In 2016, clean label’s influence over the food and beverage industry continued to grow, epitomised by Mars finally embracing the 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The most important product area, chocolate confectionery, accounted for 44% of cocoa use in 2015, but has increasingly been replaced by substitutes including dairy items or snack bars like Kind and Cliff, as consumers look to reduce sugar and fat consumption.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
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.