Category Spotlight: Health
Plant foods, nutraceuticals and organic are growing fast as more consumers are buying into their health benefits
The food and beverage industry is undergoing a change not seen in decades. A confluence of mega trends is leading to disruption and innovation that is set to change the industry and consumer choices for a long time to come. The food service sector globally and in India is also adapting to these trends. As a business leader for a leading, fast growing ingredient supplier that is benefitting from these mega trends, I have had the opportunity to observe the global and Indian industry from a unique vantage point.
My general assessment is that the industry is being impacted by the following trends that are expected to have a lasting effect. Those brands that can understand and navigate these trends will reap the benefits in the highly attractive and fast growing Indian market in the longer run. Demand for natural, clean label ingredients: Consumers globally and in India are demanding products containing ingredients that they can understand. They are skeptical of those ingredients that seem like they are manufactured in a plant with no basis of natural origin. In India, consumers are increasingly looking at ingredient panels to make informed choices. Recent consumer surveys from Purecircle India Insights have revealed that 80% of consumers are looking to cut down on consumption of artificial sweeteners. The online conversations in terms of their negative sentiment are as bad as pollution in India. This, of course, varies and not all artificial sweeteners are perceived similarly but these have basis in historical context and marketing of the ingredient. For example, in the US, High Fructose Corn Syrup [HFCS] and Aspartame have comparatively more negative sentiment than say Sucralose, though all have much more negative sentiment than natural sweeteners like sugar cane and stevia. In the US, food service majors like Starbucks have adopted stevia as an additional sweetening option to cater to the demand. In India, natural ingredients like honey, stevia, and gur (jaggery) have only 5% negative sentiment compared to Sucralose with 25% and Aspartame 44%. Clearly, there is an opportunity for products that include naturally derived ingredients. Ingredients with positive functional benefits are more desired: Consumers are selecting products that have functional benefits. This is amply demonstrated by the rise of value-added dairy, protein mixes, cold pressed juices and products with perceived holistic ingredients like aloe vera, turmeric, ashwagandha and several ayurvedic ingredients. In short, consumers are looking for higher protein, low fat, low calorie and with benefits like antioxidants, vitamins, etc. The trend is certainly more prevalent in SEC A and B but the expectation is that this will percolate down to all sectors eventually. In this context, sugar content is a negative, and increasingly low or no calorie sweeteners have a very important
role. Monk fruit and stevia with their plant-based, nocalorie credentials can support food & beverage companies and food service providers developing products/ recipes with lower calorie and sugar content. In this context, stevia has the leg-up in terms of commercial viability. Good manufacturing practices, safety, traceability and sustainability are now brass tacks: There have now been several major safety scares, perceived and real. Globally, examples like the food scare at Chipotle that arose because of poor food handling, melamine content in milk scare in China and, lately in India, the challenges posed to product safety of a few MNC brands show that managing the supply chain with the highest quality and traceability down to farm and documenting it to meet regulatory demands is important. This is not possible unless the suppliers and buyers are working in tandem to follow industry good practices and the regulations in the countries they operate. Sustainability is another aspect that is important and has the power to add to the marketing communication while positively impacting society.
From my experience of leading sustainability for Purecircle, I believe firmly that success of long term sustainability is tied to alignment to business objectives. Manufacturers who follow these practices may not be the most economical in terms of monetary costs immediately but the total cost, including reputational risk and stake holder engagement, is possible when ingredient manufacturers invest in practices that adhere to sustainability, quality and innovation. Consumers, too, increasingly feel the impacts of environmental degradation in their daily life. The pollution situation in NCR, depleting water tables in various communities and changing weather patterns are close to the heart of many consumers. Companies that speak to these concerns in their branding and communication in an authentic manner have the chance to differentiate themselves.
Upstart entrants and new innovations are poised to disrupt the industry: The millennials have an increasingly different outlook on consumption than the previous generations. This is leading to a host of ways by which companies are catering to their demand. Many large companies, especially in the developed regions that have not adapted, are suffering. These trends have presented enormous opportunities and leading beverage & food companies have faced tremendous innovation challenge set forth by the upstarts. In the US, brands like Bai, Suja Juice, Zevia and several smaller brands focused on natural/ organic, health and convenience have capitalized on consumer trends towards reduced sugar and carbonated drinks.
Plant based meat alternatives like those introduced by companies such as Impossible Foods, are set to revolutionize the fast food industry. Plant based proteins like pea, lentils and even cricket flours (yes) are addressing the demand for clean label, health impactful foods. New variants like Kombucha tea and experiences like nitrogen infused artisanal coffees are catering to the need for unique experiences and are disrupting the market. Interestingly, large companies have decided to have bolt-on acquisitions or equity stakes to access not only the success but also the entrepreneurial culture of innovative and niche companies. Kellogg’s acquisition of an all clean label protein bar brand RX Bar, Dr. Pepper Snapple Group’s integration of Bai into its portfolio, Nestle’s purchase of Freshly are all examples of these. Adherence to regulatory norms is the key: Nowhere is the need for regulatory understanding more important than in the Indian subcontinent. Governments are still tweaking rules and laws to bring the industry at par with the developed regimes in this diverse region with varying food practices. In this scenario, it is important that companies perform their due diligence and work with partners across the supply chain that invest resources in understanding the regulatory regime. The current regime at FSSAI is also listening to various stake holders – consumers, industry, medical practitioners – while framing laws.
But it is important to also look ahead as to what may come down the wire, based on global trends. Sugar, fat, salt are all under scrutiny across the globe. The regimes globally have adopted various practices from on pack detailed communication traffic light system or adding punitive cess or taxes on entire categories and/or sugar content. It is happening in developing and developed countries alike. In fact, just a few days ago, Sri Lanka imposed sugar taxes of 50 p for every gram of sugar in beverage, forcing many companies to react to the situation overnight. Those brands that had prepared for the possibility are in a better position to react faster.
To close, India is a highly attractive emerging market in the throes of major changes. Brands that are willing to adapt and react to changes by partnering with suppliers and customers who invest in sustainability, regulator and consumer listening are well positioned to exploit the world’s soon to be third-largest food and beverage market.
Consumers are selecting products that have functional benefits. This is amply demonstrated by the rise of valueadded dairy, protein mixes, cold pressed juices and products with perceived holistic ingredients like aloe vera, turmeric, ashwagandha and several ayurvedic ingredients.