Trend-Tracker: What’s in Store for 2008?
Food safety, probiotics,
the quest for a natural low-calorie sweetener, environmental sustainability and consumer confusion are all hot
topics. We’ve taken a look at the issues and industry trends from
2007 to decide which ones might carry over into 2008, and we’ve
consulted several industry experts to get their take on what the new year
has in store.
A slew of recalls and fears over tainted imported
products have had the food and beverage industry in the news a lot this
year, and not in the way it would like. Add to that suspicions over
genetically modified products and even the prospect of food from cloned
animals, and you have a potent mix.
Just how much the news will affect consumer behavior
remains to be seen, but several studies indicate it already has affected
their attitudes. A Harris Interactive Poll taken this summer indicated
two-thirds of consumers lack confidence in the safety of products from
developing nations. On the other hand,
consumers do not completely trust U.S. products either. A study released
this fall by the Center for Food Integrity (CFI), Indianapolis, shows a
little more than half of consumers trust products made in the United States
more than those produced abroad, and only one-third strongly agreed that
U.S. food is among the safest in the world. A quarter of those surveyed by
CFI agreed that they are as confident today about the safety of the
products they consume as they were a year ago.
Last month, President Bush proposed changes to the
food inspection system based on recommendations from a food safety advisory
panel put in place this summer. Under the recommendations, the USDA and FDA
would have authority to order recalls and to set import requirements.
A gut feeling
Get ready to follow your
gut, as probiotic products show promising growth potential in 2008. Foods
and beverages containing so-called “good” bacteria — the
kind the digestive tract needs to stay on track — are said to boost
the immune system and promote better digestive health.
Dannon Activia yogurt was one of Information
Resources Inc.’s New Product Pacesetters last year, with $128 million
in first-year sales. According to a Reuters report, the company expects Activia and yogurt drink
DanActive, two products that did not even exist in the United States two years ago, to make up 40 percent of its U.S.
sales next year. But probiotics aren’t limited to dairy drinks. Naked
Juice, Azusa, Calif., rolled out Naked Probiotic Juice Smoothie this summer
in one of the first non-dairy offerings.
The race to find an all-natural diet sweetener for
beverages is likely to intensify as low-sugar and diet products gain
popularity. Earlier this year, Dawn Hudson, former Pepsi-Cola North America
president and chief executive officer, told The New York Times a sweetener
that could be classified as natural and accepted by the natural and organic
audience was considered the “holy grail” in the industry.
Later in the year, Coca-Cola and Cargill announced
they have developed a new sweetener derived from the stevia plant, grown in
South America. In a report in the Minneapolis
Star-Tribune, a Cargill executive described the
sweetener as having a “clean, sweet taste.” The companies
expect to have the sweetener in countries such as Japan, where stevia
already is used. Acceptance of the ingredient stateside will take longer
— if ever. Stevia is not approved for use as a sweetener by the Food
and Drug Administration, and must be labeled as a dietary supplement.
Whether it is traditional
hot brewed varieties or ready-to-drink, coffee is a top trend. After 12
years of doing businesses together in North America, Starbucks and
Pepsi-Cola expanded their ready-to-drink coffee partnership internationally
this year. And Coca-Cola has partnered with Italy’s Illy Café,
Caribou Coffee and Godiva to create three lines of ready-to-drink coffee,
each with a distinctly different profile.
At the recent NACS Show in Atlanta, several speakers
emphasized the popularity of iced cappuccinos, including frozen drinks,
among 18- to 24-year-old consumers. The trend shows promise for the future,
according to Margaret Heery, vice president of national accounts and
strategic marketing at Bunn, who pointed out that those younger consumers
aren’t suddenly going to stop buying those products when they turn
25; they will take those preferences with them.
Flavored and functional
waters were a popular trend in 2007 and will likely gain traction in 2008
for several reasons. The first is Coca-Cola’s purchase of
Vitaminwater — at $4 billion, Coca-Cola paid a hefty price for the
brand and will expect it to perform. In addition, thanks to the
“bottled water backlash” from environmentalists in 2007, Mintel
International predicts, “We will likely see more functional waters,
such as those with added vitamins and calcium, while consumers go back to
the tap if all they want to do is quench their thirst.”
Whether or not consumers actually stray from bottled
water, we agree that functional and flavored waters are more likely to
escape the controversy that is affecting plain varieties.
Slow, steady growth
Craig Purser, president of the National Beer
Wholesalers Association, says continued slow, steady growth in the beer
category is on tap for 2008. “Continued growth at the high end is
likely, but even if it’s not, there are two other points that are
good for the category,” he says. “One is that beer, related to
wine and spirits, is arguably a more affordable luxury ... and
there’s the continued great drinkability of the premium domestic
Growth on the high end also is prompting the creation
of a new kind of beer distributor — one that is focused on specialty
products, or divisions within traditional beer wholesalers that handle
In addition, he says, the industry can expect to see
“stronger, smarter distributors,” which may include taking on
additional products such as non-alcohol beverages, or even wine and
spirits. “I really believe that the beer distributor is understanding
that they’ve got to think for themselves, and take into consideration
industry developments, but look at them and how they impact their bottom
line as an independent business,” Purser says.
Beauty from within
Joan Holleran, editor of Beverage
Industry sister publication New Products Magazine, says consumers may be searching
for beauty in a bottle next year.
“Not only are consumers taking more control over
their health by consuming certain foods and beverages, now they’re
trying to work food and beverages into their beauty regimen,” she
says. “It’s not enough to slap beauty creams on our skin, now
we’re ingesting products that will make us more beautiful.”
Holleran draws her predication from a number of
entries in product categories such as chocolate and snack bars, as well as
Function Drinks’ Youth Trip acai-grape beverage designed to minimize
fine lines and wrinkles.
Prepare to be perplexed, says Tom Pirko, president of
Bevmark LLC. “We’re going through an era of consumer dissidence
that is really unprecedented,” he says, pointing to an overwhelming
amount of information that bombards consumers in the marketplace.
“Consumers, for the first time, are now confused
in a way that’s preventing them from forming brand allegiances and
making sometimes even sensible decisions,” he says. “They are
overwhelmed to the point where they really just don’t know how to
make [a choice].”
Unfortunately, Pirko isn’t optimistic that the
industry will overcome the problem in ’08. “It affects the
efficiency of marketing and sales. It certainly disrupts the entire clarity
that we try to instill when we’re launching new products, because
success rates are going down ... The consumer is, most importantly,
not forming those brand allegiances, which have been the core of the
“Maybe somebody will find a way to fundamentally
simplify what they do, or get it back down to a way of presenting their
core brands in a way that insulates them a little better, but nobody has
yet, I think, really waded into the problem enough to find
solutions,” he says.
Mergers, acquisitions and changing demographics
Bump Williams, head of the beer, wine and spirits
practice at Information Resources Inc., says continued consolidation among
retailers, distributors and manufacturers will be the most profound
influence on the industry, not just in 2008, but for the next five to 10
years, perhaps leading to single-distributor systems in some markets.
In addition, Williams says beverage companies need to
consider growing ethnic populations — not just Latinos, but Indian
and Asian consumers as well — including the flavor profiles that go
with ethnic cuisine.
High-end products will continue to drive the beverage
category, recession or not. “In all of the analysis that we do, we
continue to see high double-digit growth for the high-end
categories,” he says. In fact, he says, the craft beer industry is on
its way to being developed enough that it will begin to divide into
sub-segments of luxury craft beers, premium craft beers and popular craft
On the flip side of the
craft boom, smaller brewers will be hard hit by price increases on nearly
every raw material. “That is going to absolutely break the back of
some of the smaller brewers in the United States ... Some of these guys are
going to be taking 10 to 15 percent price increases next year just to cover
the cost of goods,” he says.
Also on Williams’ list of top trends: cracking
the internet audience with advertising and promotion; the
“never-ending growth of wine”; and, thanks to the entry of U.K.
retailer Tesco, the influence of private label and changing retail formats.
“A lot of that is going to be a result of Tesco coming in,” he
says. “People are going to have to be better
Lisa Pierce, editor of Beverage
Industry sister publication Food & Beverage Packaging, says:
“In some circles, sustainable packaging is as hot a topic as the
melting polar icecaps. Because of the media blitz on global warming and
energy savings, consumers’ interest in sustainability is growing at
an exponential rate. To capitalize on that, many savvy beverage marketers
are boasting about how environmentally conscientious they are, especially
with their packaging materials and production processes.”
But she says, earning points with consumers
shouldn’t be the only reason to implement a sustainable packaging
program. “Not only is it the ‘right’ thing to do for the
environment and our kids’ futures, but it’s in your
shareholders’ best interests, too. Companies on the Dow Jones
Sustainability Index enjoy significantly higher returns than the Dow Jones
Industrial Average, S&P 500 and Nasdaq.”
Susan Neely, president of the American Beverage
Association, also says environmental issues will continue in 2008,
especially in government.
“We see all the major beverage manufacturers,
along with everybody in the consumer products industry, articulating their
green credentials,” she says. “I would say that this industry
really has a significant track record of environmental stewardship, across
the board, and is committing to even more things.
“To link it to the policy world is very important
because it is part of a larger focus that everybody from the presidential
candidates on down to mayors in local governments are going to be embracing
and looking for ways to say that they are advancing policies that are good
for the environment. That can affect us negatively and it can affect us
“This whole ‘going green’ movement
and things like carbon footprint, words like that becoming part of the
popular culture and vernacular, will have consequences in the policy arena
going forward and will definitely affect what we’re doing.”