Industry summary

Generational shift

As global nutrition company Glanbia remarks1, to fuel the demands of their on-the-go lifestyles, consumers are increasingly looking for functional foods and beverages that are high in protein, sustainable, good-tasting and in an easy-to-use format.

This extraordinary generational shift from a traditional ‘three-meals a day’ lifestyle is continuing at pace, with snacking and convenience playing a critical role in everyday routines. As the company says, there is also far greater awareness of the benefits of good nutrition across ages and genders. “As people live longer they are looking to understand specific nutritional and fitness plans to support their lifestyles, whatever their age.”

The sustainability angle is of particular importance to younger consumers. They expect their foods to be produced in an ethical way, increasingly demanding natural scents, flavourings, and traceable ingredients. When it comes to health they also understand that it is no longer just about taking more sugar and salt out of their diets, but also recognise the importance of having more protein too.

Obesity crisis

There remains a mismatch between these underlying trends and the fact that nations across the globe are continuing to grapple with an obesity crisis.

Demand for high-fat and high-sugar foods has not disappeared overnight and many consumers continue to eat highly-refined and processed foods and not enough fruits and vegetables. Adding to the problem, they lead increasingly sedentary lifestyles driven by the changing world of work and increased urbanisation.

To realise the scale of the global problem, China has now overtaken the US as having the world’s largest overweight population2. However, on the positive side, this has led to concerted efforts by Chinese consumers to lead healthier lives. Among the fastest-growing food and beverage categories are bottled water and yoghurt, while the Chinese fitness industry is also growing rapidly.

Meanwhile in Britain, a third of children are classed as obese or overweight when they leave primary school, according to the NHS, while similar statistics can be found in the US and other developed nations. The World Health Organization (WHO) says obesity rates are rapidly increasing in the developing world too, particularly in urban settings. According to latest figures from the WHO, globally more than 41 million children under five are overweight, with almost half living in Asia and a quarter in Africa3.

Projected Rates Of Obesity

Investment proposition

Against this backdrop food and beverage companies have an unrivalled opportunity to not only capture the market opportunity but also play their part in helping tackle the obesity crisis. In response a whole new generation of young, nimble, ‘better-for-you’ food brands are rapidly emerging.

These start-ups are an attractive investment proposition. For instance, Danone Manifesto Ventures, the investment fund of the French food giant, is targeting start-ups in the health drinks, snacks, baby food and alternative protein sectors, and plans to invest in around 25 companies by 2020. A recent investment was in Yooji, a French start-up that aims to revolutionise baby food by providing frozen portion-sized organic products.

As the market rapidly evolves, multinationals are also growing their better-for-you product offering through acquisitions. A good example is Coca- Cola which has made a series of recent acquisitions as it aims to continue to diversify its beverage portfolio. This year it has bought UK coffee chain Costa, French fl at fruit drinks brand Tropico, and Australian kombucha drink provider Organic & Raw Trading, as well as taking a minority stake in BodyArmor, a sports drink brand.

1: Glanbia Performance Nutrition – Global Market Trends
2: Global Times
3: World Health Organization - Global Strategy on Diet, Physical Activity and Health

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