Major changes in food and beverage during 2016
Dec. 21, 2016
by Monica Watrous
KANSAS CITY — Meal kits, cold brew coffee and kombucha generated plenty of buzz in 2016, but the industry’s most significant issues this year were transparency and sustainability. These key themes lay at the heart of policy change, business strategy and consumer expectations in the food and beverage marketplace. Here’s a look at events and trends in 2016 that are expected to impact the year ahead.
Just label it
President Barack Obama on July 29 signed into law an act of Congress requiring the mandatory disclosure of foods containing bioengineered ingredients. The law specifies food manufacturers must disclose bioengineered foods by way of on-the-package text, a symbol or electronic or digital link with language on the package such as “scan here for more food information.”
Small and mid-size food and beverage companies have seen sales increase at the expense of the industry’s 25 largest companies. The top 25 food manufacturers in the United States, which include companies with annual revenues of more than $4 billion a piece, have ceded 300 basis points to small and medium-size competitors since 2012 and have grown revenue at 1.8 percent compared with 11 percent to 15 percent for smaller companies, according to a report published by AT Kearney and The Hartman Group.
The industry is adapting to changes in the marketplace in part by establishing venture capital funds to invest in emerging brands, particularly with a health and wellness focus. In the past year, these companies have included Kellogg Co., Campbell Soup Co., the Hain Celestial Group, General Mills and Tyson Foods, which this year took a minority stake in Beyond Meat, a manufacturer of meat-free burgers and meals.
Free for all
Consumers remain wary of additives, preservatives and artificial colors, flavors and sweeteners, prompting manufacturers and restaurant chains to remove such ingredients from products. This year, a number of companies launched clean label efforts, including McDonald’s Corp., Nestle USA, Hormel Foods, Hershey Co., General Mills, Campbell Soup Co., Panera Bread, PepsiCo and Kraft Heinz, among many others. Global sales of clean label food and beverage products may reach $180 billion by 2020, according to Euromonitor, featuring such marketing claims on labels as all natural, no artificial additives, no artificial colors, no artificial preservatives, no artificial flavors, no artificial sweeteners, GMO free, BPA free and no monosodium glutamate.
Additionally, foods free from gluten, wheat and dairy have moved from niche to norm, with many products appealing to consumers without food allergens, according to Innova Market Insights. Sales of gluten-free foods were forecast to reach $1,328 million in 2016, according to Packaged Facts, a 6 percent increase over 2015. In contrast, sales of gluten-free foods in 2013 were $837 million, an 86 percent change compared to the previous year.
The year also saw a dramatic rise in consumption of plant-based food and beverages, a market that now exceeds $4.9 billion in US sales, according to SPINS, growing 3.5 percent since last year and outpacing the total food and beverage industry. Driven by health, environmental and animal welfare concerns, more than a third of Americans eat at least one vegetarian meal per week, and just over a quarter of consumers said they ate less animal meat in the past year, according to the Plant Based Foods Association.
The new Nutrition Facts
Added sugars, vitamin D and potassium are in the Food and Drug Administration’s new Nutrition Facts Panel, and calories from fat are out, according to final rules published by the agency May 20. The new rules will require the declaration of a gram amount of “added sugars” in a serving of a product, establish a Daily Reference Value and require a per cent daily value declaration for added sugars. The new rules also will change “sugars” to “total sugars” and require the statement “includes ‘X’ g added sugars” be indented and declared directly below total sugars on the label.
The FDA in September also issued a guidance document that updates how the agency defines the nutrient content claim “healthy.” The guidance was issued in response to the agency’s effort to make it consistent with the Nutrition Facts Panel final rule.
Taxing the sweet stuff
The fall elections brought more clarity to the apparent building momentum of beverage taxes, which came on the heels of a recent World Health Organization recommendation to tax beverages sufficiently to boost prices by 20 percent, claiming it will reduce soda consumption and aid in its earlier recommendation that non-nutritive calories should constitute no more than 5 percent of total daily caloric intake, though most agree 10 percent is more realistic. The residents of four cities, Albany, Oakland and San Francisco, California, and Boulder, Colorado, passed taxes that will go into effect in 2017. They join Berkeley, California, which passed a soda tax in 2014, and Philadelphia, where the City Council passed a tax on both sweetened and diet beverages earlier this year. A few days after the election, the Cook County, Illinois, (Chicago) Board also approved a beverage tax to begin in 2017.