Growth for small brands expected

Fragmentation of consumers’ beliefs about health is contributing to the break up of traditional food and beverage markets and opening the doors of opportunity for start-ups and small brands, according to Julian Mellentin, director of New Nutrition Business.

Author of 10 Key Trends in Food, Nutrition and Health 2016, Mellentin says, “Big food companies are being forced to rethink their business models.”

One of the trends identified in the report is ‘the great fragmentation’, which explains how high volume opportunities are scarce and becoming scarcer. In some markets they may already be history, says Mellentin.

People’s ideas about food and health have become a menu of choices from which they select and change as new information becomes available. We’re all food explorers now, looking for novelty and variety. This is producing a proliferation of niches that smaller companies and new brands – often premium – are perfectly placed to serve.

In the future, smart companies will only rarely launch mass market brands aiming to rapidly get high volume. Instead, they will build portfolios of small brands, finely targeted at an ever more fragmented consumer market. A few of these will become big brands, some will be big niche, most will remain niche, according to the report.

Another of the trends is ‘plant-based foods and beverages’. Non dairy plant ‘milks’, such as almond milk, have seen sales jump by between 20% (Spain) and 50% (US).

This trend is not driven by beliefs in veganism or vegetarianism, but rather by consumers’ love of variety and novelty. We’re all flexitarians now, says Mellentin, using cows’ milk on our cereal, almond milk in our smoothies and coconut milk in our cooking as it suits us. And the halo of health and sustainability around plant-based foods means consumers feel good about their choices.

This trend has also been made possible by improvements in the taste of plant-based foods (which accounts for almond milk’s rise at the expense of soy milk), and by technical advances that make it easier to include plant-based ingredients such as beans and seaweed in good tasting snack formats.

‘Beverages redefined’ is another trend. Beverage giants’ sales have peaked, soft drink sales are plunging and fruit juices are struggling. Small niche drink brands are reshaping the market. Plant waters such as coconut and birch water meet consumers’ desire for products that are naturally healthy, have no additives, are naturally low in calories and sugar, and are sustainable.

“Plant waters will be a $4 billion market by 2025,” predicts Mellentin.

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