Health fragmentation driving growth for food brands

The massive fragmentation of consumers’ beliefs about health is contributing to the break-up of traditional food and beverage markets and opening the doors of opportunity for start-ups and small brands, says Julian Mellentin, director of New Nutrition Business and author of 10 Key Trends in Food, Nutrition and Health 2016. “Big food companies are being forced to rethink their business models,” he says.

The great fragmentation explains how high volume opportunities are scarce and becoming scarcer. In some markets they may already be history, said Mellentin.

Just as the person who listens to Bach’s Goldberg Variations at home also listens to Aerosmith or Black Sabbath while driving to work, people’s ideas about food and health have become a menu of choices from which they select and change as new information becomes available. We’re all food explorers now, looking for novelty and variety.

This is producing a proliferation of niches that smaller companies and new brands – often premium – are perfectly placed to serve.

In the future, smart companies will only rarely launch mass-market brands aiming to rapidly get high volume. Instead they will build portfolios of small brands, finely targeted at an ever-more fragmented consumer market. A few of these will become big brands, some will be big niche, most will remain niche.

The report gives the example of US giant General Mills as one of the few larger and more visionary companies already embracing the change. It has set up a new business unit – called 301 Inc. – to invest in entrepreneurs and early stage food companies.

“The rapidly evolving consumer landscape is dramatically changing the game in the food industry,” said John Haugen, general manager of 301 Inc. “Tremendous opportunity exists…to partner with and foster emerging food brands.”

 

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