Five top trends set to shape the APAC food and beverage sector in 2020
APAC’s reformulation race: Fortification rising alongside fat, salt and sugar reduction
Reformulation in the Asia Pacific region has been a very key trend for the past year, not least because it has been heavily driven by regulations and policies implemented by the various countries.
One of the most significant examples here was that of beverage giant F&N in Malaysia, which announced it would be reformulating some 70% of its products to reduce sugar levels so as to mitigate the effects of the sugar tax implemented on July 1 2019.
An estimated 90% of F&N’s product portfolio was affected by the tax, and the company’s initial reaction had been to raise prices for these, which it later retracted.
PepsiCo Australia and New Zealand also recently announced a switch to canola oil for some of its savoury snacks, which would reduce saturated fat content in popular items such Doritos, Tostitos, Twisties, Burger Rings and Cheetos by more than 80%.
Nestle has also been doing a lot in this area, particularly with its Milo brand. It launched a ‘no added sugar’ version of Milo in Thailand earlier this year in March, and a stevia-reformulated version in Australia in May.
Although innovation in this area still looks set to continue for a while yet moving forward, reformulation on the other end of the spectrum, i.e. the addition of nutrients to fortify instead of the removal or reduction of undesirable ones, seems to be gaining ground.
“[Nestle remains] committed to better nutrition, through our efforts in reducing sugar and sodium content and at the same time adding or increasing ‘positive’ nutrients through micronutrient fortification in our products,” Nestle Malaysia Group Corporate Affairs Executive Director Nirmalah Thurai told FoodNavigator-Asia.
“Some of our recent innovations in this area include Milo Nutri Pluz UHT being fortified with protein, Vitamins B and D, calcium and other essential nutrients; Milo Protein Up with 13g of protein; fortifying Nestum Brown Rice with Vitamin C, and increasing wholegrain content by 28% and 64% respectively in our Koko Krunch and Fitnesse Original cereals.”
Moving forward into 2020, Thurai predicted that consumer habits and lifestyles will continue to evolve, and stressed that further reformulation and product innovation would be in line with this evolution of consumer needs.
“We foresee on-the-go meals and drinks to be on the rise, and more and more consumers are seeking out products with natural, organic, authentic recipes and ingredients. In addition to these trends, consumers are on the look-out for healthier snacking options,” she said.
“There is also growing interest in a plant-based diet among consumers.”
Plant-based and cell-based product development continues to grow
Thurai’s comment demonstrates clearly how plant-based products are en-route to become a mainstream category, evolving from a niche protein space to a major contender in the food and beverage market across 2019 and into 2020.
According to Global Food Industries General Manager Jacek Plewa, the four major trends fueling this industry growth are: taste, health concerns, sustainability/environment and animal welfare.
“The plant-based industry has managed to offer products on par with the taste profiles and expectations of meat-eaters; [satisfies consumer demands and awareness for [preventative health care and demand for cleaner labels; [and fulfils their needs to do something about] sustainability, environmental , and animal welfare issues,” he said.
In line with these, moving forward Plewa is looking to bring together sustainability and local crop production to support the local economy, in addition to further salt and sugar reduction for products. He also foresees significant further growth for the plant-based industry moving into 2020.
“We see the plant-based industry to be blooming in full swing with more and more acceptance by non-vegetarians,” he said.
“The industry will see many applications in more meat categories like poultry and other kinds of white and red meat. Currently the plant-based industry is mainly concentrated on beef burgers and would be possibly moving into other categories which are dominated by animal meat like fish and seafood.”
Seafood growth will also be apparent in cell-based meats where the rapidly growing interest in this field is clearly evidenced by the amount of financial backing being poured into it, making it a clear trending sector in 2019 and moving into 2020.
“More investment dollars are being put into cell-based meats and more companies are looking to see how they can employ their technology to this sector, which is great,” Singapore cell-based seafood firm Shiok Meats CEO Sandhya Sriram told us.
Shiok Meats was launched in August 2018, and in just over a year it has patented its technology, showcased its thousand-dollar prototype of the Shiok Shrimp dumplings, grown fourfold from a team of two to eight, and importantly, also raised some US$5mn in funds.
Moving into 2020, the firm has big plans for much more too.
“[For us in 2020, the industry] can look forward to exciting developments such as more prototype launches, and a series A funding round with the aim of setting up our pilot manufacturing plant,” said Sriram.
“Beyond that, we’re looking to commercialise by 2021.”
As for the cell-based sector as a whole, regulations and market entry are general high priorities – and Sriram expects significant developments in these areas next year.
“Moving forward into 2020, [I expect the] regulatory landscape to get clearer, and [that] clean meat companies will get closer to market [than we are now],” she said.
Beverage trends in APAC: Healthy but REAL ingredients
In the APAC beverages sector, more and more consumers are looking for healthier options, but at the same time the trend has evolved such that beyond just the concept of health, they also want to make sure they are getting real ingredients, according to David Westall, Kanguru President Asia Pacific, former Coca-Cola Korea Bottling CEO and former Pepsi Cola Bottling Central Asia CEO.
“Consumers are getting smarter, they want more and at good value,” he said.
“There is definitely still a strong trend for well-being, better-for-you products in the region, which many big companies have been rising to and trying to address. - However, things are changing – consumers are getting smarter.
“They are starting to challenge some of these companies that make promises [of wellness] but fail to deliver - for example in the energy drinks sector, Coca-Cola Energy promises energy and vitality but adds just 0.06mg to regular Coca-Cola, and consumers are [learning to ask questions about this].
He emphasised that the ethos now and moving forward is that consumers want ‘more and what’s best for them, what suits their lifestyle, and is good for health’ – but they are not willing to pay much more for this.
“This is the major challenge for big companies – they are used to keeping products low-cost and manufacturing at high speed, but when making real good-for-you products, this requires a different manufacturing process entirely,” Westall added.
Packaging traceability and sustainability to remain major focal points
As for food and beverage packaging trends that the Asia Pacific region can expect to see moving forward into 2020, Tetra Pak Asia Pacific Services Digital Transformation Manager Somashekar Ganganna told us that traceability and sustainability are expected to remain important priorities.
“There is a lot of need today [for food manufacturers] to pay attention to traceability on packaging, as consumers and especially millennials want to know what they are consuming,” said Ganganna.
“They need reassurance that they are not eating or drinking any fake products, and they also want to know where these are coming from, so information like country of origin is also very vital.”
Sustainability will also be important to consumers, especially with rising levels of awareness about carbon footprints and the like.
“Also, companies can use packaging [to communicate] with consumers – it is how consumers will be able to find out more about the stories [and feel more connected],” he added.
Big beverage companies such as Coca-Cola have also clearly upped the ante when it comes to approaching sustainability efforts in 2019.
One of these was its backing of a recent report pushing for F&B firms, especially in the ASEAN beverage industry, to look at setting up non-profit facilities focusing on PET recycling in line with its overall World Without Waste company vision.
“World Without Waste includes a global goal to help collect and recycle 100% of the cans and bottles we use, by 2030, so that none of our packaging ends up as waste,” Coca-Cola Asia Pacific Leads for Communications, Sustainability and Public Affairs Matt Echols told FoodNavigator-Asia.
“This is a major undertaking and our top priority in APAC from a sustainability perspective. We know the issue is particularly pressing in APAC and we’re determined to being part of the solution.”
Other major sustainability foci for the company included packaging design innovation focusing on recyclability and circularity, as well as partnerships to collect bottles for recycling.
For instance, in Australia in March it was announced that all plastic bottles 600ml and smaller would be made from 100% recycled plastic by year-end, whereas in Japan its new green tea product Hajime Rokucha was made from 100% recycled PET resin through bottle-to-bottle recycling in partnership with Seven & I Holdings.
“The beverage sector needs to continue offering consumers a choice of recyclable packaging formats and needs to make it easy and convenient for consumers to be part of a circular economy,” said Echols.
“The partnership and collection aspects are also very important. No single company, organisation or government can do this alone because the issues and solutions are complex and global. In 2019, we’ve been actively involved in launching industry-led collection and recycling models in APAC.”
Moving forward into 2020, even more sustainability work can be expected from Coca-Cola in APAC.
“There are a lot of exciting projects underway. For example, we’re working hard with our partners to bring online next year two new state-of-the-art recycling facilities, one in the Philippines, the other in Hong Kong,” Echols added.
East-West convergence on its way up
According to CP Group US Business Chairman Boonchai Opas-Iam-Likit (Boonchai), the trend of East-West convergence in food and beverage is expected to rise in importance in the near future.
He highlighted that he United States and EU regions remain the main trendsetters in terms of food and beverage movements, but that multiculturality is set to increase due to digital advances.
“From these regions [in the West], the F&B trends then tend to spread to Japan, Korea, Taiwan and then China and South East Asia,” he told us.
“That said, I see a combination and convergence of East-West trends coming – Asia will see a rise in Western food consumption, whereas countries in the West will see a rise in Asian food consumption.
“This is all a result of increased diversity and inclusion, and is greatly attributed to social media. Consumers today, especially the younger generation, know so much more about foods and beverages worldwide, and as such are able to adopt a multicultural cuisine easily.”
He also emphasised, in this vein, that proper wording and messaging is going to be increasingly important within F&B to gain buy-in with consumers.
“Here, a personal message and wording is key – saying a food is important for a certain ‘diet’ may carry a negative connotation, but using the term ‘eating well’ would mean it is healthy without any negative implications,” said Boonchai.
“Similarly, branding today must carry a positive message. For example, if you say a product is ‘lean’ or for such a function, this might indicate that the buyer has a problem with his/her weight, which is not good. But saying the same product is for ‘eating well’ just means it is as part of a healthy lifestyle and well-being.”
