The Need for Ingredient Diversification in Foods

February 2023

In 2022, the combination of COVID-19, geopolitical tensions and increased climate events deepened disruptions to food supply. Combined with mounting health and sustainability pressures, the context invites food players globally to rethink ingredient sourcing and offerings. Aside from helping to tame more volatile costs, diversifying ingredients can help meet nutritional needs among consumers, whilst aligning with regulatory changes and even contributing to more sustainable business models.

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This report comes in PPT.

Key Findings

Food businesses must brace for era of higher volatility in commodity prices

The COVID-19 pandemic, the war in Ukraine and economic sanctions on Russia have shaken the mechanics of food inflation globally and caused commodities like food ingredients to experience lingering higher prices. In most markets, food players need to challenge their ingredients’ cost effectiveness and/or elevate margins through a more indulgent recipe.

Consumers to look for star ingredients with natural health benefits

In parallel with the unabated rise of clean label foods, consumers’ appetite for natural ingredients that promise better functioning body and mind will grow even stronger. Food manufacturers will need to approach both trends in tandem whilst delivering the relevant mouthfeel through novel sensorial aspects such as shape, texture and/or size.

Health and sustainability grow on governments’ legislative agendas

Across many key markets worldwide, regulatory bodies are following stricter approaches on nutrition labelling and food sustainability. Brand owners can not just anticipate but lead the change by investing in reformulations that align with their key markets’ governmental policies – notably, when it comes to sugar/fat/salt content and their ingredients’ resource intensiveness.

Large potential in more sustainable ingredient selection and sourcing

As more and more major climate events prove increasingly devastating for food businesses across regions, the sustainability of ingredients has yet again gained importance in food producers’ long-term success. Resilient crop choices, resource-efficient ingredients and regenerative agriculture are some of the most strategic priorities to have in the selection and sourcing of future food ingredients.

Key findings
Lack of ingredient diversity globally puts sustainability of food supply chain at risk
Four types of drivers for ingredient diversification
Commodity costs: Persistent inflation pressure to force a rethink on certain ingredients
Retail price hikes for branded food likely to further push private label up
Consumer desire to “eat better” stronger than ever, with rising focus on free from offerings
Plant-based ingredients to thrive alongside recipes aiming for a more targeted health benefit
Food legislation sharpens, with more nutritional standards and tougher sustainability rules
UK’s war on HFSS products only one of various drivers for “healthier” snack reformulations
More strategic crop choices becoming essential amid rising climate-related risks
Onwards with more resource-efficient and streamlined ingredient sourcing
Amid higher inflation, ingredient suppliers bring more affordable solutions to the fore
As indulgence further permeates the home, premium recipes disperse private label threat
As indulgence further permeates the home, premium recipes disperse private label threat
Reducing “unhealthy” ingredients vs adding nutritional value: Food brands need both
UK snacks reformulations for regulatory compliance: Less sugar, more texture
Unilever suggests more planet- and people-friendly pizza with alternative ingredients
Gearing up for future opportunities through ingredient diversification

Health and Wellness

Health and Wellness encompasses a number of key claims made on a food or drink products that suggest a health and/or wellness positioning. It comprises positionings relating to better for you, dietary and free from, fortified/functional, health benefit, natural and organic. Please note that data is not available at this level or other aggregated claim levels.

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