Bangkok--23 Apr--SCB
Highlight
What and how we eat today would look very strange to anyone living more than a decade ago. For example, buying a box of pasta made of something other than wheat, or even ordering a prepared meal ahead of time at home by computer would have been unusual back then. The following is what’s changing when it comes to how we find, cook and eat food; how we think about what we eat; and how producers are adapting to these changes:
Health and wellness food: organic, gluten-free, low-sugar, low-calories
Convenience food: ready-meals, packaged food, meal kits
The halal food
Functional food & beverages: beauty drinks, protein powder
Food for the elderly
Health And Wellness: Mainstream consumers have become more health conscious in the last decade. The booming success of natural and organic food retailers such as Whole Food Markets is a great indication that this is a significant trend driven by increasing consumer awareness. Key categories include organic, gluten-free, lactose free, low sugar, and low calorie foods. The global organic food and beverage market was estimated to be worth over $80 billion in 2013 and is expected to reach $161.5 billion by 2018 with a compound annual growth rate (CAGR) of 15%. North America and Europe are the two largest markets for organic products, accounting for 95% of the global market (Figure 1). Similarly, the demand for gluten free products has risen in countries with large Caucasian populations where more patients are diagnosed with celiac disease as 100% gluten-free food is the only life-long treatment for people with gluten sensitivity. Not only does the demand for gluten-free food come from people suffering from celiac disease- a lot of people choose to buy gluten-free food instead of traditional products containing gluten because they think of it as a healthier choice.
Convenience Food: Globally, demand for convenience food has been rising on account of busier lifestyles, the growth of retail chains, and smaller household sizes. Convenience could mean anything from ready meals to ready-to-cook (or meal kits) and home delivery.It also encompasses a range of processed foods that have longer shelf lives and are easy to use. What consumers look for in convenience food are ease of use, packaging, nutritional value, safety, variety, and product appeal. The ready meals market, which is one of largest segments of prepared and convenience foods, is estimated to be worth over $80 billion by 2015, with a growth rate of 6% per year. The US is the largest market in the world, while emerging markets like Asia Pacific, Middle East, and Latin America will add to future growth.
The Halal Food: The halal economy is emerging as one of the most influential and fastest growing markets in the world today due to the rising Islamic population and untapped opportunities across the value chain. The halal industry is often called “the world’s third billion market” after China and India as it serves over two billion Muslims globally. Halal simply means lawful in Arabic. For food specifically, wide variety of food is permitted , with the exception of food falling under six main categories easily memorized using the mnemonic ABCD IS- Alcohol, Blood, Carnivorous animals and birds, Dead meat, Immolated food provided to deities other than Allah, and Swine. The halal food industry is expected to maintain a growth rate of 10% per year to reach $1.8 trillion in 2018 from only $1 trillion in 2013 (Figure 2), not to mention the opportunities across the halal food value chain from farming to distribution methods which must comply with Shariah law. However, a complication for players in this market is that there is no consensus on the global Halal standard. Each Islamic country still has its own certification organization, making it confusing and time-consuming for new players to enter the market.
Functional Food And Drinks: Functional products will continue to influence mainstream products as consumers seek better and more varied options that meet their specific needs i.e. mental benefits, athletic performance aids, beauty, and immunity. The global functional food market was worth $54 billion in 2014, up 25% from the previous year according to Leatherhead Food Research. Although the functional food and drink segment only accounts for 5% of the total F&B market, we see strong interest from various players especially in products for weight management, and heart and digestive health. Additionally, the largest markets for functional food and drink are Japan and the US as people are more familiar with the products and have more money to spend than most developing countries.
Food For The Elderly: With the global population aging and set to grow even further, the food industry is gradually preparing to accommodate this growing group of consumers. According to the United Nations, over 20% of the world population (approximately 2.2 billion persons) will be over 60 by 2050. This visible and most predictable trend will be present both opportunities and challenges for food producers as it adds a new category of consumers. Most companies have not yet clearly responded to this trend; however, a few large companies have recently started to tackle this target market. For example, Amazon launched its 50+ Active and Healthy Living Store offering products for customers in the 50+ age range; Nestle redesigned its coffee jar, giving it a waist to make it easier to hold and open while Asahi group has developed single-serve soft stews to serve Japan’s rapidly aging population and rising number of nuclear families.
Implication
As mainstream consumers today increasingly become more health conscious, we are seeing a shift towards healthier foods, especially in the US and Europe. Similarly, demand for functional food and beverages has been rising in the past few years as consumers begin to pay more attention to what they eat, especially in higher income countries such as the US and Japan.Additionally, as a result of busier lifestyles and an aging population around the world, convenience foods are driven heavily by a trend toward more convenient food preparation and consumption. Consumers are attracted to them by the relatively low cost and complexity, ease of use, availability and safety. At the same time, markets matter. The top two fastest growing markets include Muslims and the elderly.
While predicting the future is not an easy endeavor, players can slowly and gradually adapt to changing behavior to gain insight into where the industry will head next:
Finished product manufacturers can gradually tweak their offerings and launch them in a few markets to test the concept at the beginning stage before any full launch.
On the other hand, manufacturers can also act as suppliers to provide other players ingredients when their current business situation does not permit them to produce finished products themselves.