Keynote speaker Dr. Barry Sears, president of Zone Labs, began Prepared Foods' 2005 New Products Conference (NPC) with the provocative question “Can Processed Foods Save America from Itself?” He suggested an alternative thinking about obesity.
Current lines of thought say Americans eat too many calories and exercise too little, leaving the processed food industry as the usual suspect to blame. Sears suggested viewing obesity as an adipose tumor, a cancer that can be treated with chemotherapy—in the form of food. The underlying cause, he contended, is inflammation caused by excess production of arachidonic acid, which presents some opportunities in developing products that promote wellness and taste good.
The next big thing, in Sears' view, will be anti-inflammatory foods, similar to the foods in the Zone diet, which create a “physiological state where diet-controlled hormones are used to achieve balance,” described as the evolution of the Mediterranean diet. What challenges will this pose to the industry? Several were touted, including increasing proteins as carbohydrate levels are decreased, as well as maintaining palatability while increasing satiety. Sears admitted changing the composition of baked goods will be a challenge under this diet plan, but new proteins may make anti-inflammatory foods possible. After all, he asserted, since the processed food industry helped create this problem, it can help resolve it.
One area benefiting from a positive health perception has been the natural products sector. To define the natural products industry, Jeffrey T. Nibler, president of SPINS Inc., simply directed the audience to ingredients panels: that is where the consumers look for “natural” products, of which organics are a subset, as are supplements, herbals and functional beverages. There has been something of a convergence in consumers' minds between specialty gourmet and natural products. Sustainable products, products with a concern about the industry or world as a whole, also have become a notable trend. Make no mistake, however: consumers buying natural products are doing so because these items are viewed as “natural.”
Room for Natural GrowthThis category has much upside potential to grab more consumers for entry into purchasing natural products, and it has room to grow: 2% of the population is buying 50% of total natural product sales. Some 40% of current natural purchasers cited diet and weight loss as a reason for their natural selections, although the “avoidance” trend had some merit in this category as well. Gluten-free products, for instance, had sales of around $60 million, representing roughly 13% growth.
In 2004, natural product sales rose 7%, as new retail efforts by such companies as Whole Foods Market have tapped into the gourmet lifestyle. New stores, Nibler noted, have 10 different cooking stations and give consumers the option of eating in or taking home their goods, increasing competition with foodservice alternatives.
What is a foodservice manufacturer to do to compete? Campbell Soup Co. met the perceived healthfulness of natural products head-on, with a fortified line of vegetarian entrées, soups and chilis. Functional food is a $7.3 billion market, explained Joyce Friedberg, senior marketing manager with Campbell's Away from Home division, and consumption is rising, particularly on college campuses. The Campbell's line of products has communicated “healthy” in a number of ways, including using vegetables, ensuring a low-fat content and improving the line's preparation methods, as the company attempted to extend beyond vegetarian trends and reach nutritionally concerned consumers. The result was a line fortified with eight vitamins and minerals, with minimized salt and fat content, no trans fat or hydrogenated oil, and an all-vegetarian line, 75% suitable for vegan dieters.
Offering another foodservice perspective, McDonald's USA's Mark Lepine delved into the behavioral shifts of the American consumer, finding there is no balance anymore—no separation between home life and work life. Wealth is no longer a goal, but happiness is, which has consumers willing to spend money to save time, “buying” back time to spend doing enjoyable things.
As such, consumer reasons for dining out have changed: historically, dining out was largely social, a special event where the consumer had a long, relaxing meal at a higher cost. Now, consumers view dining out as a functional refuel, a part of everyday routine meant to be quick for on-the-go lifestyles. According to Lepine, the only aspect unchanged is the desire for indulgence/taste when dining out.
Behavioral shifts also are occurring in areas of nutrition, where the predominant focus is moving from negative (low- and no-) to positive (healthy fats, healthy oils) connotations. Lepine questioned whether consumers will go from health conscious to health active and the speed at which such a shift will occur. Some movement has begun already, notably in young families. If it is a true behavioral shift, he assured, it will be a slow process and take longer to happen than trends/fads of recent years.
Around the GlobeLynn Dornblaser and David Jago, editorial directors with GNPD Consulting Services, offered their annual take on new products from around the globe, culminating in the NPC staple, “Global New Products Tasting Session.” Growth continues in new product introductions, although 2005 likely will see slowdowns in more developed regions. In the U.S., beverages are seeing the most introductions, with nearly every notable trend appearing there.
In their presentation, Dornblaser and Jago focused on the following 10 trends they believe will thrive over the next five years:
1) Body and soul; health and wellness. New products are incorporating a more holistic approach. Balance is key and, in terms of portion control, “mini-size me” seems to be the mantra.
2) Disease prevention. Obesity and osteoporosis also were covered. Expect to see more products offering heart-healthy benefits, as well as products to control blood pressure and cholesterol. Diabetes may be the next big epidemic, and one notable product introduction has been tailored to children with diabetes: Kraft's Kool-Aid Jammers.
3) Balanced nutrition for kids. Children eating the right things in the right quantities. For example, manufacturers are trying to increase kids' milk consumption.
4) Looking to Europe. Probiotics are moving beyond the “little bottle” concept into other segments, like butter. Glycemic index concerns could be a post-low-carb trend. Allergens and “free from” foods are being seen in the U.K., strongly driven by private label (i.e., Boots' “Free From…” line).
5) Looking Far East. Black foods, which are not new, are tied to ying-yang, are flavorful and provide healthful benefits. These foods are spicy, have a strong flavor and are made with whole grains; many are high in fiber.
6) Celebrating age. Baby Boomers (those born between 1946 and 1964), number 77 million; consequently, developers should consider formulating for these older consumers. At the present time, however, virtually nothing is on the market for this group, reports Dornblaser and Jago. Packaging, in particular, could use a re-working on many products.
7) Return to simplicity. This trend likely is an effort to avoid stress and also something of a backlash against portability.
8) I want it, and I want it now! In a return to immediate gratification, Boomers and teens (Millennials) are ushering in the next age of on-the-go: one-handed eating (though there are no products that can be opened with one hand, yet). While a product may be designed for on-the-go consumption, that does not necessarily mean it is instant. For example, the Wolfgang Puck self-heating latte beverages require 6-8 minutes of preparation.
9) Cause marketing and fair trade. These efforts communicate to consumers that a company cares and is aware of global issues. Masterfoods' created pink M&Ms to symbolize its commitment to breast cancer awareness. Nestlè also is about to launch a fair-trade Nescafe in the U.K.
10) Multi-culturalism. Very much driven by private label, this features products that focus on regional cuisine and retool it.
Looking a little further into the future, Dornblaser and Jago suggest technology will offer drastic changes to developers, possibly allowing true customization of food and drinks. They also pondered the idea of the death of the supermarket, as there are so many alternative ways to shop: a new generation of convenience stores, not to mention increased competition from restaurants. Sustainable packaging likely will develop as a result of various environmental concerns, but the speakers also warn about “anti-trends,” such as indulgence, youth-oriented products and fantasy packaging (or packaging that is too outlandish), to name a few.
Examining the globe's hottest products, Jane Perrin, managing director of global services at ACNielsen, explained health and wellness issues are driving growth, growth that is led by soy-based drinks and drinkable yogurts. More than 20% of developed markets will be over 65 by 2030. This group of senior citizens is a different variety than those of the past: they are more affluent, living active lives and concerned with health and wellness issues. Dieting will continue to be a big factor for them, and accessible packaging also will play a big role.
Developing markets (Africa, India, China, Latin America) have much younger populations. These groups likewise have health/wellness concerns, but theirs are more family-focused: lowering infant mortality, improving education, providing adequate nutrition and medical care. Product needs in these markets center around baby food and products, as well as smaller-sized products.
Valerie Skala-Walker, vice president of analytics product management with Information Resources, discussed the “Shopping Habits of Ethnic Consumers,” observing that by 2020, when today's children are starting their families, ethnic consumers will account for 39% of the U.S. population. As such, manufacturers should begin preparations for this diverse group now. Currently, Asian-Americans number roughly 4% of the population, but that number is estimated to increase 45% by 2020. This group is influential and younger (31.6) than the national average (35.3), more educated, marketing ready and earning higher incomes. However, they are not without their challenges, notably in their diversity, representing over 15 countries and a wide range of languages.
The second largest ethnic population in the U.S., African-Americans, faces a number of health problems, notably obesity, diabetes and asthma. Large and growing (+21% through 2020), this group is trendy and, when spending, puts a premium on image and having “the best,” Skala-Walker notes.
Hispanics are a large, fast-growing group, with a buying power growing 9% per year. They spend 15% more on food at home than the average U.S. household and may be ready for convenience, both in traditional foods and in the mainstream U.S. foods they consume.
R&D ToolsSince the expanding presence of foodservice offers traditionally retail-driven companies methods to improve their new product development process, John Li, corporate executive chef with Kraft Foodservice, explored tools used in foodservice menu and product development. Key insight can be gleaned from data and research, though other elements, such as industry associations and events, also play a role. At Kraft, Li observed, consumer-centric research revolves around two points: why consumers eat what they eat, and what they are eating.
One trend Li noted in particular is the concept of “trading up,” which is tied closely to indulgence and may be regarded as “justified indulgence.” Restaurants worth a trade up, in the minds of consumers, are those that have created a polished casual segment. Here, Cheesecake Factory is considered the innovator, but others (including Fleming's, a steakhouse that breaks out of the traditional male-oriented mindset by designing for women) are coming online.
Li offered five design rules to consider: differentiate with design, as it is the DNA of a successful product; rewrite the rules and create a new roadmap (as Fleming's is with the steakhouse concept); confront the unfamiliar; make it real and authentic; and make an emotional connection with the consumer that will win their loyalty. Further still, Li recommends regarding foodservice as a beta test for retail products and concepts.
Li's concept of trading up was echoed by a number of panelists in Bryan Urbick's presentation, “What Women Want,” as several female consumers explained they have switched preferred products in an effort to keep their families healthier. In fact, a number of health-oriented messages came shining through in the live consumer panel, particularly in the area of school lunches—the subject of a passionate plea by several parents (more than one of whom was a teacher) to help ingrain healthful eating habits into children. Furthermore, clean labels and avoidance of empty calories were two elements that routinely prompted purchase by the group.
Near the EndMerlin Development's Leslie Skarra delved into the difficulties in “Maintaining Vitality in a Product's 'Golden' Years.” Sustainable new products require an intense focus upon the end user, offering them the best combination of quality, price and occasion. Brands with long-term staying power, she noted, usually engage the consumer's heart or mind, so it is necessary to maintain a laser-like focus on end-user attributes, specifically convenience and relevance, and remain aware of long-term cost capabilities. Even once the product is on the shelf, the work may not be complete, as manufacturers should optimize the product to fit the end-user's usage of the product, not necessarily the originally envisioned concept. Indeed, she attested, the world is fundamentally different after the product enters the market. Above all, avoid a focus on internal goals rather than that end user.
End-user focus also permeated Chris Miller's examination of “What Consumers Want You to Know and You Forgot to Ask.” The purpose of connecting with the consumer, according to Miller, is to inspire a “deep understanding that will create meaningfully differentiated goods and services.” Of course, Miller admitted that such knowledge always leads to the quest for more knowledge.
Such a dilemma has faced Gatorade developers from the onset of the brand, explained Dr. Bob Murray with Gatorade Sports Science Nutrition Institute. Discussing innovation efforts at Gatorade, he noted particular rules for the powerful brand. Being such a large brand does present some restrictions, as brand equity is everything and, generally, the company has been risk-averse. He admits Gatorade is not great at innovation yet, although new ownership in recent years is driving innovation, a notable recent success being Propel fitness water. Science is everything at Gatorade, which should come as little shock from a company that was founded around the realization of the change in taste perception when a person is active. With that science-oriented focus, the brand can afford to be slow, believes Murray: “Science is everything to the unit; it drives the brand's growth but is an iterative, slow process to build to confidence.”
TestingAs Li suggested in his presentation, a number of companies are looking to foodservice to test concepts. According to Ralph Rush, director of channel and consumer insights with Kellogg's Special Channels, flavor has been the key driver and will continue to be for the foreseeable future. Ethnic foods are almost a subset of the flavor movement, while also being something of a counter to the comfort foods, as well as being borderline indulgent. When it comes to flavor, preparation techniques almost give restaurants an unfair advantage, he argues, by using methods the consumer cannot or will not use at home. Mega-trends impacting foodservice include: fresh, which can be communicated in many ways, including such terminology as “local” or “homemade”; mass customization, as with Chili's “Build Your Own Burger” and Pizza Hut's 4-for-All; and premium ingredients, making menus more ingredient-driven (e.g., Bonefish Grill's prosciutto-wrapped Monkfish Marsala).
This year, the conference's third day focused on packaging. Kevin Leibel, with Innovation Management, explored how packaging can help a company communicate and instill its brand(s) into the mind of the consumer. Any packaging must have two goals: increase product use and be brand-centered, as Leibel reasoned consumers will pay a premium for a brand, while only “a transactional price for a product (i.e., a commodity).” Also, bear in mind another Leibel note: “A package that makes it easier to use/consume a product will result in more usage/consumption of that product.”
Packaging to help sell and improve a product was the focus for Steven Landau, CTO with ScentSational Technologies. Olfaction packaging adds FDA-approved flavors in plastics for packaging to help communicate aroma technically and emotionally. In addition, the flavors also migrate into the product and create a better experience. As Landau notes, this technology adds flavor without adding fat, sugar, carbohydrates or calories. Butter and salty notes also can be added to fool the taste buds.
Innovation is key, but not easy to achieve, observed Dean Lindsay with Dean Lindsay Design Inc. Good ideas are not cheap, and a package can be the tipping point, as packaging innovation really goes to the consumer, he finds, creating consumer experiences in a culture of innovation. He did dispel some myths: innovation is not always about creating hot new packages, nor is it about crazy creativity. While it might be expensive to some degree, true innovation is worth it.
The 2006 New Products Conference will be held October 15-18 at the Ritz-Carlton Amelia Island in Amelia Island, Fla. For more information, contact Marge Whalen at 630-694-4347, e-mail firstname.lastname@example.org or visit Prepared Foods' website: www.PreparedFoods.com.