As baby boomers mature, their heightened focus on healthy living is driving significant product development, industry experts said. By sheer weight of numbers, they will continue to do so for many years to come.
According to research conducted by the U.S. Department of Agriculture's Economic Research Service, the nation's population is wealthier, older, more educated and more ethnically diverse than ever before. ERS expects these demographic changes to become even more pronounced in the next 10 to 15 years.
ERS also predicts that while the overall number of people between the ages of 20 and 44 will decline by the year 2020, the proportion of the population over the age of 45 will increase. As a result, the baby boomers, who currently fit into the older segments of the population, will be among the age groups to watch. They will continue to demand health-related foods and convenience, according to observers.
Lower energy levels and the onset of physical ailments might even affect the types of stores these older shoppers choose to frequent, said Ross Nixon, vice president of merchandising for Dahl's Food Markets, a 12-store chain based in Des Moines, Iowa. "In the not-too-distant future, much of the population will be over 50, and I wonder where the consumers in that age bracket will choose to purchase products in the next 10 to 20 years," said Nixon. "We might see a slowdown in the trend of people shopping 115,000-square-foot and 175,000-square-foot stores and more people shopping 40,000-square-foot to 60,000-square-foot stores instead because it won't take as much energy and time for those who have a harder time getting around."
While some older consumers will likely be concerned about mobility, more and more are also likely to be concerned about health and wellness trends.
"This year, it's been more about the inherent goodness of foods [or functional foods] and low-[carbohydrate products]," said Lynn Dornblaser, director of consulting service for the global new products database for Chicago-based Mintel International Group, a consulting and research company that tracks consumer packaged goods trends.
According to Tom Vierhile, executive editor of Productscan Online, a products database company based in Naples, N.Y., functional foods were making waves a few years ago, but it may have been a little too soon for most consumers as products like heart-healthy Benecol and Take Control didn't perform as well as manufacturers expected, he said.
"What will work the best are foods for cholesterol maintenance and the new high blood pressure beverages that have been introduced in European markets," said Vierhile. "There are also some memory-enhancing [products] that people seem to be buying into and even gums in Japan that are supposed to help with allergies, which might someday enter the U.S. market."
Functional foods might still have a way to go, but vitamin-fortified waters have already been a big hit, calcium-fortified orange juice has fared well, and Hershey's has even come out with a calcium-fortified chocolate syrup.
Valerie Skala Walker, vice president of the analytic insights group at Information Resources Inc., the research company based in Chicago, expects to see more products like those on grocers' shelves in upcoming years. She believes most of them will be produced by food manufacturers rather than drug companies.
"I would bet on the food manufacturer over a pharmaceutical company that's trying to produce a food item any day," she said. "Medical value is usually secondary to flavor with consumers. They won't eat food that doesn't taste good, even if it is nutritious. The food and beverage manufacturers have the core competency of making sure food tastes good first and foremost."
Nutrient-infused foods aside, the latest dietary trend to hit supermarkets is the low-carb craze. According to Productscan Online, between January and March of this year, manufacturers had already introduced 586 new low- or no-carbohydrate foods and beverages in the U.S. market, this figure compared to the 633 introduced in all of 2003 and 339 in 2002.
Despite the current hoopla surrounding low-carb foods, experts are predicting that -- like most diet-based trends -- this too shall pass.
"In 2003, Atkins and the specialty companies were playing in the low-carb space, but in 2004, the major manufacturers have started coming in. We expect sales in low carb to more than double this year over 2003 for this reason," said Walker.
IRI expects this trend of double-digit growth to continue through 2005 and 2006 before beginning to taper off. Some of the future decline will likely be due to the federal government's eventual regulation of the product-swollen industry.
"It's going to be really important to watch for the government to issue regulations on what manufacturers can say and not say on low-carb packaging," said Dornblaser. "Once the [Food and Drug Administration] comes out with these guidelines, a lot of products will go off the market immediately because they can't meet regulations. Others will make changes to labeling."
Retailers agreed that they've seen this all before. This time, the focus is just on low carb instead of low fat or low calorie.
"Ten years ago, it was a desire to eat less fat. Now, it's low carb. I don't know if that will last," said Paul Simon, spokesman for Schnuck Markets in St. Louis. "It will probably peak and then level off, but the desire to eat healthier is going to be with us for a long time."
According to the Times & Trends New Product Pacesetters 2003 report, products like Michelob Ultra, Atkins Endulge nutrition bars, Atkins Endulge frozen novelties and Breyer's Carb-Smart ice creams were Pacesetters in the category just a year ago. Some are predicting which low-carb products will stand the test of time.
"If you look at Weight Watchers and Slim-Fast, you'll see that they've created a strong enough following to survive the ups and downs," said Walker. "I see a brand like Atkins continuing to be there after the low-carb fad dies down, along with some of the other top-sellers, but many of the products won't last."
In the same low-carb category are the newly launched reduced-sugar sodas that have retailers wondering which brand will come out ahead. Soft-drink consumers are "either going to buy one or the other," said Joe Boyd, beverage category manager for Minyard's Food Stores, an independent based in Coppell, Texas. "I don't think it's going to bring new people to the category, though."
Coke is heavily pushing its reduced-sugar C2 as a low-carb beverage, while Pepsi is not positioning its Pepsi Edge as a low-carb drink.
Another factor that will impact future consumer product trends is the government's war on obesity and heart disease, which is expected to bring about changes regarding artery-clogging trans fatty acids.
"An additional concern, next to functional foods and low carb, is taking trans fats out of products," said Dornblaser.
Frito-Lay has already made strides in this area, switching from using hydrogenated oils, which contain high levels of trans fatty acids, to corn oil in cooking some of its most popular salty chips, such as Doritos, Tostitos and Cheetos.
Consumers are not only choosing foods and beverages that promote better health. They also want products that fit into their hectic lifestyles. Enter the convenience factor. "People are on the move, and anything like candy products in cups, snack bars and meal-replacement bars will continue to do well in the portability category," said Vierhile. "Looking five to 10 years into the future, there will also be more products that are packaged in microwaveable pouches and anything that takes steps away from preparing a product for consumption."
Even the big names in produce are getting in on the act, with Dole, Del Monte, Sunkist and others offering more user-friendly and to-go fresh food items.
"At this year's [Food Marketing Institute] show, I noticed that just about every produce brand is coming out with packaged produce with labeling that tells what nutrients are in the food and how to prepare them," said Walker. "They're labeling double-washed, packaged potatoes with cooking instructions for cooking in the microwave and labeling oranges as 'power oranges' with lists of what nutrients they contain."
Salad companies created a $3 billion market for themselves by simply washing and packaging salad in bags, and Walker predicts that virtually every other produce company will soon follow suit, offering their fruits and vegetables in ready-to-serve or ready-to-cook packages with preparation instructions for the cooking-illiterate.
On-the-go snacks are also a big hit with consumers, a trend that experts expect to be around for a while.
"Lay's Stax is one of the revolutionary portable products that changed the way consumers could eat salty snacks, kick-starting the category," said Dornblaser. "I think the next big wave will be focusing on other types of snacks, whether salty or savory, in forms that are really easy to take with you."
Dornblaser noted another trend that is just beginning to take wing: "desk-fast" foods. She cited Lender's introduction of a single-serve bagel, with a cream cheese tub, knife and a napkin, all in the same pack.
"We've seen Campbell's Soup at Hand and Lunchables, but we haven't seen that sort of thing for breakfast until now," she said.
Because consumers are more educated than ever before, even quality has taken on a new meaning for some shoppers, said Doyle. Instead of assuming that the traditional or big-name brands are the best, more and more shoppers are buying off-brand products like cheese and spending their food dollars in categories where there is more of a distinct difference in taste, texture and overall quality, she said.
With so many trends to consider and tens of thousands of new products entering the U.S. market each year, retailers have their hands full determining which products get shelf space. Syracuse, N.Y.-based Penn Traffic, which owns 216 stores, has a strategic method for picking and choosing from the many new products that are introduced.
"We look at whether the category has growth potential, if a new product will catch on within our banner as a whole or in individual markets, and what kind of push the product is getting from the manufacturer as well," said Joe Ramirez, spokesman for the company. "Once we make a judgment that [the product] is something that consumers will like, we have to keep it on the shelves long enough for people to notice it and try it."
Along with these criteria, Penn Traffic looks to current and future trends that will strengthen the potential for a product's success.
"If a brand is connected to a popular trend, like the Atkins and low-carb craze, there's a good chance that people will try related products just because of the fad. The trend creates its own 'brand' wake behind the product," said Ramirez. "When an established brand introduces a variant, that obviously gets consideration from us, especially when there's a big advertising push to support the product, which almost always piques the curiosity of customers."
Keith Shannon, frozen foods category manager for Schnuck Markets, St. Louis, agreed that brand extensions are a safe bet. "When a customer sees a Snickers ice cream bar and they have tried the Snickers candy bar, they know the flavor profile and what to expect," said Shannon.
While manufacturers work frantically to produce new products, some brands are simply crossing over from the restaurant channel into supermarkets. It happened with Starbucks, Boston Market and TGI Fridays, and one of the latest entries, Krispy Kreme.
"We'll continue to see the most popular flavors at casual restaurants entering into the mainstream marketplace," said Walker. "Food watchers should also be watching upscale restaurants for which flavors will eventually become mainstream. Food trends often start in upscale restaurants and work their way down to casual restaurants and then to the supermarket level."
"In the ethnic category, we continue to experience an increase in consumer demand for more authentic items," said Brian Frey, spokesman for the 224-store chain, which is based in Pittsburgh. "In select locations, we have unique Worldwide Food aisles that offer customers the opportunity to experience foods from different countries and ethnic cultures."
To catch the attention of today's consumers, makers of consumer packaged goods must create innovative products that offer customers a benefit or feature that is not available to them through other products.
In 2003 alone, there were 33,678 new food, beverage, health and beauty care, household and pet products introduced to the retail market, a 6% increase from the year before. Yet fewer than 10 out of every 100 new entries are truly innovative, according to Productscan Online, which tracks the CPG industry.
Productscan has nearly one million products in its database, most of which have failed. In an attempt to understand what makes the few successful products fly, the company developed a list of criteria for determining what actually makes a product innovative.
"Positioning a product to new users or usages is one [criterion], which isn't as common as some of the others," said Tom Vierhile, executive director at Productscan. "A handful of products fall into this category, like breath strips for dogs, which are definitely targeting a new user."
Creating a new product that provides a consumer benefit with new packaging is another indicator of innovation. Yoplait's Go-Gurt Yogurt is a prime example: Packaged in a tube, it eliminates the need for a spoon.
Offering additional value through a new formulation is another factor, like Hain Pure Foods Kitchen Prescription Soup, which has the benefits of an herbal supplement.
"Another [criterion] would be introducing a new technology, something that we tend to see more in health and beauty," said Vierhile, citing the development of a cough medicine for children in a gel form that doesn't easily spill. "Creating a new market for a product is also innovative, like isotonic drinks for dogs."
Productspan recently added a sixth requirement to its list: merchandising. According to Vierhile, coming up with a new way to sell a product also makes the grade for innovation. "It could be something as simple as selling fragrances in a vending machine," he said.
While creating a new product is easy, thinking up a product idea that consumers will buy is another story, he said. Manufacturers are always busy searching for the next product that will afford them an even larger piece of the consumer pie, but the amount of time and money it takes to develop and introduce new items to the consumer have CPG manufacturers "risk-shy," said Vierhile.
"Innovation is a tough nut for companies to crack because it does require some risk-taking," he said. "That's why so many companies are now coming out with limited editions. If consumers like them, the companies keep them out there. If not, they haven't lost too much money on a product launch that failed."