6 trends shaping food and beverage growth in 2022 – Food Dive

Editor’s note: This story is the first in a series on the trends that will shape the food and beverage industry in 2022.  

As many consumers hope for a fresh start in 2022, the ongoing pandemic will play a major role in shaping food and beverage trends regardless of whether COVID-19 itself finally becomes a thing of the past.

The virus’ effect will be especially noticeable in health and wellness, with functional ingredients such as a daptogens , nootropics and CBD making their way into new product categories .

Plant-based meat, which has seen tremendous growth during the past two years, will continue to evolve, with more progress made on the form plus texture of products. And Generation Z is maturing into adulthood and will shape trends with its interest in ethical sourcing, sustainability and local food.

The new year also is expected to provide a boost to private label as inflation, a draw-down in savings and better-quality products attract new customers to the category or bring back those who chose to stock up on more familiar brand names throughout the pandemic. Meanwhile, CPGs that are not only facing higher expenses but also supply-chain disruptions will continue to see ongoing labor shortages disrupt their operations.  

After conversations with industry experts and analysts, here is a breakdown of the six biggest trends that Food Dive predicts will impact the food and beverage industry in 2022.

Jeff J. Mitchell via Getty Images

1 . Gen Z gets ready to take over

A decade ago, the newest buzzword was “millennial, ” referring to people born between 1981 and 1996. At the time, millennials were entering adulthood, and were about to mold society with their attitudes upon technology and social issues, their relatively high levels of education, and purchasing power.

Now, Gen Zers — people born between 1997 and 2012   — are starting to come into adulthood. Barb Stuckey, president and chief innovation officer at Mattson, said their entirely new perspective on society and the environment is likely to cause big changes in the food business.

“I think the Gen Z consumer really will be driving things from the bottom up, inch Stuckey said.  

She recalled how one person who works with young readers around the globe had described the generation:   “They have a generational stress on them because of what’s happening with the planet. ”

A 2018 study found that Gen Zers have between $29 billion plus $143 billion in buying energy — though much of the money represented in this study came from allowances. And while Gen Z consumers said in a Piper Sandler report last spring that food is their top spending priority , they pay much closer attention to the sustainability, nutritional value and the ethics of the corporations who make what they eat.  

Plant-based meat maker Impossible Foods has been paying close attention to Style Z’s opinions and behavior, and found that younger consumers are more likely to eat plant-based food and eat less meat in order to save the environment. A survey commissioned by the company discovered   that kids 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. After those kids read a statement about the impact animal agriculture has on climate change, 78% said it was important to do something to reduce the use of cows for food.

Stuckey said that just about every new brand today launches using the story of its mission,   sustainability aspects, philanthropy and commitment to making the world a better place on full display. These assets, she said, are likely to only be more important in the near future.

This attention to sustainable and social missions goes deeper than brand new brands, though.   In the food company, the traditional supply chain will be flattening as CPGs plus their suppliers shift from traditional approaches — like trucking produce grown within warm and sunny California all over the United States — to searching for ways to make food more local.   EIT  Food, an Europe-based agrifood  innovation agency, found in the study last year that 74% of Gen Zers said that growing food locally helped with sustainability. Half said that importing food is not sustainable.

In response, some companies are bringing a new spin on old ideas, like AppHarvest, with its massive greenhouse for indoor farming in Kentucky — a location that is less than a day’s drive from more than two-thirds of the U. S. population. Some are using technology to re-engineer precious commodities that have traditionally been shipped from afar into chemically identical items, like Atomo’s bean-free molecular coffee and Voyage Foods’ no-cacao chocolate .

While companies like these are all still scaling up, Stuckey said more traditional manufacturers and retailers will likely be willing to work with them in 2022. The pandemic taught everyone lessons about what happens when long and inflexible supply chains break, she said. It also reinforced consumers’ desire to know where their food comes from, and underlined the environmental footprint that a long supply chain leaves behind.

Though some of these foods made through new technologies might seem odd in order to older, more traditional consumers, Stuckey said Gen Z will help them succeed on the market in both the short and long term.

“You’re going to have people who are really excited, like the Gen Z customer who is really, really, really focused on the environment because they’re growing up having to clean up this mess we’ve made, ” Stuckey said.

kerdkanno via Getty Images

2 . Functional ingredients find new applications

As people pay more attention to their own health and wellness because of the pandemic, CPGs are finding new ways to incorporate classic functional ingredients into more of their products in 2022.

Neil Saunders , managing director with Global Data, said while ingredients such as adaptogens, probiotics and nootropics aren’t necessarily new, the way they’re being incorporated into food and beverages is changing.  

Adaptogens, for example , are moving from a powder form incorporated in to teas and coffees to mainstream products such as sparkling water, energy bars plus chocolate. Other ingredients such as prebiotics, often found in yogurt, are transitioning into drinks and foods that can be consumed during different occasions like an Olipop soda or nutrition bar. And CBD is usually making its way into sparkling water , beer, coffee, cocktails and even jelly beans to help people relax.

Shoppers used to look to food and drink offerings for hydration or sustenance, but increasingly they are turning to them as a way to improve their mood, gain a boost in energy, provide nutritional benefits or improve their gut health. The shift is especially prevalent in younger Gen Z . and millennial consumers.

A 2019 study from Kerry discovered 65% of consumers looked with regard to function in what they consume and drink. The outbreak has only accelerated demand, with Research and Markets estimating that the global functional beverage market alone will be worth $158. 3 billion in 2023.

“It is an area that is growing and is actually capturing a lot of consumer interests, ” Saunders said. “These ingredients are sort of problem-solving in a way, so I think that’s why consumers are very interested in all of them and they’re willing to spend on them. ”

Large CPGs are increasingly taking notice, too.  

Nestlé, Hormel Foods and Danone are incorporating nutritional therapy or medical uses into some of their products. PepsiCo launched a functional water called Driftwell aimed at combating stress plus inducing relaxation, and Soulboost , which   reportedly boosts mental stamina. And Molson Coors’ hard seltzer brand Vizzy is made with a superfruit that contains 30 times more vitamin C per cup than an orange.

Courtesy of Beyond Meat

a few. Plant-based meat takes on brand new forms

Despite some discouraging recent earnings reports from publicly traded companies that make plant-based meat, many experts say that the segment will certainly continue to grow in 2022.  

But the items that drive this year’s growth will be very different from the burgers, grounds and plant-based chicken nuggets that made plant-based a hot trend a handful of years ago, according to Emma Ignaszewski, corporate engagement project manager with the Good Meals Institute.

“We’re starting to see more product launches in the whole cuts area, ” Ignaszewski stated. “There are a couple really interesting companies out there which are making some large strides on texture, in particular, and I think that’s something that we see is really exciting as a component of the consumer’s organoleptic experience. There’s still room regarding innovation. ” 

This is coming through the use of different ingredients, technologies and methods of producing the analogs, Ignaszewski said. While soy, wheat and pea proteins have been some of the biggest staples of plant-based meat, many ingredients are getting a new look. Consumers say they are interested in a variety of tastes, functions and different kinds of plant protein in their meals, Ignaszewski said. And manufacturers are broadening their horizons. Last year’s launch associated with Beyond Chicken Tenders included fava bean protein as a main ingredient. Chickpeas and lupini beans are also getting consideration.

Several plant-based meat companies happen to be rolling out new technology plus perfecting high-moisture extrusion to make more meat-like plant-based items in forms similar to tenders or whole cuts. Kellogg’s MorningStar Farms Incogmeato brand launched all new tenders this past year using a proprietary technology that the company says can more realistically tear along fibers like chicken. JBS-owned Planterra announced that following significant R& D, it has a new whole cut and shredded item launch planned for this year under its new True Bite brand.

Meat analog products produced through fermentation will also change the game in terms of forms and textures. Though they are not plant-based per se, planned launches from companies including Meati and Aqua Cultured Foods use mycelia and fungi to mimic the structure and texture of traditional meat products.  

Other new technologies are helping plant-based foods makers produce more realistic products. Plant-based fats, used by companies like Juicy Marbles, are being incorporated into these newer products to create a more realistic taste and mouthfeel. Plant-based companies are also experimenting with cultured fats, like Silva Sausage’s partnership with Mission Barns to make a plant-based sausage with actual animal fat grown from cells.

Joe Raedle via Getty Images

4. Value returns

After losing ground during the pandemic, plr and value brands are set to make a comeback within 2022, according to Gary Stibel, founder and CEO of New England Consulting Group.

Private label found itself harder hit by supply chain and transportation interruptions as issues cropped up at the end of 2021, according to brand analytics tracking firms. Consumers, many of whom have been working from home due to the pandemic, have also been buying a lot more premium products since they haven’t been spending money on commuting or even meals out.

But as the economy is definitely expected to shift, with more people returning to offices and eating in restaurants, value is back, Stibel said. And with inflation driving food prices up , consumers are looking to save a bit wherever possible.

Private label has transformed in the past decade, going from the cheap no-name alternative at grocery stores to branded and premium items that help influence consumer loyalty . New premium prime label offerings possess hit stores in the past 12 months, including Amazon’s Aplenty brand name, and more than 250 offerings from Kroger’s Simple Truth and Private Selection lines.

“We have got private label clients whose biggest challenge is acquiring new capacity because they’re out of capacity, and they can charge more because they’re delivering high-quality monogrammed foods, ” Stibel said.

On the other side of the coin, however , are usually major manufacturers changing their particular focus in the face of rising prices. Stibel sees inflation like a continuing trend in the economy for the next 18 to 24 months.  

Whilst rising prices are bad for consumers on the lower end from the economy, they are good for business, he said — especially those industries with very tight margins like food. Stibel predicts a lot of companies will use the opportunity to enact price increases they haven’t been able to institute in past years — including during pre-pandemic times, when growth rates were flat or minuscule.

But , he said, these companies will be doing more to provide value to consumers in other ways, including the eventual upsizing of packaging.

In a world where scarcity “becomes a variable, you’re willing to pay more for a larger size, ” Stibel said. “You want to have the cabinets filled. So both in terms associated with sizing, in terms of positioning, you’re going to see more of a return in order to benefit-driven positioning. ”

Courtesy of Gotham Greens

5. Greens embrace the branded approach 

For decades, products such as Dole pineapples, Chiquita bananas and Driscoll’s berries have given a branded facing to fruits and vegetables, while the greens section continues to be filled with nameless, generic perishables.

But progressively, once-nondescript lettuce, basil and other greens are being branded by companies such as Bowery, Gotham Greens and Square Roots as a way to tout their environmentally friendly production practices or to connect the customer with the exact farm where it was grown.  

Elly Truesdell, a partner at Almanac Insights, said upstart produce companies have recognized exactly how effective large CPGs have been in storytelling to build their brands; they’re now using that will tactic to their advantage.

“It’s both a new concept of having branded create to a degree but it’s also just how much is being put into those brands to message plus tell a story about the farming and the practices behind the product, ” Truesdell mentioned.

A study by Foodmix Marketing Communications found 68% of shoppers will pay a lot more for produce that is top quality over private label or unbranded options. Brand becomes more prevalent by generation, with two-thirds of millennials and Gen Zers considering it important that the fresh produce they buy can be branded, compared to less than half of Gen X and baby boomers.

Viraj Puri, co-founder and CEO of indoor gardening company Gotham Greens, said when his firm launched its line of packaged salads and herbs in 2011, it observed there were only a few recognizable produce brands on the shelf, largely relegated to legacy fruits such as bananas, oranges and pomegranates.  

“There was very little brand loyalty that would impact a consumers’ decision to buy produce from one store to the next, ” he said in an email.    

Today, Gotham sells its greens at approximately 3, 000 retail locations across more than 45 states. It touts the freshness of its product, the use of sunlight and renewable electricity to power its farms and the recycling of all of its irrigation water among some of its defining factors.

The branding trend infiltrating greens also has leaped into the seafood case, where companies like Scout Canning and Luke’s Lobster stand behind transparency and durability. Truesdell noted seafood is being impacted by concerns including overfishing, microplastics and ocean wellness that have provided momentum intended for branding.

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6. Labor continues to weigh on provide

After a year where striking workers at Frito-Lay, Mondelēz , Kellogg and other food CPGs were able to win contracts with more time off and improved wages, labor in general may emerge emboldened by these types of successes in 2022. This could lead to new rounds associated with contentious negotiations between businesses and workers, as well as strikes, according to labor expert plus Temple University professor Bryant Simon.

“I just don’t see the pressure to create better conditions abating anytime soon, ” Simon stated.

One tactic that labor advocates used to their advantage in 2021 and will continue to apply in the year ahead is influencing public opinion through social media. Simon cited Kellogg’s decision to return to the negotiating table after receiving widespread criticism of its plan to replace striking workers as one example of just how effective this pressure could be.

Another factor that will encourage workers is the political support from national leaders. President Joe Biden has shown he is willing speak out,   having publicly sided with union employees within the Kellogg strike and calling for legislation to prevent replacement hiring. But a divided Congress that many expect to shift toward more business-friendly Republican control next year   could provide a counter weight here.

That said, the labor market is expected to tighten; economist Michael Feroli of JP Morgan told Yahoo News that he predicts the national unemployment rate in order to fall to a historic low of nearly 3% by the end of 2022. And   the surge of the omicron variant associated with COVID -19 is spelling out uncertainty, Goldman Sachs told the publication.

Meanwhile, almost 200 large union contracts are set to expire before December 2022, covering nearly two hundred, 000 workers in the as well as beverage space, according to Bloomberg Law . This includes   several Frito-Lay factories .

Several Wall Street economists predict that the working conditions that led to the particular strikes this past year   — including 12-hour shifts at food plants to meet rising demand —  can gradually improve .   Going forward, unions will continue to try to change hiring, wage and benefit practices that they see as unjust, according to labor historian and University of Rhode Island professor Erik Loomis. This could include frameworks like Kellogg’s two-tier payment plan   that provide newer employees with fewer advantages than veteran workers,   or restoring pensions that manufacturers like Mondelēz   have swapped out with 401(k) retirement programs.  

“Workers are not in the mood to compromise right now, ” Loomis said.