Friday, November 30, 2007

Friday Fishwrap

End-of-the week news, ideas, analysis and opinion

Food and beverage trends 2008: A Natural~Specialty year is on the way
Natural, organic, specialty, gourmet, premium, fresh, healthy, green and sustainable top the list

If the various market and consumer researchers, prognosticators and analysts (including us) are right, 2008 will be a natural~specialty year in terms of the top hot trends in food and beverage marketing and consumption in the U.S. and Western Europe.

For example, a just released report by market research firm Datamonitor predicts the following top ten food and beverage trends for 2008.

>Probiotics, healthy foods
>Natural and organic foods and beverages, especially for kids
>Fresh foods, especially premium quality prepared foods
>High-nutrient Superfruits
>Exotic foods, especially foods from Africa
>Specialty foods that promote sleep and stress relief
>Healthy and natural foods with "crunchy" and "crispy" taste profiles
>Bold, hot and spicy foods
>Increased use of caffeine in beverages and foods
>Green, "eco-friendly" foods, beverages and grocery products

You can read a detailed summary describing these top 10 food and beverage trends for 2008 here, along with examples of numerous food and beverage products in these categories introduced this year that Datamonitor has tracked, and which point to strong growth for next year. You also can read a short piece summarizing Datamonitor's top ten food and beverage trends for 2008 published yesterday in Beverage Daily here.

As the Datamonitor report shows, the top ten food and beverage trends for next year all center around the natural/organic, specialty/premium, healthy/environmental sector. As we suggest here often, these categories (an consumer movements) are related and have strong synergies between them They're also increasingly converging together.

For example, natural and organic foods consumers tend to also be "greener" consumers. They also focus more on healthy eating and are most likely to be early adapters to foods and beverages like probiotics and superfruits, for example. Additionally, there's a growing convergence between specialty and premium foods and natural/organic foods consumers--and marketing. These consumers share a concern for quality. More and more, quality in terms of food and beverage products is meaning all-natural or organic as well, in addition to the elimination of food additives, preservatives and artificial coloring.

This "healthy" convergence is demonstrated by an emphasis on the part of specialty foods manufacturers and retailers (store brands) to introduce more and more new products that have natural or organic attributes as well as being premium quality. By the same token, natural foods manufacturers and retailers are increasingly going premium with their new natural and organic food and beverage products.

In fact, a new study from market researcher Mintel says the top food and beverage trend for 2008 will be "getting the junk out of food and beverage products." In other words it's the elimination of preservatives, additives, artificial flavorings and colorings and other such ingredients in their existing products, as well as not putting them in new products introduced in the majority of cases that will be a key event in the food industry beginning next year. This isn't to say food and beverages with these artificial ingredients are going away anytime soon. Rather, Mintel says there will be a rapid decline in their use beginning in 2008.

This junk-free food and beverage movement has been picking up steam in the U.S. and Western Europe, and dovetails with the natural, organic, green and sustainable consumer movements. The definition of healthy is being expanded we believe to include not only what is in food but how and where it's grown, packaged and tastes. In other words, healthy not only means a healthy person, but a healthy environment as well. It's becoming an external as well as internal definition. You can read about the Mintel 2008 food and beverage trend study in more detail here.

As we mentioned above, taste is a key factor--and premium taste is one of the hottest trends for 2008, according to a new study from Packaged Facts and

A new study from market research firm packaged facts says sales of specialty and gourmet foods are predicted to grow by a whopping 63% over the next five years. This consumer flight to premium quality foods is being driven by a number of factors, according to the researcher. These factors include consumers' becoming more sophisticated via travel and multiculturalism, retailers carrying expanded selections of specialty, gourmet and ethnic foods, and a convergence between specialty, natural and organic foods.

This growing consumer sophistication and the availabilty of a wide variety of specialty, gourmet and ethnic foods, not only in specialty stores and supermarkets, but in natural foods stores, mass merchandisers like Wal-Mart and Target, online, and even in drug stores, is growing the premium foods market to the point that Packaged Facts predicts it will grow to $96 billion annually in five years, compared to the categories current sales of $59 billion. (You can read more about the Packaged Facts' specialty and gourmet food and beverage report here.)

Packaged Facts isn't the only consumer research firm to predict this huge growth in the specialty, gourmet and premium food and beverage categories. (We use all three of these terms because each has certain distinctions. However, from a sales standpoint, they are one category.), a consumer products trend analysis firm and website, is predicting 2008 will be the year for the "premiumization" of nearly everything and anything, including food, grocery and beverage products. By this, the firm means virtually no product category will escape having some sort of premium version.

"Premiumization" is one of the consumer research firm's top 8 trends for 2008, along with what it calls status spheres, snack culture, online oxygen, brand butlers, crowd mining, MIY (make it yourself) and eco-iconic. (you can read more about these seven other trends here.)

In terms of the food and beverage industries, "premiumization" means an increasing trading up by consumers to more premium-quality products. It also means food and beverage manufacturers, marketers and retailers will not only continue their current rapid pace of premium specialty and gourmet foods new product introductions, but will excellerate it even more. also says we'll see niche "premiumization" in the food and beverage sectors. For example, limited addition super-premium food and beverage products like deserts and bottled waters, will be introduced in very upscale packaging and for a limited period of time.

As examples, they sight Evian's new, limited release Palace bottled water. Set to be introduced either at the end of this year or early in 2008, the water will only be available for sale at high-end bars and restaurants. The sleek bottle features a specially designed pouring top and comes with a stainless steel coaster. It will sell for between $15-$20 (USA) per bottle.

Other super-premium bottled waters include Bling H20. Bling water comes in a frosted glass-bottle with a cork that's embellished with crystals. The water is a much a personal accessory as it is a beverage. It's big with the Hollywood crowd, and was featured backstage at the MTV awards and the Emmy's this year.

If the first two bottled waters aren't premium enough for you, there's Tasmanian Rain. This utra-premium water comes from the pristine north coast of the Australian island of Tasmania. According to the bottlers, the water comes from a spot where the World Meteorological Organization records the world's purest air.

Beer also is getting "premiumization" treatment. This summer, Carlsburg launched its Carlsburg 900 in a limited number of bars in Stockholm, Sweden. The brew is made with refined virgin hops, selected crystal malt, and is triple filtered in a special process that ensures a pure, delicate taste, the brewer says. Carlsberg 900 also is priced at the premium end of the price range. A bottle costs about the same as a class of quality champagne. also sights some premium foods as an example of niche categories that are undergoing the "premiumization" process. Chief among these are marshmallows. Dean & Delucca's gourmet Boule' Marshmallows come in such flavors as passion fruit, lemon chiffon, pure vanilla and rose petal. They retail for $28 a bag--and it's not a very big bag. Another gourmet foods maker, Pete's Gourmet, sells premium flavored and dipped marshmallows for $1 each. Dean & Delucca recently reported that in its stores and on its website the pricey gourmet marshmallows are selling out.

Honey's and chocolates are two other categories the consumer research firm says also are getting "premiumized" in a big way. Foods and beverages lead this "premiumization" trend, according to Of course, we see this daily in nearly every food category in the supermarket. Retailers are aiding this trend by creating store brand specialty, gourmet and premium foods and pricing them more reasonably than manufacturer brands, thus expanding the market for these goods into the moderate income sector.

Fresh foods also are getting the "premiumization" treatment. Whether it's in-store fresh prepared foods at grocers like Whole Foods, Wegman's, Safeway Stores and others, or manufacturer-produced fresh and frozen entrees, the trend is towards premium quality. Tesco's entry into the U.S. market with it's Fresh & Easy Neighborhood Markets also is fueling the growth of fresh, prepared foods marketing and sales. The retailer is offering scores of fresh, prepared foods at its Fresh & Easy stores in California and Nevada (13 open so far). The grocer plans to have at least 200 stores open in the next two years, and all will offer extensive selections of premium prepared foods.

As we end 2007 and move into 2008, our analysis tells us the hot button trends and consumer movements will be: natural and organics. The categories will continue their rapid growth. However, we see retail prices on organics coming down at least 5% as retailers like Safeway, Kroger and others continue to expand and grow their store brand organic grocery lines.

Specialty, gourmet and ethnic foods. As the research discussed in this piece demonstrates, category growth will be huge. We also see an increasing number of large, multi-national packaged goods companies getting deeper into specialty foods marketing. Major companies like Kraft, Heinz, General Mills and others will move upscale with line extensions and even new brands.

Ethical consumers and marketing is a growing trend, and it will continue to grow in the years ahead. Consumers increasingly want to know how and where their foods are produced. They also want to know the corporate behavior of the companies that produce their foods. It's a small movement at present, but will grow bigger in the next five years.

Local food sourcing also will continue to grow. However, consumers love imported foods too much to give them up. Therefore, in the main, locavores (those who only eat foods produced within a 100 miles of where they live) will remain a small, minority movement. However, more and more consumers will buy local foods whenever they can, making it an important movement and marketing concept for food marketers, retailers, consumers and small farmers.

Green issues will begin to move into the mainstream in a big way in 2008. More and more consumers will demand sustainability from food producers, marketers and retailers. The industry will respond, led by key players like Wal-Mart, Whole Foods, Safeway, Tesco and others on the retail end. On the supply side, companies like Proctor & Gamble, Clorox, Hain-Celestial and others will move further with their green initiatives, setting an example for others in their industry to follow.

Healthy foods, especially foods containing new natural ingredient innovations, will continue to be a major hot button. We are beginning to see healthier foods positioning throughout the supermarket, from the dairy case to the snack aisle. This will intensify, and grocers will get more involved in their customers health issues by putting health and wellness clinics in-store, increasing the quality and quantity of health labeling information, and even demanding their suppliers produce healthier products.

As we said at the beginning of this piece, there's a synergy between these top trends for 2008. That synergy is the growing convergence between the natural and specialty foods industries, and the growing consumer movement towards eating healthier and defining healthy as not only something internal but external (the environment). Within this mix, taste is key. Consumers won't trade off healthy and "green" for quality anymore. In fact, they want premium quality taste along with the natural, organic, healthy and green attributes in their foods---and from their food producers and retailers.

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