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Food and Nutrition Consumers are engaging with food and nutrition like never before. Our in-depth analysis examines the most important implications across the industry, providing market intelligence, original thinking and key insights.

The Evolution of the 'Health' Concept

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The offer of food or beverage products considered “healthy” has evolved from an expected trend to a mandatory reality. The massive launch of products with such positioning in recent years led this claim to lose its differential aspect and to become a basic requirement for any brand wanting to stand out on the shelves. In addition, consumers’ understanding of the “healthy” concept has moved beyond the simple desire for weight control and has become a synonym for well-being, mental health, and a balanced lifestyle. Building healthier brands is key for those companies wishing to stand out in consumers’ minds.

The sixth edition of ‘Building Healthier Brands’ (BHB 2016), held in Brazil, gathered key stakeholders from food and beverage supply chains: manufacturers of ingredients, communication and design agencies, manufacturers of final products, associations and official organisations. BHB 2016 gave insight to the key paths to take when building a healthier brand and surpassing consumers’ expectations. Three major movements emerged from the discussions leveraged by panellists: the evolution of the “health” concept; the use of local ingredients, and the emergence and consolidation of new platforms to communicate and sell products and services.

The evolution of the “health” concept: What else do my customers want?

Euromonitor International’s presentation emphasised the increasingly wide meaning of “health” in consumers’ minds as they develop a deep understanding of their own needs, tastes and specificities – a movement that is reflected in the way they purchase food and beverages nowadays. Products with limited positioning, such as reduced sugar or low calories, are losing space to those offering wider functional benefits, such as “free from” composition (i.e. lactose, gluten etc.), and organic production.

According to Euromonitor International research, from a global perspective, products positioned towards food intolerance, fortified/functional, naturally healthy, and organic are set to register average constant CAGRs of 5% in retail value terms until 2020, while those characterised as ‘Better For You’ (with reduced sugar, caffeine or fat content) are set to register a CAGR of just 1%. A similar trends happened in Brazil where for ‘Better For You’ beverages presented a constant value CAGR of 3%, while organic, fortified/functional, naturally healthy, and products indicated for intolerance over the same period, showed a CAGR of 6%.

In order to reinforce the growth of fortified/functional products, it is worth mentioning the emergence and consolidation of protein-enriched products, such as Itambé’s (GBO: Itambé SA) 2016 product launches: Itambé Pro and Itambé Pro+, both lactose free and with higher protein content. The first product has 13g of protein per 200ml, while the latter offers a 22g concentration targeting high performance athletes. Even though distribution has been limited to high end retail outlets and unit prices are still prohibitive for a great majority of Brazilians (costing twice as much per litre compared to standard milk), these products exemplify consumer demand for superior products. Alexandre Almeida, president of Itambé in Brazil, reinforced the importance of consistent development of new products to meet consumers’ changing demands.

Products offering consumers a wider range of benefits can take advantage of higher profit margins as well as a strong position in consumers’ preferences – something important during a recession when people’s habits drastically change and several items are struck off the shopping list. The case of Itambé demonstrates how Brazilians are inclined to pay more for products they perceive as superior. But only if the proposal matches what is actually delivered! If consumers perceive the unit price range to be consistent with the delivered benefits, the product will likely occupy a much more solid positioning in their minds – and shopping baskets.

The case for local ingredients: the growth of safer choices of flavours

Guga Rocha, a well-known Brazilian chef, presented his perspective on the increasing - but still little explored - use of local ingredients in the food and beverage markets. Guga supports the further knowledge and use of herbs, fruits, fish, and many other ingredients typically from Brazil or that, in a certain way, benefit local communities as they are explored. He has a strong argument, but a difficult task, as less than 3% of retail value sales of all food and beverages in Brazil, in 2015, actually came from sustainable sources and fair trade labelled products. Furthermore, even by 2020, this scenario is not expected to change. Euromonitor International reports the same situation happening around the world.

Beyond the ethical and sustainable issues surrounding this topic, if we consider a more strategic perspective, the use of local ingredients, instead of imported raw material, can also contribute to maintain manufacturers’ higher profit margins and consumers’ interest. Native components have a considerable lower cost – enabling brands to operate at higher margins – but also tend to be more attractive to consumers as they are more likely to purchase familiar products during tough economic times.

After a sales peak, in recent years, of products flavoured with imported superfruits (especially cranberry and blueberry), manufacturers are finally turning their attention to the wide range of ingredients well known by Brazilians. For example, the category of 100% juice continues to grow at double-digit rates, especially through sales of purely orange and grape juice, while other types of beverages take advantage of combining premium ingredients with local fruits – such as Obrigado’s (GBO: Frysk Industrial Ltda) coconut water with jabuticaba, a Brazilian fruit. Açai, Guaraná and Yerba Mate are other local ingredients that have been increasingly added to many beverages and packaged food types.

Emergence and consolidation of new platforms to communicate and sell products and services.

In general, middle- and higher-income consumers are becoming more aware – and sceptical – about the products they consume. They are interested in learning nutritional values and questioning the veracity of the information presented in the manufacturers’ claims and product packaging. They take advantage of the increasing penetration and use of the internet to check product information but also research reviews, leveraging online platforms and social networks as “trustworthy” and “reliable” arenas. During a period when disposable income is highly restrained by the current economic situation and the cost of a purchase error might be high, other users’ opinions have become more relevant to consumers than manufacturers’ communication campaigns.

On the other hand, consumers also expect open and transparent communication from manufacturers and brands. Pérola Cussiano, regional product marketing manager of the Messenger platform, reinforced how brands can take advantage of online channels to get closer to their consumers. Whether through automatic/algorithmic responses or individualised online client service, online platforms now constitute a new path to engage with customers and leverage loyalty during times when unit prices and promotions might be more attractive.

Overall, BHB 2016 indicated that the healthy products’ market – whether global or local, despite of the unfavourable economic situation – continues to present opportunities to explore dynamic innovation and to increase product penetration previously not accessible for a large number of consumers. It is critical to point out, however, that the process of coming up with an innovation, whether it’s a new product or a new concept, is also increasingly challenging. Cynthia Antonaccio, director of Equilibrium consultancy, reinforces the importance of re-thinking the creation process to make final results more responsive to consumers’ needs and desires. As information access and fierce competition increase, differentiation and clear positioning stand out as the keys to success in the coming years.

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