The evolution of consumers’ priorities toward the consumption of natural foods and beverages is the main contributor to the overall health and wellness (HW) market. Consumers are looking for minimally processed or unprocessed products in line with the clean label trend, with an increasing desire for whole foods, ancient grains, green tea, and plant-based proteins from nuts and seeds, as well as ingredients with particular health functionality. In addition, plant-sourced ingredients and algae such as spirulina are in hot pursuit, as they are perceived as natural in origin and environmentally sustainable, as well as healthier.

This trend is apparent globally, with an outperformance of naturally healthy (NH) and organic offerings versus better for you (BFY) and fortified/functional (FF) products in both developed and emerging markets. This shows the move from artificially fortified foods and beverages and those with reduced salt, sugar and fat to more naturally nutritious offerings.

Emerging markets are following in the footsteps of developed countries, but there is a massive gap at the country level. While India, for instance, is still far behind in terms of product development, and led the growth of the BFY category ($2 billion in absolute terms in the review period), with fairly basic products such as reduced fat dairy accounting for most of this, Brazil and China are closely following the trends around naturally healthy products already seen in mature countries.

Vietnam is also seeing interest in naturally healthy products; a good example of this trend in the country is TH True Yoghurt Matcha Green Tea, which was launched by TH Food Chain JSC in 2015 and contains EGCG (epigallocatechin gallate) and vitamins. It is positioned for anti-aging, driving differentiation, and engaging especially with women. This is a good example to keep an eye on.

Fortified/Functional: Still Current
Although FF has slowed down, it is still important. Its performance is stronger in emerging markets, where consumers are increasingly looking for products with functional ingredients such as probiotics, omegas or vitamins as a means of minimizing nutritional gaps in their daily diet, or to boost their well-being. However, developed countries continue to innovate in this area, mainly around protein and plant-based ingredients, as well as in particular categories, such as FF milk formula, in which nutritional science is key.

Although value sales of NH outgrew those of FF in 2015 already, the latter still showed the fastest growth in absolute terms over the review period at the global level. The desire for FF foods and beverages is mainly driven by consumers’ growing demand for key functional ingredients linked to a health positioning.

Protein continues to be the hottest trend, and shows no signs of slowing down any time soon. The increasing desire for protein-packed snack bars, flavored milk drinks, and indulgent products is a good example. It is important to note how protein has evolved, and including it in indulgence foods is such an advance. A good example in this space is Wheyhey, which is a FF ice cream, high in protein and reduced in sugar, available in the U.K. This product follows the “healthy indulgence” trend and is marketed with an appetite suppression purpose, which has secured it a strong position in the market.

As previously mentioned, developed countries are moving toward products naturally rich in these types of ingredients, whereas FF is mainly driven by emerging countries, with China well ahead, where the majority of sales are coming from FF milk formula, valued at $18 billion in 2016.

FF milk formula is an important category as it is delivering strong growth globally; within it, omega-3s are the most important fortification, being the most advertised ingredient on milk formula labels globally, linked to vision health and brain health and memory.

Naturally Functional: The Way Forward
Looking at retail value sales, as previously mentioned, a desire for more natural products was already apparent in the performance of NH offerings in 2016, valued at $249 billion globally, but it is also predicted to be the fastest growing category in the future, ahead of FF, with expected absolute growth of $42 billion over 2016-2021.

NH bottled water is in high demand, being the largest category within this offering, valued at $61 billion in 2016; in particular, NH still, natural mineral bottled water is predicted to see 42% growth over 2016-2021. Many manufacturers are working on this area; for instance, Danone’s corporate strategy is greatly focused on developing flavored and functional waters, and in March 2016 it also launched its first cross-brand TV campaign for Volvic water in the U.K., which covered natural mineral water, among others.

In addition, more consumers like the idea of plant-based foods with intrinsic protein, mineral or vitamin content, with no need to artificially fortify them. Ancient grain-based products are key within this trend, as well as vegetable-based savory snacks, which are becoming increasingly desirable, mainly among millennials.

Mondelez International, for example, in an attempt to renew consumer interest in savory snacks, launched a new brand of veggie crisps called Good Thins in March 2016, its first new snack brand in many years. This new offering incorporates many prominent snacking trends at the moment, including novel ingredients such as sweet potatoes and chickpeas, but also contains no artificial colors or flavors, comes in gourmet flavors, is free from gluten and has a thin profile. Despite the fierce competition in the savory snacks space in the U.S., the brand has managed to position itself at the top, in response to consumer demand for snacks they feel better about eating.

Following on from this, Mondelez also launched Véa in the U.S. and Canada in July 2017. The new brand includes a wide range of varieties such as Thai coconut and Peruvian sweet potato mini crunch bars, crisps and seed crackers. It comes in these three formats in six globally inspired recipes that should appeal to those interested in trying something new and looking for natural, healthier snacks. The Véa portfolio contains no artificial colors or flavors, and is non-GMO, following the clean label trend, with a main focus on millennials, which is a key target.

Global Foods Trends: Key to Functional Products
When developing functional foods, it is important to bear in mind global trends that will determine the success of the product in the marketplace.

For instance, in the regular snacks category, there is increasing demand for naturally nutrient-dense foods, with a clear movement from conventional offerings, such as chocolate bars, sweet biscuits and packets of crisps to more healthy foods, such as dairy-based products enhanced with protein or probiotics as well as nutrient-packed cereal and granola bars containing seeds and ancient grains, including gluten-free ranges that are rich in vitamins and minerals.

Therefore, manufacturers are very much focused on these types of products for future development, not only adding ingredients with particular functionalities but also moving from frying to baking, creating healthier products, or also air drying, which helps to maintain the nutritional content of the ingredients used. In the case of frying, there is a clear movement toward using olive oil, well known in the Mediterranean diet and linked to cardiovascular health benefits among others, adding functionality to the product and giving it a natural and healthy feel.

In addition, there is growing interest in snacks made of vegetables as their core ingredient (like beetroot, butternut squash and/or spinach crisps), as well as snacks made of nuts, seeds and pulses. These ingredients are also used in meat and/or dairy alternatives, following the free from trend that is growing very fast globally.

Adding botanicals to the list of ingredients is also a major trend, with preparations made from supergrains, superfruits or fungi rising in popularity in many food categories such as snacks, functional waters and hot drinks, among others. The use of jamun (black plum), moringa, goji berries, turmeric, maca and/or medicinal mushrooms like chaga are clear examples of this. Also, including organic ingredients adds a health perception to offerings.

Taking all of this into account, startups are constantly releasing new products with a natural image, backed by growing interest from investors, although this is distracting consumers from existing products. This has meant existing products have had to reformulate to keep up or else risk being shunned by consumers.

In addition, holistic and alternative medicine based on trends such as veganism, the Paleo diet (eating the same foods as our hunter-gatherer ancestors supposedly ate: fruits, vegetables, meat, seafood and nuts) or the consumption of raw or minimally processed foods are key focus areas for manufacturers when developing foods with added functional value.

Moreover, it is important not to lose sight of the story behind a product. Authentic foods and beverages speak to origin and tradition; products that are handcrafted, fresh and farm-to-table are also big news globally.

All of these trends are in line with the concept of “mindful eating,” which is one of the latest shifts in consumer food perceptions against the concept of dieting. Mindful eating is all about experiencing food more intensively. The approach involves bringing attention to all the smells, tastes and feelings that arise during the process of eating.

To conclude, there is a need to respond to consumer’s desires and develop products that have a particular functionality and are perceived as fresh and healthy. This way, manufacturers will be able to inspire consumers to eat mindfully.

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María Mascaraque is an industry expert on food and nutrition with in-depth knowledge of health and wellness trends. She provides global expertise and forward-thinking insights identifying latest product developments and key market trends in areas such as functional foods, free from, organics and naturally healthy foods and drinks. She holds a PhD in Nutrition from Complutense University, Spain. For more information, visit: www.euromonitor.com/ingredients-industry.