2014 seemed to be the year of the coconut. Whether it was coconut oil, coconut water or some sort of extract, it was one ingredient that demanded attention. But which ingredients and flavour trends will lead the way in 2015?
Food magazine recently caught up with some of the industry's top marketing research companies to look at which ingredient and flavour trends manufacturers will be at the mercy of in 2015.
When it comes to identifying which flavours will dominate, the overarching consensus was in regards to those conducive to the health and wellness movement.
"Consumer concerns regarding health and an increasing demand for convenient foods that fit in with time-poor consumers are expected to drive product trends over the next five years," says Caroline Finch, senior industry analyst at IBISWorld.
"Producers are expected to increasingly integrate exotic flavours with premium and healthy ingredients, such as wholegrain, fibre, protein and vitamins promoted for specific health benefits."
Similar to what we saw in 2014, Finch says that the popularity of "superfoods" is expected to increase within the health and wellness category.
"Superfoods that are forecast to continue to gain popularity in 2015 include maca powder, chia seeds, goji berries, acai, raw cacao, hemp seeds, coconut oil, bee pollen, and wakame seaweed. Free-from products are also expected to be a growth area, as more and more consumers discover that they have intolerances,allergies or sensitivities to certain foods."
Turning fads into sustainable trends
Lead analyst at Canadean, Michael Hughes says that two of the current trends in the FMCG space will continue into 2015: hot and spicy ingredients from the Far East and South America, and the introduction of more 'superfood' ingredients such as beetroot juice. Specifically in relation to superfoods, Hughes says that the popularity of FMCGs containing these ingredients will continue to increase.
"This trend will continue to gain momentum in 2015, as consumers continue to seek out magic bullet solutions for their health needs – the key for manufacturers is ensuring such "fads" are turned into sustainable trends and that consumers understand they need to be consumed in accordance with a balanced diet," he says.
"Alternative protein will become a big trend – particularly in the dairy category. We also anticipate that vegetable nutrition will become a big trend with demand for beetroot juice expected to grow in particular."
Daniel Grimsey, senior research analyst at Euromonitor International believes that the superfood trend is likely to increase, but warns that not every consumer is on board.
"I guess it depends on the social aspects. A lot of people are obviously into quinoa and gluten-free products, while other people hate that sort of thing," he says. "I suspect that [superfoods] will become more mainstream but it could go either way."
Functional beverages on the rise
Other areas to focus on include the gluten-free space which has gained immense popularity over the past five years, and is expected to continue to gain momentum.
But an interesting category to watch is that of plant-based water and 'superfruit' enriched beverages. Grimsey expects that elderflower, chia and superfruits such as pomegranate will emerge in the beverages category, whereas Finch of IBISWorld believes that chlorophyll may be an ingredient to watch.
"There is considerable innovation in the functional beverage category," says Finch.
"Consumers that purchase these products are typically well informed, and will select the type of plant-based water depending on the health benefits they provide. chlorophyll water is a trend that may build."
Hughes from Canadean expects the popularity of plant-based waters such as coconut water to increase, however he stresses that the market is still comparatively small compared to the soft drink market.
"It will have to be remembered that these categories will remain a niche," says Hughes. "The demand however will be driven by consumers looking to exit the carbonated soft drink market and instead seek out healthier alternative beverages. For those less driven by the desire for health, price can be a barrier for such products."
Leading the way in innovation
In terms of product innovation and addressing any gaps in the market, the health and wellness category continues to be the one to watch. However Hughes warns that the positioning of particular products within the category needs attention to secure sustainable demand.
"At the moment, I think more could be done to align certain ingredients with who should be their core audience in order to sustain fads into trends and by moving away from those consumers simply seeking a magic bullet health solution," he says.
"For example, coconut water manufacturers should do more to position products at athletes because of the potassium content, whilst alternative protein manufacturers are missing a trick not doing more to highlight the importance of protein and muscle retention to an ageing society."
Still within the health and wellness category, Finch from IBISWorld believes that there is plenty of room to grow within the vegan, biodynamic and raw food categories in mainstream supermarkets, despite a surge in new product releases over the past few years. She also adds that products targeting specific food intolerances will continue to experience increased demand.
"Products targeting fructose malabsorption also present an opportunity, as awareness builds with consumers. At the moment, there is not much depth in the range of products aimed at these consumers, presenting an opportunity in the market," she says.
Categories to watch
Finch also emphasises that manufacturers of health foods are in a stronger position for growth when compared to producers of traditional snack foods.
According to IBISWorld data, health and snack food production has experienced a six percent annualised growth in the five years to 2014-15 ($601.9 million), with forecast growth at 4.7 percent annually for the five years to 2019-20 ($758.4 million). Whereas snack food production is sitting at 1.3 percent annualised growth in the five years through to 2014-15 ($2.4 billion), with forecast growth at 1.6 percent annualised in the five years to 2019-20 ($2.6 billion).
"Some players have enjoyed immense growth by tapping into niche markets with unique ingredients, production methods and flavours," says Finch. "For example the milk company. A2 enjoyed revenue growth of almost 16 percent in 2013-14 with its milk products aimed at consumers with dairy-related digestive issues, and Carman's Fine Foods revenue increased at an annualised 24.6 percent over the five years up to 2013-14, due to the growing popularity of its health snack foods."
To add to this, Euromonitor's Daniel Grimsey believes that private label brands within the health and wellness category are leading the way in terms of product innovation.
Grimsey says that the Macro and gluten-free section in Woolworths has been particularly well executed.
"As far as health foods go, about half the market within Woolworths seems to be private labels, not to mention the Coles Finest and Woolworths Gold at the premium end of things which appear to be pushing more exotic ingredients," he says.
"Also Sanitarium Weetbix in the last year or so has branched out in several areas. They have a gluten-free version and a protein enriched version, so major brands like that which have enough shelf space can have different variants such as those.
"Goodman Fielder is also introducing gluten-free bread to the mainstream audience, and Nudie Foods is another brand to watch as they have introduced a juice containing chia now. Within the iced tea space, the Stolen recipe brand is another innovative manufacturer."
Michael Hughes from Canadean says that in his opinion, Nestle is one brand that is ahead of the curve.
"Nestle is investing a lot in health and functionality, and I am really interested to see how it make strides in the market over the next couple of years given their R&D investment," he says.