11 July 2018
As consumer behaviours shift and the retail channel landscape evolves, the FMCG industry is changing at a faster pace than ever before.
Organic FMCG growth for large businesses has been sluggish for several years now, slowed by technology-driven market changes that are fundamentally altering the historic model of FMCG business.
Add to this the impact of a younger generation of shoppers who see ‘new’ as ‘better’ and display resistance against big corporations, and the tide is clearly turning.
So what are the key trends driving this change, and how are they manifesting themselves this year?
SMALL IS BEAUTIFUL
There has never been a better time for small consumer brands to launch and thrive. This ripe environment is being driven by a potent combination of easily outsourced value chains, low shipment costs, social media’s and affable retail buyers keen to differentiate their offerings. Oh, and Amazon of course.
The colour cosmetics category is a particularly powerful example. According to McKinsey, challenger businesses – which make up around 10% of the global market – are growing around four times faster than legacy companies at the moment.
Of course, the mitigating factor is that competition amongst this smaller set is more fierce. What this means is that ultimately, the ones that survive and prosper will be those with a truly distinct audience, purpose and product.
Did you know that the average British lunchtime is just 15 minutes long? As more people replace breakfast and lunch with snacks on the go, new single serve, snack-size and 100-calorie packaging formats are booming.
Quick, convenient and easy pack sizes are replacing multipacks as the packaging of choice. It appears that the days of consumers buying in bulk to save money are dwindling.
The trend is encompassing multiple supermarket shelves. Meat and dairy products are particular benefactors, with both seeing plenty of innovation when it comes to packaging.
But the biggest shift in terms of consumption is in healthy snacks. More than half of UK consumers now eat healthier packaged snacks like rice cakes and nuts at least once a day.
Arguably, the biggest shift in consumer attitude this year is the phenomenal rise of the anti-plastic drive.
This year, we’ve seen teabags taken to task over their use of polypropylene, a single-use plastic used in the products by some of the world’s largest manufacturers.
Look out for our latest range of light and lovely eco bamboo cups – an easy, ethical choice to take along wherever your adventures may lead you. Here’s are a very Pukka cheers to reusables on #WorldOceansDay 💚🌍 – *Coming soon* -⠀⠀⠀⠀⠀⠀⠀⠀⠀ #PukkaHerbs #ComingSoon #HerbalWellbeing #Nature #Reusables #BambooCup #Reuse #GetOutdoors #LeanMatchaGreen #HerbalTea
And Waitrose bore the brunt of protests aimed at highlighting how much plastic they use in their packaging.
But some retailers are taking notice and acting. In May Iceland became the first supermarket to introduce a ‘trust mark’ to show shoppers which food packaging has no hidden plastic in it.
And Sainsburys began using airtight food cartons that reduce plastic content by 85%. The fightback against plastic is on.
THE RISE OF VEGANISM
Will 2018 be seen as the year veganism went mainstream? As more of us look to act against climate change, animal welfare and unhealthy lifestyles, living a vegan lifestyle is no longer unusual or particularly difficult.
That’s due to the explosion in vegan-friendly products on our shelves. Meat substitutes like those of Beyond Meat are rewriting the rules of a game invented and controlled for years by Quorn.
Elsewhere, as with plastic, big retailers are scrambling into action. Sainsbury’s have hired a director of plant-based innovation, and along with Tesco have been busy extending their vegan ranges.
Even fast food is taking notice. Dominos’ vegan cheese pizza is available in Australia only for now, but surely it won’t be long until we see it on these shores.
Innovation in production has been a constant force since the first Ford Model Ts rolled off the production line. But in the FMCG world, several interesting trends driven by new or alternative production techniques have taken certain categories by storm.
Take the soft drinks market, for example. Fermentation, although not a new process, has seen spectacular levels of interest for its health properties, and as an alternative to carbonated drinks.
Similarly, cold-pressed drinks are also continuing to gain traction. They retain the nutrients lost by the standard method of heat pasteurisation when extracting juice from fruit and vegetables. Both the popularity of this and fermentation are down to consumers’ preference for nutritious products with health benefits.
Sticking with drinks, nitro coffee – that’s coffee infused with nitrogen gas and then forced through a draught system – is all the rage this year. Nescafé introduced a nitro-infused version of their Azera range in March, and more brands are following suit.
Finally, an interesting trend in the beauty sector is that of biotechnology. Brands like Biossance are pioneering new ways of creating synthetic ingredients that are entirely toxin-free.
FMCG brands in the food and drink sectors are capitalising on growing demand for healthy and nutritious products by adding a little extra to some of their products. Coffee is in the spotlight here again, with new variants containing everything from turmeric to added protein.
Two big areas of focus for health-conscious consumers are the brain and the gut. Nutrient-rich ingredients such as leafy greens, nuts and berries are all shown to aid brain function and long-term neurological health, and are increasingly popular supplements. Similarly, prebiotics – the younger, hipper cousin of probiotics – are proving popular as good bacteria get more good press.
Another less obvious source of good gut health is collagen. It also aids joint stiffness and reverses wrinkles, so watch out for this as a growing trend when it comes to food and drink additives.
A swathe of new brands are giving frozen food a makeover. Irish start-up Strong Roots is growing rapidly in popularity thanks to its gluten-free and vegan-friendly range of frozen products, presented in delightfully designed packaging. And Jalm&B, a Danish bakery, produces organic buns and cakes that come packed and frozen, but with the same great taste as fresh bread.
One category seeing especially high levels of growth is frozen yoghurt. Once again, consumer demand for less fatty desserts is behind its continued rise in value.
So that’s a look at some of the micro trends shaping 2018’s FMCG environment. On a macro level, seismic shifts are occurring too – most notably the rise of both the e-commerce giants and the discount supermarkets, squeezing a huge amount of businesses caught in the middle.
For those like us, caught in the FMCG market’s ever-shifting sands, it’s a fascinating time to be trying to predict where it’s heading. Who knows what trends we’ll be uncovering this time next year?