Australia’s national science agency, the CSIRO, has taken a stab at sorting nutrition jargon from food fads to define the biggest growth opportunities for Australian food and agribusinesses that could be worth $25 billion by 2030.
Terms like ‘plant-based’, ‘free-from …’, ‘natural’, ‘personalised’, ‘gut-friendly’, and ‘high protein’ are used on food packaging today, but it can be hard to know which catchphrases end in a fad, like paleo, and which will grow and take off, like meatless burgers and flexitarians.
The CSIRO’s new report, Growth opportunities for Australian food and agribusiness. Economic analysis and market sizing, has a razor-sharp focus on the big food trends of the future, based on consumer preferences, competitive advantages, potential competitors and analysis of macroeconomic forces like population and income growth.
Here at Appetite Communications, we think there are five key takeaways from this report that will shape Australia’s future food industry with high-growth, emerging opportunities:
FOOD INDUSTRY CHANGE 1: Processed and fresh food should be good for me AND the planet
There’s a growing interest in healthy and sustainable lifestyles with consumers increasingly demanding both. Companies and brands that can provide food that is healthy for me and healthy for the planet are likely to have a clear advantage.
This isn’t just a millennial push – as the Australian population grows and also gets older, we’ll see an even stronger swing to healthier sustainable eating. This will be driven by an increased consumer understanding of the link between diet and wellbeing, along with increased government focus on preventative healthcare measures.
It’s clear there will be a growing consumer appetite – and willingness – to pay for foods and drinks with an innovative and credible health and sustainability story. Today, 40% of Australians say eating fresh fruit and vegies is a top food priority and one in four want to reduce sugar and fat intake so it’s likely the consumer appetite for nutritious foods will grow. We’re starting to see this emerge with retailers like The Source Bulk Foods with the goal of “satisfying healthy appetites and promoting zero waste” where consumers can refill their extra virgin olive oil bottles and make their own nut butters in recyclable glass jars.
FOOD INDUSTRY CHANGE 2: Dietary intolerance will drive demand for ‘free-from’ food and drinks
Our population is suffering higher rates of food avoidance with around one in ten – or 12% of us – currently avoiding wheat, gluten, dairy or lactose due to dietary intolerance or preference. More of us will strive to buy food products free from gluten, lactose, allergens, dairy or meat, according to the report.
There is consumer demand to find more food and drink products that are free from cow’s milk, eggs, peanuts, tree nuts, sesame, soy, fish, shellfish or wheat as 90% of food allergic reactions are from these nine foods.
The report says the key markets for Australian business will be soy milk and milk alternatives, gluten-free bread and other lactose-free milk products.
FOOD INDUSTRY CHANGE 3: Our food will become more functional and fortified
Food and drinks are likely to become more functional as we lean towards better nutrition and wellbeing. Products like functional milk formula for kids, fortified breakfast cereals to give us more Omega 3s or fibre, probiotic yoghurt and sports rehydration drinks are predicted to grow, with the domestic market worth $5.5B by 2030 and exports expected to reach $4.2B.
We’ve seen emerging innovation in this category – think of the explosion in products with probiotics that are already on the supermarket shelves like kefir and kombucha – and we believe it will continue to grow with more products like breakfast cereals and breads higher in resistant starch for gut health.
With the rise in understanding of how our gut microbiome influences overall health and wellbeing, we predict foods and drinks that contain prebiotics or probiotics will rise in demand as more consumers want tasty and convenient choices that benefit their microbiome. The challenge for many brands in this space will be how to help consumers understand where their product fits in a healthy lifestyle and relevance for different life-stages.
What’s more, there will be continued demand for sports drinks and whey proteins as more consumers seek out sports, fitness and more active lifestyle trends.
FOOD INDUSTRY CHANGE 4: Nutrition won’t be a one-size-fits-all – it will become personal
As our understanding of human nutrition evolves, so too does the need to personalise what we eat, drink and supplement based on our age, genetics, hormones, lifestyle and exercise patterns.
Personalised nutrition products are likely to become more popular, with everything from DIY home-test kits to check our microbiome to full on genetic testing with personalised meal planning and coaching offers.
CSIRO analysis estimates domestic expenditure on personalised nutrition services and solutions to reach $550M by 2030 as consumer awareness improves and the price of services fall.
In the short-term, CSIRO believes the focus will be on research and development, proof of concept and clinical trials before we see full commercialisation of innovative new products.
However, we are seeing new products leap into the market, such as Nourished’s recent UK launch of customised daily ‘nutrition stacks’, – personalised supplements to meet your own specific needs based on health and wellbeing questionnaires with the hope to link into DNA or microbiome tests in the future.
With research finding around 30% of consumers will pay a premium for personalised nutrition services over generic nutrition products and services, this category is likely to flourish.
FOOD INDUSTRY CHANGE 5: Sustainability will be at the heart of new product innovation
As consumer awareness of our planetary situation rises as evidenced recently with school children going on climate strikes, the CSIRO has identified three key sustainability innovations that our food and drinks industry are likely to explore and grow:
1. Alternative protein sources
Protein-rich foods eaten as an alternative to meat and seafood are likely to explode in demand. This will include plant proteins such as soy and pea, and emerging products such as insect-based ingredients.The market for alternative proteins is expected to grow at about 5% a year, more than double the rate of 2.4% for the whole food and agribusiness sector.
This trend is moving fast but we think the key to this taking off will be getting the taste and texture right to appeal to the growing market of flexitarians who enjoy the meat taste but are looking for more environmentally-friendly options.
2. Organic waste conversion
Food waste is more than a big problem, but what if food that’s currently lost or wasted could be converted into something nutritious and tasty?
Around a third of all food that is produced is lost through waste across the food supply chain. The wastage happens from farm to fork: during on-farm growing to post-harvest handling and storage; processing and packaging; distribution and in the market; and lastly by the consumer.
3. Sustainable packaging
Bioplastics and biodegradable packaging will need to innovate given the Australian government has announced a national target to ensure that 100% of packaging is reusable, recyclable or compostable by 2025.
We’ve noted some great innovations with some of our clients using compostable utensils and cups for product sampling and moving towards 100% recyclable plastic in bottles as well as biodegradable packaging.
The future looks bright
Overall, this latest CSIRO report provides strong optimism for Australian food and agribusinesses as consumer demand grows steadily for foods and drinks to meet key health and wellbeing needs. Consumers increasingly care about the environment and will expect food and drink companies to be transparent about packaging and claims. The challenge will be to communicate a food’s nutrition and sustainability story in an engaging and credible way to make sure it becomes a real part of a healthy diet, not a short-lived fad.