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New Nutrition Business has published an analysis of what it believes will be the Key Trends for 2016, focusing on the long-term growth trends and the changes that will drive increased sales or increased prices.

Key Trend 1: Beverages redefined – new opportunities lie in the flourishing world of healthy niches 

Sea change in beverages: Soft drink brands like PepsiCo and Coca-Cola have long been the defining brands of the beverage market but they have reached the high water mark and the tide is now going out on their businesses. They are being replaced with a host of brands with a variety of health benefits, from fruit waters to plant waters. A few of these thousands of start-ups will succeed, but 90% will fail, usually because of poor taste performance and/ or inability to secure distribution (because partnership with a big company is still necessary in many countries to get access to distribution)

The future is niche: As we’ve said for every trend, beverage companies will increasingly find themselves managing a portfolio of niche brands, catering for a range of tastes and preferences, some niche, some bigger.

Sugar suspicions: Increasing consumer concerns about sugar, coupled with a turning away from non-calorific sweeteners of all kinds, mean that even diet versions of traditional brands are collapsing.

Fruit beverages in decline: Fruit juice is also suffering from consumer concerns about sugar and despite the surfacing of new premium niches such as HPP, fruit juice is in long-term decline. Leading children’s brands such as Heinz have removed juice and replaced it with flavoured water and a whole generation is growing up without the fruit juice habit – their changed tastes will transform the beverage category in ways negative for carbonated soft drinks and fruit juice and positive for all other lower-sugar types such as plant waters.

Weird now, but watch this space: Anything that industry perceives as too weird or too niche tends to succeed success (as with energy drinks such as Red Bull). The naturally-sweet, naturally low-calorie nature of plant waters means that even juice giants Pom and Innocent are launching coconut waters or coconut water-and-juice-blends.

Key Trend 2: Snackification – from cheese to bugs, there are no limits 

Five insights that will help you to succeed in snacking:

Target the right consumers: Begun by targeting young adults (aged 18-30). In most countries they are the heaviest consumers of snacks.

Be open to the many new product opportunities: Fragmentation of markets and a variety of consumer preferences means opportunities abound. Consumers are very willing to buy new and innovative healthy snacks

Reinvent “old” snacks: Snacking companies are shaking up old categories and markets – such as the reinvention of meat snacks as a premium, tasty and healthy product.

Give consumers permission to indulge: Giving people permission to enjoy an indulgent snack is one of the most effective marketing strategies. This is usually best achieved by: a) using ingredients with a positive “naturally healthy” halo (such as nuts, fruit, good grains b) in addition, using chocolate

Make your snack premium: In healthy snacking premiumisation is normal – the degree of premium that convenient snacks can command is impressive, even in price-sensitive markets.

Key Trend 3: Dairy 2.0 – reborn as a natural whole food and ripe for reinvention 

The future for dairy is positive: There is enormous scope to reposition and reinvent traditional dairy foods. Just don’t expect to have a huge mass-market success – so fragmented is the market becoming that a niche or “big niche” product is far more likely

Rethink on dairy fat opens up possibilities: As new science wipes away health concerns around dairy fat, many consumers – particularly younger people – are turning back to full fat and the better taste it offers. Products that offer good-tasting indulgence are more likely to succeed.

Snackification: Savoury yoghurt, dairy-plus-grains and in particular cheese have potential as any-time-of-day snack foods in single serve formats.

Sugar suspicions could hasten move away from low-fat: The demonisation of sugar means that low-fat yoghurts, which are typically higher in sugar than full-fat yoghurts, will lose their health halo over the next 5 years and consumers will slowly switch to whole milk yoghurts with a lower sugar content.

Key Trend 4: Redefining sweetness 

Sugar is the new fat: Sugar has replaced fat as a key consumer concern – they associate it with obesity and diabetes. Increasingly, sugar may be associated with inflammation.

Tide has turned against sugar: Although in some cases consumers prefer the “honesty” of natural sugar, for the most part the tide has turned against sugar. But this is a challenge that can’t be solved with artificial sweeteners any more – people don’t want those either – and so far there are no realistic natural sugar alternatives.

Losing our sweet tooth? Consumers appear to be turning away from sweetness altogether, as the rise of flavoured waters, plant waters and savoury snacks suggests.

Embrace less-sweet: The decades-long search for non-caloric sweeteners – both natural and artificial – now looks like barking up the wrong tree. Industry investments in sweetener alternatives may never yield a good return. Companies should be looking for ways to market less-sweet products that still taste good. In the case of juice companies, for example, this means launching plant waters or plant waters blended with juice.

Key Trend 5: The fragmentation of the consumers’ mind 

Wider culture of fragmentation: Just as consumers have diverse musical tastes – they no longer feel they have to commit to a certain style – there is also a culture of dipping in and out when it comes to food and drink.

Fragmentation is now a defining force of food and beverage markets: Consumers create their own definition of what is a healthy diet – mixing health and indulgence, or vegan and meat-eating – and experimenting with new tastes at a pace that larger companies struggle to keep up with.

Technology enables choice: Easy access to information has enabled consumers to become their own experts on matters of healthy eating – and pretty pictures on social media of interesting new dishes from other cultures have expanded their horizons and fostered a culture of experimentation. E-commerce means they can easily order and try what catches their eye.

Making their own decisions about health: Having seen “set in stone” dietary advice about dairy fat and eggs overturned, consumers are sceptical about the “expert opinions” of dietitians and nutrition researchers, and that means they allow themselves more freedom to create their own health rules (while at the same time using the internet to decide for themselves what is healthy and what is not, and even to self-diagnose).

Willingness to experiment: From the US to France, consumers are discovering that experimenting – mixing up your diet from a variety of cultures and cuisines – can be fun. This is something the Millennials have learnt from their baby boomer parents, who were the first generation to do this back in the 1970s.

New Nutrition Business is the world’s leading provider of analysis and insight into the global nutrition business. The company has offices in London, the US and New Zealand, and affiliates in Japan, Finland and Korea.