Industry News

On-Trend Products Defying Economic Downturn

July 1, 2011

According to Netherlands-based Innova Market Insights, new food products with an ethical or premium positioning are on the rise despite the difficult economic situation. New data show that consumers, while pinching pennies elsewhere, are readily snatching up value-added products positioned on ethical platforms.

As a percentage of total U.S. launches, new food products with an ethical positioning grew from more than 3% in 2008 to 6% of introductions tracked in the first quarter of 2011. This paradigm shift comes as the wellness category is blurring to encompass new areas not typically considered as health and nutrition, such as “minimally processed,” “locally sourced” and “sustainable” and appealing to a more “responsible” American consumer increasingly concerned about the environment and sustainability.

The U.S. market accounted for 25% of all new global products tracked with a “FairTrade” positioning (Apr 10-Mar 11), with an explosion in launch activity in the past two years. Innova Market Insights reported a doubling in tracked U.S. launches with the typically higher-priced “FairTrade” positioning from 2008 to 2010, the worst years of the current economic collapse.

“Consumers believe that products manufactured with more respect toward animal or human welfare and the environment are worth the extra charge,” said Lu Ann Williams, head of research at Innova Market Insights. “This, in turn, led to a surge in third-party certification from organizations such as FairTrade, Rainforest Alliance Certified and the Marine Stewardship Council.”

“Manufacturers must meet the demands of third party certifiers in order to capitalize on this growing trend and boost their brand image,” Ms. Williams added. This means creating minimally processed foods, with an eye on agricultural practices and sustainable ingredient sourcing.

Also flying in the face of the soft economy is the “premium” trend. An Innova Market Insights scan of new launches found that 14% of new products tracked during the first quarter of 2011 had a premium positioning, compared to 10.5% in 2010 and up from more than 8% in 2008 when the economic crisis began. These statistics indicate consumers are willing to indulge, even—or perhaps especially—in times of financial woe.

“Recent product launch activity reveals that U.S. manufacturers are not giving up on premium products, despite the uncertain recovery,” Ms. Williams explained. “Instead, they are aiming to meet the demand for added-value encompassing better quality and offering consumers a momentary escape in stressful times.” She concludes that this trend will pressure stagnant brands to innovate.
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