Trends shaping food and beverage
- Consumers trading down to cheaper options
- Health & wellness booming globally
- Convenience driving growth in ready-to-eat
- Brands adapting with private label, digital, and functional foods
The food and beverage industry is in a state of constant flux. Nothing stays the same for long.
Remember the hype around cake pops? And what about alcopops? Once dominant. Now passé.
But while these trends have come and gone, others are proving to have far more staying power – reshaping the food and beverage industry as we know it.
1: Cost-of-living
The ongoing cost-of-living crisis has hit consumers hard, resulting in a change in long-term spending patterns.
Shoppers are less loyal to brands and increasingly choosing more affordable private label products.
“Financial pressures continue to drive a ‘trading down’ effect, pushing consumers towards more affordable alternatives,” says Karin Hyland, deputy head of co-investments at asset management firm Patria Global Private Market Solutions.
Retailers are also noticing a rise in downtrading, shifting towards more economical products and alternative categories. One area this is particularly evident is meat, with the rise in sales of cheaper protein categories such as chicken and frozen pork, at the expense of more costly proteins such as fish and beef. Another big switch retailers are seeing is from more expensive olive oil to cheaper alternatives such as sunflower oil.
Financial pressures have also led to a rise in spending on little treats over big investments. Shoppers might not be able to afford a new laptop or car, but they can afford a slice of cake or a chocolate bar after a long day.
2: Health and wellness
The health and wellness trend is another factor completely reshaping the future of food.
From gut health and food as medicine to clean-label and GLP-1, eating for health and wellness has become big business.
In fact, the health and wellness market is now worth a whopping $6.3tn (€5.4tn – Global Wellness Institute), and food and beverage is a $858.8bn chunk of that (Grand View Research).
“Consumers are increasingly aware of the impact of diet on overall health,” says a spokesperson for Grand View Research.
The increasing prevalence of lifestyle-related diseases, such as obesity and diabetes, is boosting this trend.
The ageing population is also driving demand, as older adults seek to support longevity through better nutrition.
Added to this, rising disposable incomes in emerging markets is enabling more consumers to invest in premium health-oriented products.
3: Convenience
The convenience food trend has been quietly bubbling away for years, but its power is now undeniable.
“Consumers are increasingly time-poor and willing to pay for ready-to-eat and ready-to-heat options, contributing to the growth of food service channels like bakeries, street vendors and fast-casual dining,” says investments specialist Hyland.
In fact, figures from industry insight specialists Innova Market Insights, show that three in five consumers globally, are using convenience foods once a week or more. Furthermore, one in five are opting for convenience foods more than once a day. And these numbers continue to rise.
Figures indicate a net increase of 3% in convenience food usage globally, with developing countries, particularly India and Indonesia, showing the strongest growth.
The trend towards convenience is also intertwined with the ongoing digitalisation of the consumer sector, meaning even the act of buying convenience foods is becoming more convenient.
How brands are adapting
The food and beverage industry faces an uphill battle in adapting to these megatrends. But while it won’t be easy, the direction of travel is clear. What’s more, the work has already begun.
“The industry is actively adapting to shifting trends,” says investments specialist Hyland. “To counter financial pressures, grocers and supermarkets are investing in own label products, developing sophisticated private brands across various price points.”
However, independent brands are struggling to keep up and will need to find ways to compete on price, as private label has already proven itself able to compete on quality.
When it comes to health and wellness, manufacturers are investing heavily in everything from functional foods and beverages to clean-label. And the shift is proving hugely lucrative.
“Businesses have successfully expanded their product ranges, engaged brand-new customer segments, and launched healthier alternatives such as plant-based meats, dairy-free alternatives, and low-sugar options,” says a spokesperson for food recruitment firm Harmonic. “The companies responding fastest to this trend are tapping into valuable new revenue opportunities, as health-conscious shoppers now represent a sizable percentage of the market.”
Finally, the question of convenience. Manufacturers and retailers are upping their offerings of convenience foods, as well as accelerating digitalisation to address the growing convenience trend.
“This digital transformation, from social commerce to AI-driven efficiencies, puts agile middle-market companies in a good position to innovate and scale,” says Hyland.
The future of food and beverage
The food and beverage industry is at a pivotal moment. As consumers continue to shift their priorities, driven by economic pressures, health consciousness, and the need for convenience, brands must evolve or risk falling behind.
Those that invest in innovation, agility, and relevance will be best positioned to thrive in this new landscape. The trends are clear, and the transformation is already underway.
