Fragmentation produces the growth of small brands

The study reported that health beliefs are creating a great deal of fragmentation in the food and beverage industry, which opens up opportunities and diversity in the market. The great fragmentation of consumer beliefs about health is contributing to the breakdown of traditional food and drink markets and opening the door to new opportunities for start-ups and small brands, said Julian Mellentin, director of New Nutrition Business and author of 10 Key Trends in Food, Nutrition and Health 2016 .(10 key trends in food, nutrition and health and wellness in 2016). “Big food companies are being forced to rethink their business models,” Mellentin said.

Key Trend 5: High fragmentation explains how rare and increasingly rare opportunities for large volumes are. In some markets, opportunities for large volumes may already be in the past, Mellentin said.

The change in the world of food has been influenced by 25 years of digital sampling, mixing, music remixes, food fusion restaurants – all of which are an established part of the culture that surrounds people.

Just as a person who listens to Bach’s Goldberg Variations at home might also listen to Aerosmith or Black Sabbat while driving to work, people’s ideas about food and health have become a selection of options to choose from and change as new information becomes available. Now we are all food explorers in search of novelty and variety.

This creates a proliferation of niches that smaller companies and new (often luxury) brands are perfectly positioned to serve. In the future, smart companies will rarely launch mass-market brands with the goal of achieving high volume quickly. Instead, they will build portfolios of small brands, finely targeted at an increasingly fragmented consumer market. Some of them will become brands large, some will be large niches, most will remain niches.

The report cites the example of giant General Mills as one of the few large and visionary companies that have already embraced change. They created a new business unit (called 301 Inc.) to invest in early-stage entrepreneurs and food companies.

“The consumer landscape is rapidly evolving and dramatically changing the game in the food industry,” said John Haugen, CEO of 301 Inc. “There are great opportunities to partner and encourage new food brands,” he added.

As the Great Fragmentation progresses, this new model will become the standard for large food companies and businesses. The power of this trend to redefine the market is illustrated by key trend 7: Plant-based food and drink. Lactose-free vegetable milk, such as almond milkhad sales growth between 20% (Spain) and 50% (USA).

This trend is not driven by veganism or vegetarianism, but rather by the consumer’s search for variety and novelty. Now we’re all flexitarians, using cow’s milk in cereal, almond milk in smoothies and coconut milk in cooking as we see fit. And the halo of health and sustainability around plant-based foods means consumers feel good about their choices.

This trend is also made possible by major improvements in the taste of plant-based foods (the reason for the rise of almond milk at the expense of soy milk), and technical advances that make it easier to include plant-based ingredients such as beans and algae in snacks that taste good.

Fragmentation also supports Key Trend 1: Redefining Beverages. Sales of large drinks have peaked, sales of soft drinks are sinking and fruit juices are struggling. Small niche beverage brands are transforming the market.

Plant waters such as coconut water and birch water satisfy consumers’ desire for products that are naturally healthy, additive-free, naturally low in calories and sugar, and sustainable. “Plant water will be a $4 billion market by 2025,” predicts Mellentin.

To find out the 10 trends, click here.

Source: www.new-nutrition.com


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