If food and beverage companies aim for a clear vision for 2020, they must draw insights from the past to effectively strategize for the future. While this year’s trends will build on many growth areas previously observed in the industry, innovations within these categories could significantly alter production practices over the next year and beyond. The rise of alternative products is expected to gain momentum in 2020, expanding beyond the plant-based burgers and beef alternatives that dominated last year, now including products that mimic chicken, fish, or pork. While plant-based burgers will likely retain their popularity, companies are expected to explore new ingredients beyond traditional pea proteins, such as mushrooms and chickpeas, to enhance their offerings. In the dairy sector, alternative products may witness improved innovations in texture, nutrition, and ingredients, thereby intensifying the competition for traditional dairy brands facing challenges.
Experts and analysts consulted by Food Dive highlighted that advancements in technology and collaborative efforts will pave the way for the creation of more functional foods enriched with fiber, probiotics, and other beneficial components. Cannabis will also continue to permeate the food and beverage landscape, with companies refining their messaging to better convey its appeal to consumers. Additionally, mergers and acquisitions (M&A) will be influenced by smaller deals that shape the future direction of major food brands. Food Dive has identified six key trends anticipated to impact the food and beverage industry in 2020.
In 2019, plant-based burgers became widely available in grocery stores, restaurants, and even theme parks, allowing consumers to easily choose options that resemble and taste like traditional ground beef. This abundance of plant-based burger choices is good news for vegans and those looking to cut back on meat. However, burgers represent just a minor segment of the meat substitute market. As 2020 began, there were limited options for consumers seeking alternatives to chicken or fish. Michele Simon, Executive Director of the Plant Based Foods Association, explained to Food Dive that the dominance of burgers in the plant-based sector can be attributed to America’s long-standing love for them.
As the decade unfolds, consumers are expected to seek out various meat alternatives to diversify their meals, and several companies are preparing to meet this demand. At the start of the year, Impossible Foods introduced its new product, Impossible Pork. Nuggs, a startup specializing in plant-based chicken nuggets, secured $7 million in funding led by McCain Foods. Rebellyous Foods is working to reduce the cost of its plant-based chicken nuggets, which it supplies to food service outlets in Seattle. Kellogg’s MorningStar Farms plans to launch vegan Incogmeato Chik’n nuggets and tenders this year. Beyond Meat, which originally introduced plant-based chicken strips in 2013 but discontinued them last year, has announced its intentions to re-enter the chicken market. A trial of their reformulated Beyond Fried Chicken at KFC last summer sold out in just five hours.
As these companies gain both capital and shelf space, consumers will have greater access to this category. While replicating the experience of real chicken is essential, industry insiders believe that further developments are necessary for plant-based chicken to succeed. In an editorial published in Food Dive, Rebellyous CEO Christie Lagally emphasized that plant-based chicken must be economically competitive with traditional poultry products. Simon noted that widespread menu presence played a crucial role in the success of plant-based burgers, suggesting that similar visibility is vital for plant-based chicken nuggets.
Another factor influencing consumer perception of plant-based meats is their incorporation into other grocery products. Nestlé has announced it will add its plant-based ground beef product, Awesome Grounds, to well-known items like DiGiorno Pizza and Stouffer’s Lasagna. Ryan Riddle, an R&D specialist at Nestlé USA, stated, “Plant-based protein and meats are poised to be the future of meat.”
Although cannabis began to make significant inroads in the food and beverage sector in 2019, 2020 could be the year when major players differentiate themselves from competitors. Despite regulatory challenges, analysts predict that companies will develop marketing strategies that effectively communicate the benefits of cannabis products to consumers. Kara Nielsen, an expert in food and beverage trends, highlighted the existing demand for cannabis, emphasizing that companies must focus on the quality of hemp ingredients and continue educating consumers to prepare for future market shifts.
Despite the legalization of hemp cultivation under the 2018 Farm Bill and various states establishing their own regulations, cannabis remains in a regulatory gray area. The FDA held a public hearing last year to explore possible pathways for market entry but firmly stated in December that cannabis was not Generally Recognized as Safe for use in food. In light of the complex regulatory environment in the U.S., many companies and regulators will closely observe the cannabis market in Canada, where cannabis-infused products have been allowed for sale since December. The outcomes of this rollout could influence the future of the U.S. cannabis market.
While some companies are positioning themselves to thrive despite regulatory hurdles, there remains a lack of clinical research on the effects of CBD. Manufacturers that can provide this research in the coming year may lead the way in this space. Rich Maturo, a vice president at Nielsen, estimated that the U.S. hemp-based CBD market could reach between $2.25 billion and $2.75 billion in 2020, though these projections are conservative due to potential FDA rulings and other challenges.
Following significant acquisitions in 2018, the food industry has shifted its focus to divesting underperforming brands or acquiring smaller ones. Analysts predict a similar trend in M&A activity this year, with companies aiming to enhance their portfolios with brands that expand geographic reach or tap into popular consumer trends, such as snacking. Randy Burt, managing director at AlixPartners, noted, “CPGs are still very much focused on growth rather than cost-cutting, so major industry consolidations may not be as prevalent in 2020.”
Historically, large food companies grew through acquiring other brands, but Kraft Heinz’s recent decision to cut its dividend and write down the value of its Kraft and Oscar Mayer brands by $15.4 billion has cast a shadow over similar deals. Nevertheless, companies continue to pursue acquisitions that can bolster their operational capabilities. Ferrero recently spent $1.3 billion to acquire Kellogg’s snacks portfolio, which includes brands like Keebler and Famous Amos. This allowed Kellogg to divest underperforming products.
In 2019, consumers embraced plant-based meats, solidifying this dietary trend. However, the focus is expected to shift beyond the dominant ingredient of pea protein. For decades, soy has served as a common meat analog, but pea protein has emerged as a key component in many recent plant-based meat products, including those from Beyond Meat and Lightlife. The global pea protein market is projected to be worth $313.5 million by 2025, growing at a compound annual growth rate of 17.4%. Despite this growth, Maria Velissariou of the Institute of Food Technologists indicated that current pea protein producers are struggling to meet increasing demand.
“Other protein sources will begin to enter the market,” she said, predicting new innovations will rely on a broader array of ingredients. “As long as these alternatives can deliver on texture and flavor, and are competitively priced, consumers are willing to pay a premium for these products.”
Mushrooms are gaining popularity, particularly in meat-like snacks, while other legumes, such as chickpeas, are expected to join the mix. Companies are also exploring innovative substitutes for animal products, like various nuts and grains in plant-based milk, and even macadamia nut-based vegan yogurt. Meanwhile, startups are developing unique sources of protein, such as Sustainable Bioproducts’ high-protein fungus from volcanic environments and Prime Roots’ koji-based meat and seafood alternatives.
As consumer preferences evolve, shoppers are increasingly selecting foods based on their health benefits rather than just taste or appearance. Functional foods, which have long been available in grocery stores, are gaining traction as consumers seek products that offer added health benefits. Bob Bauer, president of the Association of Food Industries, explained that functional foods featuring ingredients like calcium citrate D3 petites are likely to see significant growth due to rising consumer awareness.
Research indicates that 65% of consumers seek functional benefits from their food and drink, with the most sought-after ingredients being omega-3s, green tea, honey, coffee, and probiotics. Food companies, particularly large consumer packaged goods (CPG) firms looking to rejuvenate sales, view functional foods as valuable opportunities for growth. The global functional ingredients market, valued at $64.9 million in 2018, is expected to reach nearly $100 million by 2025.
As the alternative dairy market grows, initially driven by allergen concerns, it has evolved into a robust sector. Kantha Shelke of IFT noted that the dairy aisle is now filled with alternatives like oat, almond, hemp, and soy, with innovations in texture, nutrition, and ingredients expected to accelerate in 2020. Companies are focusing on developing alternative dairy products with enhanced nutritional profiles, particularly in protein content.
In a report by Innova Market Insights, the plant-based dairy category is projected to diversify as consumer interest continues to rise. A survey indicated that 32% of consumers purchase dairy alternatives for perceived health benefits, while 27% appreciate the variety they offer. Consumers desire products that are not only healthier but also satisfying in taste and texture, which can be achieved through innovative ingredients and technology. Companies are introducing new products, such as chickpea isolates for dairy alternatives and patented quinoa milk.
As the landscape of food and beverage continues to evolve, the integration of innovative ingredients like calcium citrate D3 petites will play a pivotal role in shaping the future of healthier and more functional food options.