Nerac Food Science Analysts Look To the Coming Year
From innovation based on nanotechnology to the increasing attention being paid to food safety, Nerac’s food science team looks at the events of 2007 to see what is likely to unfold in 2008. And whether it involves new markets based on ethnicity, increasing interest in whole grains, or even a delectable organic version of chocolate delights, food companies will find an abundance of new opportunities await them.
 
Nanotechnology: Getting Small with New Materials
The emphasis on health and wellness continues to bring innovation. And judging from the exhibits at last summer’s International Food Nanoscience conference at IFT’s Annual Food Expo in Chicago, nanotechnology is going to be big this year.

Nanotechnology allows scientists to work with materials that are one billionth of a meter in size. Because nanoscale materials have different chemical, physical and biological properties as compared to larger-sized particles, they have great potential for the food industry. But they also pose questions about the adequacy and application of consumer regulatory guidelines.

As the year unfolds, expect to see new applications emerging in coloring, flavoring, and health claims. Along with benefits come some risks, so it is likely that we will see extensive research regarding toxicity and other potential health risks, which may lead to new regulation.

Currently, there are no uniform, standardized methodologies for incorporating nanotechnology ingredients in foods. The FDA has set up a task force to assess these issues. It has its work cut out for it, as its first report says that this new field of engineering and science is estimated to grow to $2.6 trillion globally by 2014. —Shahana Jahangir

Food Safety: Start by Reviewing HACCP Plans
From greens to ground beef and pet food, 2007 seems to have been marked by headlines announcing the latest food product recall. Needless to say, no one wants to make those kinds of headlines in ’08. And no one wants to be saddled with the cost of a recall. Consider that Menu Foods’ massive pet food recall cost the company $45 million, and that doesn’t account for a potential drop in future sales or legal settlements not covered by insurance.

The place to start is by reviewing and, if necessary, revising HACCP plans and verifying whether there are any new critical control points in your facility or system. Pay particular attention to programs such as farm to fork, which can help food companies gain better knowledge of where their ingredients originate.

The meat industry should expect closer scrutiny when it comes to processing ground beef. Of particular interest will be identifying where the meat came from and the sources of possible contamination. Meat processors can expect to undergo more frequent and more rigorous USDA inspections.

As a whole, the food industry can expect to see a greater focus on maintaining better records regarding vendors and suppliers, as they do change often. Overall the most important part of record-keeping is to establish the traceability of any product in the event of a recall.  —Natasha Bangel

Ethnic Markets: Hispanic Population Growth Means Profits
From standard chips and salsa to exotic tamales and moles, Hispanic foods are on the rise in the United States. According to a July 2006 U.S. Census Bureau report, Hispanics comprise the largest minority in the country, making up approximately 15 percent of the total population. The Census Bureau predicts that Hispanics will constitute nearly a quarter of the nation’s population by 2050.
 
For food manufacturers, the burgeoning population creates potentially profitable marketing opportunities by developing healthy and functional foods for Hispanic consumers. Although the food industry has made significant progress in this area, the Hispanic market represents an undeveloped arena to promote lighter and healthier Latin American fare.

Another key to success in this market is to develop food products that both Hispanic and non-Hispanic consumers will buy. Bilingual packaging and educational marketing campaigns are just a few ways to attract both of these consumers. Goya Foods exemplifies this strategy with the success of its brands that reach beyond core Hispanic consumer into the homes of non-Hispanics.

The Hispanic market represents a growing segment of the food industry. As demographics change, U.S. food companies would be wise to invest in this emerging market. —Alison Matalanis

Grains: Getting Back to the Basics
In 2007, the media paid a lot of attention to the importance of whole grains in our diets. Comprised of the plant’s entire seed, whole grains are more than just fiber. They can be  eaten whole, cracked, split, flaked, or ground. Most often, they are milled into flour and used to make breads, cereals, pasta, crackers, and other grain-based foods.
 
Many clinical studies were published this year linking the consumption of whole grains to reduced risk of cancer and cardiovascular disease, lower likelihood of becoming obese, and even the reduction of asthma in children whose mothers ate a diet high in whole grains during pregnancy.

The cereals, snack, and bakery industries have answered these compelling studies by providing consumers with even more foods carrying whole grains. According to the Mintel Global New Products Database, more than 1,000 whole grain food products were launched in North America and Europe during 2007, including cookies, cereals, pastries, and various snack foods.

As aging baby boomers continue to look for natural ways to maintain good health, the food industry will continue explore new ways to incorporate whole grains in their 2008 product launches. —Brenda Van Goethem

Confectionary: Satisfying the Sweet Tooth with Organics 
To Americans it is Chocolate. To the French it is Chocolat. To the Italians it is Cioccolato. And to the Dutch it is Chocolade. No matter how you say it, or where you say it, people have a near universal love affair with chocolate. So, what could be better than chocolate? How about organic chocolate?
 
The organic chocolate and organic confectionery markets have been growing exponentially in recent years. Candy Industry Journal reports that in 2006 the organic confectionery segment grew by 45 percent. It also says that organic confectionery has grown by no less than 20 percent for each of the last five years due in no small part to the emerging health benefits of chocolate. Add to that the connotative aspects surrounding organic anything such as “green”, “fair trade”, and “ethical”—all attributes that consumers perceive as important these days.

In the Organic Trade Association’s recent survey of organic manufacturers, the organic chocolate segment is the "largest growing snack segment in the U.S. organic market."
Armed with information on where the market is going and why, U.S. manufacturers both organic and conventional can and should begin to develop new and novel products targeting the sweet tooth of the American Consumer, while at the same time keeping a close eye on the scientific literature revealing the continuously emerging health benefits of ingredients found in chocolate. —Coreen Reed

New Products Conference Overview
Highlights include marketing approaches that target generations

EDITOR’S NOTE:  Nerac Analysts Scott Lloyd and Natasha Bangel traveled to Naples, Fla., this fall for the Mintel New Products Conference. Here is a summary what they discovered.

Of Boomers, Gen X & Millennials
When marketing foods, it is important to keep in mind the consumer’s age, which often provides a window into their buying habits, says Larry Wu, vice president and consumer strategist for food and beverage at Iconoculture Advisory Services, a leading consumer behavior research company. For example, Mr. Wu divides consumers into boomers, Gen X , and millennials.

Baby boomers, who range from 43-61, as a whole are trying to defy aging and want to get the most for their money when shopping. The boomers at the younger end of the range want nutritious, easy-to-prepare meals that their families will enjoy. Older boomers transitioning to a life without children are less inclined to prepare meals at all.

Gen X consumers, who are between the ages of 30 and 42, are media savvy and individualistic. Convenience means everything, and they are willing to pay extra for the what they perceive as value added to a product. They are willing to pay extra for organic food, for example, because they value the fact that it is free of chemicals and hormones.

Millennials, defined as between ages 20 and 29, are generally technologically savvy, media immersed, raised for success, and have what Mr. Wu calls, “sensitive B.S. radar.” This group generally cooks only for social events, and rarely just for themselves. The point of all this is that food manufacturers and marketers need to decide whether it is potentially more profitable to go after a small percentage of a large market through mass marketing or a large percentage of a smaller market by tailoring the product and the message to meet the needs of a specific demographic.

Teens Represent A Different Opportunity
An even younger generation, today’s teens, is emerging as a consumer group to be dealt with, and the conference assembled a panel of teenagers to talk about what is on their minds to help food companies hone their marketing.

It was obvious in listening to them that their lives are extremely busy and that convenience is a huge factor in their buying decisions. And for these young people, convenience means a meal that takes less than 5 minutes to prepare. But foods must not have what they perceive as flaws. For example, caramel apples are convenient, but the caramel makes their fingers sticky. That is inconvenient. However, if the manufacturer includes a wet wipe, that changes the product to convenient.

They also like to eat out, and say that they rarely eat breakfast. Their morning schedules are tight, and often they are just too lazy to fix something that’s not convenient.

One thing was clear, however. They are put off by companies that change marketing slogans. For example, the teens said they were upset when McDonald’s changed its slogan to “feed your inner child” from “I’m lovin’ it.” But they liked the fact that Kit Kat stayed with the slogan, “Break me off a piece of that Kit Kat bar.”
 
How To Market Healthful Foods
Barb Stuckey, executive vice president of marketing at Mattson, which bills itself as the largest independent developer of new products for the food and beverage industry, said one of the hardest things in marketing foods is breaking what she called “neophobia,” a fear of something new. This is particularly true of products being marketed as healthful. However, that obstacle can be overcome if food companies apply these principles: • Put taste first and deliver an experience.
• Make it easy.
• Deliver more satisfaction and nutrition per calorie.
• Sell it on the shelf. For example, she cited Hershey’s Cocoa Via as an example of a company applying the four principles. The packaging and website deliver an experience to the customer. It’s easy, because all you have to do is open it up. It delivers an appropriate amount of antioxidants per calorie. And Hershey’s packaging sells it on the shelf because it spells out the source of the antioxidants.
 
Bertolli is another example. Bertolli packages frozen entrée dinners for two, so it delivers an experience. The packaging displays the product with wine, which creates a luxurious state of mind. Bertolli makes it easy because the product serves two people unlike other frozen dinners that are single servings or family-size portions. The product can be purchased in a reduced calorie brand. And the packaging makes the product stand out on the shelf.

If It Tastes Good, Is It Bad?
The ability to perceive flavor and sweetness varies by species, which has led to a new approach to consumer research based on genotypes and groups of individuals. As a result, said Dr. Gary Beauchamp, director of the Monell Chemical Senses Center, markets can be segmented by biological differences.
 
Also, opportunities exist for discoveries based on the reactions of receptors or receptor cells to screen for novel compounds that flavor foods. For example, oleocanthal, which provides antiflammatory and antioxidant activity, provides the peppery bite in olive oil. But put the same compound in cold medicine and it does not taste good.

That leads to the question, if it tastes good is it bad? The answer is yes and no. Yes, because sugar, salt, and fat if consumed in excess exacerbate obesity. No, because flavor compounds signal the presence of nutritionally valuable substances and may themselves be nutritionally valuable.

General Trends In Food
The conference wrapped up with some trend-spotting by two chefs from the Culinary Institute of America (CIA): • Salsa surpassed ketchup sales last year.
• Olive oil has replaced butter on bread.
• More chicken than beef sold at McDonald’s.
• People complain about the price of gas but are spending more per ounce for bottled water.
• The number of farmers markets has increased to 4,700 from 1,700 since 1994.
• “Fresh” and “authentic” have replaced “gourmet” in marketing products.
• Organics have undergone significant growth.  In a recently conducted consumer poll that the chefs cited, three quarters of the respondents agreed with the statement, in the future, menus will be more influenced by social and ethical matters. Only 9 percent disagreed and 16 percent were undecided. Consumers also listed in order of importance the following reasons for buying products:

• Sustainability
• Environmentally friendly
• Locally sourced
• Hormone-free
• Organic
• Fair trade
• Genetically modified organisms (GMO)
• Animal rights

There are a lot of different ways to develop products, and once developed, marketing has a role in the product’s success. While marketing entails many considerations, these issues shed new light on ways to approach marketing. Keep in mind that you need to stay ahead of the trends, and not just how your own products meet new needs, but also how they stack up against the competition. And with creative marketing, you might just be able to create The Next Big Thing.