This was just one of the many top healthy living trends and truths to look out for at Expo West last week, outlined by M&A specialists Whipstitch Capital.
Other key trends included collagen, better-for-you snacking, personalization, plant-based, grass-fed, functional ingredients, sugar reduction, and transparency and sustainability.
Commenting on the online retail space, Whipstitch noted that 70% of consumers will buy groceries online by 2024, with sales predicted to hit $100 billion by 2022. This growth is faster than many originally thought.
Whipstitch anticipates, “an influx of M&A, [with] retailers targeting online-centric businesses to drive revenue growth […] Retailers [are] desperate for the online ‘recipe’,” they added, and that is “easier bought than built”.
Collagen… from boom to blockbuster
As was evident at Expo West 2018 in Anaheim, collagen is increasingly visible across food, beverage, dietary supplement, and cosmetics applications. The global collagen market was valued at almost $4 billion in 2016 and is predicted to surpass $6.5 billion by 2025.
“Food & beverage and healthcare application segments are expected to grow significantly over the coming years, projected to grow at CAGRs of 7.2% and 6.4%, respectively,” noted Whipstitch, and this is attributed to the “increasing awareness regarding benefits of collagen consumption, growing population, growing geriatric population, and rising purchasing capacity of consumers”.
Announced yesterday, the Clorox Company announced it was acquiring Nutranext, parent company of a range of dietary supplement brands including Neocell, which specializes in collagen-based supplements for joint, bone, and muscle health.
Snacks are big business, with brands increasingly responding to consumer demand for clean label products and authenticity.
Data from various sources show that over 90% of consumers want snacks with additional health benefits beyond nutrition, noted Whipstitch, with 89% of Millennials already eating better-for-you snacks at least once a week.
Growth for the global healthy snack market is predicted to be 5% through 2025.
We’ve covered the impact of technology and personalization before on these pages, and food companies are increasingly investing in the space. The most notable example of this was Campbell’s Soup ploughing $32 million into Habit. Nestlé created its Nestlé Institute of Health Sciences in 2011 to research the personalized nutrition, and recently bought Atrium Innovations for $2.3 billion, which has the Pure Encapsulations brand with its PureGenomics program.
Whipstitch notes that the growth in online and mobile ordering is increasing consumer expectations for personalization. “Retailers are creating 1:1 relationships with consumers through their apps,” they noted.
Plant-based or grass fed
Growth in in the $3 billion plant-based food and beverage channel shows no sign of stopping with year-over-year growth exceeding 8%, said Whipstitch. This is being driven by deeper consumer knowledge of, and interest in, plant-based diets. This will continue as a key trend for the industry, said Whipstitch.
“Seventeen percent of consumers eat a predominantly plant-based diet and over 60% are cutting back on meat-based products,” noted the report. “Of those who are reducing their intake of animal-based proteins, 77% say the change is permanent.”
But for those who do still want meat, grass-fed is growing at a rapid rate, said Whipstitch: “[T]he market grew at a 103% CAGR for organic grass-fed and 95% for non-organic meats from 2012-2016.”
While grass-fed beef sales in the US reached $4 billion in 2015, that represented just 4% of the $105 billion of the total beef market. However, grass-fed is expected to reach 30% of meat sales over the next decade.
And this has knock-on effects to the dairy industry, with grass-fed kefir and yogurt sales up 38% year-on-year, compared to a 1% decrease for their conventional yogurt and kefir.
“Grass-fed milk products able to command a 250% price premium,” added Whipstitch.
Sugar is public enemy number one for many consumers, with 80% of consumers reported to be actively trying to reduce sugar consumption, while over 52% are also trying to avoid artificial sweeteners. But sugar reduction poses technical challenges for food formulators, which is leading CPG players to get more creative, said Whipstitch.
Start-ups like DouxMatok have developed technology to make sugar taste sweeter, and recently raised $8.1m in a funding round.
Brands are also exploring ways to reduce sugar without affecting taste. Hershey, for example, has “patented technologies that boost sweetness of a confection by altering the surface area and shape of sugar particles in chocolate,” according to company spokesperson Jeff Beckman.
Nestlé also announced a new way to structure sugar using only natural ingredients, which has the potential to reduce total sugar by up to 40% in its confectionery.
MCT, adaptogens, nootropics… momentum builds behind functional ingredients
Success in the dietary supplements space, which is valued at $40 billion in the US and $120 billion globally, is leading to cross-over into traditional beverage categories, and leading the way are ingredients such as MCT oil, adaptogens, and nootropics.
Adaptogens, for example, have been gaining momentum in the dietary supplement and tea categories for several years, but we’re now starting to see these in beverages in brands such as REBBL.
Consumer awareness of these ingredients for stress management and energy continues to grow, but there does appear to be widespread confusion around what qualifies as an adaptogen.
Supply chain transparency and sustainability
The final trend highlighted by Whipstitch is the demand for transparency and sustainability in the supply chain, which extends across the categories, but is very apparent in the protein space and food waste.
“The size and breadth of food waste problem alarmingly high,” said Whipstitch. “New brands and large CPGs [are] using innovative concepts to reduce food waste problem.”
Misfit Juicery and Yappah are just two of the brands highlighted by Whipstitch. Misfit Juicery, for example, “uses aesthetically unappealing fruits and vegetables that are typically discarded in its juice products,” said the report, while, Yappah is “a protein snack utilizing ingredients like spent grain and vegetable pulp”.
To read the full report from Whipstitch, please click HERE.