How difficult times are driving consumer trends

The concept of value

Value is a more sophisticated notion for consumers these days. Interest rate and cost of living pressures have people curtailing their purchases to “just the essentials”. But it also sees more meals cooked at home and more thought put into the products they buy, even if they are the “essentials”.

Innova Market Insights’ annual Top 10 trends report found 43 per cent of consumers were eating more meals at home compared to the 15 per cent doing the opposite. There are a couple of trends emerging from that change.

People are being more adventurous in the kitchen to keep things interesting, trying recipes from other cultures and experimenting with new and unfamiliar ingredients. Two thirds of those interviewed by Innova say they’re open to trying new global cuisines.

And, somewhat contradictory to that, more than 50 per cent of consumers say they actively look for claims and labels that show the product is locally made. There’s a national pride in times of uncertainty and buying local reassures consumers they are connected to their community.

The opportunity here comes in combining the two – think a Pakistani curry made with Australian lamb, an Italian ragu made with local beef, and pasta made from Australian wheat.

This is another way consumers are seeing value, purchasing products that enable them to be adventurous while also supporting Australian producers. 

Consumers are also defining value beyond price by considering the type and quality of ingredients in the product.

The ingredient is key

Innova Market Insights Global Insights director, Lu Ann Williams, says we are witnessing a full circle back to 30 years ago when ingredients really became part of a product’s unique selling point.

“One third of consumers across 11 countries we surveyed say they always look at the ingredients on the packet, and 42 per cent count protein as the most important ingredient,” Williams says, adding that protein has “absolute staying power”. 

Consumers are looking for favourite or new flavours, new textures or even a sense of nostalgia stemming from what’s in the product.

Meanwhile, the popularity and growth of ingredients that are better-for-you, be they healthy, adaptogenic, nootropic, probiotic, post-biotic, macronutrient, a superfood or superfruit, continues unabated.

These thoughts are making me thirsty

These functional ingredients are tightly bound to consumers’ ongoing interest in their mental and cognitive health. Beverages really take centre stage here with Williams saying there has been 10 per cent growth in soft drinks and sports nutrition products making a health claim.

According to IBISWorld, the Australia functional beverage market is worth almost $600 million a year.

Mintel defines this as “Staying Sharp”, with consumers wanting to optimise their mental performance with functional tonics and waters.

Mintel’s director of Food and Drink South APAC, Megan Stanton, says while consumers seek positive mental wellbeing, they are also “plagued by the constantly ‘always on’ nature of social media and the inability to focus their energy in a productive manner”.

Fermented drinks like kombucha and kefir and energy drinks have had exponential growth, but are stabilising as other functional beverages gain traction. The ready-to-drink (RTD) coffee category is one example, with its moving annual total to September 2023 growing at 38 per cent.

It has created a new opportunity for brands to tap into the “caffeine limbo hour” and capitalise on the familiar “afternoon slump”.

Mintel says a surge in sugar-free and functional product launches reflects the category’s better-for-you transformation. In the 12 months to June 2023, there was a 17 per cent increase in sugar-free launches globally.

Another development for the category is its repositioning as an option for the sober-curious. Mintel’s Senior Food and Drink analyst for APAC, Heng Hong Tan, says that upgrading soft drinks to sophisticated drinks for adults means brands can appeal to those reducing or abstaining from alcohol, with flavours and health benefits increasing their appeal.

This is healthy, right?

Innova also found more than a third of consumers globally say they’re being more proactive about preventing health issues. Williams says while the health concerns have not changed, how we talk about them has – there is less “I’m on a diet” and more framing behaviour as “a lifestyle” like paleo or keto (or annoying).

Weight management still tops the list of consumer concerns, which is feeding the growth of more nutrient dense products that promote a balanced diet. Heart and bone health follow closely behind.

Mintel says Gen X, currently in their mid 40s to late 50s, are “pioneering a new approach to healthy ageing”. While they get on “debunking old stigmas” and prioritising their health, it’s worth noting that consumers aged 40 and over account for the most significant share of food and drink spend.

Innova’s Williams says healthy ageing is a personalised approach focused on prevention and longevity.

These consumers are consciously looking for brands that support their nutritional, mental, physical, and emotional needs through products that address age and health related issues – for example, heart health, stress, insomnia, menopause, and gut health. A healthy gut microbiome is so hot right now.

Ingredients might be a key consumer driver, but there is growing interest and concern about food processing and its impact on nutritional value.

Is the extrusion processing for a plant-based burger to be compared to that used to make a salty puffed corn snack?

The question carries more weight when you consider consumers’ growing demand for foods that are less processed and feature more whole ingredients. Sidenote: Around 60 per cent of an average American’s daily calories come from ultra-processed foods.

A virtuous treat

Consumers may be more conscious about what they are eating and drinking from a nutrition and health perspective, but they also want a treat.

Innova says half the consumers it interviewed say they are willing to compromise on indulgence for healthier food and there’s evidence in the marketplace that brands are willing to meet that need. Over the last five years, it says there has been an increase in products that combine indulgence with active health claims. 

Williams says a third of consumers believe the best way to make indulgent foods healthier is to limit non healthy and use more natural ingredients.

Mintel says these “unguilty pleasures” show consumers might be willing to compromise on the indulgence, but they are unwilling to do so when it comes to flavour or the eating experience. This comes through in the treats consumers choose – a reduced sugar ice cream, a single serve dessert, or a smaller sized chocolate bar.

While there may be a more virtuous consumer, Mintel says carbonated soda drinks and sugar confectionery share the same group of treat-seeking consumers motivated by flavour when trying new products.

Nostalgia is also a big player in treating, creating opportunities for brands to collaborate with other brands or tap into their heritage for consumer appeal.

The seed is planted

2023 was undeniably rough for the plant-based market, with some of the pioneers like US brands Beyond Meat and Impossible Foods having undergone operational restructures, consolidation of operations, and redundancies.

Williams points out that this does not mean the industry is done for. In fact, it is only just beginning and what we’ve been witnessing is pretty standard for an emerging disruptive market segment. 

“Just because Americans don’t want to eat plant-based burgers doesn’t meant the sector is gone. When we look at actual data, we see lots of innovation. There are still limiting factors when it comes to taste and texture,” she says.

Let’s segue this into a broader protein discussion. Earlier, we mentioned protein’s staying power as a consumer preference.

Innova’s research found globally, one in six people changed to a high protein diet in the last year and more than eight out of 10 people say they are interested in having protein in their foods and drinks.

More than a third of US adults eat animal and plant proteins, but over 60 per cent say they only consume animal protein.

Meanwhile, 50 per cent of consumers Innova interviewed globally say when buying plant-based products they want familiar, recognisable dishes.

Subsequently, more consumers are considering ready meals, finger foods, and vegan or vegetarian versions of dishes that are convenient and save time.

Another interesting wrinkle here is a shift in messaging from ‘plant-based’ to ‘plant-unique’, with new products focusing their branding on the inherent properties of the plant ingredients, rather than trying to imitate or replace animal-based foods.

Tell me straight

It turns out consumers are fatigued, cynical, overwhelmed, and confused when it comes to the messages companies are trying to tell them about their products and their business.

Innova found nearly two thirds of consumers globally want straightforward communication, specifically about a company’s sustainability efforts that are on the pack.

Almost half (49 per cent) say they’re concerned about greenwashing and 53 per cent say they can’t tell if a company is. 

But this growing call for clear communication applies across the board. Mintel says it has been coming for some time, with consumers wanting clear communication to help them make informed decisions about the products they buy.

This ‘Savvy Sustenance’ trend encourages companies to highlight nutritional value and, for processed brands, to differentiate itself by explaining how its production method retains ingredients’ inherent nutrition.

There’s also a growing consumer sophistication when it comes to messaging, in that they are moving beyond the sentimental story of craft and artisan techniques, to wanting to understand how processing improves a product.

And it circles back to the idea of value. Consumers no longer see value as just being at the checkout. Nor do they only see it in what’s in the product.

We’re now seeing consumers’ value framework incorporate the company itself and whether it is ‘pulling its weight’ beyond the straight remit of making a food or drink.

Consumers attribute more value to a product if they see environmental and social causes being supported by the business, that employees are treated well, and its supply chain is transparent and ethical as well as quantifiable green credentials including sustainable packaging, better waste management, and other operational improvements. 

It is undeniable that consumers’ changing expectations are a lot to process for manufacturers. After all, they too are feeling the effects of difficult economic times, but maybe that’s part of what keeps the wheels turning: that we’re all in it together.

This story first appeared in the February/March edition of Food & Drink Business magazine.