Global Trends and Niche Markets: How Big-trends and Global Health Issues Play into Functional Food Developments ——Nathan Gray, Senior Editor, NutraIngredients

1. Global Trends and Niche Markets: How Big-trends and Global Health
Issues Play into Functional Food Developments
——Nathan Gray, Senior Editor, NutraIngredients
Let’s look at the trend of the global food industry. These trends actually
have already defined today’s food industry. The concepts of nature, the
organic and the eco-friendly have prevailed among Europeans and
Americans, and they are also applicable to Asia.

2. The first major trend is health. I think this picture is worth a thousand
words. First, to be healthy means a wholesome diet. In the past twenty to
thirty years, it was controversial that what the true health is, for example,
low oil and low carb, while some wrong ideas and statements always
have existed and spread in the whole world that confused many people,
but fortunately, now the whole industry is in a better position. More and
more people learn the significance of health, so they attach importance
to protein and fiber and traditional foods are put a high value again that
leads people back to the diet of the whole grain. People might support
that without over-processing natural foods are quite healthy.
The second big trend is labels of nature and cleanness. Compared with

3. the concept of nature, it seems not easy to understand the clean label,
which can present a sense of nature at first sight, emphasize consumers’
perceptions of product integrity, and be easy to understand the label’s
content. For example, genetically modified food and artificial food can
scare consumers, since they have labels of some pollution sources,
allergens, and excessive addition of sucrose and carbohydrate. Thus, it is
necessary for us to avoid these words.
How can we know a product qualifies for the natural and clean label?
Take an egg and a banana as an example, when we see them we are sure
that they are natural and clean foods, but if we find the contents on their
labels are complex, we will fear.

4. The third big trend is sustainability. Nowadays, most people are against
the overdevelopment of forest and destruction of environment, unmoral
behaviors and injustice means, including unfair treatment of animals and
environment, while they welcome an organic development and a
qualification of sustainability and moral standard gradually. We can find
that more and more companies, food companies and processing
companies have begun to emphasize that they focus on morality and
sustainability, and suggest their clients that they have all kinds of labels,
which qualify the new requirements. However, I reckon that there are also
some questions, since these companies merely offer a series of
environmental labels. But what do the labels mean? What do the labels
stand for in the environmental aspect? What relationships are between
these labels and consumers? All the questions are worthy of verification.
The fourth big trend is related to convenience. The staple food of
Europeans is less and less, and they hope that they can eat while walking.
The concept of three meals per day only existed in my childhood’s
memory. Nowadays, three meals per day has been already replaced by
one meal or two meals per day, and other foods we eaten are so small
that they allow people to eat as they walk, whereas we will eat more
snacking than before. Traditional snacking is changing, and some of

5. them even become meal replacements. Many people thought that
snacking is for a satisfaction of appetite, but now, snacking can also be
the staple food, so our ideas of snacking are changing. It is a really
interesting trend that thirty percent of European consumers use meal
replacement shakes or energy bar, which I never heard when I was a
child.
Another trend is genuineness and tradition. We see more and more
people gradually are interested in the origin of product, it is tradition or
not, and it is a local production or not. People now do not pay more
attention to processing technology of food, and they even believe that
present technologies and with twenty to thirty years technologies stand

6. for manual intervention or dirtiness, etc. Therefore, people hope to go
back to the traditional mode of food production. For example, the
authenticity and the traceability of product are extremely significant,
whether in the supply chain or the cultivation of consumer trust. Some
brands and areas are on behalf of quality or authenticity, so they are
approved in the whole world. Like according to the origin of a product,
you know the thing can be good, and it helps you establish trust.
The last big trend is the new science and technology and digitalization.
There are more and more digital skills that make all of things in mobile
terminal attracting numerous people to use. Such as online shopping, in
Europeans and Americans online shopping at Amazon or Alibaba is not
only at the consumer level, but also at the level of food production. From
agriculture to distribution, new technologies are increasing that is
influenced by digitalization, bring about a larger profit, and change our
business model. The trend will continue and change the way we work.
Meanwhile, social media is a tremendous wave that costs more people
more time, but it reduces the time to face and know the world. The trend
also impacts some global issues, like obesity. We have already become
overweight, and the speed of getting fat is so fast that in the world, 1,900
million adults are overweight that takes up a quarter of the world
population.

7. Besides, another issue is a distribution of obesity. In developed countries,
due to the high-oil and high-sugar diet the number of the fat is large,
which is beyond imagination in other developing counties. Obesity also
affects the disease spectrum, including diabetes. Currently Central
American countries are diabetes-prone, on the contrary, some countries
with a high obesity rate are not countries with high incidence of diabetes.
What’s more, as our number one enemy, though sugar plays a rather
important role in the flavor, more and more European food companies
have started reducing the sugar content.

8. Let’s talk about aging. Most people are getting older. Europe estimates
the percentage of Europeans aged sixty-five and older will increase from
17% to 30%, and almost one fifth of the global population will be over
sixty. There is a rapid population aging in China, India, America and
Britain, and people’s lifespan is also increasing, but for Chinese people
it is not just about living longer, but living longer in good health. It is a
great opportunity for the food industry, but it will cause huge social
issues if we don’t make a good usage. However, malnutrition still exists
in many places. Generally speaking, we believe that malnutrition is led by
hunger; like Africa and other quite indigent areas, local people lack of
calories and food, so we consider they are undergoing the malnutrition.
But in fact, there are lots of manifestations of malnutrition. About three
billion people suffer the malnutrition in the world that results in the loss
of the global economy of 3.3 billion Euros. Two-thirds of the three billion
people are mainly due to malnutrition, trace or severe nutritional
deficiencies, such as the lack of vitamins. But one third of them are due to
obesity. Although most people eat various foods, actually the foods are
not right; so many people don’t get the nutrition they really need, and
it also belongs to the malnutrition. In the past ten years, the number of
people who didn’t have enough to eat was reduced by 0.1 billion, but
there are still 0.8 billion people having kept starved for a long time. In

9. Africa, obesity and overweight have already completely surpassed
hunger and become the main reasons of malnutrition, which is mainly
due to improper diets. There are still some serious problems about
nursing care of the elderly and malnutrition. According to some data and
studies, you need reasonable nutrition supplements, even if you stay in
aged-nursing hospital, and in this way, you can have a good result.
Then we pay attention to the next problem, hidden hunger. I will give a
brief explanation for colleagues who have no idea about it. Take a short
of vitamin or microelement as an example; in some areas you might
consider that it is good for people to have enough to eat. We know a lack
of vitamin A, which exists in the red area, and generally we can

10. understand that in these red areas a series of famines may cause
malnutrition; in the blue and orange areas, though people have enough
to eat, they are still malnourished, and lack of vitamin D since they
don’t eat proper food. Please look at Sweden, there is extremely short
of sunshine throughout the year, at least half of a year, so the number of
natural vitamin in people’s bodies is quite low, but the number of
vitamin D of Swedes is high, since they drink milk, which contains a large
number of vitamin D. In the future, lots of food industries will focus on it,
and many functional food industries hope that they can exchange these
orange and yellow areas to green, and it must be this trend in the future.
Let’s focus on the amount of Omega3. The intake of people who are in
the traditional economic power, economic giant and some Asia-Pacific
economic power is not high. Then, we need to talk about other serious
global problems, population growth and climate change, which mean
less and less cultivated land but growing demand of grain. What’s more,
there is an abundant food waste; in France, one third of food is wasted by
people while many developing countries are suffering a serious famine,
since these countries are incapable to produce enough food. Besides,
there are some technological solutions to increase production, which is
popular in Europe like eating less meat. I don’t know whether there is
an idea in China, like eating meat once or twice a week at most, and

11. other time eating vegetarian. In this way, food waste can be reduced by
transforming by-products into a part of precious food, and this process
makes them become a high-quality and high priced addictive. In other
fields, like artificial meat, we can produce beef in the laboratory. In
Netherlands, there is a laboratory for vegetarian, and experimenters do a
series of creation trying to find a way with a good taste to replace meat.
They are innovating the way of eating by all means.
What do these trends mean for processing food and health-care food?
Every tendency can influence our industries, especially the industries of
functional product and nourishment, in other words, dietary supplement.
The different position you are in in this industry, the different influence
you will have. In the future, there will be more people choosing the
natural function food. Most of traditional functional drinks are
man-made; for example, if people in a country lack of Omega3, we will
immediately add some Omega3 in a functional drink, but such an
artificial addictive is hard to be accepted by consumers, since the natural
food will control the future market. In some European and American
conferences, I saw lots of advertisements about the benefits brought
about by organic food. The advantages they mentioned more were not
only the healthy benefits, but also natural and health mode of
production, healthy background and source, and some organic

12. ingredients of the product. And it is no longer about that more is better.
Microbiome is a large research field. Many studies define the beneficial
microbiome and harmful microbiome. The more we learn about
microbiome, the more we realize we don’t know, but it is really excited.
The trend of fermented food is increasing in Europe. Nowadays,
including Asia, like Japan, various fermented foods are in the market. The
market value of probiotics now arrives at 40 billion Euros, and in 2021,
the increase will reach 38 percent per year, but most of the growth is not
in dairy but in water and drinks. What’s more, the innovation focuses

13. on not only a single microbe but also multi-strains that even changes our
gut bacteria. Besides probiotics and prebiotics, some traditional raw
materials in the traditional Chinese medicine are concentrated more,
because a large number of science magazines have proved that there are
many benefits in them.
Furthermore, a lot of countries pay attention to sports drinks while some
countries almost ignore them, so there is interesting market
segmentation. In the next few years, more and more countries, especially
developing countries will concern to sports drinks increasingly, as well as
some new trends like heart health and medical cosmetology.
In my opinion, it is important for the food industry to keep drug fatigue
in mind. Most people, especially consumers may think fatigue can be
cured by advanced medicine, but it seems that compare with tables,
liquid medicine and the like, people are more willing to accept diet.
What can be used to boost the buying power of functional food?
To our surprise, according to studies people prefer to spend more money
buying functional food, because not only health but also place of origin
and naturalness, price and safety, and the most important is taste. We

14. have the healthiest and eco-friendly products in the world, but if they
had a bad taste no one would buy them, so it is all about taste. Perhaps it
is quite exaggerated, but the product with bad taste can’t make good
sales for a long time. However, it is an exception that some functional
drinks like Red Bull taste not good but they are useful. Is it because of
terrible flavor you feel they are useful? For the industry of functional
food, we hope our product has a good taste, but some exceptions tell us
that even if the product with different or even terrible taste can be still
accepted successfully as long as it reveals that as functional food it can
meet consumers’ demand. Today, the taste of functional drinks is
terrible indeed but they really make good sales, and the whole industry
of functional drinks has billions of markets.
Next, we discuss the new working style and business model. Nowadays,
there are a large number of great startup companies, which attract big
companies to copy their entrepreneurship. First both product and
company need a sense of direction, and individuation becomes more
and more vital. In the age of social media and digitalization, every people
can relate to each other, and companies should have their characters.
Compared with giant multinational companies, startup companies have
more individuality. More and more big enterprises attempt to establish
their own entrepreneurship and individuality. Sometimes, they try to

15. have more characters by acquisitions, mergers and acquisitions and
investments; plus, open innovation and joint venture companies.
When it comes to startup companies and joint venture companies,
people’s attitudes are quite open toward new development methods
and working models. For example, there are lots of big companies have
opened their VC or the platform for innovation, and cooperated with
some small companies. Therefore, we can realize that some big
companies may be afraid of a lack of products they desire that forces
them to carry out the joint venture and promote the development of
their products. In this way, the merger in the industry is growing. Scale of
merger should also be noted. For instance, in 2016 there were 707
merger cases in nutrition and health industry that the number of merger
case reaches a peak in recent years and the deal size is bigger and bigger.
We know some great deals like the acquisitions of Swisse and Mead
Johnson, which have attracted much attention, but such acquisitions are
rare in few years ago.
Next, turn our eyes on the scale of these acquisitions we mentioned
above, which the transaction amount has already arrived at 275 billion
US dollars. It also changes the pattern of this industry that means most
people have to check their strategies and then make decisions about and

16. quit of some business and entrance of other industries. With the
emergence of digitalization, network, and Internet of Things, the time of
the traditional business model has been gone. I don’t know whether
you are familiar to the concept of Internet of Things. I like it very much.
Your fridge, washing machine, and mobile phone are interconnected;
online shopping, VR, and social media are booming, and everyone can
take photos for their food. Anyway, technologies have tremendous
influence on nutrition and health industry, and we need to find our
position in the digital world.
Finally, word of mouth is all. Innovation can come from everywhere, like
some simple ideas. For instance, organize some raw materials together,
or utilize several major tendencies. In fact, it is not necessary to make a
great change. Taking Western Europe as an example, I think the sales
mode of tea is reasonable that people regard tea as a functional drink.
Besides, it is the usage of IT. Consumers prefer to spend more money
buying high-value and niche products, which truly meet their demands.
Trend is rather significant, but if you follow all of them you will fall.
Sometimes, both small and big innovations have their own value, and
what we need to do is more humanized and to pay more attention to the
niche market.