- The ‘free from’ trend – the undisputed winner at a global level
- Naturally Functional, the way forward
- Continued outperformance of HW versus the regular offering
THE FREE FROM TREND – THE UNDISPUTED WINNER AT A GLOBAL LEVEL
The days in which free from gluten, lactose or dairy products were consumed only by those with intolerances, are gone. The free from offering is increasingly trendy and has been followed and promoted as a healthy option by a host of A-list celebrities, which has driven its 7% CAGR recorded over the review period, the most dynamic within all HW categories. The likes of plant-based milk alternatives and gluten free foods, based on grains like quinoa, millet, teff or amaranth, are key within this category.
Dairy and lactose free alternatives was limited to soy milk some years ago, but other milk alternatives have already overtaken it, in terms of value sales. Almond milk is the main on-trend alternative, followed by coconut or rice milk; although other legumes and nuts, like cashews and pistachios or even peas and pulses, are also growing in popularity to produce plant-based milk alternatives. These products do not have the same nutritional profile, for instance cow’s milk contains less protein (ex- cow’s milk has 3.15g of protein/100g versus the 0.6g/100g in almond milk – USDA database). However, they are popular amongst those adopting lactose-free and vegan diets and can contain other beneficial nutrients such as fibres like beta-glucans found in oat milk versus the non-existent content of fibre in cow’s milk.
Moving into the gluten free trend, ancient grain-based foods like bread loaf, breakfast cereals and snacks stand out. Key players in the industry do not want to miss out on the opportunity, launching new products in this context, like PepsiCo did in 2016, launching a couple of new supergrain-based breakfast products under its Quaker brand in the US, including oats, barley, rye, flax, quinoa, sunflower seeds or amaranth, depending on the variety. The new Ancient Legends range, launched by Kellogg’s in the UK in 2016, is another good example. The range includes ancient grains-based muesli, cereals and granolas, containing spelt, rye and/or quinoa.
NATURALLY FUNCTIONAL, THE WAY FORWARD
Generally speaking, consumers want more natural, as confirmed by Euromonitor International Global Consumer Trends Survey, carried out in 2015, which revealed that natural is the most sought after attribute, with 44% of participants choosing it.
The desire for more natural products is already apparent in the performance of the Naturally healthy (NH) offering, valued at USD249 billion globally in 2016, but it is also predicted to be the fastest growing category in the coming years with an expected absolute growth of USD42 billion by 2021. This increasing demand for natural products is very much related to the clean label trend, which was valued at USD165 billion globally in 2016, with USD41 billion of this coming from all natural labelled foods alone.
More consumers like the idea of plant-based foods with intrinsic protein, mineral or vitamin content with no need to artificially fortify them. Ancient grain-based products are key within the free from trend but also fit within this NH trend. Moreover, vegetable-based savoury snacks are also a good fit and new offerings are becoming increasingly trendy, mainly amongst millennials. Mondelez International, for example, in an attempt to renew consumer interest in savoury biscuits, launched a new brand called Good Thins in March 2016, its first new snack brand in many years. This new offering incorporates many prominent snacking trends at the moment, including novel ingredients like sweet potatoes and chickpeas, but also no artificial colours or flavours, gourmet flavours, free-from gluten and a thin profile.
In addition, NH bottled water is growing massively in popularity. Valued at USD61 billion in 2016, it is the largest category within NH and particularly, NH Still Natural Mineral Bottled Water is predicted to see 42% growth by 2021. Many manufacturers are focused on this area, for instance, Danone’s corporate strategy is greatly focused on developing flavoured and functional waters and also launched, in March 2016, its first cross-brand TV campaign for Volvic water in the UK, that covered natural mineral water, among others.
EMERGING COUNTRIES FOLLOWING IN THE FOOTSTEPS OF DEVELOPED
Going natural is a trend happening globally as shown in the outperformance of the NH and organic offering versus the BFY and FF arenas in both developed and emerging markets. This shows the movement towards artificially fortified foods and beverages and those reduced in salt, sugar and fat to a more naturally functional offering. Free from is also perceived as a healthy natural option and stands out mainly in developed countries.
Source Euromonitor International
Within these categories, Free From Lactose Other Dairy in Denmark, Other NH RTD Tea in Greece and Organic Savoury Snacks (Excl Nuts, Seeds and Trail Mixes) in Norway, delivered the largest growth in the review period. It is also worth mentioning the US, where Free From Dairy Other Milk Alternatives like almond or rice based, NH Spring Water or Organic Savoury Snacks recorded the largest absolute growth.
Emerging markets follow in the footsteps of developed but there is a massive gap at country level. While India is still far behind in terms of product development and led growth of the Better For You category (USD2 billion, in absolute terms, in the review period), with pretty basic products such as reduced fat dairy accounting for most of it, Brazil closely follows the trends seen in mature countries. The NH trend has already trickled down in the country, with NH bottled water, for instance, being a big thing there. China also follows these trends, with key categories, like NH Carbonated Natural Mineral Water and Organic Milk Formula, showing the most dynamic growth. However, Fortified/Functional still grows the fastest in this country (USD17 billion in absolute terms, in the review period), being not just important in China but throughout Asia Pacific in general. Fortified/Functional was valued at USD97 billion in 2106, accounting for 45% of total HW retail value sales in the region, with FF milk formula, and probiotic yoghurt leading the trend. Consumers in Asia Pacific are increasingly accepting products with functional ingredients such as probiotics, omegas, vitamins and minerals, as a means of minimising any nutritional gaps in their daily diets or simply to boost their wellbeing.
OUTPERFORMANCE OF HW VERSUS THE REGULAR OFFERING
Although, overall, 2015 and 2016 proved to be disappointing years for the Health and Wellness (HW) industry, facing the lowest levels of growth in over a decade, with developing markets, like China or Argentina, underperforming, and key developed countries such as the US not doing that well, the HW industry, valued at USD707 billion in 2016, will continue to expand, expecting it to deliver 15% growth by 2021. Emerging countries will be the main contributors, with Morocco and Turkey leading the list.
Health and Wellness continues to outperform the wider Packaged Food and Soft Drinks industries towards a more natural offering through free from, organic and naturally healthy foods and beverages, previously analysed, plus the increasing awareness of good nutrition as a key part of leading a healthy lifestyle
Source Euromonitor International