Food and Beverage Ingredients Trends to Follow in 2017

Opinion | 18 Jan 2017

In 2016, clean label's influence over the food

John George
and beverage industry continued to grow,
Project Manager -
epitomised by Mars finally embracing the
Food and Nutrition
trend early on in the year. Elsewhere health
continued to influence consumption choices
and the announcement of a forthcoming sugar tax on beverages in the UK has forced
the industry to evaluate sweetening methods. These overarching trends will extend
into 2017, and many new developments will be a direct consequence of consumers,
manufacturers and ingredient suppliers trying to get on trend.

Cocoa ingredients reach a tipping point in the US

Cocoa ingredients struggled in the US between 2010 and 2015, with consumption
declining by over 5,000 tonnes. The most important product area, chocolate
confectionery, accounted for 44% of cocoa use in 2015, but has increasingly been
replaced by substitutes including dairy items or snack bars like Kind and Cliff, as
consumers look to reduce sugar and fat consumption. If there is a war on sugar,
cocoa has become collateral damage.

Chocolate confectionery and by extension cocoa's plight does not look set to improve,
with Euromonitor International's packaged food forecast model suggesting a volume
CAGR decline of 1% between 2016 and 2021. The insecurity associated with the
forthcoming Trump Presidency has seen GDP per capita revised down for 2017. With
chocolate confectionery's growth heavily influenced by GDP growth per capita, an
overall revision downwards for growth in volume consumption is perhaps unsurprising,
while increased product cost is also set to inhibit growth. However, unlike other
categories, chocolate confectionery is caught in a pincer movement as these
economic factors combine with the existing soft drivers of consumer lifestyle changes
and increasing uptake of replacements. Consumer reticence towards high sugar
products is only likely to rise, with the FDA's 2018 change requiring US products to
declare added sugar content likely to further raise awareness of problems associated
with high sugar content. With the US by far the biggest consumer of cocoa ingredients
globally, 2017 represents a pivotal year for suppliers who need to maximise usage in
alternative applications if they are to avoid getting caught in the anti-sugar crossfire.

US Chocolate Confectionery Growth Drivers, 2013 - 2021

Page 1 of 3
Increased focus on processing and production
In 2016, PepsiCo's Quaker Oats and General Mills's Nature Valley products faced
lawsuits over their use of the phrase "100% natural". The complaints related to the
inclusion of trace amounts of the chemical glyphosate, which came from pesticides
used on oats prior to harvest. These episodes reflect the fact that consumers are
increasingly looking beyond the ingredients list they are provided with on packaging
and trying to garner a better understanding of the whole process which results in the
food put in front of them. With the global value of "all natural" claims in food and
beverages set to reach US$42 million in 2017, there is likely to be increased scope for
scrutiny of production processes, and if these do not marry up with the values the
consumer is looking for, manufacturers could face negative headlines which threaten
to sink their product.

Companies recognise the importance of non-GM ingredients

Product manufacturers, particularly in the US, are increasingly looking to reassure

label-conscious consumers by using non-GM claims and now ingredients suppliers are
getting on message, with signs of this already appearing in 2017. For instance, as
2016 ended, Cargill announced the expansion of its range of emulsifiers to include
lecithin sourced from canola plants. 133,521 tonnes of lecithin were consumed globally
in 2016, with the ingredient generally sourced from soya beans. Soya lecithin often
comes from genetically modified crops, so the use of canola, should mean increased
supply for products which want to promote GM free credentials. However, suppliers
don't necessarily have to find a new source to comply. Ingredion announced in early
2017 that it was adding nine new examples to its portfolio of non-GMO verified
ingredients, taking the total to 57 and following on from Cargill at the end of 2016.
Clearly ingredients companies are recognising the need to support their customers with
ingredients which makes on product claims possible, so the pool of certified ingredients
can be expected to grow in 2017, with this in turn allowing the number of products
claiming to be "all natural" or "non-GM" to expand as well.

For further insight, please contact John George, Ingredients Analyst at Euromonitor
International, at: john.george@euromonitor.com.

Page 2 of 3
© Euromonitor International 2019

Page 3 of 3