2020 Consumer Packaged Goods Trends Driving Food & Beverage Innovation

After posting our view of the big, transformative changes driving foodservice innovation, here’s Mattson’s innovation-focused take on what’s hot in consumer foods and beverages.

High Stakes For Great Fakes

Oh, how complicated we humans are! In this era of natural, organic, clean, and whole food eating, we have somehow become enamored of all things fake. What does this say about us and the food we eat? Where to start?

The latest debate over plant-based meat and milk alternatives is whether or not they’re fake or processed, driven somewhat by consumers, more heavily by the media, and buoyed over the top by a very political campaign, funded by clients of the suspiciously-named Center for Consumer Freedom.

Impossible Foods makes a burger they claim uses 96% less land, 87% less water, and 89% fewer greenhouse gas emissions. The company is so staunch in its beliefs that it’s doing the right thing that they simply won’t accept the fake meat rhetoric.

Impossible claimed recently that their product “is as ‘processed’ as a freshly-baked apple pie. Nobody judges the safety and wholesomeness of a recipe by the number of ingredients.”

Of course plant-based meats are processed. Most of the food we eat is, in some way. But processed doesn’t mean bad. We’ve been processing food for millennia, our ancestors having figured out how to process grapes into wine, olives into oil, milk into cheese, and cacao pods into chocolate. I shudder to think of a world without food processing. And I look forward to the day our great-great grandchildren talk about our generation as the one who figured out how to turn plants into meat and milk and improved upon the staples they grew up with.

A few new CPG brands are actually celebrating their technical process. Atomo is touting its “molecular coffee,” without the bean. Their version of the brew will address the challenges that coffee beans face in a world of growing consumption which can drive deforestation. In addition, climate change puts pressure on coffee growing and growers. Atomo hopes to release that percolating pressure with a formulated coffee that can be customized to your liking.

Endless West makes formulated spirits, like their first product Glyph, “molecular whiskey — no aging or barreling needed…made overnight, in California,” versus over years for traditional whisky. They’re less about sustainability and more about celebrating the “creative capacity of science.”

Creating better alternatives through good formulation also includes RightRice, a rice alternative made from vegetables. Each grain of RightRice is built from the ground up, delivering 40% less carbs than white rice, more than twice the protein, and 100% more fiber. While it’s not rice, it walks and talks like it. Make a Medley out of it, and you can’t tell the difference.

It’s no wonder Atomo and Endless West are from tech capitals Seattle and The Bay Area, with founders from the tech industry. They’re unapologetically all about the tech. Have we finally gotten past our fear of food science? We’ll see, but we definitely anticipate others in this “great fake” space. (and I use this term lovingly)

High & Low Food Tech for the Planet

Younger consumers consider sustainability non-negotiable these days. With a looming climate crisis in their future, they’re making decisions today based on how a product impacts the environment, or better yet, what the product is doing to cure the damage that’s been done.

2019 saw Annie’s launch the first packaged product claiming regenerative ag ingredients, which they describe as protecting and intentionally enhancing soil, mostly through traditional farming techniques. We believe regenerative may become the new organic once there’s a critical mass of farmers to build the supply chain. But this is years away.

Cultivated meat, grown from cells as opposed to raising and slaughtering animals, is an answer to the problem of methane emissions from cattle. With increasing standards of living in countries around the world, comes increasing demands for more meat in traditional diets. The cultivation of meat is one way to give people what they want: beef, pork, chicken, and seafood, with lower greenhouse gas (GHG) emissions. This technology, too, is many years away from being able to make an impact on GHG, but there’s plenty of money flowing into the sector to speed scalability, much of it from tech titans like Bill Gates and Vinod Khosla.

We are on the cusp of major innovation around straws and food packaging, given a looming ban on single use plastics in general. But what about the liquid in the cup or the food in the plastic clamshell container? This is where plant-based foods come in.

Ripple touts their products as created specifically to address climate issues. The peas used to make Ripple milk, they say, are grown with little or no irrigation, and far less than dairy, almond, cashew, or coconut milk.

Plant-based food company Miyoko’s recently announced their intent to work with a California farmer to convert land from dairy to plants that would enable development of nondairy cheese and butter. The idea behind this, claims Miyoko, is that plant-based products are “better for the environment, producing 98% less greenhouse gases than dairy.”

Given what we know is (only) in our own pipeline, we predict that plant-based food growth will continue exponentially in 2020.

High Demand for High Tech Ingredients

At Mattson, we formulate with and work for ingredient companies that allow product developers to do amazing, never-before-possible things with food.

As one single example, take the consumer desire for low- and no-sugar natural products that will continue to grow in all categories, as we’re already seeing. To do this well, we need to go beyond the stevia leaf. That’s where food tech comes in.

A sugar reduction-enabling ingredient maker proudly claims, “DouxMatok is a food-tech company,” delivering sweetness more effectively to taste receptors using their proprietary technology. Talk about embracing science.

Amyris is making sweetener from yeast, using fermentation to isolate pure Reb M, the molecule responsible for sweetness in the stevia molecule, which means it has a clean true-sugar taste, without all the leafy baggage.

With all the activity that’s going on in plant-based foods, there is another side to the high tech ingredient business: scarcity. Many of the on-trend proteins are in short supply, like pea powders and textured pea proteins. Mung bean is interesting, but still not quite scaled for broad use. And if you need methylcellulose (used in both meat and plant-based burgers), you’d better have some in stock. The good ones are on backorder.

This means that there’s an opening for new options to the usual plant-based suspects. Mushrooms are coming to the rescue, with companies like MycoTech, Meati Foods, and Ecovative’s Atlast making functional ingredients from both the ‘shroom and the mycelium.

We’re already working with pumpkin seed protein, chickpea protein, quinoa protein, sesame protein, and more. If a commodity contains protein, there’s someone out there isolating it for use in plant-based foods. Sugar reduction and protein are just two of the many areas experiencing an explosion of ingredient innovation.

Meeting In The Middle

The big opportunity for making an impact on the environment and human health through food is not via vegetarians and vegans. It’s to appeal to the great, huddled, meat, pork and chicken-eating masses. Flexitarian behavior is so widespread these days that you can see die-hard, cigar-smoking meat eaters chowing down on an Impossible Whopper. But not only. These same gentlemen will return to meat the next day. It’s this less-than-fully-committed-to-meat behavior that encourages plant-based food makers that this thing can be big.

Yet some products are taking a different approach. Rather than rely on the consumer to go all-in for a plant-based meal, i.e. make a choice between beef or plant-based, they’re offering products that are half-and-half. No tradeoff needed. The mushroom and beef blended burgers at Sonic Drive-in and Monterey Mushroom’s Let’s Blend retail “ground” products are great examples. 

Recent introductions indicate that this concept goes beyond beef, with Live Real Farms’ dairy and almond milk blends. The company that makes Babybel cheese has recently announced their intent to launch a cheese that’s a hybrid of dairy and plant-based. And Perdue Farms has launched a hybrid chicken nugget that’s a blend of chicken and vegetable nutrition. Aidell’s has launched a line of quinoa and chicken blended sausages, in keeping with their legacy as the brand that created the chicken apple sausage.

These products leverage the technology necessary to make plant-based products stable, but incorporate real dairy, chicken, or beef to deliver the flavors and textures consumers crave. Whether these products get hit with claims of being processed or fake has yet to be determined. But given that plant-based ingredients are in such short supply, this may be the only way new players can enter the market in the near future.

Seamless Stores, Curated Experiences

In Seattle, Chicago, San Francisco, and New York, app-enabled Amazon Go stores are scattered across the city. This cashier-less concept from the world’s biggest retailer uses technology to allow consumers to get in and out with almost zero hassle. For sale are traditional convenience-store foods, like bars and bottled beverages, but also fresh food and meal kits to take home to cook for dinner.

My experience of Amazon’s tech is that it’s less than perfect: they either bill me for something I didn’t buy, or more often, don’t bill for something I did. But they’ve convinced me that this represents the future of retailing. Versus the painful process of self-checkout at my local Safeway, I’d rather be billed for an errant Clif bar. 

Colorado’s 2500 square foot Choice Market is highly edited to focus on better-for-you and local products in a typical convenience store format. Their fresh Root Vegetable Curry and Spaghetti Squash with Impossible Meatball bowls sell alongside beet chips and grass-fed beef jerky. The Goods Mart is another modern c-store concept that’s “curated over 300 mission‑driven products that …are… delicious, but also better for you and the environment.”

As center store shelf-stable product purchases migrate online, you’ll see stores shrinking at the core. European retailer Aldi is also experimenting with smaller “Local” stores, selling about 1500 SKUs versus the 1800+ norm. And giant Walmart has experimented with multiple small formats over the years. This year, we anticipate more smaller retail formats from both new and old retailers, with a focus on fresh grab-and-go foods.

And if the big retailers don’t figure out how to better automate or streamline their checkout process, you can bet the growth of purchases made online will increase beyond the average 45%+ per year (for the past 3) reported by Nielsen.

Already growing “third party restaurant delivery services” such as DoorDash and Uber Eats will continue to source more and more volume from traditional retailers, as consumers choose to skip the hassle of shopping and instead order dinner from their favorite restaurant. It couldn’t be simpler. Open app. Click. Netflix.

Plant-Based, Phase Two

There’s no doubt 2019 was the Year of The Plant Based Burger. A dozen or so indulgent burgers were introduced from brands such as Nestle, Lightlife, Don Lee, and more. And the early category-creating brands Impossible and Beyond began infiltrating fast-food menus, where true edible indulgence lives: high-fat, high-salt burgers in minutes for a few dollars.

But 2019 was also the year of plant-based ice cream, plant-based cheese, and plant-based sausages: indulgent food forms made slightly more permissible with their environmentally-focused, better-for-you angle.

Trying to change food behavior requires a solid strategy. And Impossible and Beyond nailed it with aggressive marketing of highly palatable food to meat-eaters, while holding their arms open to flexitarians and vegetarians. In other words, everyone. This is what was needed to get people to pay attention, try the food, and give the brands a foothold.

But what’s the strategy now? People can’t and shouldn’t eat nothing but burgers at mealtime. Even Impossible and Beyond understand this. In the long run, we’ll surely see more launches from these companies that go way beyond plantdulgent.

2019 was the year that KFC tested (and sold out!) plant-based fried chicken, and the fasting-growing segment in the restaurant industry was chicken chains. Given the chicken sandwich craze driven by Chick-fil-a, but mastered by Popeye’s, I’m predicting a slew of follow-up “crispy chick’n filets” for sandwiches from Impossible, Beyond, and everyone else in the space. Whoever gets there first and best will win big.

Lil’ gourmets highly-seasoned vegetable-forward purees

Plant-Based Eaters in Training: The New Baby Food

Years ago, baby food was pureed until smooth, sweetened with sugar, and canned/retorted within an inch of its life until sterilized. The Boomer, Gen X, and Millennials babies that ate this food will be the last generations to have fed their kids–or been fed–this way.

Research has proven that babies who experience spices and vegetables in utero, via breast-feeding, or as toddlers grow up to be more accepting of those flavors as adults. So, it makes sense that this new crop of brands is offering busy parents a convenient way to expose their kids to them. Gen Z will be using new brands that focus on feeding kids wholesome food that’s developed and seasoned to train their palates for the future.   

Lil’ Gourmets’ Sweet Potato Curry, Moroccan Butter Squash, and Coconut Cauliflower purees are organic and sold refrigerated, to deliver the taste of real, adult-seasoned vegetables to babies and toddlers. The idea is that these kids will grow up eating vegetables and global flavors, training them for future healthy eating habits.

For slightly older kids, Nom Noms World Food sells frozen meals “inspired by healthy, exotic world flavours. Designed for convenience.” With flavors like Morrocan Veggie Tagine and South Indian Keralan Fish Thali, the interactive packaging tells a story meant to engage the whole family, while exposing kids to global flavors, driven by vegetables and pulses.

Cerebelly makes pouched baby food that focuses on delivering micronutrients that are important to development, like iron, vitamin E, folate, zinc, and selenium through natural food sources such as fruits, vegetables, and seeds, fortified with nutrients derived from natural sources. Their 9-question quiz allows parents to input their kids’ information for a more personalized feeding plan.

If personalized nutrition is the food industry’s holy grail (and it is), then this is a great place to start: with babies who can’t make their own personal food decisions.

Dropwater’s compostable, vending machine- dispensed water bottle.

Water 3.0

In 2019, San Francisco International Airport banned the sale of water in plastic bottles. Consider this a shot across the bow, America. While there’s been talk of single use plastic (SUP) bans across Europe, there hasn’t been as much talk of it here. With this very public ban, though, others can’t be far behind.

Lest we forget, bottled water in the US really didn’t amount to much until Pepsico launched Aquafina bottled water in 1994. Coke followed with Dasani in 1999.

In 2019, Water 2.0 hit with Pepsico’s move into canned sparkling water with Bubly, previously dominated by LaCroix. Water 2.0 was about making products that walked and talked like carbonated soft drinks, with flavor and bubbles, minus calories, sweetness, and much-maligned sugar.    

Water 3.0 companies like Drop Water are changing the dynamic on when and how bottled water is dispensed. Their vending machines dispense compostable bottles “not made to last” that are filled after the purchase is made.

Bevi targets office environments with a vending machine that dispenses still or sparkling water, with or without sweetness, with or without flavor. Part of their pitch is the sheer pain—literally—of moving cases of water and sodas around, and disposing of the solid waste.

RTD water isn’t going away, it’s just not going to come in plastic. In fact, you can still buy water in glass or cans at SFO. But why would you with 100 “hydration stations” across the airport for fill-ups? 

Or simply push, bend, and sip from the fountain, like we used to.

CBD’s Foggy Future

If 2019 was the year of frothy breathlessness over CBD (aka cannabidiol, the non-inebriating part of the cannabis plant), 2020 may be the year of CBD retraction.

Much of the promise of CBD sparking a revolution in food and beverage has been hushed by the Food and Drug Administration’s federal warning letter to consumers, stating in no uncertain terms that (1) CBD has the potential to harm you, and harm can happen even before you become aware of it. … (2) CBD can cause side effects that you might notice… and (3) There are many important aspects about CBD that we just don’t know, such as: What happens if you take CBD daily for sustained periods of time?

The Thanksgiving, 2019 warnings went on to specify potential harm such as liver injury, drug interactions, and “male reproductive toxicity” (!).

Regarding F&B companies, many of which thought the safe path to market was simply to label and market their products as dietary supplements, the warnings are potentially fatal to their business. FDA stated, again in clear-as-day terminology, that, “…some products on the market … add CBD to a food or label CBD as a dietary supplement. Under federal law, it is illegal to market CBD this way.”

Then FDA put their money where their mouth is. Until November, companies operating in the CBD space didn’t worry much, since federal enforcement was almost non-existent. But FDA’s memo was issued alongside a laundry list of warning letters to CBD companies, many of them invoking the now-very-clear prohibition of marketing CBD products as dietary supplements.

On January 14, 2020, US Representative Collin Peterson, Chair of the House Agriculture Committee, introduced a bill that would overturn this prohibition by allowing hemp-derived CBD to be marketed as a dietary supplement. This would right the ship for existing CBD products, and open up the market for new ones.

While we at Mattson believe CBD has therapeutic benefits that should be available at a federally-regulated dose, we are sitting it out for now. Our own state of California (the largest cannabis market in the world) tried to push a bill through in 2019 to regulate and make legal adding CBD to foods and beverage. That, unfortunately, died like a lit and left behind cannabis pre-roll.