Market Trends Key trends to shape food industry in 2023 and beyond

By Catherine Wanjiku

The world of food and beverage has undergone its fair share of change over the past few years. In addition to now-familiar concerns like COVID-19 and climate change, geopolitical conflicts and rising inflation have added to the heightened sense of unpredictability. Who knows what’s next to come? Looking closely at how the sector has been performing and borrowing insights from industry experts, here are some of the trends that will set the tone and influence the market throughout the year 2023.

Value For Money

Political and economic volatilities have become the second biggest concern for consumers in 2022 as it has led to skyrocketing food prices due to rising production costs, and supply chain disruptions. According to Innova Market Insights, a global market intelligence company for consumer-packaged goods, 62% of consumers across the globe reported a noticeable rise in the cost of their food and beverages. As a result, they are turning their attention to simple but nutritious foods that are affordable. Key consumer behaviors that have emerged in response to this include buying in bulk, opting for private labels, cooking from scratch, reducing spending on luxury items, and purchasing fewer items.

To meet the nutritional, environmental, and economic demands of consumers, manufacturers must therefore innovate to extract maximum value from raw materials and the production process. For instance, the processors are downsizing their packages and product sizes without lowering prices as they embrace shrinkflation. Confectionery maker Mars Wrigley’s recently introduced in the East African market a new two-pellet pack for its PK chewing gum, going for the same price as the previous fourpellet pack of chewing gum. On the flip side, manufacturers are also availing value pack formats of their products that are discounted compared to the smaller packs, leveraging economies of scale.

Despite cost and value for money becoming more important, most consumers are still determined to sample new experiences, ensure personal well-being and support planetary health. Lu Ann Williams, Global Insights Director at Innova Market Insights highlights, “Redefining value throughout the food and beverage industry will lead in 2023 as consumers seek brands that listen, understand, and that reduce the hustle of meal preparations and thus turn to quick fix options such as pre-cooked, or pre-cleaned food products such as Kenchic Limited’s recently launched semi-cooked breaded chicken nuggets, strips, and burger patty. In Nigeria, Leky Mills introduced pre-chopped frozen yams. Several brands have also launched meal kits to cater to consumers wanting to recreate the magic at home, such as Kroger and UCOOK in South Africa.

The market for convenient meal options is rapidly growing evidenced by increased investments by players such as Simplifine Foods who have recently set base in Kenya to avail ready-to-cook sliced potatoes and frozen par-baked goods. In the UK, Premier Foods expanded its portfolio with the acquisition of meal kits firm Spice Tailor.

The shifting food preferences of consumers toward ready-to-cook food products is expected to reflect prominently in the coming year, owing to the increase in the busy lifestyles of working individuals in the face of harsh economic times.

BETTER-FOR-YOU PRODUCTS TAKE CENTER STAGE

respond to their core values. They want brands that provide quality, trust, and confidence via their product formulations, communications, and wider sustainability actions.”

Quick Quality

As highlighted above, one of the ways consumers are budgeting their food spending is by adopting home cooking. However, consumers are in pursuit of products

As consumers are leaning towards convenient foods, they are also unwilling to compromise on quality and are demanding better-for-you products. The pandemic has changed many people’s values and accelerated a trend already apparent for several years: a focus on health and wellness.

This has expedited demand for food and beverage products that represent a healthier position. People are also learning more about the gut-brain axis, and it is anticipated that brands will continue availing products that support health claims like gut health, weight management, immune support, and mood booster, among others. Innova Market Insights reports that 53% of global consumers say they have taken action to improve their physical well-being. Another 44% say that they have taken action to improve their mental and emotional well-being.

In this regard, manufacturers are expected to continue availing products that will support the physical and mental well-being of consumers such as Brookside Dairy’s new fortified whole milk dubbed Plus+, BidCo’s joOz Boost+ fruit juice, and Nano Shot’s CBD-infused beverages made with real fruit juice, no artificial flavors, zero calories/sugars, and NO THC, among others.

While presenting on the Top Ten Trends for 2023 by Innova, Lu Ann, highlighted that consumers are increasingly checking on the pack claims as one of their sources of the products' nutrition information. As a result, there has been a 69% growth in food and beverage launches with a regulated nutrition warning label. Consumers are still calling for greater transparency in food labeling to make informed decisions.

GEN-Z DEFINES MARKET

While health is an increasingly important purchase driver, younger consumers raised in an interactive digital world are creating trends and defining what markets should be providing. For Gen Z and Millennials, food and brand choices are important signifiers of lifestyle, beliefs, and values, according to Innova. These demographics have a strong voice and are used to share their views openly and widely and are in pursuit of novel and international flavors that are winning their hearts.

Gen Z's are said to embrace the new and different while being extremely responsive to positive engagement from brands. For instance, plant-based meat maker Impossible Foods has been paying close attention to Gen Z's opinions and behavior and found that younger consumers are more likely to eat plant-based food and eat less meat to save the environment. A survey commissioned by the company discovered that they were optimistic about their potential contributions to help stop global warming, with 73% saying they could make at least some difference through their personal choices. Other than environmental impact, Gen Z are also in search of food that will improve and strengthen their physical and mental well-being. Topped only by music and gaming, food is one of the top three attributes that make up Gen Z identity. They are a sizable force coming in to shake up the food market as they spend most of their disposable income on food, making them the biggest spending category for today’s youth.

Consumers Yearn For Newness In The Plantbased Category

Speaking of plant-based foods, the rapid rise of the sector has almost inevitably hit some roadblocks, necessitating a refocusing on consumer demands for high-quality, flavorsome products. Innova Market Insights highlights that the innovative food division merely mimicking green gastronomy will not blossom as a standalone sector in 2023, giving brands significant opportunities to diversify and expand. Consumers still want to see improvements in taste and texture, but there is a huge appetite for culinary

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Two-thirds of respondents to Innova’s global survey expressed a desire to try plant-based versions of traditional, local cuisines. The industry is responding with a large increase in ready-meal offerings, while there is great scope for expansion into meal kits and inventive recipe combinations. Interest in underused ingredients is also growing, creating opportunities to introduce variation in flavors and nutrition while simultaneously addressing supply concerns.

While soy, wheat, and pea proteins have been some of the biggest staples of plant-based meat, recent supply chain disruptions following the pandemic and Ukraine-Russia war have made manufacturers turn to other readily available ingredients such as Beyond Chicken Tenders utilizing fava bean protein as the main ingredient. Chickpeas and lupini beans are also getting consideration.

Meat analog products made through fermentation will also change the game in terms of forms and

Key Numbers

53%

PERCENTAGE OF GLOBAL CONSUMERS HAVE TAKEN ACTION TO IMPROVE THEIR PHYSICAL WELL-BEING textures. Though they aren’t plantbased per se, there are planned launches from companies such as Meati and Aqua Cultured Foods that use mycelia and fungi to mimic the structure and texture of traditional meat products.

Securing The Future

Public curiosity for innovative food production and processing techniques is on the rise, with conversations around vertical and regenerative farming taking center stage. An Innova survey highlighted that consumers need brands to demonstrate how novel production techniques are benefiting farmers, people, and the planet. Giant food industry players such as PepsiCo, Nestle, General Mills, Diageo, and McCain Foods, among others are pumping millions of investments to advance regenerative agricultural practices across the globe to cut down GHG emissions. The new conservation and rehabilitation approach to food and farming practices are expected to enhance biodiversity, and water quality, and improve farmer livelihoods.

With climate change looming over everything, consumers are also tasking manufacturers to align their operations to sustainable practices. In response, some companies are bringing a new spin on old operating ways, like turning to the use of green energy to power their facilities, incorporating recycling and reusing practices for their packaging, and heightening focus on proper utilization of water resources.

The focus on sustainability is expected to continue featuring in most companies following the recently held 27th United Nations Climate Change Conference (COP27), which saw states and organizations renewing their commitment to combat climate change.

In addition to that, consumers also want to see companies making a concerted effort to source everything as responsibly as possible. Some specific attributes that customers care about include Fair Trade, organically farmed, and GMO claims, among others. Some states require this labeling, while others don't. Regardless of any regulations, consumers want to make informed decisions about the food they eat and drink. In Kenya, National Biosafety Authority (NBA), the agency responsible for regulating biotech products, pledged to oversee mandatory labeling of GMO products following the government repealing its 10-year ban on the food products.

Other than the discussed trends which are expected to influence market performance in 2023, what is certain is that the food and beverage industry is always ready to reshape itself to ensure future growth. FBA