Mass-Market to Niche: Food and Beverage Companies Can Shift Direction to Remain Competitive

food and beverage
Consumer demands have pushed the food and beverage market to form collaborations between larger companies and smaller start-ups to remain competitive.
Image source: Flickr CC user USDA China

The food and beverage industry is facing a crossroads. Thanks to the internet and increased access to information, today’s consumers have diversified into many subgroups, each wanting different things. Some want to sample exotic flavors that they learned about via social media. Others will only buy organic food and ingredients because of something they read on a blog. Baby Boomers look for healthy-for-them products. Millennials desire authenticity and sustainability. How can companies keep up with these shifting, often contrasting demands?

The reality is that they can’t—at least not in the same way they have in the past. The food and beverage sector has become a saturated market. Let’s look at the beverage side of things, as an example. Soft drink sales have decreased in recent years. Even fruit juice products aren’t doing so well.1 Established categories are no longer growing, which means that companies have to look elsewhere.

In this case, “elsewhere” takes the form of niche products. Instead of soda and fruit juices, consumers are interested in drinks like iced coffee, soy beverages and flavored water.2 We’ve reached the point where brand awareness is no longer enough. I’d even argue that brand loyalty is a thing of the past. Speaking for myself and my friends, we’re less interested in who makes a product and more concerned about what it tastes like and how much it costs. If we’re anything to go by, big companies will need to rethink about their approach if they want to maintain their market share.

Collaborations between Larger Firms and Smaller Start-ups Will Play a Bigger Role in the Food and Beverage Sector

While larger companies may have a difficult time with today’s consumers, the same can’t be said for niche brands. For them, the market is ripe with opportunity. A small start-up that specializes in bottled, organic smoothies may find a loyal following among consumers who prize health and convenience. The ability of emerging brands to respond quickly to shifting buying patterns and trends is one reason why many of them are being acquired by or forming partnerships with bigger firms. If the more established companies can’t do it themselves, they’ll find someone who can.

Regardless of whether big companies choose to pursue partnerships with niche labels, diversified consumer demands have made it clear that maintaining a portfolio of small, varied brands is the key to success.3 The days of large, mass-market launches are over. A one-size-fits-all approach no longer works in this fragmented market. Look at the rise of the flexitarian. more people are now eating non-meat products, even if they’re not vegetarians or vegans. It’s not about targeting either vegetarians or meat-lovers anymore but delivering products that will appeal to buyers looking for a specific trait.

No matter what approach food and beverage firms adopt, they must make sure their plan incorporates efficient workflows that support responsive market launches. For example, it does no one any favors if it takes too long to capitalize on the latest seasonal flavor trend. If a particular food is tied to autumn, what good does it do to release it in the spring? The company will have missed out on potential buyers by then.

The BIOVIA Formulation Development Solution for CPG is a complete suite of tools designed to aid your food and beverage company’s efforts to design and release innovative, new products that satisfy diverse consumer needs. It makes the R&D process more efficient by replacing outdated systems with digital software that enables users to track project status and lab capacity, allowing them to determine whether their current developmental pace can meet expectations and capitalize on popular trends. Researchers also can access results from experiments, including past ones, which lets them to build on previous work and avoid needless duplication. Built-in collaborative tools help colleagues share information with one another, independent of location or time zone.

Is your food and beverage company interested in streamlining its R&D cycle to remain competitive in a saturated market? Please contact us to learn more about the BIOVIA Formulation Development Solution today.

  1. “Food and drink trends focus on smaller brands,” December 1, 2015, http://www.foodmanufacture.co.uk/Manufacturing/Top-food-and-drink-trends-for-2016
  2. “Niche beverages take centre stage in saturated markets,” March 4, 2010, http://www.beveragedaily.com/Markets/Niche-beverages-take-centre-stage-in-saturated-markets
  3. “Big Food, Beverage Launches ‘Scarce and Scarcer,’ Says Industry Analyst,” December 15, 2015, http://www.nutritionaloutlook.com/trends-business/big-food-beverage-launches-%E2%80%9Cscarce-and-scarcer%E2%80%9D-says-industry-analyst

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