food and beverages

The demand in the food and beverages industry is mainly driven by the rising inclination towards convenience food. The younger generation are more inclined towards eating out at restaurants, rather than having home-made food. According to Insights and Reports, millennials have more than 2.5% of their meals in restaurants, which is also equivalent to visiting a restaurant once a week. Changing consumption pattern of the consumers have even lead the grocery stores to offer prepared meals or bringing in variations to their existing portfolio. Further, restaurants and fast food chains are also looking to expand their networks by making their take-away menu much more accessible. Moreover, influx of online food ordering apps have made it more convenient. Notable players operating in this industry include PepsiCo. Inc, The Coca Cola Company, McDonalds, General Mills, Mondelez International, Anheuser-Busch InBev, Diageo Plc, Nestle S.A., Kellogg’s Company and Dr. Pepper Snapple Group among others.

Packaged Food

The packaged food industry is witnessing a paradigm shift which can be attributed to the changing consumption pattern of the consumers, majorly towards convenience food products. Asia Pacific and Middle East are expected to push the market for packaged food forward in the coming years on account of healthy living, digital convenience, and sustainability among others. According to Insights and Reports, dairy products and baked food items accounted for the maximum growth during the period from 2013-2017, projecting CAGR of 4.6%, and 3.4% respectively.

Moreover, in the biscuits category, brands hailing from Asia Pacific have gained significant notice in the global biscuits industry. Britannia, one of the leading brand of biscuits in India has overtaken Chips Ahoy!, a famous cookie brand in the U.S. in terms of retail sales, to be the world’s third largest brand in 2017. In addition to this, Parle has overtook Kellogg’s Keebler and PepsiCo’s Gamesa in terms of retail sales. Parle jumped from 12th position in 2010 to become the fifth largest brand in 2017.

 

Processed Food

Processed food has gained rapid acceptance among the consumers over the past decade, majorly driven by the shift in the consumption pattern of the consumers. Although, the developed economies such as U.S., Canada, and Germany among others are in the forefront, the developed economies such as India, China and Japan among others are expected to lead the market in the coming years. The processed food industry in India maintained a healthy growth in 2017 on account of the rising number of young population, with the median age being 26 years. The country has a relatively young population, with most of them refraining from cooking on a daily basis.

Additionally, snacks are increasingly being preferred as meal replacements among consumers. According to Insights and Reports, chocolate was the most preferred snack among the consumers in Europe, followed by cheese, yogurt, cookies and sandwiches. However, the consumption scenario of snacks is different in Latin America, with yogurt accounting for the major chunk of the market, followed by chocolates, cheese, ice creams and sandwiches.

Food & Feed Ingredients

Food ingredients consist of natural and synthetic substances that can be used as food additives, flavorings, colorants, emulsifying agents, regulators, blenders and thickeners among others in the form of minerals and vitamins in food products in order to improve the quality, nutritional value, shelf life, safety, and appearance among others. Food ingredients are imperative for the flavor, nutrition, safety, color and convenience.

The natural food ingredients market has gained significant traction in the food ingredients market over the past decades on account of rising awareness regarding the diseases and illnesses that are caused due to unhealthy diets due to which they are resorting to healthier food items, which in turn is fuelling the market growth for natural food ingredients. This factor has also led the manufacturers operating in the industry to shift their focus towards manufacturing natural ingredients over its synthetic counterparts. Further, functional food ingredients have also witnessed a significant transition and gained a high amount of awareness among the consumers and manufacturers of food and beverage products. Functional food and beverage products go beyond the basic nutrition properties that are offered by mainstream food and beverage products.

Food Supplements

The demand for the food supplement industry is expected to witness a transition in the coming years which is majorly attributed to the rising awareness about preventive healthcare among the consumers. Further, rising geriatric population, and evolving channel sales are some of the key factors that are influencing the demand for food supplements at the global level at present. The sale of vitamins, nutritional supplements, and minerals have surged over the past decade, which is majorly attributed to the emergence of several new manufacturers in this industry. The U.S is a prominent country for food supplements, and has accounted for more than 32% of the market in 2017. The country is also expected to maintain a healthy growth rate of more than 5% till 2025. According to Insights and Reports, the geriatric population the U.S. was estimated at close to 50 million in 2016, thereby accounting for more than 16% of the total population of the country. This, coupled with high spending on healthcare products is a key factor boosting the demand for food supplement products in the country.

Asia Pacific is expected to gain prominence in the food supplements industry in the coming years on account of rising geriatric population and increasing spending on healthcare. According to the Economic and Social Commission for the Asia and the Pacific (UNESCAP), the geriatric population in North and North-East Asia was recorded at 17.2% in 2016, which is expected to escalate to 36.8% by 2050. The Pacific recorded geriatric population of 16.8% in 2016, which is expected to rise to 23.3% by 2050. South-East Asia recorded geriatric population of 9.6% in 2016, which his anticipated to reach 21.1% by the end of 2050. Further, the region is also expected to witness an increased spending on healthcare. The healthcare industry in Asia Pacific was valued at an excess of US$ 500 billion in 2017, which is equivalent to 34% of the global revenue. Further, the region is also anticipated to witness a growth of more than 8% annually, in the coming years.

Food Services

Consumers in the food service industry demand a favorable guest experience, across several channels. Restaurants that invest largely in marketing and operations, and technology, are expected to have an edge over its peers in gaining the power of their employees to be able to serve as brand ambassadors in crucial moments. Players operating in the food service industry are increasingly focusing on refining employee engagement facilities, which in turn results in a positive consumer experience.

The food service industry has shifted to a daily consumption industry and has become an integral part in the daily lives of the consumers. Similar to the shopping occasions, that has migrated online, the food service industry has taken the similar path and has been welcomed with high consumer acceptance. U.S. is one of the key markets for the fast food industry with the revenue expected to cross the 200 billion mark by 2021. Key attributing factors include the large number of drive thrus, on premise restaurants, and cafeterias among others. According to Insights and Reports, there were more than 187,000 franchised quick service restaurants in 2017. Burgers ranked the first in terms consumer preference, followed by sandwiches and Asian delicacies. Consumer spending of fast food items has surged from 2.6% in 2016 to 2.9% in 2017. McDonalds accounted for the highest share, followed Yum! Brands Inc. and Subway.

The trend in the fast food industry in China has noted a shift towards changes in the lifestyle of the consumers, inclination towards the western culture and reduced leisure time among others. This has resulted in a shift in consumer inclination towards quick service restaurants over full service restaurants. The players operating in the field of fast food industry in China have shifted their focus towards low calorie dishes. The market was valued at an excess of US$ 130 billion in 2018, yet the growth rate is anticipated to be slow on account of market saturation.

The fast food restaurant industry in Brazil was hit by economic and political insurgencies during the period of 2015-2016. Lowering disposable incomes of the consumer have resulted in declining sales of the players operating in this industry. Demand for eating out is witnessing a decline, which is compensated by rising demand for takeaways and home deliveries. Online delivery apps in the country has also created a stir in the fast food industry in the country with majority of the population resorting towards home delivery options.

Alcoholic Drinks

Volume consumption of alcoholic drinks have witnessed an uprising over the past few years, especially in the emerging economies, and the same is majorly predominant among the younger population. Volume consumption of alcoholic beverages in China crossed the 55 billion liters mark in 2014 and the same is expected to show and upward trend in the coming years. Rapidly increasing middle class population, coupled with pressurizing workplace culture has given rise to increasing consumption of alcohol. The trend is further driven by ‘drinking with colleagues and clients’, which according to the Chinese population is considered to be a vital factor in career enhancement. In addition, volume consumption of spirits is greater compared to beer and wine in China, compared to other countries. According to World Bank, per capita consumption of alcoholic drinks stood at 7.6 liters in 2015.

Moreover, volume consumption of alcohol in India has also witnessed a surge in recent times, which is primarily attributed to rising younger population, increasing purchasing power of the consumers and various others. High population is another key factor resulting in the significant growth in consumption of alcohol. India ranks the third in alcohol consumption in terms of revenue. Whisky is the most preferred alcoholic drinks among the populace and India is considered to be one of the largest markets for whisky as well. According to Insights and Reports, the country consumed more than 1.7 billion liters of whisky in 2017, making it one of the leading whisky consuming country in the world.

Germany is one of the few countries where drinking alcohol in public places is considered as legal, and such products can be found from supermarkets to movie halls, and the price of beer in the country is almost as the same as water. However, the consumption of alcohol is experiencing a downturn. 2016 witnessed a meager 10% alcohol consumption in consumers aged 12-18. Alcohol consumption among the teenage population has also witnessed a decline. Several consumers are refraining themselves from the consumption of alcohol as the same has resulted in weight increase and growing tiredness. The sale of artisanal and craft products witnessed a rise along with premium products. The rise demand for craft beer in the country has given a rise to several number of microbreweries as well.

Non-Alcoholic Drinks

Consumption of soft drinks has maintained a steady pace and is expected to retain the same trend is expected to witness a downturn in the coming years. Volume consumption of soft drinks and carbonated beverages is expected to slow down in the coming years on account of economic and political insurgencies, especially in the emerging countries. Demand for functional beverage products is expected to push the growth of the market in the future as sugar free beverage items have become a primary concern among the population. Consumer preferences, price point and occasions are few strategies that are adopted by the key players operating in this industry in order to ensure a long term sustenance, and to create a higher value for money as well.

Volume consumption of soft drinks amounted to close to 6.2 billion liters in 2016. Although a huge consumption rate, India still falls largely behind the U.S., Malaysia, Thailand and Philippines. The growth of the soft drinks market is held back by rising health concerns among consumers and changing government policies among others. Aggressive research and development activities is a key growth opportunity of the soft drink industry in India.

High population of China is one of the key factors responsible for the massive consumption of soft drinks in the country. According to Insights and Reports, the country produced more than 15 million tons of soft drinks in 2017. The shift in demand of soft drinks in China is directly related to the household disposable incomes. Further, according to Insights and Reports, Chinese consumers prefer foreign brands instead of local products. Coca Cola is the preferred brand of soft drinks among consumers. However, Wahaha was the preferred local brand of soft drink among consumers, with a penetration rate of more than 15%.

Soft drinks are considered as non-alcoholic drinks and the name varies based on different regions such as soda, carbonated beverages and pop and they usually contain water, sugar or artificial sweeteners and flavoring agents among others. Key players are facing stiff competition against each other. The Coca Cola Company and PepsiCo Inc. have been in a competition against each other for decades. Product masking was a strategy adopted by PepsiCo where the respondents had to blind taste one cup filled with Coca Cola and the other cup filled with Pepsi. This test resulted to be positive as U.S. consumers preferred the taste of Pepsi over Coca Cola.

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