Business FIRST Probes Consumer, Market, and Financial Forces

A new content track, Business FIRST, debuted at the 2021 event, featuring a series of panel discussions and presentations designed to add context to scientific learning and reflect the broad range of consumer, financial, and market forces that affect food product development.

The program also included market insights presentations from Innova, Datassential, and Mintel; a presentation on narrative marketing from digital marketing agency 1o8; a recap of the mission-based genesis of two companies, B.T.R. Bar and Justice of the Pies; and a startup case study from Three Wishes Cereal.

Here are some highlights:

Conflicted Consumers

Expect values-based marketing and two-way dialogue to become essential tools for CPG brands to engage with an increasingly informed, opinionated—and often conflicted—consumer base, according to a duo of marketing and consumer behavior experts.

Ashley Ericksen, vice president at Ipsos Marketing, said consumers care deeply about issues like sustainability and Zero Hunger—but largely expect companies and institutions to deliver solutions.

“Consumers in the U.S. and beyond tend to put more responsibility on businesses and governments than they do on themselves,” Ericksen said. “So, you’re in a situation where people are thinking about the issue, they’re concerned about Zero Hunger, but they may not know how to solve it, and they want someone else to help them solve it if they can.”

Vijay Viswanathan, a professor of integrated marketing at North-western University, described a shift toward what he calls dynamic marketing. “This is where customers are trusting other customers a lot more than the brands themselves,” he said. “In fact, they are not really searching for just products or services, but they’re looking for other customers’ experiences.”

Young consumers use social media to validate their decisions. “Especially with Gen Z, emotional responses play a big role in their decision making,” Viswanathan said.

Ericksen said this new reality will impact everyone in the product development process. “If you’re a food scientist or developer or pack engineer, there’s going to be this public element now to what you’re doing,” she said. “Communication will take on an even greater [role].

“Some people might think that’s the role of marketing, but I think that’s where functions will have to work really closely together in sync, because that education and that communication—we can’t just bring it in later in the development process.”

Agtech Payday

An investment panel told FIRST attendees that capital markets still have a hearty appetite for food and agtech innovators.

“There’s certainly not a lack of money for good challenger brands or emerging brands,” said Jeff Grogg, managing director at JPG Resources. “There are large buckets of money being deployed around agtech and around food technology.”

Sanjeev Krishnan, managing director of S2G Ventures, cited three factors in support of disruptive brands: culture, wherein kids often drive their parents’ consumption and purchase behavior, based on completely different motivations and priorities; digitization, which lowers barriers to entry and democratizes customer acquisition costs; and still-untapped capacity in capital markets.

Darren Streiler, managing director of ADM Ventures, added that the trend toward disruptive brands will also drive investment from traditional CPG companies. “It’s a great opportunity for acquisitions for big food, and that’s opportunity for the startups,” Streiler said. “The fact that these startups are more nimble really could make a difference in some of these big food companies.”

Among growth categories, the panelists affirmed interest in alternative proteins, whether plant-, cell- or fermentation-based. “This is a $1.4 trillion market, Streiler said. “Currently, alternatives are at maybe 1% to 2% of that in penetration.”

Post-COVID Innovation

The COVID-19 pandemic pushed large and small companies across the food system to innovate faster to meet shifting consumer demands and counter supply chain disruptions. A group of trend watchers says to expect that accelerated pace of innovation to continue.

“We were used to humming along at 2% to maybe 3% growth, and we quadrupled that. We were at more than 11% CPG growth in 2020,” said Joan Driggs, vice president of content and thought leadership at IRI Worldwide. “A lot of the trends were the same, but they just accelerated.”

Nicholas Fereday, executive director of food and consumer trends at Rabobank, added that product developers benefitted from work-from-home schedules, which created new eating occasions. “For food companies, these are tremendously exciting times,” he said. “I don’t think that people are going to completely revert back to all the out-of-home occasions that existed pre-pandemic,” Driggs added. “People like the fact that they can cook. They see the financial benefit and the self-satisfaction.”

Ken Harris, co-founder and managing partner at Cadent Consulting Group, gave a particular nod to innovation in frozen foods. “You look at ethnic cuisine, you look at a lot of creative things, comfort foods and things that are really high quality; the move towards premium-type products is breathtaking.”

Looking forward, the panel anticipated continued growth from health and wellness, plant-based, and CBD categories, albeit acknowledging shifting consumer perceptions of health and wellness.

On the horizon, Fereday said he’s closely watching the debate about processed foods. “I’m personally quite interested in this whole NOVA score, the degree of processing of foods and the association between healthy or unhealthy outcomes,” he said. “And trying to understand: Is this going to be something that comes to U.S. markets?”