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Where business meets opportunity | Consumer trends

KnowledgeInsider

Summer 2009 ed

50ears ans959-2009

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The great illusion of the marketplace is asimple one: That it is supply based . . . that

if you build it they will come. The great reality

of the marketplace is simpler still: Nobody who

produces is in control. Nobody who

sells is in control . . . The great reality of

the marketplace is that it is demand-based.

Customers own it lock, stock, and barrel.

Jim Taylor and Watts Wacker, The 500-Year Delta1


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Table of contents

We dont all have the same choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4I t s t a r t s w i t h t h e c o n s u m e r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Fads versus trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Drivers impact trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4What drives food choices? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5The impact on agriculture and agri-food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Consumer trends and business innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

3 | Consumer trends in food markets

7 | The shifting landscape of food consumption

19 | Drivers and trends in food consumption

Food markets are changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Consumers are changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Consumer as CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Consumer as lobbyist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Consumer as product authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Consumer as individual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Consumer as engaged participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Food is changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13The regulatory environment is changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Can you have influence? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Whos influencing regulatory change? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

External marketplace drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Information push . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Policies and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Vast variety of food options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Consumer drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 I want to be healthy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 I want it my way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 I want foods produced in safe, sustainable ways . . . . . . . . . . . . . . . . . . . . . .30

32 | Final thoughts

33 | Tips, tools and strategies

Business insight

from FCCMake better decisionswith better information.Use Knowledge Insiderto help track global shiftsand industry trends.For more knowledge thatyou can use to plan forsuccess in your business,visit www.fcc.ca/learning.

Farm Credit Canadais proud topresent Knowledge Insider, a semi-annual publication offering thought-provoking information to producersand other agriculture entrepreneurs.

Trendsdescribed in this documentare supported with facts and figuresandexamined in thecontext ofwhatson thehorizonfor Canadianagriculture.

Please direct questions andcomments to FCCs CustomerService Centre at 1-888-332-3301or email [email protected].

Knowledge Insider is produced byStrategic Intelligence at FCC.

Our special thanks for contributionsfrom allof our FCCpartners andindustry experts who generouslycontributed their time, talent andknowledge to the creationof thisdocument.

This report presents forward-looking statements and is intended

for educational and generalreference purposes only. Theauthors have attempted to provideuseful information and analysis.However, FCC does not guaranteeaccuracy or necessarily share theviews of authors. Links to otherwebsites are offered as referenceto the readers of this report, basedon the information provided. Thereport is not intended to be usedas a substitute for professionaladvice.

2009, Farm Credit Canada

All rights reserved. No part of thispublication may be reproduced,stored in a retrieval system, ortransmitted, in any form or by anymeans, without the prior writtenpermission of Farm Credit Canada.

Cette publication est galement

offerte en franais.


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ShoppinglistLetssee,Ineed:

mushrooms: Whatkind?Canned,driedorfresh?

onions: Sevenvarietiestochoosefrom.

greenpepper:Atleasttheresonlyonetypeof

greenpepperbutdoIwantorganic?

Pasta:

spaghettinoodles:Whatisdurumsemolinaanyway?

Whataboutwholewheat,ricenoodlesorcornnoodles?

Glutenfree?Extrafibre?Theyrealldifferentprices.

Somearedifferentsizes.HowcanIcomparethem?

Ah-ha,heresonethatsomega-enriched.cookingoil:WhatisitIvereadaboutlinoleicacid

levels?ItssaturatedfatthatIshouldavoid,isntit?

Ithoughtoliveoilwasbest,butwhataboutthis

blendofflax,oliveandcanola?Andarecold-

pressedoilsforcookingorforsalads?Meat:

groundbeef: Regular,leanorextralean?ShouldI

trygroundturkey?Whataboutgroundsoyproduct?

MaybeIlljustorderintonight.


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Whether you produce, process, distribute or sellfood products, the success of your businessdepends on knowing what products consumers willbuy and which ones they wont. This edition ofKnowledge Insider explores consumer trends in

food markets.

The marketplace is quickly changing. Worldpopulations are growing and aging. Wealth isshifting between developed and developingeconomies. World leaders are questioning theability of global food systems to feed growingpopulations and meet changing consumerdemands.

The Internet and the media have increasedconsumer awareness of issues such as domesticfood security, food safety and traceability.

Consumers can see what people are eating aroundthe world and expect grocery shelves stocked withaffordable food that is convenient, tastes good, andkeeps our bodies and the planet healthy.

To meet consumer demands, scientists are helpingto make food more nutritious, plentiful and

flavourful. Consumers in developed countries haveseemingly endless choice, from low fat to organic,ready-to-eat to omega-enriched. Even salt comeswith less salt!

The future will bring even more innovation. Frombiodegradable packaging and cell phones that scanlabels for nutrient information to food customizedto match personal genetic coding, food productionis evolving to meet the changing needs ofconsumers and the planet.

About 80 per cent of new food products fail in thefirst year. Annual consumer trend forecasts areavailable at the click of a mouse. How do you knowwhich trends will stick and what is right for yourbusiness? Monitoring and understanding whatdrives long-term trends can guide your strategic

planning.Businesses in agriculture and agri-food are puttingconsumer trends on their agendas. As you readthrough this edition of Knowledge Insider, look foropportunities for your business to adapt toconsumer trends in food consumption.

Consumer trendsin food markets


Objective:Develop corporate strategic plan to increase market share of innovative food products.

Discussion items:1. Existing markets: low population growth in North America and Europe;

niche market opportunities for ethnic and organic foods2. Market development: South Africa, China, India and Argentina3. Corporate image and reputation: review awareness, trust and reputation in media4. Marketing: viral marketing and harvesting blogs5. Future opportunities: new product lines

Management team

Re: Discussion items

Re: Discussion itemsRe: Discussion items


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| Consumer trends

We dont all have the same choices

The topic of food is close to us all, yet noteveryone in the world has enough to eat, letalone an overwhelming choice in food products.Over one billion people worldwide live inpoverty and many do not know where their nextmeal will come from. Innovators who can findways to meet nutritional needs in an affordableway can have a positive impact on peoples lives.

Innovations can offer solutions. Nestl hasworked in partnership with farmers in India for45 years. Their Milk District Model finds cost-effective ways to secure plentiful supplies of

fresh milk. Other companies, like Unilever, areextending credit to this massive market anddeveloping customized goods to meet theirneeds. Could you develop relationships todayto build markets in emerging economies oftomorrow?

This edition of Knowledge Insider focuses ontrends in developing and developed countries.

It starts with the consumer

Its not just retailers who need to pay attention toconsumers. All players in food value chains can

use consumer trend information to deliver theright products at the right time.

Monitoring and understanding consumer trendsand their drivers can help guide innovation,increase efficiencies and prepare your businessfor changes in consumer purchasing habits.

Fads versus trends

A trend is evidence that a pattern of repeatedbehaviour has emerged. A fad is a situation thatrises rapidly and then quickly disappears. Do youremember purple ketchup?

Theres risk in entering new markets or creatingnew products based on emerging consumertrends. Martin Gooch of the George Morris Centrecompares the uncertainty to penguins ready tojump into the ocean. Will you be the first penguin

to take the plunge and risk being eaten, or will you

jump too late, after all the fish have been eaten?Are you a trendsetter, or do you prefer to try newmarkets during the growth or maturity stage?What information do you need to make thedecisions that are right for your business?Start by understanding whats driving trends.

Drivers impact trends

What motivates a consumer to purchase one foodor beverage product over another?

Decisions are based on the interplay betweenexternal and individual drivers.

Figure 1 shows four possible drivers that were atplay when a consumer decided to purchaseomega-enriched, ready-to-pour eggs in a carton.

Ideally, every player in the value chain monitorstrends on their own and then communicates withtheir partners to identify opportunities for newor value-added products.

External marketplace drivers

Saw

egg

indu

stry

commerica

lonTV

Readhealth

claimonproductlabel

Wantsherfam

ily

toeat

healthy,convenient

foo

ds Prefers

enrich

ed

foods

over

taki

ng

supple

men

ts

Consumer buys Omega-enriched, ready-to-pour

eggs in a carton

Consumer drivers

Figure 1: Drivers impact trends


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What drives food choices?

Income level is the biggest driver of food choice.Other factors like convenience, quality andvariety also drive consumer purchases.

The average U.S. supermarket offers 45,000products. Add health claims on labels and newtypes of enriched foods and its no surprise thatsome consumers wonder what to buy. Some wantgreen products and others expect traceable foodsupply chains. Many want to be confident thattheir food is safe and virtually all want it to tastegood.

How could you learn more about what motivatesyour customers and adjust your products to meettheir demands? Consider whether your pricingstructure reflects consumers price sensitivity.Assess which products your customers will pay apremium for.

The impact on agriculture and agri-foodLets look at how two Canadian industryorganizations are using trend analysis.

Pulse Canadas Pulse Innovation Project has

studied the link between pulse consumption andhealth since 2005. They are exploring how to turnan inexpensive protein source into value-addedproducts like pulse-enriched pastas and breads.

The Canola Councils Growing Great 2015campaign highlights canolas healthy properties.

Both organizations are linking their product healthattributes to consumer priorities (like weightcontrol and diabetes) to drive innovation andindustry growth. How are marketing agencies andindustry organizations in your value chains usingconsumer trends, and what could you do toinfluence their direction?

Consumer trends and businessinnovation

Successful producers and agribusinesses useconsumer trends to guide their decision making.Whether you watch trends on your own, employprofessional marketing staff or contract with anexternal firm, we believe that monitoring trends isonly the first step to success. You know yourproducts and your business. How could you learnmore about what consumers will want in the future

and understand whats driving these trends toinform your business decisions? To find out more,check out Trend Watching 101 in the Tips and Tools.

Did you know?

Prince Edward Islands Sensor Wireless Inc.knows that consumers want fruits andvegetables that are fresh and look good. Theysell customized, wireless, potato-shapedsensors that travel alongside potatoes onproduction lines. The Smart Spud uses radio-frequency identification technology (RFID) todetect how harvesters, windrowers, graders orprocessing equipment are bruising or damagingpotatoes.

Eating for the experience

Eating for survival

Staple foods

Meat

Eggs, dairy

Packagedfoods

Luxuryfoods

Income


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The shifting landscapeof food consumption

The world is changing quickly and so are foodmarkets. The role of consumers is changing, scienceis changing food, and a new regulatory environmentis being defined. What do you need to know aboutthese changes to get ready for the future?

Food markets are changing

Many factors point to changes in food markets.Canadian food-spending is among the lowest inthe developed world and has been decreasingproportionately for the past 40 years. Worldpopulations are growing and affluence is shiftingamong countries. Despite the impact of recentglobal economic events, many experts believe thatChina will be the worlds largest economy withinthe next three decades.

Figure 2 shows projections of world populationgrowth. Unlike the European Union and NorthAmerica, developing countries and Asian andAfrican countries will see massive growth. Growingmiddle classes in developing countries will

consume more protein and processed foods. Whilegrowth is somewhat stagnant in Canada, the U.S.and Europe, populations are becoming moreethnically diverse. Some markets are aging rapidlyand others have many youth.

Understanding how food markets are changing canhelp you produce the right foods for your targetmarkets and help you take steps today to serve themarkets of tomorrow.


Figure 2: World population From yesterday to tomorrow (millions)

U.S.1997-99 2015

277.5 321.2 358.5 397.1

2030 2050

Canada

1997-99 2015

30.2 34.4 37.7 40.4

2030 2050

Latin America

and the Caribbean1997-99 2015

498.2 624.2 716.7 798.8

2030 2050

European Union1997-99 2015

375.5 376.8 367.5 339.5

2030 2050East Asia1997-99 2015

1,839.82,128.4 2,302.8 2,365.0

2030 2050

South Asia1997-99 2015

1,282.9 1,672.0 1,969.5 2,258.0

2030 2050

Near Eastand North Africa1997-99 2015

377.5 520.0 651.3 809.3

2030 2050

Industrial countries1997-99 2015

892.4 950.7 978.5 985.7

2030 2050

Transition countries1997-99 2015

413.2 397.9 381.4 349.0

2030 2050

Developing countries1997-99 2015

4,572.6 5,827.3 6,869.1 7,935.3

2030 2050

Source: Conference Board of Canada


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Population growth in North America has slowed.Population in the European Union is projected todecrease. How can you grow market share where

population growth is slow or in decline?Consider niche products for ethnic markets. Value-added, processed foods for busy families may beanother opportunity. Aging consumers want moreproducts that promote longevity and have smallerportion sizes. Mass markets seek lower prices orincreased value in times of recession.

Global food consumption is changing. Wealthierconsumers will want more meat and protein in

their diets and a wider variety of products that offerconvenience and health benefits.

Monitoring trends in demographics, foodconsumption and world markets can offer insightsthat will help you make business decisions today sothat you can be ready for tomorrow.

Trends that have taken hold in developed countriesmay emerge next in developing countries. TheEuropean Union and Japan are widely regardedas trendsetters for food markets.

| Consumer trends

Figure 3: Global food consumption by category (kg/person/year)

Cereals PulsesVegetable oilsand oilseeds

Meat

200

180

160

140

120

100

80

60

4020

0

Milk and dairy

East Asian vegetable oil and oilseedconsumption (kg/person/year)

2018161412

1086420

Latin American and Caribbean meatconsumption (kg/person/year)

120100807060

5040302010

0

1979-1981 1997-1999 2015 2030

Source: Food and Agriculture Organization of the United Nations


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0 | Consumer trends

Figure 4: Fastest-growing food categories by region

Understanding where Canadian products arecurrently exported can also help you identifypossible future markets. Figure 5 illustrates thediverse range of products that are currentlyexported. How will this picture change in 15 years?

Check out our Winter 2008 edition,KnowledgeInsider: Imagine if your market was global, to learn

more about shifts in global wealth and what theymean for Canadian agriculture. Where could yourfuture food markets be? Explore opportunities tocapitalize on the trend toward value-added exportsand think about your opportunities to combineimported and domestic ingredients in new foodproducts.

Source: http://ca.neilsen.com/site/documents/2008WhatsHotinFoodandBeveragesFINAL.pdf*EEMEA Eastern Europe, Middle East, Africa

NorthAmerica

Categorygrowth rate

AsiaPacificCategory

growth rate

EEMEA*Category

growth rate

LatinAmerica

Categorygrowth rate

Soup frozen

25%

Energy/sports drinks

24%

Fruit frozen

15%

Fruit/vegetablejuice frozen

13%

Eggs

12%


52%

Eggs

28%

Ready-to-drinkdrinks

20%

Dairy/dairysubstitute drinks

11%

Water

10%

Herbs/spices

33%

Cooking fats/oils

29%

Mixed fruit/nuts/seeds

28%

Probioticdrinks

28%

Chips/crisps(vegetable based)

25%

Chips/crisps(cereal-based)

137%


66%


58%

Fruit/herbalinfusions

45%

Dips

42%


75%

Bite-sizefresh food

33%

Vegetables frozen

33%

Butter/buttersubstitutes

32%

Sweetspreads

29%

EuropeCategory

growth rate


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Figure 5: Top exports for Canadian agri-food

1

3

5

6

4

9

10 8

2

7

1. U.S.1. Fresh boneless beef2. Frozen fries3. Bread, pastry, cakes, biscuits4. Food preparations

9. Japan1. Canola seeds2. Frozen pork

3. Fresh pork4. Non-durum wheat5. Soybeans

2. European Union1. Non-durum wheat2. Durum wheat3. Soybeans4. Flax seed5. Lentils: dried, shelled

3. Mexico1. Canola seeds2. Non-durum wheat3. Fresh boneless beef

4. China1. Canola seeds2. Canola oil3. Barley4. Peas: dried, shelled

8. Indonesia1. Non-durum wheat2. Malt extract

3. Frozen fries4. Peas: dried, shelled5. Durum wheat* Canada is Indonesias top

supplier of non-durum wheat

5. Hong Kong1. Ginseng roots2. Frozen boneless beef3. Canola oil

7. Pakistan1. Canola seed, low eracic acid2. Non-durum wheat3. Canola seed, other than

low eracic acid4. Chick peas: dried, shelled

1. Algeria1. Durum wheat

2. Lentils: dried, shelled3. Chickpeas: dried, shelled4. Peas: dried, shelled

* Canada is Algerias topsupplier of non-durum wheat

6. Saudi Arabia1. Barley2. Frozen fries3. Ice cream4. Peanut butter5. Specialty cheese

1

2

3

4

5

6

7

8

9

10


Source: Agriculture and Agri-Food Canada


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2 | Consumer trends

Consumers are changing

Values around the world are converging. A betterinformed and more influential global consumer isemerging. Many global consumers are concernedwith health and environmental sustainability. Theywant customized products, quick, convenientservice, and local and international food choices.They have high expectations of the food system andneed help figuring out what to eat.

Many of your future customers are already wiredwith technology. In Europe and the U.S., SprintNextel launched MyFoodPhone, a new mobilephone that helps consumers monitor their dailyfood choices, consult with professionals andnetwork with a community of like-minded people.What could be next? Refrigerators that track

consumption and caloric intake? Shopping cartsthat calculate nutritional value or rate productchoices? Hand-held monitors that analyze dailyfood intake based on personalized eating habits?Future consumers may access and choose foodusing different values and systems than we usetoday.

The individual in the household who preparesmeals may no longer be your target customer.

The graphic shows different generations withpurchasing power. A 2005 study shows that $18billion US in annual household spending is

influenced by 3 11-year-olds.2 Their oldersiblings, the Millennials, are active consumersand prefer peer-recommended products.Dr. John Kelly of the University of Guelph says that75 per cent of U.S. wealth is held by woofs well-off, older folks.3 Whatever their age ordemographic profile, consumers are taking onnew roles. Here are a few to consider.

Consumer as CEO

Communication is global, corporations are losinginfluence in the public arena and someresearchers believe that consumers will gain CEO-like powers. Whether speaking for themselves or

represented by large corporations that gatherconsumer purchase data, the voice of consumers isnow heard more widely. Some companiesrecognize that customers want to hear from eachother, not from a corporation. They offercustomer-to-customer forums, engage loyalcustomers in marketing campaigns, and featureaverage people in product ads. Just likecorporations, customers are looking to extract thegreatest value from markets.

Consumer as lobbyist

Today, word of mouth travels faster than newproducts can get on shelves. The Internet andsocial networking have made it easier forcommunities of like-minded people to bypassgeography and voice collective concerns. The effectof consumer lobbying in agriculture is evidentthrough tighter quality control and traceability

Did you know?

In a U.S. study, 80 per cent of consumers saidtheir purchase decisions are directly influenced

by online reviews. More than half of consumerspurchasing electronics have read customerreviews and up to 90 per cent of people trustword-of-mouth suggestions.

Baby boomers Generation X Generation Y Millennials Generation Z

1940 1950 1960 1970 1980 1990 2000 2010

Did you know?

In 2004, U.S. consumers, recognized for theirobsession with body image and diet, spentnearly half of their food dollars on meals andsnacks away from home.


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measures in the meat industry. McDonalds

influenced changes to animal husbandry in theirsupply chains and changed their packaging inresponse to consumer lobbying efforts. Campbellshas voluntarily lowered salt and fat in product linessold in schools. Can you anticipate consumerconcerns and turn lobbyists into spokespeople?Will you be ready if your company comes underincreased public scrutiny?

Consumer as product authority

Your customer may know as much about yourproducts as you do. In some cases, customers maybe your best salespeople. Customer testimonials

can influence others to buy your products.

Viral marketing and social networking areredefining the world of customer influence. TheZagat hotel and restaurant guide highlights theopinions of diners and hotel patrons, not expertreviewers. This trend is already strong in the film,theatre, music and book industries. Restaurantsand foods are following suit.

Collaborative filtering software allows consumersto view millions of customer reviews online. In2008, Google had a patent pending on technology

to rank the most influential people on socialnetworking sites like MySpace and Facebook. Thetechnology could rate how successful someone is ininfluencing friends to read a news story or watch avideo clip. Can your customers help you developyour reputation and influence product sales?

Consumer as individual

Many people want to stand out in a crowd. Someconsumers define themselves through theirpurchases. From personal doodles on credit cardsto customized cell phones, the trend towardpersonalization is strong in many industries. Time

magazine recognized this trend and declared youas the person of the year in 2006. Nutritionalboosters offering benefits like a brain boost or anenergy fix are increasingly popular with juiceoutlets and health product lines. What Canadianagriculture products could be the next healthyenergy boost? By understanding what consumers

want next, you could respond to the increasing

demand for customized, individualized products.

Consumer as engaged participant

Some food retailers engage customers in theirbusiness. The personal values of Whole FoodsMarkets committed customers mirror theircorporate values. Whole Foods customers trust thatthe companys entire value chain offers healthyfoods that are sustainably produced and theyrewilling to pay a premium for their products.Engaged customers often provide word of mouthreferrals. In an era where customer and brandloyalty is fading, engaged consumers may help to

sustain your business.

Food is changing

Scientific advances in plant breeding and animalhusbandry are adding functional attributes tocommon foods and untapping nutraceutical

attributes in long-standing varieties. The push andpull of science responds to and prepares for futureconsumer needs. Innovations in food technologyoffer improved food safety. Inland, urban fishfarms are supplying delicacy fish to growingpopulations and scientists are experimenting withgrowing in vitro meat in laboratories.4

Making it work

The Farm House Natural Cheeses

Life is about relationships, dont forget that.Debra Amrein-Boyes took her fathers words toheart and into her cheese business in Agassiz,British Columbia. In addition to the on-farm retailshop, events like cheese-making workshops andBrunch on the Farm provide an experience forcustomers, and at the same time build brandawareness and customer loyalty. Hundreds ofcycling enthusiasts came out for a Slow Food

Bike Tour hosted by Slow Food Vancouver,visiting the farm and sampling the cheeses andother local farm products. A spin-off benefit ofcustomer and community involvement is thatFarm House is often featured in the media,making promotion a breeze.

www.farmhousecheeses.com



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4 | Consumer trends

Biotechnology and food science offer solutions in

mold resistance, disease and bio-safety. This canincrease yield, reduce input requirements andimprove flavour. Golden rice, a nutrient-densestaple crop, is one example of how geneticengineering combats malnutrition in developingcountries.

Science is improving what we know about personaleating habits and teaching us how to eat foroptimal health. Were learning more about thecomponent parts of food, pulling them apart andreassembling them into value-added products.Were also learning more about human genes. Inthe future, we should be able to customize dietsbased on health-related needs like diabetes orceliac disease or tailor a diet to individualgenomic coding.5

The regulatory environment is changing

Theres a shift in how we regulate and monitorfood production. Canadians want food to be safeand they expect governments and industry to betransparent, accountable and quick to act on foodsafety risks. Canadas food safety measures arealigned with Health Canada and the Canadian FoodInspection Agency (CFIA), and must respectinternational trade obligations. Our commitmentto food safety could open doors to internationalmarkets.

Government and industry leaders recognize theneed to improve standards to ensure a secureglobal food system. The emerging regulatoryframework is based on a combination of country-specific initiatives and harmonized agreements.Over 27 countries in the European Union (EU) andthe ASEAN 10 (which includes 10 Southeast Asiannations) have defined a common framework. Theframeworks function within the broad umbrella ofthe World Health Organization (WHO) and Food

and Agriculture Organization (FAO) of the UnitedNations. Factors addressed include health claims,classification of foods and supplements, labelling,additives, safety and Good Manufacturing Practice(GMP). Codex Alimentarius, which protectsconsumer health and ensures fair practices in foodtrade, works in conjunction with WHO/FAO toincrease pressure for harmonization.

Can you have influence?

You may see tighter food regulations as a barrier toefficiency or you might see value in the ability todifferentiate Canadian products on the basis ofquality and high standards. Whatever you believe,

the regulatory environment is changing. The callfor tighter regulations comes from many players.Producers, manufacturers, shareholders,regulatory bodies, non-governmentalorganizations (NGOs), government andcorporations are all seeking secure, sustainablefood systems. New Product of Canadagovernment regulations are based on opinionssolicited by government from 1,500 consumers,farmers, manufacturers, processors, distributorsand retailers. Demand for safe food and a moresecure food system is growing. Most consumerswant to read and understand nutritional

information on labels and websites, and trust thatthey are accurate.

Some government and non-government groupsare ready to support consumers seeking a morecontrolled system, better traceability or moretransparency. One hundred U.S. scientists sent apetition to the Food and Drug Administration(FDA) demanding tighter regulation of energydrinks. Australian politicians are looking at

Did you know?

Taiyo Kagaku Co. Ltd in Japan has developeda super-dispersion technology to isolatenutraceuticals from hen eggs, making theparticles smaller and more soluble andimproving the bioavailability for humandigestion.

Did you know?A study by the Guelph Food Technology Centreshowed that 75 per cent of consumers areconcerned or very concerned about food safety.

Did you know?

More than 60 per cent of the world faces newregulation of dietary supplements, based largelyon FAO/WHO guidelines and GMPs.


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Changing our food and what we wrap it in

Scientists at the U.S. Department of Agriculture havedeveloped a composite food packaging film madefrom pectin, polylactic acids and nisin that can inhibitthe growth of listeria monocytogenes. And, it can bemade from renewable resources!

A new biodegradable plastic, Ecoflex, is certified bythe North American Biodegradable Products Institute.

It can be used in bags and packaging and remainsshelf stable for one year before decomposing intocompost within a few weeks. The U.S. Army is testinga new food wrap, Toxin Alert, that identifies when afood has gone bad. When food starts aging,antibodies in the wrap attack pathogens and anX-shaped stamp shows up on the wrap.6


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What will the new world look like? Are we moving from:

Production-centric thinking to Consumption-centric thinking?

If we produce it, they will buy it to Find out what they want and produce it?

Government regulations to Self-regulation/certification?

Mass consumption to Mass customization?

Disjointed supply chains to Deeply integrated supply chains?

Profit-driven business to Sustainability-driven business?


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regulating the sale of energy drinks to minors.7

Consumer watchdog groups monitor regulationsand standards in the food industry.

In the U.S., ConsumerLab conducts independenttesting of food products in a laboratory

environment to substantiate health claims.Consumers and health-care professionals regularlyrefer to their website. In Canada, groups like KGKSynergize conduct clinical research for companies

developing nutraceutical and functional food

products, and the Centre for Science in the PublicInterest publishes the results of independenttesting in their Nutrition Action health letter.

Will you be ready when we reach the tipping pointwhere consumers demand more reliable,consistent information about where and how foodsare being produced?

Whos influencing regulatory change?

While world leaders work to create a new globalregulatory environment, some groups are alreadytaking action to meet consumer needs. Some large

retailers use their influence to set standards andexpectations further down the value chain. TheMaine lobster industry is seeking certification as asustainable fishery because Wal-Mart will onlysource from certified fisheries after 2011. TheStewardship Index for Specialty Crops is a greencoalition dedicated to tightening controls andstandards around sustainability and health. Thecoalition includes Wal-Mart, Sysco, the World

Wildlife Fund, the Environmental Defense Fund

and others. Theyre building sustainability into thesupply chain for growing, distributing andmarketing specialty crops like fruits, nuts,vegetables and horticultural crops. This foodindustry powerhouse will address such issues asemployment practices, pesticide use, greenhouse

gas emissions and impacts on soil and water. Willyou work with your value chains to get ready fortighter standards?

Did you know?Ontarios OnTrace and ATQ (Agri-TracabilitQuebec) signed an agreement in September2008 to facilitate intraprovincial informationexchange. For more information, go towww.ontraceagrifood.com.

Did you know?

The source of the health claim can impactconsumer reaction. Most consumers preferhealth claims to come from government, ratherthan industry or private companies.

Did you know?

The Food Industry Centre at the Universityof Minnesota has an online diagnostic toolto benchmark best practices in food safety.Do you export to the U.S.? How does youroperation rate?

http://webapps.cfans.umn.edu/TFIC/Main/index.html

Making it work

Flanagan Foodservice

Food distribution companies dont sell to enduse consumers, so why would they watch

consumer trends? Ask Dan Flanagan. Presidentof Flanagan Foodservice, he has monitoredconsumer trends in food markets for 31 years.Dans customers are school cafeterias,restaurants and long-term care facilities, butthat doesnt stop him from looking further upthe value chain. He understands that consumerdemand drives food sales and works closelywith his customers to meet their customersneeds. From addressing food safety concernsby becoming one of the first HACCP (HazardAnalysis Critical Control Point) certifiedwarehouses to demanding traceability fromproduce suppliers, consumer trends influenceDans business decisions. He attends

conferences and trade shows, scansnewsletters from food organizations, activelyparticipates in trade associations and watchesfor hot topics in the media. For Flanagan, beingin the middle of a food value chain meansworking closely with partners upstream anddownstream, and always remembering that theconsumer is at the wheel.

www.flanagan.ca



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Consumers are influenced by external andinternal drivers every time they purchase a foodproduct. As mentioned earlier, income is thebiggest driver of food purchases. Price should bea central consideration for all businesses.

In addition to price, consumers make choicesbased on external drivers like product healthclaims or advertising. They base decisions onindividual needs like taste preferences, dietaryhabits or health concerns.

As you read about the external marketplace

drivers and consumer drivers in Figure 6, thinkabout which ones are relevant to your productsand where your opportunities lie.

Drivers and trendsin food consumption



Consumer drivers

A|

Info

rmatio

n

push

B | Policies andregulations C

|Vastv

ariety

offo

ods

availa

ble

D|Iw

antto

behealth

y

E | I want itmy way

F|I

wantfo

ods

prod

uced

inasafe,

sustainabl

ewa

y

Consumer buysa product

Figure 6: Drivers impact trends


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A. Information push

Consumers are inundated withinformation about food. Whetherreporting on food-borne illness orquestioning the worlds ability to feed

growing populations, the media influencesconsumers. In schools and other public venues,information campaigns suggest what foods to eat oravoid. How can you help consumers make sense ofcompeting and sometimes contradictorymessages?

Helping consumers make sense

Some companies post detailed productinformation to help consumers learn about theirproducts. Atoka Cranberries from Quebec includesproduct and quality information sheets for each

product on their website, citing facts on everythingfrom expected shelf life to ingredients and data

derived from chemical, physical andmicrobiological analysis of each product. In other

cases, the messages are simple. Food author

Michael Pollan coined the expression, Eat food.Not too much. Mostly plants. Minute Maids topgrossing Simply Orange Juice and Simply AppleJuice are just that, simply juice.

According to Datamonitor, 17.6 per cent of U.S.supermarkets are developing nutritional rankinglabels. The NuVal nutritional scoring system in theU.S. makes it easier for consumers to rank aproducts nutritional value. The U.K. FoodStandards Agency uses signpost labels with green,yellow and red stoplight images. Green indicateslow concern while red suggests higher levels ofunhealthy ingredients. Researchers at theUniversity of Washington and Yale University aredeveloping new food ranking systems based onnutrient density or overall nutritional quality8

(see Figure 7).

Some companies use colour to simplify things.Unilevers Eat in Colour Knorr soup campaignfeatures orange, green or yellow soup. Each colourcorresponds with specific health claims, offeringthe simple message that brightly coloured foodsare good for you. Parmalat in Italy features a line ofproducts that offer five colours of health. Juicesfrom Japans Kayome come with a colour wheel tohighlight functional benefits. Quebec-based

Colarme Inc. manufactures natural food colorantsand flavours from beets and red cabbage for use innutraceuticals or candy coatings. Smarties broughtback its blue candies offering functional benefitsby colouring them with blue-green algae.

0 | Consumer trends

BC

D

E

F

A

Did you know?

Forty-five per cent of processed foods launchedin 2008 contained health and nutritionmessaging, compared to 31 per cent in 2002.

Did you know?

Aramark has introduced its Just4You programfor vending, identifying over 150 better-for-youproducts through their vending and schoolprograms.

Did you know?

Beech Nut offers a No Junk Promise on somelabels, making it easier for consumers to trustthat the ingredients are healthy.


Figure 7: A nutritional scoring system

LOWFAT

7.7 g per serving

LOWSATURATES2.0 g per serving

HIGHSUGAR

42.2 g per serving

MEDSALT

2.0 g per serving


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B. Policies and regulations

Most consumers are unaware ofpolicies and regulations within thefood system until a news storyhighlights gaps or concerns. Recent

incidents of food-borne illness have promptedincreased public dialogue about safety regulations.Some companies have already tightened up theirstandards before anticipated regulatory changescome into effect.

To counter problems related to trans fat, Cargilland Dow AgroSciences were producing high omegaor trans-fat free, high-stability canola oil decades

before legislative changes were made. What couldyou do to get ahead of the game?

C. Vast variety of foods options

Innovations in packaging andadvances in food science have createda system where the boundariesappear limitless. Products range from

new varieties of tomatoes, like Bellas from Demersin Quebec to new tomato products like Gouashtomato spreads by La Tomate, packaged in uniquesqueeze tubes. According to the Mintel NewProducts Global Database, nearly 15 times morewhole grain products were introduced worldwidein 2007 than in 2000, representing an increaseof 1,344 per cent. As you develop new productsor rebrand existing ones, how can you stand outin the crowd?

AC

D

E

F

B

Making it work Global Egg Solutions

As President of Global Egg Corporation/EggSolutions, Aaron Kwinter has seen theegg industry weather the ups and downsof high cholesterol concerns and come outon top. As a major player in the eggprocessing industry, Global has beenwatching consumer trends for many years.Food safety was a core value for the

company long before widespread concernsemerged in the public arena. As Canadasfirst HACCP-certified egg processingfacility, Global was ahead of its time. Aaronbelieves this gave them a competitive edgein working with industrial and foodservicecustomers who have come to trustGlobals approach to food safety andstrong corporate values.

www.eggsolutions.com

Making it Work

Woolwich Dairy Inc.

Tony Dutra believes healthy eating has movedfrom a trend to a way of being. As CEO ofWoolwich Dairy Inc., Canadas largest producerof goat cheese products, Tony is growingmarkets in Canada and the U.S. for hisproducts. Tony uses consumer trends to move

goat cheese products from niche markets tomainstream. He reads food magazines, attendsNorth American food shows and travels to theSalon International de lAgroalimentaireInternational (SIAL) in Paris. Woolwichswebsite includes information about its foodsafety certifications and quality assuranceprogram because Dutra understandsconsumers want brands they can trust. Thecompany strategy is to make products thattaste good, are crisp and clean in appearance,and have high production standards.

www.woolwichdairy.com

A

B

D

E

F

C


PhotocourtesyofWoolwichDairy


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2 | Consumer trends

D. I want to be healthy

Health is a leading driver in globalfood markets and a daily topic ofdebate and dialogue. Manyconsumers expect more health

benefits from food products than ever before.Food allergies are common and obesity andcardiovascular disease widespread. Over the pastdecade, the number of overweight people in theworld has often been equal to the number ofundernourished people. It is predicted that by2030, there will be 80 million people in India withtype 2 diabetes. Many consumers are looking fora magic answer that will ensure good health.

Two-thirds of respondents in a 2007 ACNielsenstudy felt that the pressure to look good is muchgreater today than it was for their parentsgeneration. The same study showed that globally,

1.6 billion adults are overweight and 400 millionare obese.9 Health-care systems are stretched tothe limit. The World Health Organization (WHO)links obesity to high blood pressure and type 2diabetes and says that 80 per cent of prematuredeaths can be prevented by factors like a healthy

diet. WHO predicts that 700 million adults will beobese by 2015.10

Related trends were watching:

Healthy oils

Knowledge about the health benefits of oil isgrowing and it looks like your grandmothers dailydose of cod liver oil made sense. At the same time

that trans-fat bans are growing, overall worldconsumption of oils is rising.

In Canada, the export value of fats and oilsincreased 52 per cent in 2007.11 Current trends areshowing a demand for healthy oils that includeessential fatty acids (EFAs).

Researchers are experimenting with healthyreplacements for commonly used oils. Canadascanola and soybean industries are developing oilsto meet specifications of Consumer PackagedGoods food processors and restaurants in Canada.Researchers in South Korea and the U.S. have

found a way to use functional ingredients extractedfrom oats to replace some of the fats traditionallyused in baked goods. Interest in hemp products isgrowing, partly due to their high gamma-linolenicacid content.

Consumer drivers

A

BC

E

FD

Did you know?

New York City, California and Philadelphia havepassed regulations that require calories to belisted on the menus of certain restaurant chains.Their goal is to raise awareness and combatobesity.

Did you know?Since 2000, the health food industry worldwidehas increased by over $US 50 billion.

Figure 8: Per capita consumption of vegetable oils

Near East andNorth Africa

Latin America andCaribbean

South Asia East Asia

25

20

15

10

5

0Industrialcountries

1979-1981 1997-1999 2015

Source: Food and Agriculture Organization of the United Nations


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Essential fatty acids (EFAs) are fatty acids (linolenic,lineolic and oleic) that are necessary for humannutrition and can only be obtained through diet tosupport immune, cardiovascular, reproductive andnervous system function. The body can manufactureomega-9 from oleic acid on its own if the other twoEFAs are present (omega-3 from alpha-linolenic acidand omega-6 from linoleic acid). Chicken, flax, fish oiland many other foods are rich in EFAs.


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Organics, whole foods and superfoods

The trend toward purchasing food reduced insugar, salt, fat or other ingredients has been strongin recent years. Whole foods and superfoods are a

more recent trend, evidenced by the popularity ofthe Whole Foods Market chain. Whole foods havelittle or no processing. Foods like broccoli,almonds and oatmeal are often consideredsuperfoods as they provide multiple health

benefits. Its estimated that whole grain food sales

in the U.S. will reach $7.5 billion by 2009.12

There is debate about the future of organics. Someanalysts dont foresee a rapid rise in organicsbecause of end-user price sensitivity. Othersindicate growth. A Canadian Grocer publicationshowed 28 per cent growth in certified organicfoods from 2005 to 2006 and many large retailersare including organic product lines.

4 | Consumer trends

Making it Work Manitoba Harvest Hemp

Mike Fata no longer weighs 300 pounds. Hecredits hemp products for his successfullifestyle change and weight loss. His story is acornerstone of his marketing campaign forManitoba Harvest Hemp. When asked how theymonitor consumer trends, Mike replied, Wehelped create some of them! As Harvest Hemphas grown, Mike has continued to personallypromote the health benefits of hemp at tradeshows, consumer events and in-storedemonstrations. Mike learns what consumerswant by being on the street with them. Harvest

Hemp has many customer testimonials on theirwebsite and is active on YouTube and MySpace.They send a monthly newsletter to over 5,000readers and will soon be launching a customerblog. For Harvest Hemp, engaging andeducating consumers is the key to success.

www.manitobaharvest.com

Making it Work

ShaSha Bakeries

As business owner, ShaSha does more thanmake bread and cookies for customers. Heengages them. Customers are involved inproduct testing, educational seminars andcan access nutritional information on thecompanys website. Formerly a chefconsultant for a luxury hotel chain, ShaShaquit to develop a business selling productsbaked without yeast, made with a sourdoughleavening agent from Egypt. ShaSha believesthat some consumers have been awakenedby personal health circumstances. He creditsthe growth of his business to a strongfollowing of customers, many with healthconcerns, food allergies or an enlightened

view of nutrition. He knows that customersalso like his baking because the productstaste good.

www.shashabread.com

PhotocourtesyofManitobaHarvest


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Functional foods and nutraceuticals

A trip to the grocery store will reveal thatfunctional foods and nutraceuticals are becomingmainstream. Recent Canadian consumer researchshows that there is more awareness of functionalfoods and nutraceuticals, and increasedappreciation of the health benefits related to theiringredients. Over 75 per cent of the U.S.population believes they are deficient in somenutrient.13 Functional foods and nutraceuticalsoffer natural and convenient ways to providenutrition.

Health Canada and Agriculture and Agri-Food

Canada developed the following definitions.

Functional foods are similar in appearance to,or are conventional foods demonstrated to havephysiological benefits and/or reduce the risk ofchronic disease beyond basic nutritionalfunctions. Functional foods may be developed byadding active ingredients to basic food products(e.g. muffins with beta-glucan, foods with addedsoluble fibre) or by using special productiontechniques such as plant breeding, geneticmodification and specialized feeding regimes(e.g. tomatoes with enhanced lycopene levels,

omega-3 eggs).Nutraceuticals are products purified from foodsthat are generally sold in medicinal forms, such aspowders, tablets or capsules, demonstrated to havephysiological benefits or to provide protectionagainst chronic disease. Nutraceuticals can bederived from plants (e.g. antioxidants, echinacea,fenugreek), from animals and microorganisms(e.g. elk velvet, essential fatty acids, enzymes, etc.)and from marine sources (e.g. glucosamine,chitosan, fish oils).

Functional foods have been popular in Japan, the

EU, the U.S. and China for several years. One studyshowed that 66 per cent of U.S. consumers usedfunctional foods in 2008 and that educated femalebaby boomers were the biggest users.14 Many foodprocessors are adding functional ingredients toproducts like bread, milk, yogurt and cheese. Mostof the 2,000 members of the University of Guelph

Consumer Food Panel prefer healthy foods to comein a product form they are already eating. Canadianproducers grow crops like borage, eveningprimrose, hemp and blueberries for use asnutraceutical ingredients. What could you produceor process to enter this market?

Consumers use nutraceuticals, often in pill orpowder form, to customize their diets and meet

their health needs. Some examples ofnutraceuticals are beta carotene (derived fromcarrots for cellular antioxidation), flavonols from

onions (to neutralize free radicals), and lycopenefrom tomatoes (for prostate health). As ourunderstanding of personal genomic codingincreases and the demand for customized dietsgrows, is there an opportunity for your products inthe nutraceuticals industry?

Did you know?

About 20 per cent of Japanese consumers overthe age of 65 regularly purchase functionalfoods. Foods with approved health claims inJapan are considered FOSHU (foods forspecific health use). Are you ready to enter theFOSHU market?



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Intestinal bacteria live in our digestive systems.Probiotics are friendly bacteria found in fermentedfoods like sauerkraut and yogurt. Prebiotics arenon-digestible foods that pass through our digestivesystems and help the friendly bacteria to grow andflourish.


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Canadian researchers are developing new food

products. Some, like the University of Guelph, aredeveloping omega-enriched milk. Others arefinding new ways to optimize nutrition from wholegrains.

Barley, rarely used as a food ingredient in NorthAmerica, is being processed into flour for use inbaked goods, pasta, snack foods, nutrition bars andnoodles. The Canadian International GrainsInstitute and the Food Processing Development

Centre in Leduc, Alta., are developing barley flourwith enhanced nutritional properties and testing itwith various food products. Whole grain barleyflour is rich in beta-glucans, known to reduce

serum cholesterol and the risk of heart disease. InDecember 2005, the United States Department of

Agriculture (USDA) approved a health claim that

barley may reduce the risk of coronary heartdisease.

To help consumers reach Health Canada andUSDA-recommended pulse consumption levels,Canadian researchers are incorporating pulsesinto common food products like muffins, breads,pasta, cookies and noodles. Theyre also

developing functionally enhanced flour fromprairie grains for use in bakery products.

Wheat, buckwheat, pulses, barley and flax offerspecific health benefits. Barilla from Italy sellswhole grain pasta made from a blend of floursthat includes wheat, lentils, chickpeas, spelt andothers. What else do Canadian producers growthat could be a new functional ingredient forhealthier foods?

Probiotics and prebioticsMany products are enriched with the functionalbenefits of probiotics. BioGaia sells gum andlozenges with probiotics. Nestls Boost KidEssentials boxed dairy drink includes the bacteriain the straw. Could your food products be enrichedwith probiotics or prebiotics? What could the nexttrend in additives or functional ingredients be?

Did you know?

Attribute-rich foods can be consumed directlyby humans for enhanced health benefits andfed to animals to produce enriched products forhumans. A diet fortified in flax can be fed topoultry to produce omega-3 enriched eggs. TheCanola Council of Canada says feeding canolameal to dairy cows will increase milk productionby one litre per day in comparison to soybeanor cottonseed meal.

Making it Work

Bioriginal Food & Science Corp.

In 2000, after developing an innovative lineof flax-based products for functional foodapplications, Bioriginal opened offices in theNetherlands and China, and an oilseedprocessing facility in northern China.

More recently, the company worked withAgriculture and Agri-Food Canada to developa new patented process for manufacturingconjugated linoleic acid (an essential fattyacid) and was one of the first Canadiancompanies to receive a site licence from theNatural Health Products Directorate.Bioriginal took innovation from the laboratoryto the board room.

www.bioriginal.com


PhotocourtesyofCanadianIntern

ationalGrainsInstitute


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Toronto Miami Vancouver SydneyLos

AngelesNew York

City Montreal

8 | Consumer trends

E. I want it my way!

Some consumers want theirpurchases to define them. Otherswant their products to offer anexperience. This trend is growing and

many products and services are already beingtailored to meet the global demand forcustomization.

Related trends were watching

Ethnic foods

Growing racial and ethnic diversity throughoutCanada, the U.S. and the EU offer opportunities

to provide niche products. Ethnic food marketsare growing in cities (see Figure 9). The GeorgeMorris Centre forecasts that by 2017, more thanhalf of the Greater Toronto population will be non-European in origin. Their study of the Canadianpork industry suggests that the ethnic Chinesemarket is currently worth $47 million and thatMandarin and Cantonese consumers want adifferent sensory experience in taste, texture,tenderness and colour than other Canadianconsumers.15 How could you change your currentfood products to meet the unique needs of ethnicmarket segments in North America or overseas?

Halal food

Halal refers to foods that are permissible underIslam based on the content and process.

Guidelines to produce Halal foods are extensive

and can be applied to meat, seafood, dairy, grains,oilseeds, fruits, vegetables, beverages, nutrientsupplements and pharmaceuticals. There are 1.5billion Muslims in the world, with between nineand 10 million Halal consumers in the U.S. andover 800,000 in Canada. It is projected that by2011, there will be more than one million Halalconsumers in Canada and that 10 per cent of thepopulation of Metro Toronto will be Halalconsumers.

Kosher food

Kosher certification is becoming common at many

stages of food value systems. Kosher foods meetspecific, detailed Jewish dietary laws. Producingkosher foods or labelling them more clearly is agrowing trend in North America and otherdeveloped countries. A broad perception thatkosher foods are safer has contributed to recentgrowth, with as many as two-thirds of kosherproducts in the U.S. purchased by non-Jewishconsumers. Many Canadian producers, large andsmall, include kosher certification on their labels,websites and other promotional material.

Food allergies

Consumer awareness and concern about foodallergies and sensitivities is growing. The impact offood allergies is widespread, from consumers

A

BC

DF

E

Figure 9: North American Markets for ethnic foods

The bulk of Canadas immigration isfrom Asia (thousands)

150

120

90

60

30

0Total Asia Total Europe Africa All other

Foreign-born as a proportion of totalpopulation (selected international metropolitan areas)

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Sources: Statistics Canada

1994

2003

1991

2000

1997

2006


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seeking customized foods to schools becomingpeanut-free. The United States Department ofAgricultures National Peanut Genomics initiative

is using plant genomics research to mitigatepeanut allergies in consumers.

I want foods I can afford

Income is the biggest driver of consumerpurchases. Some consumers are willing to pay apremium for foods that meet their individualneeds or preferences. For others, price is the keyfactor in making a purchase. Other factors comenext. What else do you need to understand aboutyour customers price sensitivity?

What will the future bring?

Mass customization

Through their Clubcard program, global retailerTesco offers millions of product lines, each oneslightly different. By tracking purchases and usingthe data to influence product design, Tescocombines mass production with the demand forcustomization, allowing them to mass customizeproducts.

Genomic coding

Nutrigenomics studies how genetic variationdetermines each bodys requirements for, and

response to nutrients. After 10 years of work, in2000, the Human Genome Project completed itsfirst draft of research, which allows scientists touse DNA profiles to tailor individual diets.California-based Pacific BioSciences claims thatthey can sequence a persons entire genome in halfan hour at a cost of less than $1,000. Personalizednutrition based on genotype could be the future offood.16 If so, existing food systems will requiremassive re-engineering. What could you do to getready for this change?

Did you know?Pomegranate is a kosher supermarket in NewYork similar to the Whole Foods Marketgourmet mega-store model. Their motto, Evenbetter, reflects their highly regulated processingstandards. Rabbis supervise kosher standardsin three kitchens one for dairy, another formeat and a third for parve (fish, vegetables, fruitand grains).


Figure 10: Ethnic-based consumption patterns in the U.S. (kg per capita)

2003 2007 1997 2007 1997 2007 1997 2007

Asian Hispanic African American Caucasian and other

900

800

700

600

500

400

300

200

100

0

Total meats Total fresh produce Total processedfruits and vegetables

Source: Statistics Canada


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F. I want foods produced in safe,

sustainable waysSome consumers are demandingmore sustainable, greener solutionsfrom their food products andsystems. Most want to trust that foods

are safe to eat. As the world searches forsustainable solutions and builds more secure foodsystems, what opportunities can you create for yourbusiness?

Related trends were watching

Food safety

The globalization of food supply has pushed thelimits of safety systems. No system is perfect. Foodsafety is needed at all stages, including food

preparation at home. Technologies to address food

safety concerns like canning, freezing,pasteurization and vacuum-packaging havebecome commonplace. Technologies such as food

irradiation and genetic modification can challenge

consumer confidence. Increasing calls for greaterfood safety are prompting further research andinnovation.

Traceability

Not in retail? Wondering how consumer trendsapply to businesses that dont sell directly to enduse consumers? Heres some food for thought. Asfood systems become more traceable, all players invalue chains will experience increased scrutinyregarding issues of food safety, sustainability andother consumer trends. Canadas federal agencyCanTrace advocates food supply chains that can

trace one step forward and one step back. What willyou do to get ready?

Sustainability

The food industry can make it easier forconsumers to feel good about the effect that theirpurchases have on the environment. The U.K. usesfood miles as one measure of the overallenvironmental food print of agriculture andagri-food. Japans Sapporo Breweries is the firstbeer company to advertise its carbon footprint oncans. Environmental, humane, natural and organic

trends in the EU are often ahead of the rest of theworld. When your value chains start calculatingCO2 emissions, will you be ready? What can welearn from food systems overseas?

Who are the early adopters or trend setters?

Dole Organics is an industry leader in traceability.The Planet Dole program allows consumers to logonto their website and, using the code from thelabel of a Dole product, they can enjoy a virtualvisit to the farm where that piece of fruit wasgrown.

The Carbon Trust program in the U.K. measurescarbon used in creating products and lists it ontheir labels. Juice manufacturer Odwallacontributes to farmland conservation and keeps 99per cent of its fruit and vegetable waste out of thelandfill. Ice cream maker Haagen-Dazs recentlybegan a honey bee conservation program.17

0 | Consumer trends

A

BC

D

E

F

Did you know?

Canadian Partnership for Consumer FoodSafety Education has launched a new websiteto raise awareness about food safety practicesat home.

www.befoodsafe.ca


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2 | Consumer trends

The response of Maple Leaf Foods to the 2008listeria outbreak is seen as a model for corporatetrust, transparency and accountability by thepublication Food Safety & Quality and others.Maple Leaf developed a values-based code ofbehaviour to guide quick decisions based on twocorporate values do whats right, and dare to betransparent.

Final thoughtsModern food systems have come a long way.Innovations in logistics and food handling systemshave improved our ability to move fresh goodsaround the world. Scientific advances haveincreased crop yields. Our growing understandingof human health and the nutritional properties offoods is furthering the development of functionalfoods and ingredients. Consumers in developedand developing countries expect food to beplentiful and nutritious. Recent developments inpackaging and nutrigenomics provide hints aboutwhat the future of food will look like. How can yoube ready to meet their needs in the new era of foodconsumption?

Monitoring long-term consumer trends andunderstanding what consumers want can help youdistinguish trends with real value from passingfads. While you understand what your customerswant today, what about your future customers?Whether theyre looking for a quick, convenientmeal or want sustainably produced foods,understanding what matters to consumers canhelp you meet their needs. Sustainability andhealth will drive consumer purchases. What else is

on the horizon?

To be sustainable, businesses will find ways tomeet the needs of consumers and the environmentwhile remaining profitable. Understanding whatthe consumer wants is a good place to start. Thefuture of your business and Canadian agriculturelies in finding the right mix between the needs ofpeople and the planet.

Making it Work Sunworks Farm

In 1995, Ron and Sheila Hamilton started

growing organic chickens for their own use.Faced with various health concerns, fromallergies to celiac, the choice was personal.Sunworks Farms is now the largest organicchicken producer in Alberta, raising over100,000 broilers per year. Their operation isexpanding to keep up with demand. Accordingto Sheila, they have grown 20 to 30 per centper year without doing anything different. Today,Sunworks Farm sells organic, free rangechicken, turkey, duck, geese, pork, beef andeggs to consumers at Edmonton and Calgarysfarm markets or directly from their farm. WhileSunworks has grown, it hasnt lost sight of itsroots. Sheila talks to customers regularly to find

out what they want and speaks to groups abouther familys journey back to health. She hearsfrom customers who want clean, quality foodand who like to know where it comes from. Sheinvites them to Family Farm Day to share a mealevery Labour Day. Guests bring condimentsand Sunworks provides the meat.

www.sunworksfarm.com

PhotocourtesyofFlanaganFoodservice,

Inc.

Learn how Flanagan Foodservice, Inc.is Making it Work on page 17.


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Tips, tools and strategies | Consumer trends

KnowledgeInsider


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4 | Consumer trends

How will consumer trend informationinfluence your business?

Consumertrends

information

Corporateculture

Manufacturingprocesses

Productionand agronomic

processes

Product design,packaging

and delivery

Externalnetworks

Value chainrelationships

Customerrelationships

Nature ofyour business

model

Strategicvision

Purpos

e Physical

People

Anticipating impacts today can help you prepare for tomorrow.


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If you watch the news, go online, attend tradeshows and read industry publications, you alreadyhave a good start. You know your products and yourbusiness. What do you need to know aboutconsumers and trends thats relevant to your futuresuccess?

The sheer number of people allows for a widevariety of niche markets and trends to develop. Youcan start to shape the future of your business byasking yourself these questions:

Which consumer trends could result in newproducts and markets? How could I anticipatetrends before they become widespread?

Where are the markets for my products? Arethey niche markets or mass markets? Are theydomestic, overseas or both? Should I look atsomething new?

Who can I work with to influence the strategicdirection of my industry? How could I improvecommunication within food value chains? Howcould I use consumer trend knowledge throughall steps of the value chain?

Do my products offer solutions for customers bymaking it easier for them to reduce their impacton the environment or address healthchallenges? Could I simplify their lives byproviding clear, concise product information?

Will my current business model or way ofthinking need to change, and how?

Where do consumers want to find my productsand how do they want to access them? What newdelivery channels or formats could I develop?

How do I meet consumer needs during volatileeconomic times?

What new research can help me with newproducts, packaging, food safety or formulation?

What do I need to understand about thechanging regulatory environment and how itimpacts my future business opportunities?

Whats my company vision? Do we need tochange to get ready for a new world ofsustainable consumption?

Whats the role of consumers in my business andhave I integrated their role into my vision?

Where do I start?

Tips, tools andstrategies

Enhance your corporatecompetencies through learning

www.fcc-fac.ca/en/LearningCentre/workshops_e.asp#vision-and-goal-setting

www.gftc.ca/index-e.cfm

www.farmcentre.com

Notes


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6 | Consumer trends

Watch for new concepts and emerging fads. Somemay get traction and catch on. Monitor consumerbehaviours and media over time to see whatpatterns emerge. What are foodies eating? Whatare youth doing? Todays fringe behaviours may betomorrows lifestyle. There are many ways tomonitor trends. What mix is best for yourbusiness?

Trend analysisSome companies monitor emerging trends andoffer information on a website. Some createoriginal content including forecasts andpredictions of future trends. Customized data canbe purchased and some research is free.

Neilsen Buzz-Metrics, a Cincinnati firm, says theyhave figured out how to gain access and tracktrends based on blog content and online dialoguesbetween millions of people. The firms searchengine uses a process called Floodgate to groupmessages according to general themes by tracking

key words and phrases. Then they sortdemographically and track emerging trends inconsumer opinion.18 For food trends, check outjust-food.com or agencies like Datamonitor andEuromonitor.

Clinical research on consumerpreferences

Researchers worldwide test consumer responses tonew food and beverage products in controlledlaboratory settings.

At Nestls research centre in Switzerland,

consumers test products for taste, texture andaroma. At the Restaurant of the Future, a $4.5-million facility in the Netherlands, cameras recordfacial expressions, gestures and even the weight oftheir diners.19 In Manitoba, the CanadianInternational Grains Institute and the RichardsonCentre for Functional Foods and Nutraceuticalsconduct on-site product development and testing.What resources are available in your province orregion?

Consumer surveys and research

Data from consumer surveys can tell you what theybelieve or think, but it doesnt show how theybehave. Academic researchers study many topicsrelated to food and consumers, and manyacademic programs post academic studies andfindings on their websites.

Collecting consumer purchase data

Customer loyalty programs are one way that data iscollected from consumer purchases. Someretailers will share this data with members of theirvalue chains to help get the right products onshelves. Tesco, Britains largest supermarketchain, is a world leader in data collection, trackingconsumer purchases through their Clubcardcustomer loyalty program. The Home GrownCereals Authority in Britain co-funds a programusing Tescos Clubcard consumer purchasedatabase to help the grains sector understandmarket trends.20

Engaging customers

Many companies, large and small, involvecustomers in their business to help increase theirengagement and loyalty. You could engage yourcustomers more through product demonstrations,crowd-sourcing, blogs, customer-to-customerforums, new product development or invite themto your farm or facility to experience agri-tourismand entertainment activities.

Gathering competitive intelligence

Watch what your competitors are doing on their

websites, at trade shows, through media coverageor even by collaborating with them. Look beyondthe food industry. Lands End allows customers tocreate a virtual model based on their personalmeasurements and then cuts clothes to fitperfectly. Adidas will customize shoes to eachcustomers feet.

Trend watching 101


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Energy solutionsTips, tools and

strategies

One way to connect your business with changingconsumer needs is to develop new products orredesign existing ones. You may also findopportunities to rebrand existing products or usenew packaging technologies. Start by exploringconsumer trends and drivers as a way to generateideas for innovative product development.

New product Im considering: ______________________

What opportunities does this product presentfor my business?

Increase market share in existing markets?

Develop new markets or niche markets?

Replace or enhance current product lines?

Are your value chains ready?

Does your value chain work collaboratively to meetchanging consumer demands? What could you dodifferently? How could you help your partnersunderstand their role in meeting consumersneeds?

What motivates your value chain partners? Howcan you use this understanding to help your valuechains get ready for changing consumer food habits?

Thinking of developing new products?

Figure 11: Product design and development (examples in italics)

Grocerychain

Eggproducer

Fooddistributioncompany

Foodmanufacturer

Sell the productsconsumers want.

Expand distributionmarkets.

Validated throughhealth claims.

Add value tocommodity.

Omega-enriched ready-to-pour eggs in a carton

Playersinyour

valuechains

Possible

motivations

Trendsto

monitor

Productdesign/

development

Consumer trends


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8 | Consumer trends

Whats the culture of your business? The world isincreasingly transparent, and consumers careabout corporate values and expect accountability.Is it time for a tune-up? Here are a few questionsto get you started.

1. Is my business transparent?

Why not share your corporate and productinformation with consumers? It could help you

increase customer confidence and appeal toyounger generations who have been raised toexpect openness and transparency.

2. Do you build consumer confidence

through trust?

Consumers want to trust that foods have beenprepared with their best interests in mind. Whatdo you look for in trusting relationships and howcan you build trust with your customers?

3. Do you have a culture of accountability?

Are you fully accountable for your products and

decisions and how they impact customers? Willyou be responsible when things go right, and whenthey go wrong? All FCC employees have receivedtraining and coaching in being accountable. Tofind out more, go to (www.fcc-fac.ca/en/AboutUs/Profile/culturalpractices_e.asp.)

4. Is your approach to sustainability genuine?

Consumers are smart. Those who valuesustainability are looking for genuine efforts toreduce environmental impact. How green is yourbusiness? Are you communicating yourstewardship to consumers?

5. Do you offer and deliver quality?

Consumers increasingly demand quality. Theylook for certifications that ensure processes areconsistent and meet or exceed expected standards.If youre making quality products, let consumersknow.

6. Do you use knowledge to influence strategic

decision-making?

Knowledge is a key way to advance Canadianagriculture and agribusiness. In a complex world,knowledge can guide informed decision-makingbased on facts, long-term trends and food science.How do you use knowledge? What are yourknowledge gaps?

7. Can you rethink your company in relation tofuture consumers?

How do customers see you? Are consumers drivingthe direction of your future product and marketdevelopment?

8. Are values your value-add?

Do your corporate values mirror those of yourcustomers? Some stores, like Whole Foods Market,have made it easier for customers to shop based ontheir values. Many of their customers dont readlabels because they trust that the values of thecorporation match their own and that Whole

Foodss sourcing and value chains are sustainable.

Are you looking to improve trust in yourorganization? The Conference Board ofCanada publication The Trust Imperative:Taking Governance to the Next Level is writtenfor directors and managers who want toimprove their corporate trust with stakeholdersincluding the public, investors, employees,customers and suppliers. It looks at how trustimpacts operations and long-term prosperity, atthe factors that help determine how differentstakeholder groups evaluate an organizations

trustworthiness, and the kinds of questionsdirectors should be asking to oversee andassess stakeholder trust. According to MichaelBassett of the Conference Board of Canada,In a world of ever-increasing complexity, trust isproving to be a key competitive advantage forfirms.

What about your business culture?


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Innovative ideas can come from many sources.They may be a surprise that comes from anunexpected combination of ingredients orthoughts. They may come from new employeeswho see things with fresh eyes. Or they could comefrom dedicating time to brainstorming or blue-skythinking. Carve out some time for your company.Read through publications and start thinkingdifferently about your products, markets and

customers. Then let the ideas flow.

What if?

Population growth in India and Africa presentsopportunities for increased tonnage or newmarkets for my commodity-based bulk products orvalue-added packaged foods.

What I know:

What I need to find out:

Where to look:

What if?Rising incomes in emerging economies createdemand for different goods that my company couldproduce for new markets.

What I know:


Where to look:

What if?

Adding functional ingredients to my companysexisting products would open up new markets or

boost existing sales in Canada and the U.S.?

What I know:


Where to look:

Consider food waste

Researchers at the University of Arizona haveshown that 40 per cent of all food produced in theU.S. isnt eaten. Wasting food contributes to highercosts and less productivity and profit and cannegatively impact the environment.

How can innovative thinking help turn this storyinto an opportunity? To start, you could reducefood waste within your operation. Then you couldcollaborate within your value chain to reduce foodwaste from farm to fork. Both steps may decreasefood waste and increase profits.

Now, think about consumers and what drivesthem. Many consumers want to minimize theirimpact on the environment. They want fresh, tastyand affordable food. Many want to feel includedand unique through their purchases. How couldthis knowledge help reduce food waste?

Heres a possible solution. Your value chain couldconvert food waste or other biomass into

biohydrogen as an energy source, or compost itinto fertilizer.21 You could develop innovativepackaging that reminds consumers to eat foodsbefore they expire, reducing household food waste.Product labels and advertising could promote yourfood waste initiative. You could encourageconsumers to buy bulk by offering lower prices andpass along your savings from reducing waste.

This is just one example of how you could use yourknowledge of the changing landscape and role ofconsumers to create a sustainable future. Excessivefood waste is one of many signs that our current

state isnt sustainable. Innovators like you will findways to turn bad news stories into opportunities,maintaining or even growing profit margins. Howcan you turn problems into profit?


Blue-sky thinking


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0 | Consumer trends

Knowledge Insider toolsWhat youll find Web address

Learn about economic or market conditions

The World Bank provides national and internationaldata, research and analysis of global trends.

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,menuPK:476823~pagePK:64165236~piPK:64165141~theSitePK:469372,00.html

The Conference Board of Canada www2.conferenceboard.ca/weblinx/

Visit agriculture and Agri-Food Canadas CanadianConsumers page about food and beverage consumption.

www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1170860293780&lang=eng

North America Agriculture Statistics Fact Sheet http://webpage.siap.gob.mx/menuarbol/english/FactSheet-Englishfinal.pdf

Food and Agriculture Organization, United Nations www.fao.org

United States Department of Agricultures NationalAgriculture Statistics Service

www.nass.usda.gov

Listen to podcasts about innovation and consumerpreferences.

www.foodcom.com/trends-insights/mattson-innovation-radio

The George Morris Centre www.georgemorris.org/GMC/Home.aspx

Be informed about food safety

The American Council on Science and Health foodsafety information

www.acsh.org/healthissues/categoryID.6/category_detail.asp

Agriculture and Agri-Food Canada sector-specificeconomic and market information

www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1177676316971&lang=eng

Monitor health trends

Alberta Agriculture and Rural Development Reporton Obesity and Food Consumption

www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis8438

The European Food Information Council www.eufic.org/index/en/

Independent firms provide trends reports. www.trendwatching.com/trendreport/

Agencies monitor the business environment. www.frost.com/prod/servlet/svcg.pag/CMFB

Subscribe to online publications and reports

Register for a free subscription about trends. www.just-food.com/register/index.aspx?lk=faq

The Datamonitor Group and Euromonitor International

offer business information and market intelligence.

www.datamonitor.com

www.euromonitor.comFind learning opportunities or network with others

Canadian Farm Business Management Councils www.farmcentre.com

Functional foods and nutraceuticals network. www.nutrinetcanada-nnc.ca

MaRS Landing links agriculture, food and health. www.marslanding.ca


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What youll find Web address

Industry-related research

Prince Edward Island Food Technology Centre www.gov.pe.ca/ftc

Guelph Food Technology Centre www.gftc.ca

University of Manitobas Richardson Centre forFunctional Foods and Nutraceuticals

http://umanitoba.ca/research/rcffn

Government of Albertas Food Science andTechnology Centre

www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/fst5129

Pacific Agri-Food Research Centre, British Columbia www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1180620561099&lang=eng

Cintech Agroalimentaire www.cintech-aa.qc.ca

Agriculture and Agri-Food Canada has 19 researchcentres across Canada

www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1166204468590

Regulations & Policies

Canadian Food Inspection Agency www.inspection.gc.ca/english/toce.shtml

Funding for food companies in Ontario www.omafra.gov.on.ca/english/food/industry/funding-prog-index.htm

Endnotes1 Jim Taylor and Watts Wacker, The 500 Year Delta: What Happens After

What Comes Next (New York, NY: HarperCollins Publishers, Inc., 1997),p. 192.

2 Allison Finnamore, The incredible purchasing power of kids,AgriSuccess Journal, September/October 2008, p. 7.

3 Dr. John Kelly, Food, A Healthy Value Proposition (Agri-Food Innovation

Forum, Toronto, February 11, 2009).4 New Harvest website, www.new-harvest.org/default.php; Marcia Wood,

Seafood Future: Cobia and Pompano on Inland Fish Farms? posted onthe FoodReference website, www.foodreference.com/html/a209-inland-seafarms.html; India: Inland f ish farming delivers richharvest, Fish Farmer, January 6, 2006, www.fishfarmer-magazine.com/news/fullstory.php/aid/267/India:_Inland_fish_farming_delivers_rich_harvest__.html; India ranks second in inland fish production, EconomicTimes, November 2, 2007, as posted on The Fish Site,www.thefishsite.com/fishnews/5607/india-ranks-second-in-inland-fish-production.

5 Sian B. Astley, Institute of Food Research, Nutrigenomics: linkinggenomics, nutrition and health research, as posted onFunctionalFoodNet, www.functionalfoodnet.eu/images/site/assets/news/nutrigenomics.pdf

6 Jane Byrne, PLA based film may be effective antimicrobial,Foodproductiondaily.com, January 13, 2009,www.foodproductiondaily.com/Quality-Safety/PLA-based-film-may-be-effective-antimicrobial; BASF, Ecoflex Biodegradable Plastic,www.plasticsportal.com/products/ecoflex.html; Toxin Alert website,

www.toxinalert.com/.7 Neil Merrett, US leading crackdown calls on caffeinated energy drinks,

Foodnavigator-usa.com, Octob

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