3 NATURAL TRENDS THAT WILL IMPACT CONVENTIONAL CPG RETAILERS IN 2020
BEDROCK’S KEY TAKEAWAYS
- Plant-based meat and milk alternatives are now mainstream food products.
- Organic food items are increasingly common across product categories.
- Customers are seeking out “functional food” items that meet a variety of health needs beyond basic nutrition.
In CPG, Natural Trends are Becoming Mainstream
It wasn’t so long ago that natural food categories were the exclusive domain of niche specialty stores. Today, the category has expanded into mainstream markets, with products claiming space across multiple aisles — and this growth shows little sign of slowing down.
As new natural CPG startups continue to enter the scene, natural trends will become one of the biggest drivers of growth in 2020. Manufacturers seeking to capitalize on this shift will need to assess the performance of their existing CPG products across all categories and understand what resonates with consumers. Beyond specific sales data, they will also need to keep a finger on the pulse of the industry as a whole. Here are a few natural trends manufacturers should watch.
Plant-Based Meat and Milk Products are On the Rise
There’s always been a market for vegetarian and vegan alternatives to meat and milk products, but the field has exploded in recent years. Brands like Impossible Foods and Beyond Meat have established themselves as leaders in the plant-based protein market, and other upstart competitors have found growth with unique product offerings.
This trend isn’t exactly new, but plant-based alternatives have finally become mainstream. Approximately one-third of 2018’s food & beverage investments were dedicated to plant-based initiatives, and customers are now flocking to meat and milk alternatives — according to the Food Revolution Network, there’s been a 600% increase in people identifying as vegans in the U.S in the last three years.
But veganism isn’t the only trend fueling the plant-based pivot. Mainstream health organizations are recommending a plant-based diet for health reasons, and plant-based brands have forged strong partnerships with fast food outlets like Subway, Burger King and others to increase their visibility, and encourage customers to seek out their products from retailers.
This trend is already leaving its mark on supermarket shelves, where consumers can find a wide range of traditional and plant-based products. New plant-based CPG startups are on the rise, while traditional meat and milk brands face unexpected competition. One fact is clear: We’ve just begun to see the impact of alternative meat and milk products in the CPG marketplace.
Organic Items are Increasingly Common Across Product Categories
Customers often seek healthier alternatives to traditional food items, even if they aren’t plant-based. Organic products represent one of the biggest opportunities in this space — the market is projected to reach $680 billion by 2027, accelerating the growth brands have seen in recent years. More impressively, even though organic items typically cost more than traditional products, customers are willing to pay more for the perceived benefits.
Organic food is becoming more prevalent thanks to drivers that go beyond personal health. The category is perceived as carrying more nutrients while avoiding harmful chemicals, and production methods are generally perceived to be more sustainable. Organic food items also tend to perform well across multiple categories, including prepared foods, snack foods, and fresh vegetables.
As we move into 2020, CPG companies that offer organic products can expand their brand in several promising ways. One prime example is environmentally-friendly packaging, which is becoming a priority for organic and non-organic shoppers alike. Customers are also receptive to innovations that enhance the variety of organic products on store shelves. As these developments continue, organic will become an even more popular preference.
Customers are Seeking Out Functional Food Products
While some customers don’t shop specifically for plant-based or organic products, a general awareness of healthy food and nutrition has permeated our culture. This has prompted the rise of “functional foods,” a catch-all term referring to items that have some additional purpose for function. It often applies to foods with ingredients that are known to promote health or prevent disease beyond basic nutritional requirements.
Functional food isn’t formally recognized as a category within the United States, but it is recognized by regulatory bodies around the world. The term was first introduced in Japan, where the government officially manages an approvals process for any functional food product. For example, Japanese regulatory agencies maintain a list of ingredients that have scientifically-recognized dietary benefits, such as improving blood pressure, mineral absorption, or even dental hygiene.
In regions where functional food isn’t formally defined, such as the United States, CPG brands are just beginning to recognize its value. One study from ingredients company, Kerry, found that 65% of customers want functional benefits from food and beverages, often from products that include omega-3s, green teas, honey, coffee, or probiotics as additional ingredients. With the global market for functional food expected to reach $100 million by 2025, CPG companies should watch this trend closely.
Get Help in Understanding Natural Trends
In just over a decade, the CPG retail market has transformed as more natural brands move into conventional retail spaces. The forces driving this growth won’t disappear in 2020, which means manufacturers will need an expert understanding of their internal sales data to capitalize on natural trends moving forward.
That’s where Bedrock Analytics comes in. Our purpose built CPG analytics tool helps you create custom charts and tables that are insightful and presentation-ready. Before introducing a new natural product to the market, CPG manufacturers need to understand where their existing products perform best and why. To get these crucial insights and more, reach out to Bedrock Analytics and schedule your demo today.