I N GR ED I ENT S

Future Flavor Trends in FoodNew opportunities in sensory innovation

By Carol Raithatha

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Carol Raithatha

Carol Raithatha is the director of Carol Raithatha Limited, a UK based consultancy

specializing in advice, training and project work within the areas of sensory testing,

and consumer and product research. Carols career has focused on food and its

perception; flavor being an important aspect of this. She has worked with a range of

food manufacturers including Associated British Foods and Cadbury Schweppes

among many others. Carol is a Fellow of the Institute of Food Science and Technology,

and a committee member of its Professional Food Sensory Group. She is also a

committee member of the Society of Chemical Industry Consumer and Sensory

Research Group and an Associate Member of the Market Research Society.

Copyright 2008 Business Insights Ltd This Management Report is published by Business Insights Ltd. All rights reserved. Reproduction or redistribution of this Management Report in any form for any purpose is expressly prohibited without the prior consent of Business Insights Ltd. The views expressed in this Management Report are those of the publisher, not of Business Insights. Business Insights Ltd accepts no liability for the accuracy or completeness of the information, advice or comment contained in this Management Report nor for any actions taken in reliance thereon. While information, advice or comment is believed to be correct at the time of publication, no responsibility can be accepted by Business Insights Ltd for its completeness or accuracy.

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Table of Contents

Future Flavor Trends in Food

Executive Summary 10

Drivers and the bigger picture 10 Top flavors by food sector 11 The role of food and flavor manufacturers 12 Key trends in food flavors 13 Conclusions 14

Chapter 1 Introduction 16

What is this report about and what is its scope? 16 Research methodology 16 Flavors in food defined 17 Report structure 17

Chapter 2 Drivers and the bigger picture 20

Summary 20 Introduction 21 Travel and immigration 22 Increasing travel means increased awareness of global flavors 22 Ethnic food continues to gain popularity 23 Nostalgia and slow food 25 The role of established brands 25 Memories on the plate 27 The slow life 27 Ethics and carbon awareness 28 Ethical issues are affecting food and drink purchasing 28 Environmental concerns are becoming an issue in food choice 30 Ethical and green flavors for the future 30

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Cooking, entertaining and eating out 31 The business of cooking and entertaining 31 Eating out continues to increase 32 Consumers as connoisseurs and experts 33 Snacking and single item meals 35 More snacking is predicted in the US and Europe 35 Complex mixtures and ethnic influences 35 Natural provides opportunities 37 Multi-sensory experiences 38 A virtual world 38 Sensory touchpoints and signatures 38 Innovation in the kitchen 39 Health and wellbeing 41 Eating healthier 41 Flavors in reduced foods 42 Flavor and functional food and ingredients 43 The effect of the older generation 45 Demographic shifts 45 Foods designed specifically for the elderly 46 The industry view 48

Chapter 3 Top flavors by food sector 50

Summary 50 Introduction 51 Bakery and cereals 51 Top and fast growth flavors 51 Chocolate trends 54 Grain and seed trends 59 Wafers 62 The industry view 63 Confectionery 64 Top and fast growth flavors 65 The rise of dark chocolate 67 Exotic and antioxidant fruits 73 Fruity mint in chewing gum 75 The industry view 76 Dairy 78 Top and fast growth flavors 78 Strawberry 80 Other berries/darker fruits 80 Exotic fruits 82 Cheese 83 The industry view 83 Snacks 85

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Top and fast growth flavors 85 Chocolate and dark chocolate snack bars 87 Nut trends in snacks 89 Exotic fruits 90 Chip flavors 92 The industry view 93 Cross-sector assessment 94

Chapter 4 The role of food and flavor manufacturers 98

Summary 98 Introduction 99 Company type 99 Influential food manufacturers 101 Danone 103 Nestl 105 Kraft 107 Flavor manufacturers 110 Global presence 112 Technologies to develop, extract and deliver flavor 115

Biotechnology to produce flavors 115 Flavor creation 117 Flavor delivery in food 119

Novel flavors and ingredients 120 Taste modulators 120 Sensates and physical effects 122

Insight, added value and innovative services 124 Market and consumer insight 125 Sensory and psychophysical testing 127 Culinary expertise and the restaurant experience 129 Training 131

Chapter 5 Key trends in food flavors 134

Summary 134 Introduction 135 Health 136 Natural 137 High antioxidant flavors 144 Superfruits 149 Flavors in reduced foods 154 Alternative types of sweetness 160

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Indulgence and experimentation 165 Ethnic and international 166 Provenance and varietal 171 Fusion flavors, pairings and novel sensory 174 Homemade and traditional 183 Other emerging trends 185 Flavors for the elderly 185 Ethical flavors 186

Chapter 6 Conclusions 188

Summary 188 Introduction 189 Key opportunities 189 Natural and functional 190

Bolder natural and reduced foods 190 Vegetables for sweetness and functionality 190

New antioxidant flavors 191 Dark chocolate 191 Newer superfruits 192

Ethnic and international 192 Dominance of the Mediterranean and Asia 192 Ethnic combinations 193

Flavor experiences 193 Herbs, spices and heat blends 194 Stimulating flavors 194

Index 195 References 197

List of Figures Figure 2.1: Consumer psychology and behavior drivers 21 Figure 2.2: Purchasing of ethical or socially responsible grocery items 29 Figure 2.3: The propensity of European and US shoppers who have taken active steps to eat

healthier in the last 12 months, 2006 41 Figure 2.4: The influence of drivers on demand for new flavors 48 Figure 3.5: Launches of traditional bakery products with dark chocolate variants 55 Figure 3.6: Healthy, organic and ethical bakery product launches with dark chocolate 56 Figure 3.7: Examples of indication of cocoa content in chocolate covering on biscuits 57 Figure 3.8: Examples of chocolate cookies launched in December 2007 57 Figure 3.9: Interesting chocolate blends in bakery products 58 Figure 3.10: Examples of recently launched oat cereals 60 Figure 3.11: Examples of bakery product launches with new grain flavors 61 Figure 3.12: Examples of premium type wafer products 63

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Figure 3.13: Dark chocolate versions of core products 68 Figure 3.14: Premium and indulgent dark chocolate examples 70 Figure 3.15: Innovative dark chocolate marketed as healthy 72 Figure 3.16: Mango candies promoted by functional ingredients 74 Figure 3.17: Non-chocolate candies with new fruit flavors 75 Figure 3.18: Mint and fruit blends in chewing gum 76 Figure 3.19: Examples of recent blueberry, raspberry, blackcurrant and pomegranate dairy sector

launches 82 Figure 3.20: An example product with a blend of mango and coconut flavors 83 Figure 3.21: Premium and upscale coffee ice cream products 85 Figure 3.22: Chocolate snack bars 89 Figure 3.23: Nut snack products 90 Figure 3.24: Exotic fruit snacks 91 Figure 3.25: Interesting flavor blends in chips 93 Figure 4.26: The influence of manufacturers on flavor innovation currently and in the next 5 years

100 Figure 4.27: Multinational food manufacturer modes of flavor innovation 102 Figure 4.28: Flavor innovation within flavor and ingredient manufacturers 110 Figure 5.29: Key food flavor trends 135 Figure 5.30: Importance of health trends over the next 5 years 137 Figure 5.31: Garlic flavored and ethnic products that claim to be natural 141 Figure 5.32: Natural products with roasted or spicy flavors 143 Figure 5.33: A novel sweetener claiming to be high in antioxidants 146 Figure 5.34: Ratings for growth in usage of antioxidant flavors over the next 5 years 148 Figure 5.35: New vegetable and/or hot/spicy product claiming to be high in antioxidants 149 Figure 5.36: New goji (berry) flavored products 152 Figure 5.37: New products with spice flavor with claiming to be low or no salt 158 Figure 5.38: Examples of recently launched reduced foods promoting the flavor of core

constituents or added herbs or lemon 159 Figure 5.39: Naturally sweet products with chocolate flavor 163 Figure 5.40: Naturally sweet products with vegetable flavors 164 Figure 5.41: Importance ratings for food indulgence trends over the next 5 years 166 Figure 5.42: Indian flavored new product launches 169 Figure 5.43: New products with Vietnamese and Malaysian flavors 170 Figure 5.44: Varietal potato chips 172 Figure 5.45: Lindt Madagascar Noir Chocolate 173 Figure 5.46: Fusion sauces 175 Figure 5.47: Chili and chocolate pairings 177 Figure 5.48: Chewing gums promoted on sensations 178 Figure 5.49: New products promoted on sensations 179 Figure 5.50: Novel sensory products from Japan 181 Figure 5.51: Products providing interactive experiences 182 Figure 5.52: Ratings for growth in usage of retro flavors in food over the next 5 years 184 Figure 6.53: Key emerging opportunities in food flavors 189

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List of Tables Table 2.1: The number of visitors to regions and continents, (m), 2005-2006 23 Table 2.2: Ethnic food retail market, by cuisine, ($m), Europe and US, 1999-2009 24 Table 2.3: Consumer awareness of ethical issues and the influence on purchasing decisions 28 Table 2.4: Out-of-home food and drinks market value, ($m), Europe and US, 2005-2010 32 Table 2.5: Number of snack and light meal occasions, per person per year, Europe and US, 2005-

2010 35 Table 2.6: Functional food and drink market value, ($m), Europe and US, 2001-2011 44 Table 2.7: Consumers aged 55 and over, by region, (m), 2002-2012 45 Table 3.8: Top 20 flavors in new bakery introductions, % of all products launched, 2004-2007 52 Table 3.9: Top 20 flavors in new confectionery product introductions, % of all products

launched, 2004-2007 65 Table 3.10: Top 20 flavors in new dairy product introductions, % of all products launched, 2004-

2007 78 Table 3.11: Top 20 flavors in new snack product introductions, % of all products launched, 2004-

2007 86 Table 3.12: Top 5 flavors in terms of new product launches in 2007, in terms of all products

launched per sector 94 Table 3.13: Top 5 fastest growing flavors in terms of new product launches as percentage of all

products launched per category, per year, 2004-2007 95 Table 3.14: Top 5 emerging flavors in each sector 95 Table 4.15: Top 10 manufacturers that drive innovation through new food flavors 101 Table 4.16: Example flavor innovation activities of major suppliers 111 Table 5.17: Top 20 flavors in new product introductions claiming to be natural, % of products

launched, 2004-2007 139 Table 5.18: Top 20 flavors in new product introductions claiming to be high in antioxidants, %

of products launched, 2004-2007 145 Table 5.19: Top 20 flavors in new fruit flavored product introductions, % of products launched,

2004-2007 153 Table 5.20: Top 20 flavors in new low or no salt product introductions, % of products

launched, 2004-2007 156 Table 5.21: Top 20 flavors of new product introductions claiming to be naturally sweet, % of

products launched, 2004-2007 161 Table 5.22: Classification by region referred to in new product launches, 2004-2007 166 Table 5.23: Classification by country referred to in new product launches, 2004-2007 167 Table 5.24: Top 20 flavors in new product launches claiming to be homemade or traditional, %

of products launched, 2004-2007 183 Table 5.25: Top 10 flavors in new product introductions targeted towards the elderly, % of

products launched, 2004-2007 186

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Executive Summary

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Executive Summary

Drivers and the bigger picture

The number of visitors to Europe, Asia-Pacific, the Americas and Africa increased

between 2005 and 2006. The regions showing the highest percentage increase were

South Asia, Sub-Saharan Africa, and South East Asia.

The predicted compound annual growth rate (CAGR) between 2004 and 2009 for

the ethnic foods market is 3.5% in the US and 12.2% in Europe. Other Asian food

(not Indian or Chinese) has a predicted CAGR of 20.1% in Europe.

66.3% of consumers are sometimes or always influenced by provenance and

traceability when purchasing food and drinks. This figure is 69.2% for unfair

international trading practices and rules (particularly at the expense of producers in

developing countries).

In 2006, over 30% of consumers in Spain, Italy, and the UK said they had bought

more ethical or socially responsible grocery items in the last year.

The predicted CAGR 2005 to 2010 in the out of home food and drinks market in

Europe is 2.1% for meals and 1.3% for snacks.

At least 63% of European and US shoppers said they had taken active steps to eat

more healthily in the past 12 months. 75% of food industry executives surveyed for

this report rated health as a big influence on demand for new flavors.

Functional food and drink market value between 2006 and 2011 is expected to

grow by a CAGR of 5.0% in the US and 4.9% in Europe.

The number of consumers aged 55 and over is predicted to grow at annual rates of

2.7% in the US, 1.5% in Europe, and 3.6% in Asia-Pacific between 2007 and 2012.

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Top flavors by food sector

The top five most common flavors in the bakery and cereal products sector in 2007

in terms of new product launches were chocolate (9.4%), wheat (2.6%), vanilla

(2.6%), strawberry (2.5%) and oat (2.2%). Wafer was the fastest growing flavor in

the sector between 2004 and 2007.

When food industry executives were asked for two emerging flavors in the bakery

and cereals sector, the top five flavors were; vanilla, cranberry, cinnamon, nuts, and

almond.

The top five flavors in the confectionery sector in 2007 in terms new product

launches were chocolate (8.4%), milk chocolate (6.8%), dark chocolate (4.4%),

strawberry (4.2%) and mint (2.9%). Dark chocolate was the fastest growing flavor.

The emerging flavors in the confectionery sector most mentioned by food industry

executives were; dark chocolate, green tea, pomegranate, cranberry and caramel.

The top five flavors in the dairy sector in 2007 in terms new product launches were

strawberry (7.3%), chocolate (5.3%), vanilla (5.1%), yogurt (4.4%) and milk

(3.2%). Strawberry was the fastest growing flavor.

The emerging flavors in the dairy sector most mentioned by food industry

executives were; vanilla, mango, fruit, coffee, and pomegranate.

The top five flavors in the snacks sector in 2007 in terms of new product launches

were chocolate (2.9%), potato (2.8%), cheese (2.4%), almond (2.3%) and peanut

(2.2%). Cashew was the fastest growing flavor.

The emerging flavors in the snacks sector most mentioned by food industry

executives were; spice, barbeque, cranberry, Indian, and nuts.

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The role of food and flavor manufacturers

According to respondents of the industry survey carried out for this report, in terms

of flavor innovation multinational food manufacturers are the most influential,

followed very closely by flavor manufacturers, then small/local food

manufacturers, and retailers last. The situation is expected to be very similar in five

years time.

According to industry executives, the top three companies driving innovation in

food flavors are: Danone, Nestl and Kraft.

The top players in the flavor manufacturing and supply market now all have a

global presence in terms of sales, production, and flavor creation and applications.

There is a strong focus on the Asian region and the market opportunities there. For

example flavor manufacturer Symrise, opened a Sensory & Consumer Science

Center in Singapore in 2007.

There is a movement to capitalize on opportunities in taste modulation. Senomyx is

a US based company, using proprietary taste receptor-based assays and screening

technologies to discover and develop novel flavors, flavor enhancers and taste

modulators for the food, beverage and ingredients industries. Senomyx has entered

into product discovery and development collaborations with: Ajinomoto, Cadbury

Schweppes, Campbell Soup Company, The Coca-Cola Company, Nestl and

Firmenich.

Givaudan has been investigating the partial replacement of salt with an enhancer

and the masking of off-tastes such as bitterness.

Flavor companies are focusing efforts on sensates and ingredients with physical

effects. An example is International Flavors and Fragrances high-intensity cooling

technology which the company says imparts a clean, refreshing, energizing taste

and feel.

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Key trends in food flavors

81.4% of industry executives rated flavors from natural ingredients as the most

important trend within healthy food and drink over the next five years.

Garlic was the most common flavor in new products launched in 2007 claiming to

be natural. It was in 2.0% of all products launched in the trend.

Dark chocolate was the most common flavor in new products launched in 2007

claiming to be high in antioxidants; in 3.5% of all products launched in the trend.

The five fastest growing flavors in high antioxidant foods, in terms of increase in

product launches between 2004 and 2007, included the superfruits pomegranate,

raspberry, goji, and cranberry; as well as dark chocolate.

71.2% of industry executives rated ethnic flavors as the most important trend

within the indulgent food and drinks over the next five years.

The Mediterranean and Asia are the most popular regions in international and

ethnic foods. Together, flavors from these regions were in approximately 2/3 of

ethnic product launches in 2007.

Italy is by far the most represented country in ethnic food and drinks, with 26.6% of

ethnic products launched in 2007 claiming to contain flavors from the country.

Chocolate and garlic were the most common flavors in new products launched in

2007 claiming to be homemade or traditional, in 2.3% and 2.2% respectively, of all

products launched in the trend.

According to industry executives, retro flavors vanilla and barbeque are expected to

experience the most growth in usage over the next five years.

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Conclusions

The most opportunity for growth in food flavors are within applications that

provide both health and indulgent characteristics and benefits.

Natural flavors are a growing area with significant opportunity. More natural

flavors are being offered by flavor manufacturers and almost any food can be

formulated or reformulated with natural ingredients. Natural is being linked more

closely to functionality, and both trends are crossing over into the mainstream.

There is an opportunity to spice up natural and reduced foods, as well as to bring

out flavors of the core ingredients in reduced foods.

There are growing opportunities to use vegetable flavors in innovative ways in

healthy foods.

Dark chocolate has grown in popularity over the past few years and is becoming a

major flavor in the bakery, confectionery and snacks sectors. Dark chocolate is

increasingly promoted based on its antioxidant properties.

There are many exotic superfruits that have not yet been discovered, offering

lots of opportunities for food manufacturers.

Provenance and ethnic trends are merging; for some products, the labeling of

international origin is detailing specific regions within countries. There are many

opportunities for Mediterranean and Asian foods in a range of applications and to

be targeted at consumers all over the world.

There is a growing expectation for flavors to be bold, distinctive, and stimulating.

Many consumers are more willing to experiment, and there are growing

opportunities for flavors to create experiences. Herbs, spices, sensates, textures,

fusions, and interactivity can deliver these.

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CHAPTER 1

Introduction

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Chapter 1 Introduction

What is this report about and what is its scope?

Flavor is an integral part of food and what it offers consumers. This report summarizes

top flavors for selected food categories as reported by Productscan. It is a

comprehensive review of new and emerging food flavors. The report has a global

focus, although it examines regional issues where relevant.

In addition, this report presents and evaluates consumer drivers affecting food flavor

trends, the role of flavor and food manufacturers in flavor innovation, and key flavor

trends. Sources include company reports and websites, newspaper articles and general

information sources, scientific literature, press releases, trade evaluation and

commentary, various statistical sources, results of Business Insights consumer

surveys, and primary research results of a survey conducted for this report in March

2008.

Research methodology

Productscan is used in this report for a quantitative evaluation of flavors in product

launches globally. Productscan Online is the worlds longest established and largest

database of new product launches in fast moving consumer goods. It contains detailed

reports on all key new products launched, including full product details plus an

innovation rating that determines whether and how a product breaks new ground. The

Productscan Online database is updated using a variety of sources, including store

checks, trade fairs, notification from manufacturers, and press releases.

Important drivers and trends with respect to flood flavors have been identified and

explained using statistical information from a range of relevant Business Insights

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primary surveys; other statistical sources; company reports, information and press

releases; trade and general press; and findings from several scientific studies.

An additional source of information is a primary research survey conducted for this

report. Executives from global consumer goods manufacturers and suppliers, and a

range of roles within these organizations, took part in the survey. The participating

respondents were located across the globe.

Flavors in food defined

The common understanding of flavor in food relates to taste, odor, and/or a

combination of the two. Flavor is imparted from a range of sources, including; major

constituents, added ingredients, flavorings, reactions occurring during cooking and

processing, etc. The definition mainly used in this report refers to flavors as per the

description of a product on its packaging or label.

Report structure

The chapters of this report are structured as follows:

1. Introduction: Report overview and methodology.

2. Drivers and the bigger picture: Review of key issues affecting food flavor

trends with a focus on consumer psychology and behavior.

3. Top flavors by food sector: Review of top current flavors and fastest

growing flavors in terms of product launches.

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4. The role of food and flavor manufacturers: The impact of food and flavor

manufacturers on development of innovative flavors.

5. Key trends in food flavors: Review of the key trends in food flavors.

6. Conclusions: Analysis of the major opportunities in food flavors; and the

flavors, trends and drivers linked to them.

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CHAPTER 2

Drivers and the bigger picture

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Chapter 2 Drivers and the bigger picture

Summary

The number of visitors to Europe, Asia-Pacific, the Americas and Africa increased between 2005 and 2006. The regions showing the highest percentage increase were South Asia, Sub-Saharan Africa, and South East Asia.

The predicted compound annual growth rate (CAGR) between 2004 and 2009 for the ethnic foods market is 3.5% in the US and 12.2% in Europe. Other Asian food (not Indian or Chinese) has a predicted CAGR of 20.1% in Europe.

66.3% of consumers are sometimes or always influenced by provenance and traceability when purchasing food and drinks. This figure is 69.2% for unfair international trading practices and rules (particularly at the expense of producers in developing countries).

In 2006, over 30% of consumers in Spain, Italy, and the UK said they had bought more ethical or socially responsible grocery items in the last year.

The predicted CAGR 2005 to 2010 in the out of home food and drinks market in Europe is 2.1% for meals and 1.3% for snacks.

At least 63% of European and US shoppers said they had taken active steps to eat more healthily in the past 12 months. 75% of food industry executives surveyed for this report rated health as a big influence on demand for new flavors.

Functional food and drink market value between 2006 and 2011 is expected to grow by a CAGR of 5.0% in the US and 4.9% in Europe.

The number of consumers aged 55 and over is predicted to grow at annual rates of 2.7% in the US, 1.5% in Europe, and 3.6% in Asia-Pacific between 2007 and 2012.

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Introduction

This chapter presents and discusses current (and future) drivers affecting flavors in

food. The focus is on consumer psychology and behavior. There are many complex and

interacting drivers in this area. The drivers are often linked to specific consumer

segments and context dependent behavior within segments.

Figure 2.1 summarizes the drivers which are explored in more detail in this chapter.

Figure 2.1: Consumer psychology and behavior drivers

Travel and immigration

Nostalgia and slow food

Ethics and carbon awareness

Cooking, entertaining and eating out

Snacking and single item meals

Multi-sensory experiences

Health and wellbeing

Effect of older generation

Driving demand for new food

flavors

Travel and immigration

Nostalgia and slow food

Ethics and carbon awareness

Cooking, entertaining and eating out

Snacking and single item meals

Multi-sensory experiences

Health and wellbeing

Effect of older generation

Driving demand for new food

flavors

Source: Author analysis Business Insights Ltd

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Travel and immigration

The impact of travel and immigration has led to a general increase in range and

complexity of foods available (and expected) in most developed regions.

Increasing travel means increased awareness of global flavors

The number of people traveling to all continents has increased in recent years, as

shown in Table 2.1. Increased travel means increased awareness and knowledge about

diverse cultures, food and flavors. Individuals often look to recreate the exotic,

interesting or indulgent experiences they have when on holiday and/or when traveling

for business. Purchasing power has increased for middle class segments of the

population in many developed countries, and the middle class itself is growing in

developing countries such as China and India. With the costs of air travel also having

decreased, travel for pleasure has become a possibility for many more consumers

globally.

Table 2.1 shows the continents with the greatest increase (2005 to 2006) in percentage

of visitors were Asia-Pacific and Africa. The regions showing the highest percentage

increase in visitors were South Asia, Sub-Saharan Africa, and South East Asia. An

increased awareness and familiarity with these regions is likely to result in the

introduction of new types of products linked to these regions, and an increase in use of

Asian and African spices and ingredients in new product launches around the world.

Food manufacturers have the opportunity to take advantage of consumers familiarity

with a whole new range of foods.

In December 2007, The Pittsburg Post-Gazette1 reported one of the 10 developing

trends for 2008 is a spotlight on all the foods of Asia. It sites the influence of the

Beijing Olympics in 2008; and predicts the food of China, Indonesia, Malaysia,

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Singapore, India, and particularly Korea, as being of interest to American shoppers and

consumers.

Table 2.1: The number of visitors to regions and continents, (m), 2005-2006 Millions of visitors 2005 2006 % Change 05-06 Europe 441 458 3.9% Northern Europe 52.9 56.3 6.6% Western Europe 142.6 148.7 4.3% Central/ Eastern Europe 87.1 88 1.0% South Mediterranean 158.4 165 4.2% Asia-Pacific 155.4 167.1 7.6% North East Asia 87.6 94 7.4% South East Asia 49.3 53.8 9.0% Oceania 10.5 10.5 0.3% South Asia 8 8.8 10.1% Americas 133.5 136.3 2.1% North America 89.9 90.3 0.5% Caribbean 18.9 19.5 3.2% Central America 6.5 6.9 6.1% South America 18.3 19.6 7.2% Africa 37.3 40.3 8.1% North Africa 13.9 14.7 5.8% Sub-Saharan Africa 23.4 25.6 9.4% Middle East 39.2 40.8 3.9%

Source: World Tourism Organization (UNWTO) 2007 Business Insights Ltd

Ethnic food continues to gain popularity

The inflow of foreign populations into many OECD (Organization for Economic Co-

operation and Development) member countries is increasing. For example, according

to OECD statistical data, the yearly inflow of Chinese to Canada more than doubled

between 1996 and 2005, while the yearly inflow of Algerians and Moroccans to France

more than tripled in the same period. One traditional route to employment for

immigrants is through foodservice (restaurants, etc.), and immigration means there is a

consistent entry of new types of food into certain regions. Flavor knowledge and

preferences from one region spread to new locations.

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Table 2.2 shows continued growth in the value of the ethnic food retail market in both

the US and Europe. The expected growth (CAGR 04-09) in foods from the Asian

continent into Europe is large. Other Asian cuisine is expected to show the highest rate

of growth in Europe, but the growth rates for Chinese, Indian, and Mexican foods are

also high and offer growth opportunities for manufacturers. Kosher foods are expected

to show the highest rates of growth in the US. In both regions, the growth of Other

ethnic foods is also significant. This growth means successful food manufacturers will

either need an increased knowledge of flavors and ingredients from a range of regions

around the world, as well as expertise as to how to apply these in new products that

appeal to consumers; or will need to purchase or co-operate with already established

local companies. It will also be important to keep watch on emerging trends to spot

which new (Other) ethnic foods become popular.

Table 2.2: Ethnic food retail market, by cuisine, ($m), Europe and US, 1999-2009

Cuisine 1999 2004 2009 CAGR 99-04 CAGR 04-09 US Mexican 14,774 17,612 20,700 3.6% 3.3% Chinese 4,043 4,517 4,783 2.2% 1.1% Other Asian 7,200 8,258 9,148 2.8% 2.1% Kosher 4,019 7,458 9,973 13.2% 6.0% Other 2,913 4,032 5,138 6.7% 5.0% Overall 32,949 41,913 49,703 4.9% 3.5% Europe Chinese 999 1,934 3,459 14.1% 12.3% Mexican 583 1,008 1,587 11.6% 9.5% Indian 715 1,400 2,296 14.4% 10.4% Other Asian 142 385 961 22.0% 20.1% Other 87 196 442 17.7% 17.7% Overall 2,526 4,923 8,746 14.3% 12.2%

Source: Business Insights Business Insights Ltd

A typical example of the broad acceptance and growth potential for international food

introduced to a host country through immigration is Panda Express, a Chinese

restaurant chain, which is fast approaching 1,000 restaurants throughout the United

States, Puerto Rico and Japan. The Panda Express background involves the owning

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family bringing recipes from the Yangzhou region in China to America. This

demonstrates that business plans based on consumer preference for authentic ethnic

food are viable, and innovative food manufacturers can learn from this concept. Many

ethnic foods in the US are now considered to be as mainstream as the traditional

hamburger and fries.

The established and increasing popularity of ethnic foods in restaurants means that

consumers are likely to seek out ethnic and international flavors in the foods they buy

in general, and that the associated flavors will eventually become part of their normal

repertoire. Understanding which ethnic foods and flavors are popular with which

demographic segments of consumers, is important for food manufacturers to be able to

provide the type foods that are preferred.

Nostalgia and slow food

Simple, local and traditional food is an antidote for an increasingly complex and

threatening world. Flavor perception, emotion, and memory are intricately linked. This

in part explains the trend towards foods and associated flavors that are linked to earlier

or less complicated times. Although this trend appears to be a contradiction with other

trends driving food flavors discussed in this chapter (i.e. international and ethnic

appeal, novelty and experimentation) all these drivers can be important for different

demographics of consumers in different contexts, and therefore provide opportunity for

food manufacturers.

The role of established brands

There are many retail food brands that have been household names for more than 100

years. Chocolate and cocoa products were first produced under the Cadburys brand in

England in 1831. Kraft started with a wholesale cheese business in Chicago, Illinois in

1903. The company now is relevant for more than a billion people in more than 150

countries, and Kraft brands include an extensive list, including household names such

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as Ritz, Philadelphia, Prince, and Nabisco. Many flavor preferences are established in

childhood, and food manufacturers should be aware of the impact of familiar flavors on

food choice. For example, perception of generic chocolate flavor in the US may be

highly linked to Hersheys Milk Chocolate for many consumers, whereas in the UK it

may be linked to Cadburys Dairy Milk, as these are the products the consumers in

each case ate during childhood.

The value of classic brands is linked partly to the place products hold in the consumers

memory. Some packaged food manufacturers invest heavily in mature products and

brands, marketing the nostalgia around them. Some examples of products promoted

based on nostalgic or childhood associations include;

Findus crispy pancakes in the UK, are described by the company as folded pockets

of flavor and marketed around childhood memories of family meals and quick and

convenient snacks during university days;

Werthers Original classic Cream Candy made from a traditional recipe with real

butter and fresh cream by the German confectioner Storck, is marketed by the

company as a product that many people describe the flavor of, as just like in the

old days.

The above examples show that flavor and its link with memory are often specifically

referred to in marketing communications.

The fact that certain products can be marketed, at least in part, using nostalgia, means

that food manufacturers need to be aware of retro trends and flavors. There may be

opportunities for using these nostalgic flavors in rejuvenated food applications or in

new combinations. Classic brands can be reformulated to be healthier (see further

discussions below) and appeal to a middle aged group that wants the flavors they

remember, with the assurance that what they are eating is good for them.

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Memories on the plate

Nostalgia and tradition also has a role to play in trends in eating out and what

consumers cook and prepare at home and when entertaining. One of the Benchmark

Hospitalitys Five Tasty Trends for 2007 was Heres to the Memories: the trend for

many great chefs to use techniques and recipes (hearth and home memories) from

their childhood for menu items in top American restaurants.

The Retro Food Recipes website has hyperlinks to UK food retailers, and gives a list of

top 30 recipes which include; Beef Bourguignon, Duck a La Orange, Prawn Cocktail,

Coleslaw, Strawberry Cheesecake, French Onion Soup, Chicken Kiev, and Ratatouille.

Elements of these nostalgic trends will probably cascade down from restaurants to

manufactured food products. Traditional cooking techniques, recipes, and flavors are

likely to influence new product development in the packaged food market.

The slow life

Consumers are voicing their opinions and making lifestyle decisions through

movements like Slow Food. Slow Food is a non-profit, eco-gastronomic member-

supported organization that was founded in 1989 to counteract fast food and fast life,

the disappearance of local food traditions and peoples dwindling interest in the food

they eat, where it comes from, how it tastes and how our food choices affect the rest of

the world. Slow Food is an international organization and has 80,000 members. The

Slow Food manifesto encourages the rediscovery of flavors and savors of regional

cooking.

Trends like Slow Food mean that awareness of where food comes from, and its links to

regional traditions and flavors, is likely to become more important for consumers when

making food choices. This implies that, for the segment of consumers who identify

with movements like Slow Food, there is an opportunity to target food products with

regional flavors and ingredients that have a link to the local community and its history.

Provenance and authenticity of flavors are trends that are linked to this driver.

28

Ethics and carbon awareness

The ethical and environmental aspects of food are becoming important issues for

consumers, and are beginning to compete with more traditional choice factors such as

price, taste and convenience. Ingredient sourcing, manufacturing and marketing of

consumer goods are now affected by this increased consumer awareness. This may

affect food flavors as well.

Ethical issues are affecting food and drink purchasing

Table 2.3 shows the influence of ethical issues on consumers food and drink

purchases. The most influential issues are; problems associated with waste disposal,

particularly packaging; use of pesticides, fertilizers, or other potentially harmful

agrochemicals; unfair international trading practices and rules (particularly at the

expense of producers in developing countries); and provenance and traceability.

Table 2.3: Consumer awareness of ethical issues and the influence on purchasing decisions

With regards to food and drinks, how aware are you of the following issues and how much do they influence your purchasing behavior? % always or sometimes influenced by this issue Animal husbandry (for meat and products containing ingredients of animal origin) 64.4% Provenance and traceability 66.3% Use of Genetically Modified Organisms (GMOs) 64.4% Use of pesticides fertilizers other potentially harmful agrochemicals 71.0% Food miles (the distance that a products ingredients have traveled) 30.9% Patenting of plant or animal genomes 26.0% Overfishing 53.7% Deforestation/soil erosion 47.7% Problems associated with waste disposal particularly packaging 73.9% Pauperization of small farmers 56.1% Unfair international trading practices and rules (particularly at the expense of producers 69.2% in developing countries) The loss of agricultural animal and plant varieties 50.5% The homogenization of foods and food cultures through globalization 50.9%

Source: Business Insights Consumer Survey Business Insights Ltd

29

Some consumers in the US and most countries in Europe (except for Germany) say

they are buying more ethical or socially responsible grocery items. In Spain, Italy and

the UK over 30% of consumers surveyed, said they were purchasing more ethical or

socially responsible grocery items (see Figure 2.2).

Figure 2.2: Purchasing of ethical or socially responsible grocery items

Answers to the question: Over the last year I have bought ethical or socially-responsible grocery items

0%

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FranceGermanyItalyNetherlandsSpainSwedenUKEuropeUS

Source: Business Insights Consumer Survey, US and Europe, 2006 Business Insights Ltd

These findings highlight the fact that provenance, traceability and Fairtrade are high on

consumers purchasing agenda. Scrutiny of the origin and value chain for flavors and

ingredients used to formulate foods is likely to increase. Because many flavors are

currently sourced or manufactured in developing countries, it is important for food

manufacturers to be aware of the ethical issues at every point.

30

Environmental concerns are becoming an issue in food choice

Even though consumers are traveling more and looking for exotic experiences, they are

also becoming increasingly aware of their effect on and responsibility towards the

environment. Table 2.3 shows that 31% of consumers surveyed in the US and Europe

were always or sometimes influenced by food miles when purchasing food and drink.

In response to this, retailers of all types are becoming concerned with carbon footprint.

The food retailer Tesco claims that it has begun looking for an accepted and commonly

understood measure of the carbon footprint for its products. The company says it

intends to use this to label its products so that customers can compare carbon footprints

as easily as prices or nutritional profiles. Tesco also states that as an interim measure,

the company has put an airplane symbol on all air-freighted products, and it will

restrict air freight to no more than 1% of its imports with a bias in favor of sourcing

from developing countries.

The implication of the awareness and monitoring of food miles is that the use of flavors

and ingredients from one region in foods sold in another region is likely to be made

clear to consumers and subsequently scrutinized by them. Manufacturers will need to

understand their supply chain and manage this appropriately to obtain interesting and

high quality flavors to use in food products, without excessively damaging the

environment.

Ethical and green flavors for the future

So far the trend for ethical food has not greatly affected food flavor itself, but could in

the future. Food miles, Fairtrade, and child labor could affect the acceptance of flavors

derived and manufactured from natural ingredients in developing countries. There may

be more scrutiny around the use and source of exotic flavors in the industrialized

economies.

31

There are already examples of food manufacturers working towards sustainability in

the food industry with respect to new ingredients. An example is the Sustainable Aa

Project. Sambazon, a supplier of aa products, contributes resources to this public-

private partnership. The project aims to prove that sustainable agro-forestry in the

Amazon estuary can improve living conditions, enhance educational opportunities, and

promote forest conservation.

The manufacturers of VeeV, which according to the company, is the worlds first aa

spirit, claims to be the first US alcohol company, and one of the first consumer

product companies to fully offset the carbon footprint of their business activities. This

is achieved though a partnership with Climate Clean LLC.

Projects and initiatives that demonstrate sustainability, ethical manufacture and

purchasing, and carbon neutrality, may become core requirements for food

manufacturers and ingredients companies who hope to market exotic or new

ingredients and flavors.

Cooking, entertaining and eating out

An increased interest in cooking and eating as entertainment means a greater interest in

flavors. Consumers are exposed to a wide range of flavors and many are developing

sophisticated tastes. This applies to what consumers buy, cook and order in restaurants.

Some consumers are becoming flavor experts in their own right. Often the interest in

flavor is linked with personal identity and social acceptance.

The business of cooking and entertaining

Cooking has becoming big business. Cooking programs and celebrity chefs are popular

on television in most countries. Best seller lists in many countries include cookbooks.

Amazon US lists 5,882 books in the cooking, food and wine category. When visited on

March 14, 2008, the top two bestselling books on www.amazon.co.uk were both from

32

celebrity chefs; Delia Smiths How to Cheat at Cooking and Jamie Olivers Jamie at

Home: Cook Your Way to the Good Life.

The BBC first reported in 20012 that the noun Delia has been included into the

Collins English Dictionary. Since then the Delia effect is often referred to, and

occurs when millions seek out an ingredient or piece of equipment the chef and TV

presenter, Delia Smith, has recommended. These items include cranberries, prunes, and

omelet pans.

In a global and media conscious environment, flavor trends coming from cooking

programs and celebrity chefs can quickly spread. Food manufacturers need to be aware

of these trends and be able to provide ingredients, flavors, and products as they become

popular and are requested by consumers influenced by these trends.

Eating out continues to increase

Table 2.4 shows a predicted increase in eating out in Europe and the US, with the trend

stronger in Europe. For many consumers, the restaurant, take out meal, or snack,

provides an introductory experience to a range of new flavors and ideas for food to

prepare and eat in the home.

Table 2.4: Out-of-home food and drinks market value, ($m), Europe and US, 2005-2010

Europe US 2005 2010 CAGR 2005 2010 CAGR Meals Breakfast 39,420 43,583 2.0% 35,991 36,868 0.5% Lunch 230,463 250,433 1.7% 147,926 150,538 0.4% Dinner 204,099 231,187 2.5% 118,770 122,450 0.6% Overall 473,982 525,203 2.1% 302,686 309,856 0.5% Snacks Morning 43,839 48,350 2.0% 36,033 37,624 0.9% Afternoon 63,444 70,103 2.0% 39,832 41,335 0.7% Evening 224,792 236,146 1.0% 136,532 138,073 0.2% Overall 332,075 354,598 1.3% 212,397 217,032 0.4%

Source: Business Insights Business Insights Ltd

33

Eating out more often changes expectations in terms of the range, variety, and quality

of food and flavors a consumer may expect in their daily routine. A restaurant

experience is often considered to be indulgent. Consumers with broad experience of

eating out are looking for more indulgent experiences with food in other contexts,

including what they buy to prepare at home for guests and for themselves.

Another key element of eating out is often personal choice. This increased emphasis on

personal choice in food is also likely to make consumers more aware of flavors they

prefer, and incorporate food choice and flavor as part of identity. For the food

manufacturer, this means that values associated with specific flavors can be used as a

way to target specific groups in the population.

Consumers as connoisseurs and experts

More consumers globally are learning about food and flavors and becoming experts

in specific food and drink products. The internet provides access to an array of gourmet

food clubs. Examples include chocolate, cheese, and Italian food, among many others.

These clubs allow consumers to either sample foods on a regular basis or join a group

of like minded individuals for tasting sessions.

This is likely to increase the overall level of sophistication, and increase expectations

of quality, towards food. Knowledge of flavors and subtleties of taste will increase for

some consumers, and this means that food manufacturers will need to provide higher

quality and more sophisticated flavors and ingredients to some segments of the

population.

In July 2007, the WSET (Wine & Spirit Education Trust) announced that the number of

students sitting a WSET exam for the academic year 06-07 had doubled that at the

beginning of the decade. WSET claims to be the largest global provider of education in

wines and spirits. In the academic year 2006/7 over 20,000 candidates in 39 countries

and nine languages sat a WSET examination. Training of this type is important, as it

often involves learning to systematically assess a product and rate its overall quality

34

with respect to agreed criteria. If more consumers are exposed to these practices they

will become much more aware of good and bad quality flavors.

Food retailers are already picking up on this trend and offering what might be

perceived to be products targeted directly at the consumer connoisseurs. For example,

in the UK, the retailer Sainsburys offers the Taste the Difference range which is

about quality ingredients, authentic products and, most of all, fabulous taste. Taste

the Difference products include foods with subtle blends of flavors which are often

identified by provenance. Some examples are; San Marzano tomato and fresh basil

soup, chestnut smoked salmon, outdoor reared British back bacon, and black cherry

panettone. These products are often seen as indulgent as well as different.

In the UK, the Food Standards Agency produces a guide to Setting up and running

community and school food clubs. In addition to a range of other outcomes focusing

on health and food safety, the clubs are designed to enable their members to be creative

when cooking food, and to read and understand food labels. Initiatives like this means

that the next generation will be aware of food flavors and ingredients, and ask for

creative and high quality food.

The trend for the consumer as an expert or connoisseur is not confined only to Western

economies. For example, an article in the UK newspaper, The Independent, in February

20083, reported an expected increase of 35% this year in wine consumption in India, a

trend that has been seen for the last few years. The article explained that wine clubs are

being set up and wine tasting organized by leading global producers and Indias own

wine industry, and that the interest in wine is partly fuelled by the increasing number of

people traveling abroad for business and holidays. Globally, increased interest in

flavors and tasting is likely to mean that consumers will be demanding more variety

and higher quality products in retail outlets in developing countries. Interest in flavor in

these contexts is also becoming a way of affirming social status and worldly

knowledge.

35

Snacking and single item meals

More snacking is predicted in the US and Europe

Table 2.5 shows that consumers in the US and Europe are likely to be snacking and

eating more light meals by 2010. The trend is stronger in Europe than the US, and

stronger for light meals than snacks. The per person rate of eating light meals in Europe

was only about half that in the US in 2005, showing an important potential for growth.

The increase in informal, smaller meals and snacks provides an opportunity for new

products based on new eating contexts.

Table 2.5: Number of snack and light meal occasions, per person per year, Europe and US, 2005-2010

Snacks Light meals 2005 2010 CAGR 2005 2010 CAGR Europe 694.2 719.3 0.7% 127.5 146.3 2.8% US 775.3 795 0.5% 221.8 243.4 1.9% Overall 734.7 757.1 0.6% 174.6 194.9 2.2%

Source: Business Insights Business Insights Ltd

Complex mixtures and ethnic influences

Traditionally snacks have intense flavors as well as interesting textures. Examples of

traditional snacks include items with a range of shapes, flavors and textures; olives,

beef jerky, cookies and cakes, potato chips, etc. In French a word for snack is amuse-

gueule literally entertaining the mouth. An increased focus on snacking is likely to

increase development of intense and complex flavors; giving more scope in product

development creativity than for traditional items that are eaten as part of a meal. In a

classic meal, all items balance and complement each other, so none of them should be

too intense or characteristic. Snacks are often seen as a form of entertainment, not just

sustenance.

36

The current packaged food market has many examples of snacks with complex flavors.

These flavors may be based on novel mixtures of added flavors, or on interesting

combinations of foods. Often these snacks have ethnic influences or demonstrate

aspects of fusion of one ethnic food type with another. An example of a producer of

snack products following this trend is Kettle Foods, which markets a range of

adventurous flavored products. These include (among others) Buffalo Bleu, Spicy

Thai and Tuscan Three Cheese potato chips in the US.

The near future will see an opportunity for manufacturers to create new snack products

based on traditional themes, but using a range of novel and unique flavors. The variety

and availability of flavors and ingredients through global suppliers can help to develop

products that are creative and capture consumers imagination and desire for

experimentation, while retaining consistency and quality.

The fact that consumers like to snack and are looking for exotic and intense flavors

serves as an opportunity globally by food retailers, food service organizations, as well

as tourism. For example, in Taiwan, the China Post reported (November 3, 2007)4 that

foreigners had voted Taiwans top five snacks as oyster omelettes, bubble tea, salty

fried chicken and steamed buns (xiaolongbao), rice buns with meat, and stewed pork

rice (lurofan). The voting was conducted at an event organized by the Corporate

Synergy Development Center under the supervision of the Department of Commerce,

Ministry of Economic Affairs, with the aim of promoting Taiwanese gourmet food on

the international stage.

The goal of events described above is to expose tourists and business people, as well as

the worldwide media, to ethnic snacks with new flavors and textures. This will help to

spark demand for similar experiences in other countries, creating an opportunity for the

export of a countrys foods and ingredients. Novel and different is increasingly a

positive feature for snacks, giving food manufacturers a wide range of opportunities

and sources from which to draw new product development ideas, but also presenting

the challenge of finding the next new big thing.

37

Natural provides opportunities

The majority (61%) of European and US consumers sought to improve the healthiness

of their snacking in 2007. Attitudes like this are increasing the demand for natural

snack examples. Natural for food products usually means no artificial flavors, colors, or

preservatives, and minimal processing; but the interpretation of natural for consumers

of snacks may mean manufactured with what they consider natural flavors or made

from what might be considered more natural or organic core ingredients. Natural

flavors and ingredients include traditional herbs and spices, honey or molasses, and

vegetable and fruit flavors or additions. Examples of snacks with different core

ingredients include crisps made from root vegetables other than potatoes (parsnips,

carrots, etc.). Other examples are tofu, rice and fruit based snacks. Fruit snacks include

items like apple chips, fruit leathers, etc. An example of a product line launched in the

US in the last few years, which illustrates this trend, is Danielle Crispy Fruit Chips

(Sweet Jackfruit, Tangy Pineapple and Honey Banana) and Crispy Vegetable Chips

(Crunchy Pumpkin, Wild Taro and Spicy Carrot) from New England Herbal Foods,

LLC.

Many snack bars also claim to be natural. These snack bars are often promoted as a

healthy alternative to breakfast. They normally feature fruit, nut, seed, grain and/or

yogurt type flavors, and sweetened with honey, brown sugars, etc.

The popularity of natural snacks presents opportunities, but also challenges for food

and flavor manufacturers to creatively use natural ingredients and flavors to produce

good tasting and healthy products.

38

Multi-sensory experiences

A virtual world

Many consumers are used to living in a heightened reality and expect their senses to be

stimulated in a range of ways and combinations; personalized audio stimulation

through mp3 players, visual stimulation through video games and web enabled mobile

phones, etc. Many public places, such as airports and train stations, have large video

screens showing adverts, music videos, news, etc. Most stores and restaurants play

music hoping to enhance their customers enjoyment of the shopping or dining

experience. Products and services activating the senses are seen as a way of increasing

the variety in our everyday lives and heightening the emotional element of our

experiences, and as a consequence, are being sold around the world in very large

numbers. Macworld estimates that Apple will sell 51.1 million iPods in 20085.

Marketers are increasingly conscious of the benefits of using all the senses to promote

products. Branding through the senses has been used in the service industry and for

larger consumer goods (cars), but is now also considered a way to differentiate low

involvement fast moving consumer goods. Packaging and product designers can

incorporate aromatic, tactile and audio components that work as emotional cues. This

takes advantage of the link between sensory experience and consumers emotions. This

means that flavors as well, and their links with other sensory stimuli, will become

increasingly important from a marketing perspective.

Sensory touchpoints and signatures

In his book Brand Sense, Martin Lindstrom is persuasive in suggesting building

powerful brands through touch, taste, smell, sight and sound. Developing a set of

unique sensory touchpoints that are consistent with the brand is now considered

important when designing consumer goods. The concept of signature smells or sounds

(sonic branding) is moving into the mainstream. Some interesting new and old

examples are:

39

The Windows start up and closing jingle which is a part of so many working

peoples everyday life;

The Swedish clothing designer Odeur endorses all garments with the scent of

Odeur an androgynous, clean, white and light scent;

The sound of Kelloggs Rice Krispies is a registered trademark: Snap! Crackle!

Pop!.

This trend is important for food and flavor manufacturers for two reasons:

The next step for non-food consumer goods may be to develop signature flavors for

certain brands and complementary food items featuring that flavor;

There may be opportunities in food for developing products that stimulate all of the

senses in a more direct way than previously, and whose flavor, texture, appearance,

odor, sound are designed to tell a story. Food flavor development may become

intricately linked with branding.

Innovation in the kitchen

In autumn 2007, Heston Blumenthal, the chef, and owner of the Fat Duck restaurant in

the UK, was featured in a BBC television series called Food In Search of Perfection

in which he shared his scientific approach to classic dishes. The BBC describes

Heston Blumenthal as a culinary alchemist and its website posts some of his inventive

recipes such as Tomato Fondue. The website also describes Fat Duck restaurant dishes

such as Sound of the Sea a seafood dish designed to be eaten while listening to a

personal stereo playing the sounds of waves crashing on the beach. The dish was

designed in the context of research by a collaborator; Professor Charles Spence; the

head of the Crossmodal Research Laboratory based at the Department of Experimental

Psychology, Oxford University; which has shown that recreating the correct

environmental cues while eating, can make a dish more enjoyable. Dr. Spence was the

keynote speaker with a talk entitled, Sensory and Consumer Perceptions of Acoustic

and Textural Combinations, at the Society of Chemical Industry, Acoustic and

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Textural Perception meeting, in London in November 2007. On the Fat Duck website,

Heston Blumenthal and his colleagues propose that preparing and serving food could

be considered a performing art, because of the fact that all the senses as well as the

mind are engaged.

Creating a multi-sensory experience is part of the chefs role in respected restaurants

and cooking circles. The diner is invited to experience everyday things in a new

context, and usually stimulate a novel combination of senses.

Molecular gastronomy is a term given to the concept of applying science to cooking.

By using molecular gastronomy type techniques, chefs may use their expertise and

creativity to create refined, varied, and intense foods. This might involve trying out

what might seem bizarre combinations of tastes, but the combination could be based on

a theory about food or ingredients complementary chemistry.

Will elements of the multi-sensory experience trend find some resonance in flavors

used in manufactured food? For the purposes of entertainment and aesthetic

stimulation, some flavors are likely to be more complex, multifaceted, or designed to

be used with other sensory touchpoints. It is important for food manufacturers to be

aware of these trends, as they could impact on food product design and the range and

type of flavors needed. Flavors may be designed in the future to specifically

accompany certain textures and/or colors, and/or sounds. Food as an experience or art

will require a higher level of flavor expertise than for food as a commodity.

41

Health and wellbeing

Eating healthier

Consumers globally are becoming more aware of the impact of what they eat on their

health and overall wellbeing. In Europe and the US consumers of all ages report that

they are taking steps to eat more healthily. The effect is similar for all age groups, but

most marked for the oldest group surveyed (65+); 70% of this group reported an

increased level of taking active steps to eat healthily in the year before the survey, and

none reported a decreased level (see Figure 2.3). For food manufacturers this shows the

strength of the trend towards healthy eating and the role and volume that healthy

products are likely to have in the future.

Figure 2.3: The propensity of European and US shoppers who have taken active steps to eat healthier in the last 12 months, 2006

Answer to the question: To what extent have you taken active steps to eat more healthily in the previous twelve months?

0%

5%

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Much less Slightly less The same Slightly more Much more

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18-24

25-34

35-49

50-64

65+

Source: Business Insights Consumer Survey, 2006 Business Insights Ltd

42

The opportunities for promotion of healthy eating and foods, and ingredients to support

these trends are becoming important in developing economies as well. There is a

growing awareness of the importance of healthy eating in India. On its healthy-

india.org website, The Public Health Foundation of India cites that Indians consume

less fresh fruits and vegetables, consume more tobacco, consume more unhealthy diets,

and are more sedentary than their Western counterparts. The website also states that

India has the largest number of people with diabetes in the world, and the Foundation

estimates that in 2003 approximately 30m people were suffering from chronic heart

disease in India.

Indian Food Industy.Net identifies the health food and health food supplements as

rapidly rising segments of the food processing industry in India. In addition, the site

claims that India is the worlds second largest producer of food next to China.

Healthy foods as a concept incorporates a range of new product development

potential; including reduced foods and functional foods. Flavors in these foods need

to be developed and designed specifically to support the formulation.

Flavors in reduced foods

In response to consumer demand many food manufacturers are producing reduced or

low sodium, fat, sugar or calorie versions of traditional favorites:

In February 2008, the Campbell Soup Company announced a major step in its

sodium reduction efforts by adding 36 reformulated ready-to-serve varieties under

the name Campbells Select Harvest soups to its portfolio of lower sodium

products and reformulating its 12 condensed kids favorite soups to meet the US

government criteria for healthy foods;

In the US, General Mills offers Cinnamon Toast Crunch Reduced Sugar breakfast

cereal, while Kelloggs offers Frosted Flakes Reduced Sugar and Froot Loops

Reduced Sugar breakfast cereals.

43

The above examples are important to note because reduced calorie, fat, sugar and/or

sodium products often require stronger, bolder flavors; or a different balance of flavors

than the full versions.

The Institute of Food Researchs reduced-fat foods fact sheet highlights this issue with

respect to fat, saying that when the fat content of a food is reduced, its often necessary

to change the overall recipe of a food to achieve acceptable flavor qualities. The sheet

highlights that this is because fat plays a unique role in the development and release of

many flavors.

Food manufacturers will increasingly need to understand how changes in recipe

formulation affect flavor and be aware of specific flavors and ingredients which

synergize with reduced recipes. Many flavors used will be bolder and more

distinctive to make up for the flavor enhancing properties of sugars, salts and fats.

Flavor and functional food and ingredients

Functional foods are those products that provide benefits beyond basic nutrition by way

of added components and which may help prevent disease and promote health. Table

2.6 shows the increase in the value of the functional food and drinks market in the US

and Europe. The CAGR was 4.7% or higher in all areas between 2001 and 2006. This

growth is predicted to continue although at a slightly lower rate. Sweden and Italy

show the highest predicted growth rate. Food manufacturers are using a new range of

ingredients which provide or enhance functional properties in familiar products.

Examples include:

Warburtons in the UK adds inulin extracted from a vegetable source to its Healthy

Inside breads. The brand was launched in July 2005. The company describes the

product as the first loaf of its kind that is baked with a prebiotic ingredient that

works with the bodys defenses to help to produce good bacteria;

Barry Callebaut, a Zurich based manufacturer of cocoa and chocolate, has

developed ACTICOA cocoa and chocolate products, as a result of a special

44

process that preserves large amounts of the polyphenols naturally present in cocoa

beans. The company claims that the end result is a functional product that combines

excellent taste with a very high content of natural antioxidants.

Table 2.6: Functional food and drink market value, ($m), Europe and US, 2001-2011

2001 2006 2011 CAGR 01-06 CAGR 06-11 France 599 764 941 5.0% 4.3% Germany 1,375 1,890 2,398 6.6% 4.9% Italy 677 1,042 1,428 9.0% 6.5% Netherlands 216 272 331 4.7% 4.0% Spain 401 598 765 8.3% 5.1% Sweden 140 215 296 9.0% 6.6% UK 1,565 1,998 2,416 5.0% 3.9% Rest of Europe 893 1,235 1,589 6.7% 5.2% Europe overall 5,865 8,013 10,163 6.4% 4.9% US 15,570 21,298 27,179 6.5% 5.0% Total 21,435 29,311 37,342 6.5% 5.0%

Source: Business Insights Business Insights Ltd

Functional foods often contain ingredients (fruit or vegetable inclusions or extracts,

carbohydrates, herbs, phytonutrients, fiber sources, antioxidant sources, vitamins,

minerals, etc.) which can impart flavors in themselves. If the flavors imparted by

functional ingredients are unpleasant or inappropriate for the context (this may be the

case with some vitamins, minerals, etc.) flavors or other ingredients may need to be

added to counteract the functional ingredients by covering or complementing

unpleasant notes. The food manufacturing industry has recognized this issue and is

attempting to learn more about formulating with functional ingredients For example,

Working with Functional Ingredients is one of the topics in the FONA International

(formerly Flavors of North America), Top 10 Challenges of Flavor course, currently

offered in the US.

In many cases functional ingredients add pleasant flavors, and therefore introduce

consumers to a new area of flavor. For example, the increased use of berries and their

45

extracts as a source of antioxidants in the past few years has introduced the flavor of

cranberry and blueberry to a whole range of global consumers who may not have had

much experience with these flavors before. New berries gaining popularity now include

goji and aa, among others. Knowledge of new functional ingredients and the flavors

they impart is important for successful design and launch of new products in a health

conscious environment.

The effect of the older generation

Demographic shifts

Changes in demographics mean the elderly are likely to have an impact on the range

and type of flavors in food, if only by their impact on society as a whole.

Table 2.7: Consumers aged 55 and over, by region, (m), 2002-2012 Millions 2002 2007 2012 CAGR 02-07 CAGR 07-12 US 62.1 70.5 80.6 2.6% 2.7% France 15.8 17.8 19.5 2.3% 1.9% Germany 24.5 25.8 27.5 1.1% 1.2% Italy 17.5 18.6 19.5 1.2% 0.9% Netherlands 4 4.5 4.9 2.3% 2.0% Spain 11.1 11.7 12.4 1.1% 1.1% Sweden 2.7 2.8 3 1.2% 1.0% UK 15.9 16.9 17.9 1.3% 1.1% Other Europe 104.6 111.9 121.7 1.4% 1.7% Total Europe 196.1 210 226.3 1.4% 1.5% Australia 4.3 5 5.7 2.9% 2.5% China 183 216.6 264 3.4% 4.0% Hong Kong 1.4 1.7 2 4.1% 4.2% India 108 126.8 151 3.3% 3.6% Japan 39.8 45.5 47.8 2.7% 1.0% New Zealand 0.8 0.9 1 2.5% 2.2% South Korea 7.7 9.1 11.2 3.5% 4.2% Other Asia 67.5 78 94.3 3.0% 3.9% Total Asia-Pacific 412.4 483.6 577 3.2% 3.6%

Source: US Census Bureau Business Insights Ltd

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Table 2.7 shows the number of consumers over 55 is increasing in many regions in the

world. Of the regions evaluated, the growth rates over the last five years as well as

those predicted for the next five years, are highest in Asia-Pacific, with the US the next

highest and Europe the lowest. The increased number of elderly people could enhance

the effects of other flavor trends discussed earlier, such as retro-food and nostalgia.

Foods designed specifically for the elderly

Scientific studies have examined the changes in flavor perceptions with ageing. Most

agree that flavor perception does change with ageing, but there is some debate about

the affect this has on liking and flavor preferences. Earlier studies found flavor

preference changes over the lifespan. For example, a study on nutrition and

chemosensory perception in the elderly published in 19936, found that older subjects,

rated high concentrations of sugar and salt as pleasanter than young subjects did. The

author proposed that multiple influences contribute to this phenomenon.

In the European Commission funded project Healthsense (completed in 2003), the

research program confirmed that the performance of the senses decreases with age, and

as part of the project, optimized foods for elderly people were developed.

In the European Journal of Clinical Nutrition, a study in 20007 stated that losses in

taste and smell that occur with advancing age can lead to poor appetite, inappropriate

food choices, as well as decreased energy consumption. The researchers remarked that

evidence was emerging that suggested a compensation for taste and smell losses with

flavor-enhanced food can improve palatability and/or intake, increase salivary flow and

immunity, reduce chemosensory complaints in both healthy and sick elderly, and lessen

the need for table salt.

A more recent study8 (published in 2007) investigating the differences between elderly

subjects and young subjects in food perception and food liking found that losses in

sensitivity to taste and to olfactory and trigimenal stimuli, as well as reduced chewing

efficiency, were observed on average for the elderly compared with the young.

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Furthermore, subgroups of the elderly were observed in which the compensatory

strategies of flavor enrichment, textural change, and irritant addition led to an increase

in food liking. However, these subgroups did not differ in their sensory acuity.

Taste is affected by age itself and is also affected by the range of medications and

treatments elderly people are likely to be taking. Some medications cause unpleasant

background tastes in the mouth.

Food manufacturers are now starting to design foods specifically for the elderly. The

food itself may be adapted, often in terms of its texture (softer or easier to chew and

swallow), but the packaging can also be adapted (easy to open packaging). Japan is a

leader in this trend. The fact that foods are being created specifically for the elderly

means that there is an opportunity to tailor the flavor of these foods and increase

enjoyment, increase consumption, and repeat purchases. For example, salt could be

used to enhance flavor when acuity is low, but often this age group is also on sodium

reduced diets, so more novel methods of flavor enhancement need to be used. Flavors

in foods designed specifically for the elderly are likely to enhance existing flavors, to

increase impact, and ensure the consumer perceives the pleasant aspects of the overall

product flavor.

In addition to the sensory or ergonomic aspects of food products, the healthiness of

foods is a specific issue for the older generation. Foods marketed for the elderly often

are promoted on specific healthy ingredients. This expands on the opportunities for

food manufacturers to create foods designed particularly for this age group.

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The industry view

In the survey carried out for this report, respondents were asked to rate the influence of

various drivers on demand for new flavors. All the drivers in the survey were rated as

having a big influence by at least 25% of respondents. 75% of food industry executives

rated health as a big influence on demand for new flavors. Immigration was rated the

second most influential. Ethical issues were rated, on average, as having the least

influence. Travel, snacking, the ageing population, and nostalgia, were rated

somewhere in between. The average response over survey respondents for all the

drivers evaluated is shown in Figure 2.4.

Figure 2.4: The influence of drivers on demand for new flavors

1 Little influence

2 3 4 5 Big influence

Travel

Immigration

The ageing population

Eating out

Snacking

Health

Nostalgia

Ethical issues

Response average

1 Little influence

2 3 4 5 Big influence

Travel

Immigration

The ageing population

Eating out

Snacking

Health

Nostalgia

Ethical issues

Response average

Note: Respondents were asked to rate influence on a scale of 1 which was little influence to 5 which was big influence. The response average is an average of the ratings given along the scale.

Source: Business Insights Industry Survey March 2008 Business Insights Ltd

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CHAPTER 3

Top flavors by food sector

50

Chapter 3 Top flavors by food sector

Summary

The top five most common flavors in the bakery and cereal products sector in 2007 in terms of new product launches were chocolate (9.4%), wheat (2.6%), vanilla (2.6%), strawberry (2.5%) and oat (2.2%). Wafer was the fastest growing flavor in the sector between 2004 and 2007.

When food industry executives were asked for two emerging flavors in the bakery and cereals sector, the top five flavors were; vanilla, cranberry, cinnamon, nuts, and almond.

The top five flavors in the confectionery sector in 2007 in terms new product launches were chocolate (8.4%), milk chocolate (6.8%), dark chocolate (4.4%), strawberry (4.2%) and mint (2.9%). Dark chocolate was the fastest growing flavor.

The emerging flavors in the confectionery sector most mentioned by food industry executives were; dark chocolate, green tea, pomegranate, cranberry and caramel.

The top five flavors in the dairy sector in 2007 in terms new product launches were strawberry (7.3%), chocolate (5.3%), vanilla (5.1%), yogurt (4.4%) and milk (3.2%). Strawberry was the fastest growing flavor.

The emerging flavors in the dairy sector most mentioned by food industry executives were; vanilla, mango, fruit, coffee, and pomegranate.

The top five flavors in the snacks sector in 2007 in terms of new product launches were chocolate (2.9%), potato (2.8%), cheese (2.4%), almond (2.3%) and peanut (2.2%). Cashew was the fastest growing flavor.

The emerging flavors in the snacks sector most mentioned by food industry executives were; spice, barbeque, cranberry, Indian, and nuts.

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Introduction

This section uses Productscan data to outline key flavor trends for four major food

sectors; bakery, confectionery, dairy and snacks. Flavor here is defined as the attributes

listed on the product. In addition, this section reports relevant findings from the food

industry executive survey carried out specifically for this report.

Bakery and cereals

Bakery products evaluated for this section include:

Bread;

Cereals;

Cookies;

Crackers;

Mixes and baking;

Pastries.

Top and fast growth flavors

The top 20 flavors in bakery product launches in 2007 are given in Table 3.8. In

general, sweet (rather than savory) flavors feature more often in new product launches.

On the whole, the top flavors are more traditional or established, rather than novel.

There are no distinctly ethnic or exotic flavors in the list. For example the fruit flavors

feature strawberry, apple, raisin, lemon and orange, rather than exotic fruits or new

fruits such as cranberry, aa, etc. This reflects the everyday nature of many bakery

products, and also the fact that many of these products are eaten for breakfast. In most

Western countries, breakfast foods feature simpler flavors than foods consumed later in

the day.

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Table 3.8: Top 20 flavors in new bakery introductions, % of all products launched, 2004-2007

Flavor 2004 2005 2006 2007 Chocolate 8.8% 8.2% 9.3% 9.4% Wheat 2.7% 4.3% 3.0% 2.6% Vanilla 2.5% 2.4% 2.6% 2.6% Strawberry 2.8% 2.5% 2.7% 2.5% Oat 1.6% 2.0% 1.9% 2.2% Apple 1.9% 2.0% 1.9% 1.9% Cream 2.7% 2.4% 2.0% 1.6% Honey 1.4% 1.7% 1.6% 1.6% Coconut 1.4% 1.0% 1.4% 1.6% Cinnamon 1.8% 2.1% 1.4% 1.5% Almond 1.7% 1.4% 1.4% 1.5% Raisin 1.4% 1.3% 1.2% 1.4% Lemon 1.7% 1.3% 1.5% 1.3% Orange 1.2% 1.1% 1.4% 1.2% Hazelnut 1.2% 1.2% 1.1% 1.2% Milk 1.2% 1.3% 1.3% 1.2% Milk Chocolate 1.6% 1.4% 1.4% 1.2% Cheese 1.4% 1.2% 1.4% 1.1% Rice 1.4% 1.4% 1.1% 1.1% Butter 1.5% 1.5% 1.2% 1.1% Cocoa 1.4% 1.1% 1.3% 1.1% Note: Year ends February 18th 2008.

Source: Productscan Business Insights Ltd

An analysis of those flavors decreasing in new product launches in this category over

the period 2004 to 2007 showed the largest mover to be cream which decreased by

1.1% over the period. 1.1% as a proportion of the typical overall percentage for any

flavor, as shown in Table 3.8, shows that changes in flavor in this sector are happening

at a moderate rate. On average it might take up to 4 or 5 years for a flavor to move in or

out of the top 20 list. The list of flavors making up the 10 fastest decreasing is:

Cream;

Chocolate chip;

Milk chocolate;

Corn;

Nut;

Butter;

Banana;

Custard;

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Herb; Fudge.

This list of flavors decreasing the fastest is quite varied, but it contains many with

higher fat contents (cream, butter, custard, fudge, milk chocolate), and so is

demonstrating the demand for healthy type bakery products. The decrease in corn

flavored products might be explained by the rise in corn prices linked to the use of this

crop for bio-fuel, rather than because of an overt change in consumer tastes. Wheat is

perceived as a healthy flavor, but wheat prices have also increased in the last few years,

due partially to weather problems and demand from emerging economies. This could

explain why this flavor showed a sharp increase from 2004 to 2005 and then a sharp

decrease through 2007.

An analysis of the growth rate in flavors in new product launches in this category over

the period between 2004 and 2007, showed no flavors to be growing at a rate of more

than 1.0% per year. This indicates that although flavors in bakery products are

changing, these changes are taking place gradually, and product developers may have a

few years to see trends emerging and take advantage of them. Wafer is the fastest

growing flavor. The list of the fastest growing top 10 is;

Wafer;

Oat;

Chocolate;

Bread;

Cookie;

Cereal;

Cracker;

Spelt;

Rye;

Dark chocolate.

With a few exceptions, these fastest growing flavors are indicative of a trend in the

bakery sector for new products to be healthy and contain whole grains and cereals.

Dark chocolate is also perceived to be healthier than milk chocolate and it features in

the fastest growing list. Wafer and biscuit flavors may be linked to indulgent and

international types of bakery products being introduced.

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Chocolate trends

Chocolate is by far the most popular flavor for new product launches in the bakery

sector, in 9.4% of new product launches in the sector in 2007. This can be compared to

the second most common flavors which were wheat and vanilla (both at 2.6% of new

product launches in the sector in 2007). Part of the popularity of chocolate is that it has

become a truly global flavor, recognized and appreciated by most cultures and in most

regions. Chocolate is also one of the fastest growing flavors in the bakery and cereal

sector, so is likely to continue in its popularity for the next few years.

There are interesting trends in chocolate in the bakery products category. Chocolate

and dark chocolate are growing but chocolate chip, milk chocolate, and white chocolate

are decreasing. Specific choice of the type of chocolate flavor is linked to the growing

consumer discernment in chocolate types. The rise in popularity of dark chocolate is in

some part, linked to health concerns, and the perceived benefits of high cocoa

percentage products. Many traditional products/brands (for example chocolate covered

biscuits) are focusing on, or introducing dark chocolate variants. Although moving

towards the future, there is demand in the bakery market for chocolate products, some

of these will need to be perceived as healthy as well as indulgent. Examples of

traditional products with new dark chocolate variants launched recently are shown in

Figure 3.5:

Twix Caramel Cookie Bars in a Dark Chocolate version were launched by

Masterfoods US in 2005;

McVities Digestive Biscuits with Dark Chocolate Flavored Coating were launched

in Canada in 2006;

Pepperidge Farm launched Soft Baked brand of Chocolate Chunk Cookies in

Turkey in August 2007. The cookies are offered in a Dark Chocolate variety;

Dark Chocolate Loacker Quadratini wafers launched in Italy in July 2007.

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The above examples show how specifically highlighting dark chocolate flavor is a

promotional benefit.

Figure