It’s no secret that new product innovation is tough. Over 25,000 new products are introduced in the United States each year (Oreg & Goldenberg, 2015) and less than a quarter of them meet their company’s financial objectives (Schneider & Hall, 2011). New products are a key contributor to revenue and share growth making them the lifeblood for any healthy B2C or B2B business.
In 2016, the domestic CPG industry had sales of $797 billion, with dollar sales growth of 1.4%. The lowest level since 2011 according to IRIWorldwide¹.
Despite the best efforts from some of the brightest minds from companies of all sizes and resource levels, collectively the CPG industry is not generating the sales dollar growth it once enjoyed. However, a ray of hope is coming from some of the newer, smaller entrants into the industry:
IRIWorldwide also reports that in 2016, small & medium companies accounted for more than three-quarters of all New Product Pacesetter (NPP) companies and 64 percent of NPP dollars².
There is no silver bullet technique these companies are using to develop and launch their new products, but a key contributor is their ability to identify a niche or need and then masterfully deliver the innovative solution consumers are expecting. These small and medium size companies are generating their new product concepts from a variety of traditional, proven methods such as consumer surveys, data analysis, shopper insights, third-party development firms, R&D, internal stage-gated new product development processes and good-old fashioned industry experience and intuition.
I would like to suggest another option that is fast, affordable and effective: Trend-Driven Innovation.
Trend-driven innovation is essentially crowd-sourcing new products with all businesses contributing their collective intelligence in the form of vision, campaigns, and products. It’s kind of like looking over the shoulders of the sharpest product innovators in business today.
The trend-driven innovation process was brought to light by a team at TrendWatching in London, England back in 2002. They identified that businesses and their new products, company visions and marketing campaigns were establishing new consumer expectations and therefore new trends. They demonstrated, with hundreds of examples, that these new trends are the best predictor of consumer expectations and are the basis of trend-driven innovations. The team at TrendWatching has been on the global speaking and keynote circuit with their unique trend and innovation system for the last 15 years.
I discovered TrendWatching in 2016 while seeking out new ideation and innovation methods for a small to medium size company budget. During my search, I found the book Trend-Driven Innovation (Mason, Mattin, Luthy & Dumitrescu, 2015) authored by four TrendWatching employees. Minutes after starting the book, I realized that trend-driven innovation is the solution I was seeking for effective concept ideation and generation for all sizes of CPG companies.
Fast forward to today, I continue to study trend-driven innovation and have become a client of TrendWatching so I have full access to their suite of innovation creation solutions. I developed the 8 Food & Beverage Industry Trends That Will Guide Your Business to Breakthrough Innovations based on their global mega-trends framework, hundreds of hours of industry research and my decades of experience within the industry.
In order to follow the trend-driven innovation process, we must first understand that we are now in the expectation economy. The expectation economy is an economy inhabited by well-informed consumers across the globe who have a long list of high expectations that they apply to each and every product, service, experience and/or company.
Their expectations are based on years of personal consumption experience and the flood of readily available information online and word of mouth. High-quality, innovative products and services are no longer a unique benefit in the expectation economy; they are expected! The expectation economy is:
- Business Led – Innovative businesses drive the expectation economy by triggering points of tension & creating new expectations among consumers called expectation transfer.
- Free of Borders – Expectations advance if the consumer becomes aware of new benefits, in any product or service, through friends, family, co-workers, ads, social media, etc. even in another industry, category or country.
- Ever Expanding – Consumer expectations expand when they experience a new attribute or benefit that is better than current offerings. Those new expectations are applied to all products, services and companies that come in contact with that consumer.
Some well-known examples of expectation transfer are digital music followed closely by digital books. In digital music, Napster created the expectation for downloadable digital songs, which led to iTunes as they legalized, organized and simplified digital music for easy listening on our devices and that has led us today to Spotify and on-demand streaming music. Closely following the trend in music, digital books evolved as consumers expected more downloadable products and then exploded with the launch of the Amazon Kindle and now ebooks can be read on subscription with Kindle Unlimited.
Closer to our industry, some prime examples of expectation transfer are:
Chipotle Mexican Grill was a pioneer in providing fresh, higher-quality food the way the customer wants it with a higher degree of transparency that was not common in the quick service restaurant industry. Today, there is widespread evidence that players in their industry have had to adapt to the new, higher expectations that Chipotle created over the past two decades.
Another innovative, trendsetter in food and beverage retail is Whole Foods. For many years, they educated consumers on the beneficial attributes of a healthy organic lifestyle and they artfully merchandised the foods and beverages that supported their mission. If a consumer stepped foot into a Whole Foods, their expectations on food quality and the transparency and sustainability practices of those food suppliers were forever changed. The impact Whole Foods has made on the food and beverages we consume today because of their constant challenges to consumer expectations is visible in nearly any food retailer in the U.S.
Now you can see that every time a consumer engages something new, exciting or better on social media, the news, on a shelf in another category, in a restaurant, in a different country or hears about it from a friend; that that expectation is transferred. When consumers observe that Amazon is testing drone deliveries, Carvana is selling cars from a vending machine, that a traditionally sweet treat has less sugar, but still tastes great or a well-known multi-national company is committed to zero carbon emissions by 2020 those events are creating expectations that will soon be transferred to other products and companies.
Based on the expectation economy and the trends and innovations within the US Food & Beverage Industry, below are the eight trends that will guide companies to growth.
8 Food & Beverage Industry Growth Trends
- COMMUNITY CONNECTIONS – Local; tribes; groups aligned based on similar needs or beliefs
- CONSCIOUS CONSUMERISM – Purpose; fairness; social consciousness for plants, animals & people
- ECO-SUSTAINABILITY – Climate; regeneration; repurpose; sustainable food from farm to table
- EXPERIENTIAL EXCITEMENT– Food is fun; exciting new flavors; experiencing cultures through food
- HEALTHY WELLBEING – Food as medicine; allergy friendly; presence of positives; absence of negatives
- LOW-GUILT GOODNESS – Indulgence with little or no guilt; great taste with a healthy halo
- ON-THE-GO CONVENIENCE – Portability; snacking; grazing, OTG; EZ yet functional packaging
- TRANSPARENT TRUTH – Transparency; sources; certifications; sharing more with consumers
Below are more details of the eight industry growth trends, triggers of each trend and more examples of current innovations within each trend.
People are naturally social beings, who will forever enjoy coming together, making connections, collaborating, sharing and more. The internet is making connections both online and in the real world faster and easier. These connections are translating to more communities based on demographics, geography, causes and beliefs more common and more meaningful.
One of the triggers leading the Community Connections trend is growing localization (urbanization) as people continue to move to large urban cities and the basic need to belong still exists. This has led to more sub-communities as well as pride and support of an individual’s nearest, local community.
An example of the Community Connections trend is the online support group for the Whole30 diet. User-generated content and grassroots influencers on Instagram has led to a tight-knit online community of people at varying stages of success on the Whole30 dietary program.
Consumers’ awareness of the connectivity between animals, people, and the planet is rapidly expanding. These consumers are not willing to accept the status quo and are working to provide the fairness and equality to those that need it. They also EXPECT businesses to share in the responsibility and take concrete steps to be part of the solution.
One of the triggers of the Conscious Consumerism trend is equality. The internet and social media have made the world more transparent. Now any person or group can share if they are not given an equal opportunity and consumers expect businesses to fill gaps in equality.
The Amazon Give Back Box that they launched in December 2016 is a good example of the Conscious Consumerism trend. In partnership with Goodwill Industries, customers can refill their cardboard boxes with donations, print out a free shipping label and then send the parcel via UPS or USPS. Goodwill receives the items and sells them to generate income to support their community-based programs.
Consumers are increasingly aware of the negative impacts their consumption has on the planet, society or themselves. For some, a sustainable lifestyle is not a choice but a way of life. Overall, few consumers today believe that actively harming and polluting the environment is acceptable.
Businesses that harm the environment will not be tolerated while those that seek to reduce their impact or repair what’s broken will be rewarded.
Regardless of your personal stance on climate change, our place within the environment we live in is a passionate topic and it’s not going away anytime soon. The media, both traditional and social, delivers a steady stream of news and information on climate change. Major environmental disasters, the Olympics in China, documentaries like Al Gore’s Inconvenient Truth and everyday conversations among students, parents, friends and neighbors keep sustainability near the forefront of social issues for consumers around the globe.
A vision-related example comes from a recent announcement from General Mills Inc. They set a goal to cut greenhouse gas emissions by 28 percent by 2025, as well as, the objective of zero waste-to-landfill at 100 percent of its production facilities over the same timeframe.
Food and drink are no longer just a practical matter of quenching thirst and hunger. Increasingly, the food we eat and the beverages we drink are the centerpieces of our daily routines, our entertainment, and our social status.
Food and drink can transport us to new cultures, turn an ordinary evening into a night to remember and become the source of stories shared for years to come.
The experience economy and the shift towards collecting experiences and stories over products is a key driver for the growing demand for new dishes, new flavors and new methods to experience food. In fact, 78% of millennials told Eventbrite in a 2014 survey that they would rather spend money on an experience than a product.
An interesting example of the experiential excitement trend is a campaign by General Electric in 2016. They created the world’s hottest chili sauce named 10^32 with the Trinidad Moruga Scorpion pepper. A limited run of 1,000 bottles of 10^32 was available exclusively online via media site, Thrillist, selling out in a few hours.
The desire to improve one’s health and wellness can manifest in many ways: the desire for better health, greater knowledge of healthy choices and protection from harmful ingredients. Consumers increasingly look to brands to help – or encourage – them with the products, services, and tools to achieve their Healthy Wellbeing goals
There are many reasons for the continued growth of health and wellness trends and food allergies have been a key trigger for the growth. More consumers are finding that food is the main culprit to their health issues while others are also learning that healthier food is the solution to their health issues. Increased awareness, research, product solutions and community support regarding food allergies is a driven force of overall health trends.
A startup company provides a timely example of the healthy wellbeing trend. Before Brands has received multiple rounds of financing to launch their new line of baby foods founded on a growing body of evidence in support of nutritional strategies that include potentially allergenic foods as a regular part of a healthy diet. These edible products are designed to be incorporated into the diet of healthy infants beginning around 6 months of age as part of solid food introduction, to give parents the confidence that their baby is accustomed to a wide variety of foods now and for the future.
In developed nations, food and drink are no longer just a basic need and are now often a source of excitement, comfort & pleasure. Several society-wide health epidemics, specifically obesity, have exposed that some of these pleasures also come with a high cost to health. However, consumers don’t want to give up on their food and drink pleasures so they are looking to the industry to create solutions allow them to continue to indulge, but with less guilt and cost to health.
Research that too much of some ingredients and not enough of others can be detrimental our health is extremely compelling. The knowledge is simply too widespread to ignore.
Halo Top ice cream is the poster-child of the Low-Guilt Goodness trend. It is lower in calories and carbs than traditional ice cream and it even has a fair amount of protein. The real excitement comes when consumers report that their indulgent flavors like birthday cake, red velvet, chocolate chip cookie dough and sea salt caramel taste as good as regular ice cream for a real, low-guilt cup of goodness.
Despite technological advances, consumers continue to get busier. For those always on the go consumers, convenience is expected and they are supporting the products and services that help them manage their hectic lives, save time and make life easier.
This growth of this trend has no end in sight, therefore, products that make consumption easier, give back valuable time and do so without sacrificing health or quality will be highly sought after.
You may be able to see the trigger for the on-the-go convenience trend without too much outside research. Chances are that just looking at your own life over the past decade proves this growing trend. People have less time and actively seek products and services that can help them save even small bits of time.
An excellent example comes from a repeat generator of innovation: Whole Foods. Their new Bryant Park store in New York recently opened in January and it offers a new produce butcher service. Customers can take fresh produce such as fruit or vegetables to the counter and choose to have the produce cut, sliced, diced, grated, chopped or julienned.
Consumers’ demand for detailed and relevant information with complete honesty and transparency on the brands and companies they support is insatiable. Now, consumers are armed with supercomputers in their pockets and they aren’t afraid to use them in order to research companies and brands for the info they EXPECT them to provide. Transparent companies and brands are building trust and a full funnel of consumers in the process.
The digital revolution made the world more transparent. One result? Consumers will call out inappropriate or opaque brand behavior and share it with their peers.
Free-from, superfood snack company Zego Snacks delivers the perfect example of the transparent truth trend. In addition to gluten-free certification and declaration that the production of their free from bars are in a dedicated facility (except coconut), they test each batch for residual levels of major food allergens. Consumers can view the test results by scanning a QR code on the front packaging of each bar.
Now you know the trends that are guiding consumer expectations in the food and beverage industry. The next step is to use utilize those trends to identify and generate the next breakthrough products consumers will want next.
Which trend will you use to create your next breakthrough innovation?
- Source: IRIWorldwide, CPG Growth Leaders, March 2017
- Source: IRIWorldwide, NEW PRODUCT PACESETTERS: Building Bridges to a Growth-Filled Tomorrow, April 2017
Robert Goluba is the Owner & Chief Innovation Guide at Evertouch Consulting where he guides CPG businesses to better results with trend-driven innovation that generates new products that are on-trend and uniquely innovative. The exclusive Transformative Innovation Solutions system (TIS) by Evertouch Consulting is an effective, affordable and fast process that delivers product solutions that stand out from the competition, delights customers and helps achieve financial objectives! Learn more about Evertouch Consulting and TIS at EvertouchConsulting.com