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5 Hottest Food Trends at Expo West |

We were delighted to appear in The Ohio State University’s Food Innovation Center Blog:

Expo West

Natural Products Expo West 2014 was an incredible show of natural, organic, and healthy food and beverage manufacturing, ingredients, and in many ways – the future of the food industry, given that healthier food has moved from trend to societal shift. The natural, organic and healthy products food industry is growing nearly three times higher than the food industry average, per Penton. I had the privilege of attending with 67,000 of my closest friends and 2,600 exhibitors. Expo West was an enlightening window to emerging food industry trends.

 1. Gluten-free continues to explode, up 20% versus last year, driven by perceived health benefits and better diagnosing of celiac disease. New brands, new food categories, and Gluten-freeimproved organoleptics were virtually everywhere. Per NPD, 30% of consumers want to reduce the amount of gluten they are eating, and gluten-free foods’ household penetration has leaped to 11%, more than doubling since 2010, per Nielsen. The tidal wave is projected to continue as the foodservice sector (restaurants and institutions) catches up with consumer demand at retail. Even Pillsbury has jumped into the space with gluten-free dough (et tu, Doughboy?) as has Columbus’ Donato’s with its gluten-free Donato’s and Sonoma Flatbreads brands. Gluten-free is projected to grow by 22% annually through 2016, per Mintel.

2.  Non-GMO (genetically modified organisms) verified food offerings have tripled since last year, in response to growing consumer demand, as well as organic manufacturers’  non-gmo efforts. Regardless of where you stand on the contentious GMO discussion, consumers are responding. 93% of Americans said that foods that have been genetically modified or engineered should be identified, per a recent New York Times poll and non-GMO has recently surpassed ‘organic’ among consumers’ desired food claims. Whole Foods’ requirement of GMO labeling on all products in U.S. and Canada by 2018, will also drive non-GMO consumer awareness. Promising, except only 11% of consumers say they are willing to pay more.

Non-GMO food and beverages are projected to grow at a 13% compound annual growth rate for the next few years and account for 30% of retail sales by 2017, even without mandatory labeling, per Packaged Facts. General Mills, Smart Balance, Ben and Jerry’s, Chipotle, and Kashi have all taken proactive stances on GMOs by either eliminating them or pushing for increased labeling. To help manufacturers and consumers with product and ingredient sourcing, the verification body, the Non-GMO Project has established a centralized database. Buckeye brag: Marzetti launched Mamma Bella GMO free garlic breads, led by Fisher alum Adam Koenigsberg.

3. Proteins, Popcorn, Chia and Kale were prevalent in multiple categories. New protein-rich or enhanced products targeted to consumers who are reducing or eliminating red Popcorn Indiana brand(or all) meat from their diets included yogurts (whey and soy proteins), snack bars (almond and pea protein isolate), and pancakes (oats, quinoa, and whey). Popcorn, with its better-for-you consumer perception, was featured by over 25 companies in every mainstream and exotic flavor. Most intriguing were Popcorn Indiana’s fit brand, positioned as a low-calorie option, and chip’ins, a popcorn-based extruded snack chip. Chia continues to be a hot omega-3 rich and filling superfood in many bars, yogurts, drinks, as well as seeds alone. And kale, which has grown four-fold since 2008, is the hot supergreen in raw snacks, chips, sauces, dressings, and disturbingly: macaroons.

4. More Funding, Investments and Acquisitions – The health and wellness segment’s rapid growth is attracting interest and investment from multiple sources. Major food Food_Acquisitionscompanies are penetrating the segment via acquisition and joint ventures, such as Coca-Cola (Zico and Honest Tea). Heinz (Hain Celestial), and Campbell Soup (Plum Organics), and the sector has become a darling of private equity leaders such as Sherbrooke Capital (Angie’s Popcorn) and Alliance Consumer Growth (EVOL brand). There is also an explosion of funding available for smaller companies through food incubators and crowd-funding platforms, with over 25 new food and agriculture funding sources launched last year. This foretells both continued growth among increasingly well-capitalized companies, as well as improved product quality and rate of innovation.

5.  Local Participation –  Ohio was well represented by many of our friends at 19 companies. In addition to the aforementioned Marzetti and Donato’s, Almondina, Avitae, Bunker Ohio StateHill Cheese (Heini’s), Eurochoc Americas Corp., Fit Organic, Fremont Authentic Brands, Garden of Flavor, Gaslamp Popcorn (Rudolph Foods), Graeter’s, Herbal Science, Jeni’s Splendid Ice Creams, 1-2-3 Gluten Free, R.A.W. Real and Wonderful, Swurves (Mike-Sells), Trophy Nut, Unistraw, and Wyandot Snacks exhibited, all of whom we expect are gearing up for the surge in new business… and hiring talented Buckeyes.”

Meet the Expert

Tammy Katz is an Adjunct Professor of Brand Management at the Fisher College of Business, The Ohio State University, and Chief Executive Officer of Katz Marketing Solutions, a marketing and brand management consulting firm. She is particularly interested in brand management, marketing strategy, commercialization, corporate outreach, and consumer-driven innovation.

Food Mergers and Acquisitions that will shape 2014

Brilliant overview by Paul Conley/FoodDive: three expected trends in the food industry.

1.  Buying market share
2.  Dumping the non-core (refocusing on core)
3.  Buying younger (and more innovative) companies

“This week saw two more giant deals for the food industry in a year that has been filled with mergers, acquisitions and divestments. Sysco announced it would spend $3.5 billion to buy competitor U.S. Foods; meanwhile, WhiteWave announced it would spend $600 million to acquire Earthbound Farm.

Those deals, as different as they were, pointed to a series of business trends in food and beverages that dominated the headlines in 2013. These are hardly new concepts in the mergers and acquisitions world, but they did seem to take on a new urgency this year. And we see no reason why those trends won’t continue into 2014.

BUYING MARKET SHARE
There’s a change-management and business theory known as “corporate lifecycles” that we adore. Without spending a lot of time explaining what is a fairly complex approach, suffice it to say that the theory tracks the growth of companies at various stages of their existence.​

(Image credit: Flickr user karen_2873) One of those stages is called “aristocracy,” when a company tends to struggle to find growth, shies away from new markets, and focuses on short-term financial gains. Aristocratic companies often take to merging with other aristocratic companies in an effort to control market share.

The Sysco-U.S. Foods merger is a classic example of such a royal wedding. But it’s not the only one we’ve seen this year.

Dairy Farmers of America, although structured as a cooperative, has been acting the part of the aristocratic corporation in its mergers with Dairy Maid and other similar companies. Another approach common among aristocratic companies is to buy up smaller competitors in smaller markets. That’s the approach J&J Snack Foods seems to be taking as it buys up every other pretzel maker in North America.

DUMPING THE NON-CORE
When aristocrats age they often enter the stage called “early bureaucracy,” a time marked by corporate restructuring and blame placing. It’s also a time when a corporation will announce with great fanfare that it is shedding non-core assets, returning to its roots, and “doing what we do best.”

(Image credit: Wikimedia Commons

No company has better illustrated this trend in 2013 than Nestle. The world’s largest food company has suddenly taken to selling anything that doesn’t seem Nestle enough. Jenny Craig? Dump it. Givaudan? Who needs it?

Other companies in a similar position include Chiquita — which hired a new CEO in 2012 who plans to focus on the core” and “eliminate distractions ​— and Del Monte Foods, which has decided its core is actually pet food.

BUYING YOUNGER COMPANIES
Aging corporations often look to regain their youth by buying a much younger company that is presumed to have expertise in new markets. Examples this year include Coca-Cola, which is seeking shelter from the anti-soda movement and completed its takeover of coconut-water bottler Zico Beverages; Campbell Soup, which is seeking shelter from the declining market for canned soups by buying Silicon Valley darling Plum Organics; and Post Holdings, which is seeking shelter from the collapsing market for cold cereal by buying every company it can find that doesn’t make cold cereal.

(Image credit: Flickr user sfllaw)The corporate lifecycle approach to understanding businesses isn’t flawless, but it can be illuminating. And nearly every transaction we’ve seen this year fits into the model. (WhiteWave’s purchase of Earthbound Farm is a particularly wacky one. WhiteWave was spun off as non-core by Dean Foods just 14 months ago, and is buying Earthbound as it exits the “adolescent” stage, when company founders step aside.)

And if nothing else, corporate lifecycle theory is pretty good at predicting what a company is likely to do as growth slows. Which is a sort of long-winded way of saying we expect A-B InBev and SABMillerto merge in 2014 in one of the largest aristocratic marriages in food and beverage history.”