth.  Amy’s Kitchen, for example, a relatively new company focused on frozen and canned dishes, makes products positioned as organic and vegetarian, and sometimes “light & lean.”  Packages contain symbols denoting certified kosher, soy free, lactose free, gluten free, light in sodium or low fat, depending on a particular item’s attributes.  The company’s ingredients are non-GMO, which appeals to many consumers.
Another example is Chobani, a pioneer in the making of Greek yogurt.  This thick and creamy variety of yogurt is perceived as more natural and healthier than some other versions.
One of the more successful companies focused on taking advantage of these trends is Hain Celestial.  It has been rapidly acquiring smaller food companies that satisfy today’s consumer interests.  Its product lines include herbal teas, packaged vegetarian foods, “Garden Veggie Straws” and similar snacks, dairy-free milk alternative products and “Earth’s Best” foods for small children featuring organic and whole grain ingredients.
This shift in consumer trends has been extremely hard on old-line food companies, ranging from McDonald’s, on the restaurant side, to Coca Cola on the beverages side and Kellogg, General Mills, Kraft and Heinz on the packaged foods side (where profit margins have historically been very low).
Today, packaged food companies are in full combat mode, redoing recipes and reducing long ingredient lists and purchasing aggressive younger companies that better suit today’s trends, while attempting to evolve their marketing to appeal to the evolving interests of consumers.  Many consumers prefer foods that do not include a high number of chemicals, flavorings and additives.  Consequently, foods that feature fewer ingredients overall are highlighting that fact on packaging, instead of burying ingredient lists under mandated nutritional information (e.g., CB’s Nuts Peanut Butter with one ingredient only).  Kraft, for example, is removing synthetic colors and artificial preservatives from its mac and cheese products.  A long line of restaurants and food companies have announced that they are migrating to using chicken and other meats that have not been raised on feed that uses certain antibiotics.  Tyson has announced it will no longer feed its chickens with human antibiotics.  Hershey is removing artificial ingredients from its milk chocolates.  This isn’t merely a trend, it’s a mass migration of packaged food firms struggling to plug big holes in their leaking ships.
A major problem, however, is cost.  Organic ingredients can be much more expensive than traditional items.  Likewise, non-GMO may have broad appeal, but genetically-modified seeds can lead to agriculture that has higher output and much lower cost per unit of food.  Artificial preservatives can extend shelf life, and thus reduce wastage and total costs to the consumer.  The end result may be more packaged and restaurant foods with more natural ingredients in America and other high-income nations, where consumers can better afford them.  Meanwhile, lower-income nations with large or rapidly expanding populations may have no choice but to rely heavily on genetically modified seeds as well as artificial ingredients and preservatives that result in lower prices.

Consumer-Driven Trends in Food and Beverages
1)        Reduced sugar content
2)        Avoidance of artificial sweeteners
3)        High demand for organically grown fruit, produce and grains
4)        High demand for whole grains, “ancient” grains and heirloom-style vegetables
5)        Demand for humane treatment of farm animals (cage-free chickens, free-range grazing animals)
6)        Growing demand for dairy-free food and drink substitutes, such as soy milk, oat milk and almond milk
7)        Demand for locally sourced foods and farm-to-table produce
8)        A continuing backlash against genetically modified crops and ingredients
9)        Demand for fresher foods in general, with fewer chemical additives such as preservatives
10)     Demand for craft beers, artisanal alcoholic beverages and organic wines
11)     Increased market for healthier snacks, “functional” foods or foods with nutritional benefits
12)     Lower consumption of soft drinks, with waters, teas and juices as alternatives
13)     Strong demand for gourmet coffees and teas
14)     Reduced demand for highly processed, packaged foods (e.g., more consumption of home-cooked oatmeal instead of packaged cereals)
15)     Reduced interest in restaurant menu items that appear to be based on highly processed, unhealthy, frozen or chemically treated ingredients
16)     High demand for low-carbohydrate menu items in restaurants
17)     Growing avoidance of certain foods, such as gluten, peanuts, shellfish or soy, due to perceived intolerance or allergies
18)     Demand for increased food safety procedures
Source: Plunkett Research, Ltd.

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