GlobalData has identified a number of 'innovation trends to watch' that will shape the food and beverage market in 2019, including a growing tendency for government intervention, through various bans and taxes, and an increased focus on transparency.
'Mind the ban'
Speaking to FoodNavigator-LATAM, Tom Vierhile, innovation insights director at GlobalData, said the increased government intervention trend, labeled 'mind the ban' by GlobalData, was particularly relevant for Latin America.
“We think the growing tendency of governments to intervene in FMCG markets and either nudge or force consumers to make more healthful choices is going to be a major concern going forward,” Vierhile said.
“...There is an evolving view that industry self-regulation is not working quickly enough to change consumer behavior with regard to key issues like obesity and plastic pollution. We think that this has opened the door for governments to be more pro-active by implementing more sin-type taxes or by actually banning products, in some cases.”
Whilst government regulation varied quite dramatically across Latin America, with Chile “much more aggressive than other countries in the region” at discouraging excessive sugar consumption, for example, and Brazil much slower and doing so, Vierhile said the regulatory landscape would definitely evolve.
“Food and beverage makers will need to keep close tabs on where this is going, but we would not be surprised to see new regulation aimed at curbing consumption of confectionery and/or snack products,” he said.
Operating in these “increasingly politically-charged environments”, he said, meant companies had to keep on top of new regulations and how these might impact them.
“Companies are going to want to have lots of different irons in the fire, in case new regulations force some course corrections,” he said. Confectionery firms, for example, might want to consider blurring the line between snacks or innovating with iconic, healthy ingredients that could help convey a positive health message to consumers, he said.
Innovation for 'novelty-seeking' consumers
Importantly, Vierhile said Latin American consumers – a relatively young demographic compared to the rest of the world – were open to innovation and tended to be “more novelty-seeking”. They also placed high value on health and wellness when selecting products, as well as how companies or brands aligned with ethical and environmental concerns.
According to GlobalData's 2018 Q3 Global Consumer Survey, 73% of Latin American consumers stated 'how enjoyable or unique a food product is' always or often influenced product choice, versus just 62% of consumers globally, and 67% of Latin Americans considered health and wellness influential in product selection, compared with 62% of global consumers again. In addition, just over half (52%) said product choice was also influenced by how ethical, environmentally-friendly and socially-responsible a company or brand was – this compared to just 43% of consumers globally.
Across Latin America, Vierhile said there had already been a lot of health-focused innovation with a clear trend towards better-for-you products. Grupo Bimbo, for example, had launched Plusvita whole wheat bread, made with hulled barley which was considered beneficial for managing weight, boosting gut health and improving heart health, and PepsiCo Argentina had launched NatuChips Andean Mix, made with sweet potatoes, potatoes and cassava. Other food manufacturers had incorporated ancient grains or regional super fruits like açaí.
As industry moved into 2019, this type of product innovation would continue to be important, Vierhile said, but would also require total transparency – another key trend set to evolve next year.
“We are already seeing more food makers – mainly smaller companies – provide specific details on ingredients, even offering consumers the chance to track the flow of ingredients through the production process. Transparency is going to be an increasingly crucial issue with consumers.”