Despite ongoing challenges with inflation, increased costs of product/distribution, and raw material price rises, innovation remains a key driver of success for the packaged food industry. Packaged food innovation strategies are being refined to provide better products that push the bar on health, sensory experience, and value demands.
Health: Seeking greater harmony of function and flavour
Health remains a top value driver in packaged food – commanding not only shopper attention, but also spend. For example, innovations leveraging functional ingredients such as plant-based/non-animal derived proteins are expected to rise above historic levels in the next five years, as are popular health claims like “good source of vitamins”, “gluten free”, and “natural”.
Underlying taste demands and preferences will inevitably impact the long-term performance and acceptance of foods that seek to succeed through amplified health positioning
Source: Euromonitor International
For this reason, innovation strategies are paying closer attention to balancing health and taste needs. Natural ingredients are being optimised to provide maximum flavour and function. Plant-based nutrition is working to overcome taste limitations. And health claims and flavour features are getting equitable attention on pack.
A good example is Turtle’s multigrain, chocolate-flavoured cereal innovation; the product leverages multiple, bold claims to emphasise its nutritional merit while also depicting the product’s indulgent aspects with chocolate call-outs and flake imagery. The Belgian-native brand saw double-digit sales growth in its home market in 2023 while its ambition to grow has led to expanded market distribution in Germany and Saudi Arabia in 2024.
Flavour and texture experimentation are quite popular across food innovations. Euromonitor International’s Voice of the Consumer: Lifestyles Survey, fielded January to February 2024, finds that 39% of global consumers enjoy trying new tastes and food combinations – highest among millennials and Gen Z. With the demographic of grocery purchasers shifting, new tastes will need to be attended to.
Culturally significant flavours have been moving across the globe and expanding their reach beyond their original geographies, catalysed by greater global connectivity and consumer openness to trying new, authentic tastes. In savoury snacks, for example, spicy flavours, like jalapeño, chili, chipotle, and wasabi, have seen substantial global growth, making up nearly a fifth of tracked new product launches (NPLs) in 2023. In addition, texture has helped amplify the experience and sensation of flavours. Crunchy textures often accompany spicy flavours for this reason – to intensify the heat. And longer term, across all packaged foods, there has been increasing use of herbs and spices – up 13.9% across 2019-2024.
Unlocking value: Brand and private label investments accelerate
The affordability crisis has increased the number of price-conscious and value-driven consumers with their demands on the agenda of retailers and manufacturers alike.
More than one in three consumers globally (38%) say that they try to eat nutritious, but cheap foods – bringing to light the new industry-wide challenge of elevating affordability and value simultaneously
Source: Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey, fielded January to February 2024
Recently, private label food manufacturers have been tackling this challenge by increasing investment in innovation and NPLs. Tracked private label packaged food NPLs grew by 3.6% in H1 2024 versus H1 2023 with shares at their highest percentages in over a decade. And the strength of private label is not only limited to staple foods, as now private label is increasingly penetrating treat categories and occasions; examples include US retailer Target’s Favorite Day line, United Arab Emirates retailer LuLu’s Classic Bites Pistachio Cookies, and in Poland Carrefour’s Classic Vita' Up dairy yoghurt snack launch. Private label’s share is forecast to grow further in 2024 with Euromonitor International’s Voice of the Industry Survey 2024 highlighting the fact that 43% of food and beverage professionals believe that private label and low price/discount competition will impact future sales.
Key aspects of future innovation success
In the years ahead, manufacturers will be focused on improving product or service portfolios to increase share in existing categories while expanding use occasions and attending to the new level of value expected by consumers.
New innovations should pay greater attention to the balance between nutritional and taste features, expand on culturally inclusive and diverse flavour and texture experiences, and offer quality enhancements at affordable prices to meet the growing value demands of consumers.
For more information on NPL activity in packaged food and the state of innovation, please see Euromonitor International’s report, Product Innovation in Packaged Food.
We track NPLs at online retailers across 54 fmcg categories and 32 countries. Contact us here to see which new products have been gaining ground in your category.