Echoing comments that flavor and fragrance companies have made about the marketplace over the past several months, a Leatherhead Food Research report said emerging markets in 2013 will continue to gain more interest as Europe still faces challenges.
“Emerging markets will continue to gain more interest as the growth in population, life expectancy, urbanization, economic output and consumer spending will continue to significantly outpace that of developed economies,” Matthew Incles, strategic insights manager for Leatherhead Food Research, said in his report on the Global Food Industry Outlook for 2013.
“By now, we had rather hoped that the economic outlook for Europe would be much more positive than it is. However, recent OECD [Organisation for Economic Co-operation and Development] projections show that the economy will actually contract in Q1 before returning to very modest growth for the remainder of the year," he added.
The situation is made worse by the inability of households to pay down debt and the deterioration in consumer confidence, suggesting that consumer spending will continue to be constrained.
Still, Incles says the outlook for the U.S. is much more promising. The same OECD projections show growth in economic output rising at 2% or more per quarter throughout 2013, a reduction in household debt and rising consumer confidence, suggesting that consumer spending might also rise. As food represents a necessity item, Incles said the effects of the wider economic environment are not as keenly felt as compared to other industry sectors such as construction.
“However, factor in an expected rise in retail food prices (because of a poor northern hemisphere harvest for some key agricultural commodities), and we can expect that consumers will still feel the pinch at the checkout. There will be no let-up in the necessity to demonstrate good value for money in 2013,” Incles added.
Leatherhead predicts that sustainability, governance and regulation, and innovation in health and wellness will be major themes of focus for the coming year.
In regulation, in particular, the greatest emphasis will be directed at creating a legislative framework that works in the interest of consumers and encourages positive dietary changes, particularly in regions of the world where governments prioritize public health issues, such as dealing with rising obesity levels.
“Expect continued scrutiny of the use of salt, fat and sugar, as well as how ‘healthy’ foods are marketed,” Incles said.
For example, Dec. 14, 2012, heralded the enforcement of the much-anticipated European Food Safety Authority (EFSA) article 13.1 health claims. Reviews of the Foods for Particular Nutritional Use (PARNUTs) framework in Europe and nutrition facts labeling in the U.S. can also be expected in 2013.
As a result, Leatherhead predicts there’s plenty of opportunity for innovation in the food industry, which will also examine the needs and wants of the older consumer, particularly in health and wellness. Analysts expect manufacturers will continue to adopt a natural/clean label policy wherever beneficial and there's considerable interest in how the European functional food market performs in the wake of the enforcement of EFSA’s article 13.1 general health claims.
“Free From” products are expected to have continued success in the new year and manufacturers will continue to be interested in finding new technologies to reduce salt, fat and sugar.
Throughout the global economic downturn, sales of fair trade foods have continued to rise and additives and ingredients now have considerable recognition and importance to consumers. Analysts say the presence of certain ingredients can transform the value proposition of the product if the consumer perceives it to deliver tangible benefits, although they say it can equally damage the value proposition if a product contains an ingredient that the consumer doesn’t want to see.
To that end, Leatherhead believes that how consumers perceive certain ingredients will have even greater influence on overall liking of the product than ever before and ingredients will take more of a center stage.