Insights

Four Growth Opportunities for Dairy in 2022

Read about four key food and beverage trends for 2022.

11 Feb 2022

9 min

#All Categories #Sustainability #Mental Wellbeing #COVID-19 #Nutrition #Global #Insights #Immunity

2021 was another trying year, but despite the challenges brought on by the global pandemic, we continue to see growth opportunities on the horizon for the dairy industry. In this article, I have summarised the four key food & beverage trends that are being reported in the market to help brands identify these growth opportunities.

Some of these opportunities have accelerated or continued to develop because of the pandemic including the focus on self-care and immunity among consumers, the balancing act consumers are doing when making food choices and where, when, and how consumers eat. While others have developed momentum in spite of the pandemic such as sustainability. This reinforces the importance of this trend and indicates that showing consumers that you have an end-to-end sustainability story will need to be a key focus.

1. Focus on Self-Care for Immunity and Resilience

Health-consciousness is at a peak and the focus continues to shift towards a proactive and preventative mindset. Developing immunity and resilience has become the top priority for consumers. They’re changing their behaviours little by little to achieve better health and wellness outcomes, so they are armed for whatever life throws at them.

Consumer focus on immunity

Immunity remains top of mind as the pandemic raises concerns about whether our health is good enough to fend off the virus. There’s been increased awareness on how food and nutrition can support this. A survey Fonterra conducted across different markets globally in 2021 shows hows that the majority of consumers feel that it is important to eat a well balanced diet. 

88%

of consumers feel that it is important to eat a well-balanced diet to prevent major illnesses1

 

Consumer demand in this space is diversifying. Consumers are looking to a wider variety of ingredients like protein, vitamin c, iron and probiotics to name a few. We are also seeing product development start to move towards different categories, or even targeting different consumption occasions like sports nutrition, as brands look to cater to consumer needs around immunity.

Looking ahead, we expect consumers will be more sensitive and critical when evaluating immunity claims. Brands will need to be ready to substantiate their claims to satisfy consumers.

The growing importance of mental wellbeing

Within self-care, mental wellbeing is a trend to watch with the pandemic accelerating conversations in this area. As lockdowns, stress, feeling of lack of control and isolation hit consumers, they are talking more openly about caring for their mental health and the concept of holistic wellness – caring for both body and mind – is becoming more pronounced.

While we often hear mental wellness discussed as one bucket, there are actually different areas that consumers are trying to address here. Taking aside clinically related mental wellbeing concerns, mental wellness in the day-to-day can include reducing stress, promoting relaxation, getting a good restful sleep, or mental alertness and focus.

The link between food and non-clinical mental wellbeing related issues is a global consideration. Surveys have shown

Consumers around the globe are becoming interested in or already believe that what they eat can impact their mental wellbeing just as much as it affects their physical health.

The key challenge, however, is that mental wellbeing is a highly intangible offer. So being able to provide evidence of efficacy will be an important driver of success.

S&AL - Young asian man meditating outside on wooden deck

2. Mindful eating

Very much connected to achieving immunity and resilience, the trend of mindful eating is worth discussing separately as this focuses on the ongoing balancing act that consumers do every day when making food choices. There is a plus and minus equation that is at play here as consumers pay closer attention to what is in their food. 

63%

of consumers have become more attentive to ingredient listings on food & drinks2

Consumers are seeking hero ingredients that allow them to gain maximum health benefits from what they are eating. 

Protein powers on

Protein continues to do well in this space. We expect it to continue to grow outside of the sports nutrition category into everyday foods and drinks including snacks. As consumers become more familiar with protein and its benefits, we anticipate that conversations will turn to high protein quality (e.g. natural, sustainable, complete). 

Blends of plant and animal protein will also be an interesting space to watch. While previous conversations have focused on the demise of animal protein (including dairy) in favour of plant proteins, it seems that animal protein continues to sell and coexist with alternatives. 

The consumer mentality for getting the ‘best of both worlds’ can offer opportunities for blending animal and plant proteins providing complementing benefits for consumers.

Untapped opportunities for probiotics 

Probiotics is another ingredient worth paying attention to. We expect probiotics to diversify into health claims beyond digestive wellness. Consumers are now starting to associate probiotics with a range of benefits from general wellbeing to boosting the immune system and even reducing stress.

Below: Percentage of consumers who consider immunity as a reason for purchasing probiotics

However, while the consumer demand for probiotics into other health claims expand, innovation in food and drink has some catching up to do. According to Mintel’s GNPD, digestive wellness dominates probiotics related health claims in food and beverage NPDs (new product development). This is double the number of products linking probiotics to immunity benefits. 

Clean Label Products

Besides looking to add hero ingredients into their diet, consumers are also being mindful of what to exclude.

The trend of clean label eating continues, be it in the form of seeking foods that claim to be or are perceived as more ‘natural’, reducing intake of ingredients like sugar, salt or trans-fats, or preferring products with a shorter ingredients list. A space to watch here will be how minimal processing techniques can be used to deliver clean label claims. We are seeing brands talk about processes that reduce naturally occurring sugars, or air frying to reduce fat content.

1 in 3 consumers in China agree that eating less processed food is important and they have been doing so as a healthy eating habit (4)

Green protein smoothie in blender

3. Revisiting Old Habits

One of the key impacts of COVID-19 to our daily lives is the rediscovery of habits that we had before life became always ‘on the go’ and our ever busy lifestyles took over everything. Lockdowns and isolations have forced us to slow down and prompted us to revisit old habits. The home has become the focus of life once again.

The switch to eating at home

As food consumption refocuses to home centric lifestyles, and many consumers remain cautious about dining out, recreating foodservice offerings at home has become a way to cope. Prepared meals and meal kit providers are expanding their repertoire to serve foodservice deprived consumers. Manufacturers are also looking to transform foodservice food and drink into packaged formats to make it convenient and accessible for consumers to enjoy at home.

Influence of social media on cooking

Thanks to social media, consumers are also finding a renewed interest in food preparation at home.  

We are seeing a new group of ‘food experts’ on the rise in the form of everyday home cooks who create viral cooking and food preparation videos, inspiring consumers to rediscover home cooking and baking.

Consumers have put down recipe books in favour of social media platforms to help them cook. In fact, showing consumers how to coat grapes with sugar and freeze them so you can snack on them later can gain you 25M views these days!

Multi-daypart snacking

The pandemic has also disrupted how we snack, pushing it out to multiple dayparts, and further blurring the boundaries between snacks and meals.

This is something we expect to continue beyond the pandemic. Extending the appeal of certain food and drinks into multi-daypart snacking requires brands to look into how they can use formats and flavours to cue the occasion for eating. Some brands have made format changes to move products out of the traditional breakfast category to make them a viable snack option throughout the entire day. Better for you snacks that can be eaten as a small meal in place of a full one is another strategy for brands to consider. 

4. Sustainability Gains Momentum

Sustainability has moved along slowly and steadily over the last decade. The pandemic, while putting a pause on some sustainability initiatives like reducing packaging in favour of product safety and hygiene, has accelerated conversations in other areas. Consumers have started to recognise how interconnected the world is as a result of the pandemic.

Our horizons are now broader and there is greater consideration of the ethical and environmental impact of the food we eat, not just locally but to the planet as a whole.

Food supply shortages have made consumers more aware of sustainable, agricultural and manufacturing practices and the adoption of a more local approach to supply and demand. It has increased consciousness around food wastage and highlighted the need to make food supply last longer. Upcycling ingredients and reducing production impacts on the planet will all be important moving forward.

Technology, such as digital product labelling and mobile tracking apps, will be critical in promoting traceability and transparency. Consumers will demand greater accountability from brands to provide evidence on how they are being sustainable.

Brands need to provide quantifiable evidence that they are doing good by the planet. Being able to trace the origin of food also provides reassurance of quality and safety which has become top of mind for consumers. Attention to carbon footprint has also accelerated, with farming practices, manufacturing and supply chain often coming to mind here for consumers. While packaging has long been the key sustainability focus for many consumers and brands, there has been a significant shift for consumers toward the impact of the entire supply chain on the environment.

This will put into focus the need for brands to consider an end-to-end sustainability story in order to satisfy consumer needs in this space.

Farm shot with mountains, cows and tress and plants

Opportunities for the Dairy Industry

These trends highlight where dairy can look for growth in the near future as we continue to navigate the challenges caused by the pandemic.

As in previous years, the continuously growing needs around health and wellness create an opportunity for dairy to really showcase its health credentials. Many consumers continue to turn to dairy to support their wellness needs, enabling dairy sales to show resilience during the pandemic.

There was an 11% increase in US dairy retail sales in 2021 compared to 2019.

With constant advancements in digital technology and with growing consumer consciousness around claims, consumers will be more critical in their approach to evaluating and interrogating claims being made by brands. They will require accountability from brands to provide evidence about their claims, be it on health and wellness or sustainability.

As with anything during this pandemic, agility and adaptability will be key. As consumers adapt their behaviours to adjust to their surroundings, so should brands

  

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This article was from the February edition of Perspective.

Expert

Roshena De Leon

Global Insights Manager, Fonterra AMENA (Africa, Middle East, Europe, North Asia and the Americas)

Roshena joined Fonterra in early 2015, and as the Global Insights Manager for Fonterra (AMENA) she is responsible for communicating her in-depth understanding of global markets, categories and consumer trends through strategic initiatives and opportunities. Roshena has a passion for telling the story behind the data and working with NZMP and their customers on which innovations and actions can bring insights to life. Roshena has 20 years of experience in both qualitative and quantitative research with a strong focus on the FMCG category. Prior to Fonterra, Roshena has held roles in various global market research and media agencies and MNCs.

The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.

  • [1] Fonterra health and wellness survey 2021
  • [2] FMCG Gurus clean label survey 2021
  • [3] FMCG Gurus probiotics survey 2021
  • [4] Mintel report: build trust amidst ultra-processed food publicity
  • [5] IRI data US

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