Innovation courses through the food and drink industry as businesses continue to strive for oneupmanship in an increasingly competitive market. But food and drink industries face tougher competition as different sectors seeking to satisfy key consumer needs - 'beauty from within' and 'on-the-go consumerism' - blur the category boundaries, claims a new report.
"Packaged goods manufacturers and retailers will begin to face stiff competition from brands outside the original remit of what is traditionally considered 'direct competition'," said Daniel Bone, a Datamonitor analyst and author of the report.
Until recently, skin health was still considered to be the domain of the cosmetics industry and restricted largely to topical creams rather than internal nutrition. But CPG developers are now promoting the idea that the outside of the body is a reflection of what goes inside. Datamonitor consumer surveys have found that 87 per cent of respondents across Europe and the US already follow a regime of some type.
The report identified the growing trend for 'skingestibles' - healthcare supplements promising beauty benefits, beverages containing beauty ingredients such as aloe and collagen and drinks being co-branded with a spa or beauty salon.
A recently launched US product that illustrates the concept is SkinCola. Described as an all-natural, super-oxygenated drink, the beverage claims to be helpful in hydrating and beautifying. "As the connection between beauty and health grows, there is an opportunity for manufacturers and retailers to develop sophisticated product offerings by promoting personal appearance through food and beverages. Ultimately, successful innovation relies upon a clear understanding of consumer needs and how to satisfy them with the appropriate product offering," said Bone.
As those in the industry have witnessed, ingredients with a positive effect on health are being introduced in foodstuffs rather than in supplements. The report claims that instead of focusing on what can be removed, such as sugar or fat, manufacturers are embracing the concept of 'positive nutrition'. Traditionally, products with healthy ingredients were linked to categories and product lines boasting a healthy image, such as dairy products and fruit juices. Today, highlights the report, these same ingredients are being incorporated into categories such as biscuits and sweets that have clearly sought to overcome negative consumer perceptions concerning health.
An example of the 'positive nutrition' trend can be found in the UK supermarket chain Tesco's launch earlier this year of, what it claims, is the first cholesterol-lowering hard cheese product, called 'A Healthy Alternative To Cheese'. The product, made from milk which has had all its dairy fat removed and replaced with a vegetable oil, is naturally high in phytosterols and prevents cholesterol entering the blood stream. The product was developed by fellow UK firm Angel Technologies in association with researchers at Cambridge university.
Turning to the burgeoning 'on-the move' trend, Datamonitor has identified a number of important innovations embracing the on-the-go consumerism concept. The concept of 'sippable' packages in particular appeals to a broad age range.
"Whenever possible, manufacturers and retailers must consistently seek to incorporate simple design features that provide consumers with enhanced convenience and mobility for their on-the-go lifestyle," said Bone. For example, Land O'Lakes in the US has found success with its single-serve Grip'n Go fluid milk line. Products include skim milk as well as strawberry, chocolate, chocolate shake and coffee-flavoured Grippacchino. For Datamonitor the product illustrates the growth opportunities available to CPG players by taking milk from its former status as a mealtime staple to a convenient and nutritious on-the-go beverage.
As product innovation in any industry causes category boundaries to shift, traditional players often face new challenges and threats from both emerging and established players in ways that were not previously possible, writes the report."Spotting such trends early is crucial to getting, or staying, ahead. Marketers need to relentlessly observe how lifestyles and buying habits are changing as this is critical for the new product development process," warned Bone.
For the analyst, although growing synergies between sectors represent an 'enormous opportunity for future innovation', not least in the form of joint ventures and strategic alliances, businesses will face a new threat - companies and/or brands outside the traditional remit of direct competition.