COVID-19 has changed the way we grocery shop, cook at home, and more. Here's how health influences the food industry.
In the last year, the COVID-19 pandemic shifted consumer behavior in everything from online grocery shopping to a renewed focus on home cooking. Two trends, in particular, are driving innovation in the food and beverage industry: increased focus on immune health and greater demand for supply chain transparency.
Research by ADM revealed health and immunity as one of the company’s top five global food and beverage trends for 2021, with approximately 31% of consumers saying they are buying more products tailored to their health; and 50% preferring food and beverage products that naturally contain beneficial ingredients.
Additionally, industry observers have noted that more Americans want transparency from the brands they buy. These two trends are transforming the way food and beverage brands operate and the way they communicate with consumers.
Immune Health Becomes a Bigger Focus
One of the many changes brought about by COVID-19 is more consumer interest in immunity-boosting diets, driven by the need for a strong immune system in the battle against the virus. Innova’s 2020 Market Insights survey found that six in 10 global consumers have begun looking for food products that support their immune health.
In response to this development, some food and beverage manufacturers are incorporating immunity-supporting ingredients into their products.
Greek Yogurt maker, Chobani recently announced a yogurt line focused on probiotics. In announcing the new product line, the company cited findings from a 2019 study by U.S. and European researchers showing that consumption of probiotics can reduce flu-like sickness, resulting in the need for 2.2 million fewer antibiotic prescriptions, 54 million fewer sick days annually, and saving $919 million a year in lost productivity.
President and COO Peter McGuinness says, “There’s no question that the importance of immunity has taken on new meaning in these times, and that’s why so many of our foods and drinks have benefits of probiotics to support immunity, digestive and gut health.”
PepsiCo, meanwhile, is capitalizing on the immune health trend by marketing Propel Immune Support, an extension of its Propel bottled water line. It’s just one of a number of beverage brands that have launched immunity-boosting products in the last year.
Consumers’ growing focus on immune health is also driving food and beverage companies to invest in personalized nutrition. GrandView Research has reported that the global personalized nutrition market was valued at $1.9 billion in 2019 and is likely to grow more than 9% annually through 2025. Looking to take advantage of this trend, legacy food and beverage brands like Mars, Inc. have been moving into this space through acquisitions or investments in personalized nutrition startups.
Mars Edge, a segment of Mars focused on targeted nutrition, acquired a majority stake in Foodspring, a German company that markets sports nutrition products like protein shakes and vitamin supplements and markets them to athletically focused consumers. Commenting on the rationale behind the acquisition, Mars Edge president Jean-Christophe Flatin stated, “We’re moving from one-size-fits-all food to what’s right for me…We’re building a targeted nutrition business that will allow us to pioneer personalized nutrition territory.”
As consumer priorities and behaviors change, food and beverage companies are taking advantage of the opportunity to innovate and meet consumers’ needs.
Supply Chain Transparency Gains Importance
From sustainability to responsible farming, consumers want to know that the sourcing of the food products they buy is aligned with their values. According to the International Food Information Council (IFIC) Foundation, Americans increasingly want visibility into where and how the ingredients for their food are sourced. Brands are pursuing several strategies to meet this demand.
More companies are making transparency a central part of their strategy. In an industry first, Nestlé released a list of its commodity suppliers, along with data about its 15 priority commodities, a first step on its journey toward full supply chain transparency. Outlining the reasoning behind this initiative, the company stated on its website, “We are dedicated to achieving transparency and traceability within our business, and we are focusing on the raw materials most important to us.”
Smithfield Foods has taken a different approach to supply chain transparency. The company has partnered with the SaaS provider, FoodLogiQ, a company that uses blockchain technology for traceability and food safety. The intention of these approaches is not only to mitigate supply chain risks but to build consumer trust. Indeed, research has shown that consumers are more likely to remain loyal to brands that provide transparency about their supply chains.
Food labeling is a vital part of product packaging and marketing. Brands use labels to communicate the substance and value of a product, and consumers use them to make purchase decisions. Clean labeling refers to the practice of making food products with simple, familiar ingredients. In a guest column for New Food magazine, Jaclyn Bowen, the executive director of food transparency non-profit, the Clean Label Project, wrote, “Consumers are increasingly concerned about exposure to chemicals such as glyphosate, lead and plasticizers, with links to long-term chronic disease like cancers and reproductive harm.”
Some food and beverage companies have responded to developments like the clean label movement by opting in to certifications such as those offered by the Clean Label Project and Go Clean LabelTM. Both Clean Label Project and Go Clean LabelTM evaluate products’ ingredients. If a product receives approval, a brand owner can include a certification logo on their packaging. Large grocery chains like Trader Joe’s and Aldi have bought in, compiling lists of ingredients they won’t allow in the products they stock.
Managing food quality and safety via the cloud
As food and beverage companies continue to look for ways to improve their food handling processes, they are exploring cloud-based supply chain management systems. These systems can provide real-time visibility into operations, materials and suppliers. Brands like Conagra and Tyson have partnered with FoodLogiQ, using its technology to create supplier dashboards that enable them to monitor supplier performance and track the farm-to-fork part of the supply chain.
Other companies are relying on blockchain solutions to manage food safety. In 2018, Walmart partnered with IBM to use blockchain to track food from farm to store. As a result of implementing IBM’s Food Trust solution Walmart reduced its food traceability time from 7 days to 2.2 seconds, making it less likely that infected food will reach customers.
Consumers’ increased emphasis on immune health and their demands for more transparency from food and beverage brands are already transforming the industry, as companies take steps to address consumer concerns. Food and beverage brands that can tailor their strategies to meet these new demands will be best positioned to navigate the changing industry landscape. Contact your Relationship Manager or Find a Banker to learn more.