Disruptive Innovation and Functional Foods

Today's consumers seem to be changing many long-standing societal norms and these behavioral changes are opening the door to disruptive innovation. From eating less meat, to refusing vaccines, to trading in the suburban home for an eco-friendly urban flat, to rejecting financial services models and managing one's own portfolio - consumers are starting to "just say no" to traditional behaviors. When they say NO, when they break the mold, balk tradition, swim upstream, consumers are creating entirely new markets for products and services and sometimes entirely new category opportunities.

Fortification and Functional Ingredients

Certainly the food and beverage industry is feeling the effects of these new "disruptive" attitudes and behaviors. Consumers are becoming more focused on what they are putting into their bodies and are taking a longer, more educated look at product labels. They are showing less tolerance for a long list of what they sometimes refer to as unrecognizable ingredients on labels. These trend leaders are making their voices heard by turning to simpler, more "natural" products. NMI research shows that consumers are looking for foods and beverages with a short list of recognizable ingredients and they prefer foods that are "minimally processed".

Not surprisingly, as consumers become more knowledgeable about the health benefits of bioactive ingredients they begin looking for products fortified with them. Still, there are some consumers who seem less interested in products which are fortified or have "added" functional ingredients and are expecting foods be naturally rich in beneficial nutrients. These new consumer demands for simple, transparent, and nutritionally dense foods are driving demand for specific functional foods, sometimes in otherwise saturated or stagnant categories. A good example is Five ice cream by Haagen Dazs. Five simple ingredients listed on the package makes it less objectionable to some health oriented consumers (who may not even eat ice cream) allowing them to justify the indulgence through its natural dairy perception and benefits of the protein.

Ingredient Sourcing

In addition to more simplicity on the list of ingredients, there is also a growing interest among consumers for more information on how and where the products were sourced and manufactured. Savvy consumers are becoming less tolerant with traditional farming and manufacturing practices and want their foods, for instance, free of pesticides, hormones and antibiotics, preservatives and less processing. While a portion of consumers have turned to organic foods to avoid some of these negatives, consumer confusion and mistrust continue to create challenges for the organic industry. Almost half of consumers confide that the benefits of organic foods and beverages are not clear to them and about two-thirds are not sure that products labeled as such are truly organic.

Such consumer concern is going beyond organic and is expanding to issues outside the scope of traditional organic benefits. While consumers indicate that they do expect their stores to carry organically grown foods, consumers also want their stores to carry foods that are locally grown, foods from farms that practice sustainable agriculture, and meat and poultry from free-range and humanely raised animals.

These concerns are also becoming more global in scope. Labels certifying that global workers rights and global environments are being protected are carrying more weight with consumers as they are becoming more aware of how their purchases affect the world around them. NMI research shows that increasingly consumers exhibit higher purchase intent when a food or beverage product carries a fair trade certification, a rainforest alliance certification, or the marine stewardship council logo.

With the downturn in the economy, food safety issues, corporate mistrust, oil spills, and the list goes on, consumers are increasingly realizing that some traditions no longer fit their value set. They have begun to look in new directions for better ways to live their lives. In their quest to take the road less traveled, they are breaking new ground creating new opportunities for industries that possess the insights into this new, demanding consumer.