Compromising PositionsIn the area of organic foods and beverages, the number of items and the variety available to the shopping public has skyrocketed. Organic versions of milk, cereal, frozen food— even junk foods—can be found in supermarkets around the country. Organic products have become a $7.7 billion/year business, according to the Organic Trade Assoc., and is the fastest growing category in the supermarket. Its 20% annual growth (sustained for over a decade) has found the attention of large corporations, the very outfits against whom the organic movement once represented a radical alternative.
While these firms may not have been the originators, many have positioned themselves as innovators in the organic arena. That trend shows no sign of abating, as more than a quarter (25.3%) of respondents to Prepared Foods' R&D survey believe products with organic claims offer tremendous growth potential. Marketers, in particular, identify the value of the organic claim, as fully a third say the organic label offers one of the greatest areas of expansion. However, additional promise may rest in another, closely related area.
More than half of all respondents (52.5%) say products with all-natural/clean labels also exhibit significant growth potential. This breaks down to some two-thirds of marketers, 57% of R&D personnel, but only 41% of general managers, giving such labels a thumbs up for growth.
However, it remains to be seen just how long this trend can or will last. Take, for instance, the fat free/lowfat boom of just a few years ago. From the late 1980s through the middle 1990s, research activity focused on the development of foods with little or no fat. Searching for the Holy Grail—a healthy, tasty, affordable substitute for “bad” fat— was a goal that continues to elude food technologists today.
In the meantime, consumers' concerns have ventured elsewhere, toward healthful foods that have great taste. Fat content is less of a concern to today's consumer. A poll conducted last year by the Food Marketing Institute found only 46% of supermarket shoppers interested in proper nutrition were worried about fat. The number had been 60% as recently as 1996.
Other products that have surged in popularity include “homestyle” comfort foods, snacking items and “ready-to-finish” meals. The latter is a relatively new item featuring a starch and vegetables, plus a sauce packet, to which consumers add meat or another protein source. This type of product was touted as a possible future trend at Prepared Foods' New Products Conference last month.
The word “homestyle” may be a particularly key new product attribute. Responding to an audience member's question about a current trend that will most heavily influence the future, Edward Haft, president and CEO at Sara Lee Bakery, Chicago, commented that the next five years may well see a renewed focus on family eating occasions. However, convenience must not be forgotten.
Consumers may want to feel like they are cooking a quality meal, but that does not mean they are willing to prepare an elaborate dinner and clean up afterwards. Simply put, this return to family togetherness during dinner will require quick, easy cooking methods, perhaps incorporating speed-scratch qualities or one-dish meals that are not only convenient, but also permit the family to add ingredients or to help in preparation in order to make it “theirs.” A start in that direction has been the “finish-on-your-own” meals briefly mentioned above.
On The RunConvenience is always a factor to keep in mind, a lesson not lost on R&D personnel and marketers in the food industry. This year's survey found 43.6% of respondents believe ready-to-eat products for grocery store deli or “perimeter” locations offer significant growth possibilities. Furthermore, RTE products for use at family and fast food restaurants offer great potential for 40.4% of respondents.
Positioning convenience foods as on-the-run meals may also be another good opportunity. Take, for instance, recent introductions of lunch kits, including the new StarKist To-Go, designed to offer the time-pressed consumer a quick and easy meal. “There is really no adult lunch kit,” says Kara Baker-Kessler, spokesperson with Heinz North America, Pittsburgh, “which makes the StarKist Lunch To-Go product so unique. In concept testing, consumers ked the product and wanted to buy it. It was very unique, and they thought it was a good value for the money. In today's busy society, where 60% of women are in the workforce (according to Department of Labor statistics), people are looking for (and companies are trying to give consumers) great-tasting products that are quick and convenient. These are the two benefits of Lunch To-Go.”
In all, portable, easy-to-hold foods represent a sizable group, considering the widespread enjoyment of items such as enchiladas, tamales, pocket sandwiches, stuffed breads, egg rolls and other stuffed snack foods. Appetizers, for instance, have garnered tremendous appeal for foodservice diners and also are finding their way into home meal planning. Furthermore, the opportunity exists to develop natural/healthy/vegetarian versions of these items and expand the target base even further.
Convenience is always a factor, but consumers have grown more finicky as well, and wise is the developer who takes this into account. For instance, some 39% of respondents believe premium-priced, “chef” quality products offer lucrative market opportunities over the next 12 months. This trend is nothing new, as the demand for higher quality and more convenient foods has been increasing steadily for a number of years.
“Those responsible for developing and executing new products in the marketplace today face an interesting dilemma,” says Kevin Buck, president of The National Food Laboratory Inc. (NFL), Dublin, Calif. “Consumers want great tasting, easily prepared and inexpensive products. Many consumers don't have a problem spending $100 on a good dinner at a restaurant but won't spend more than a few dollars on a prepared retail food. It's very possible to develop great tasting prepared foods today—but not for $1.50 per serving. The food industry's challenge is to change the perception of prepared foods to court the segment of the population that can afford 'restaurant quality' products.”
“One key factor we particularly foresee driving R&D and food marketers across the board,” Buck observes, “is the need to upgrade the perception of prepared foods. The technology exists to manufacture very upscale prepared foods.”
R&D personnel may find this a Herculean task, due to consumers' negative experiences with the quality and taste of supposedly upscale refrigerated and frozen foods. Some restaurant-branded products are finding a niche in this rea, but shoppers must have tremendous confidence in the brand in order to pay more money for a food they're not sure will surpass their expectations.
Be that the case, shoppers do seek products suitable for a wide range of eating occasions—from simple snacking to family meals to formal dinner parties. As always, safety, health and nutrition play a vital role, but so does the need for quality foods that can be prepared simply and quickly.
Money Talks, NowUntil recently, the price of a product had not been the most important factor in consumers' purchasing decisions. Just last year, Prepared Foods' survey found 29% of marketing respondents believed having the lowest cost product among their competitors would be a factor in growth potential, while less than 10% of R&D personnel responded in kind. With the economic downturn (this survey was conducted prior to the incidents on September 11), those statistics ballooned to 52% of marketers and 63% of R&D employees perceiving economically-priced products—when compared to their competitors' goods—as new growth areas.
Considering the economy, large companies are unlikely to attempt widespread, risky product launches, but don't expect those firms to abandon aggressive practices completely, according to Rick Wolfe, president of PostStone, Toronto, a business research and strategic planning firm. “Shareholders are always after increased profits, so it is pretty difficult to sit out a sluggish economy unless market intelligence tells you that consumers are holding on to their wallets and the most prudent hing to do is consolidate your company's position. It is a rare business where you can just shut the innovation doors for a long period of time.”
Blurred LinesBaby boomers have seen the number of eating options proliferate over their lifetime. In addition, they are better educated about the food they eat and have more disposable income with which to try a variety of foods. Chinese, Italian and Mexican cuisines are no longer considered ethnic foods and have entered the mainstream. Marketers are keenly aware of this fact, as demonstrated by the results of this year's survey. While 21.2% of marketing personnel cite the great growth potential of products targeting minority/ethnic populations, some 24.2% believe ethnic-type products for “non-ethnic”—or mainstream—consumers will be a catalyst for growth.
A closer look at the numbers shows another interesting trend. Overall (this includes marketing, R&D and general management), close to 29% of the respondents believe ethnic- oriented products formulated for mainstream consumers harbor growth potential. Products specifically targeting minority/ethnic populations garnered nearly 21% of respondents' expectations.
Some 44% of the R&D participants seemed to favor ethnic-type products for the “non-ethnic” public while 29% of the R&D population favored products specifically for minority/ethnic populations.
Opportunities may well abound in those areas, though the lines between some so-called ethnic cuisines and mainstream foods have blurred to the point of nonexistence (e.g., Italian and Mexican foods). The opportunities that spring up from such possibilities are numerous, as developers have boundless potential for ingredient additions or recipe suggestions.
Looking on the foodservice side of the industry, Buck says, “With the continued influx of immigrants, and readily accessible travel for Americans, global cuisine has gained in popularity. Restaurants featuring foods from Thailand, Vietnam, Malaysia, Morocco and Ethiopia are more prevalent, along with restaurants featuring authentic regional cuisines from Italy and France. These trends have overtaken the generic Asian, Italian and French food fashions. Blends of Mexican, Latin American and Caribbean cooking, also known as Nuevo Latino, are 'in.' The wave of spicy foods has come in with Southwestern cuisine and has continued to grow with the Nuevo Latino trend.”
Dinnertime, itself, has taken a new meaning. Many families no longer sit down together to eat their meal. Often, dinner is a sandwich, soup or a simple snack and a beverage. Breads, coffee, desserts and side dishes are making way for snacks and carbonated drinks. That is not to say all R&D endeavors are in what many consumers would consider “junk foods.”
In fact, nutritionally fortified products hold strong appeal, with nearly 30% of all respondents to this year's survey touting the growth potential to be found in this category. Those numbers are particularly strong when responses from R&D and marketing personnel are considered individually.
Some 34% of R&D respondents believe in the growth potential of nutritionally fortified products, which interest health-oriented consumers, while 42% of marketers believe in the future of this brand of nutritional science. Indeed, the positive effects of certain foods and nutrients upon the body constitutes a wide-open field with valuable marketing potential.
“Nutraceutical ingredients [and foods] have also become more mainstream,” Buck says. “These new product introductions are focused on a consumer benefit or specific ingredient, adding interest to the R&D process.” The developer gains more knowledge of the ingredient, its interactions with other ingredients and how it will affect flavor. As regulators take a closer look at the nutraceutical area, it will affect the development of new products and partially determine whether there is a continued strong push in this arena, Buck notes.
Looking into the future, functional foods would appear to hold much promise, with roughly a third of marketers and R&D personnel citing the attractive growth potential of these items. These foods will serve to allow consumers to take more control of their health, fat consumption, energy or weight control.
Undoubtedly, innovation, new products and developing proprietary foods and food technologies are key to any successful food company's growth, but those new products and brands must make a difference in their category to meet with success.