Agri-Food Trade Service

Agri-Food 2010 Hot Trends Report
United States

April 2010

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.

Please address any comments or suggestions you have on this report to: infoservice@agr.gc.ca

Introduction

Trends in consumer habits and preferences are changing in the United States (U.S.). The economic crisis of 2008-09 affected the spending habits of millions of Americans and although economic indicators show positive results, the public remains pessimistic. As the U.S. emerges from recession, consumers' spending habits are not expected to reach pre-recessionary levels in the near future. Consumers are increasingly demanding value in the products they buy – meaning high quality at a competitive price.

Hot trends in 2010 will be influenced by "greater societal trends and consumers' growing awareness and/or interest in issues" regarding local sourcing, nutrition, sustainability and simplicity. Consumers' busy lifestyles create demand for convenience meals, but buyers are paying greater attention to quality and nutritional content in their food. As a result of the recent economic downturn, consumers seek value, variety, convenience and comfort in the food they purchase.

The National Restaurant Association (NRA), which conducts an annual survey of professional chef members of the American Culinary Federation, was a primary source of information for this report. In 2010, survey participants ranked 214 items as a "Hot Trend", "Yesterday's News" or "Perennial Favourite". Results showed that more locally sourced food and drink, shorter, more authentic ingredient lists, and increased consumers' attention toward ethical production and the nutritional benefits of products will be hot trends in 2010.

However, trends overlap and contradict in many cases. Authentic foods are growing in popularity with local sourcing, simplicity and sustainability. Also, consumers are paying premium prices for organic foods, although the U.S. economy remains weak. Busy lifestyles dictate greater spending on convenience meals and restaurant quality foods at home, which are comforting when consumers are eating out less. In addition to greater demand for comfort food, consumer desire intrigue in their food choices such as ethnic cuisines and new beverage varieties.

Consumer Behaviour

As the U.S. economy emerges from recession, consumers will be going out to restaurants less frequently, desiring comfort foods at value prices. Thus, in order to attract consumers, restaurants must give diners exclusive unique and desirable flavours to keep them coming back. Decreased dining out will contribute to consumers buying more restaurant-quality food in retail stores that can be made at home or on the go, such as ready meals and frozen pizzas. Demand for gourmet varieties of chocolate and indulgent desserts in retail stores will rise because consumers want to treat themselves in relatively inexpensive ways.

Americans are beginning to purchase more private label products, which involve little sacrifice and considerable savings. BrandSpark and Better Homes and Gardens surveyed 50,000 grocery shoppers. More than 40% of shoppers reported purchasing store brands instead of name brands, and 63% said they plan to purchase private label products after the economy recovers.

As consumers stretch their dollars they are looking for more ways to personalize their food products to efficiently meet their needs. Consumers will be making fewer shopping trips and buying more items in bulk in 2010 and there is opportunity for technology to enter and simplify the process. iFood incorporates Internet technology into consumer's shopping ritual from providing product information to service. iFood technology uses the Internet, web applications and programs as a method for building customer relationships and allowing customers more control over their order opportunities. Online grocery shopping is expected to double by 2014 with most consumers purchasing bulk items. Consumers say removing the delivery charge on orders would make ordering online more appealing.

Several trends will remain after the American economy rebounds including eating restaurant-quality meals at home, purchasing more private label foods, using online coupons more frequently, spending less on luxuries, buying premium products at discount stores, and eating cheaper, more convenient snacks. Some trends are expected to reverse when consumer spending power recovers. For example, dining out and purchasing premium priced products are expected to rise again. However, experts predict consumer spending will not reach its pre-recessionary levels in the near future; the days of excessive consumer spending are over and in future consumers will focus on value.

Nutrition

Increasingly, consumers in the U.S. are concerned about improving their health, so they are purchasing more nutritious foods. Two-thirds of Americans consider themselves overweight, and a 2007 survey showed 77% of Americans have tried to lose weight at some point in their life. This creates significant opportunities for restaurants and retailers to supply products that include health benefits and omit unhealthy additives. Smaller portion meals and desserts allow consumers the option to eat their favourite foods in guilt-free portions. Functional foods which boast health benefits are in growing demand. Also, sufferers of gluten and lactose food allergies will see their food choices broaden.

Attention to Nutrition

Consumers desire wholesome meal options that are accommodating to busy schedules. They scan labels for high fibre content, whole grains, reduced sugar, low calories, high protein and low sodium. Consumers are switching from traditional food staples to nutritionally redesigned foods. For example, whole grain pasta, which is high in fibre, potassium and magnesium, is the top selling item in pasta product sales for many producers. Health and wellness products are the fastest growing in the pasta category.

Sodium levels in food are considered the new 'health' issue for the next five years. Consumers and health organizations are concerned with sodium levels because excessive sodium consumption is linked to high blood pressure and heart disease. Since 70 to 80 percent of sodium in the average American's diet comes from packaged foods, consumers demand sodium levels be reduced in products; the days of companies relying on salt to mask defective taste are over. Therefore, manufacturers are re-engineering food products to reduce sodium levels.

Nutritional food choices for consumers on the go are in increasing demand. Whole Foods, a natural food retailer, had higher take-out sales than restaurants Applebees, Red lobster, Olive Garden, Maggiano's and On the Border combined. Between 25% and 30% of Whole Foods' shoppers purchased home meal replacements. A survey of 1000 U.S. consumers by the Produce Marketing Association showed that between 72% and 84% across all age categories, purchase fresh cut produce from retail outlets and only 15% of consumers buy from convenience stores. This signals an opportunity for convenience stores to offer healthier options. A few apples and packaged sandwiches are not enough, so convenience stores have begun to offer a variety of fresh foods options. Healthy frozen options that can be heated and eaten on the go are great for time strapped consumers.

Smaller Portions

Despite the fact that consumers pay greater attention to nutrition they still crave their favourite foods and sweets. For this reason half and smaller portion meals and desserts are growing in popularity. T.G.I. Friday's now offers the 'Right Portion, Right Price' menu that allows customers to order their favourite meals in half sizes at lunch and dinner. Single portion desserts such as Betty Crocker's Warm Delights, are the fourth hottest trend for 2010 according the National Restaurant Association (NRA) chefs' survey, while half-portions are the seventh hottest trend. Smaller portions allow consumers to manage caloric intake without sacrificing taste. Consumers can indulge in their favourite foods without feeling guilty about poor eating choices.

Nutritional Children's Foods

Rising obesity rates makes children's health a growing concern in the U.S. Research on what children are actually eating and what influences their choices helps food producers identify ways to encourage children to want to eat more nutritious food. Better-for-you foods are a wise angle to approach the children's food market; however, producers must strike a balance to appeal foods to both kids and parents. A trend in 'hiding' vegetables in smoothies and pasta sauces has been successful in this respect.

The most successful kids' foods in 2010 are healthful, natural and low-fat. Of the ten case studies reviewed by Foodnavigator, almost all showed that parents are purchasing children's foods they perceive as natural as possible. This means they avoid products with unnatural or potentially harmful ingredients such as added sugar, artificial sweeteners, preservatives, colours or flavours. According to the NRA's chef survey, on average 65% of respondents felt nutritionally balanced fruits and vegetables and ethnic inspired children's foods were hot trends for 2010. Children's entrée salads and fun-shaped foods are losing popularity in this category, but classic foods like hot dogs, hamburgers and chicken nuggets are considered perennial favourites by over 50% of respondents.

Functional Foods

Functional foods boasting medical and nutritional benefits are here to stay. Foods infused with antioxidants and probiotics are increasing in demand across the U.S. This trend explains growing popularity in frozen desserts that include added nutrients such as omega-3 fatty acids, calcium and vitamin D.

Super fruits that are high in antioxidants are a major product category in functional foods. Pomegranate, the category's most popular fruit is facing new competition in 2010. Candidates for 2010's hottest super fruits are Borojo, Baobab, Maqui and Yumberry. Borojo is a natural energizer while Baobab, Maqui and Yumberry are high in antioxidants.

Intolerance Foods

For years consumers with dietary restrictions have had limited food options, but this segment of the population is finally getting more variety in food choices. Producers who offer gluten-free, lactose-free and vegan ingredients and food options are reaching a growing market of consumers looking for more options to accommodate their restricted diets. Additionally, this trend applies to the broadening base of health-conscious consumers. An opportunity exists in providing comfort foods with modified ingredients to cater to this consumer segment. For example, Cruzer Pizza in Los Angeles introduced organic, gluten-free and vegan pizzas and sales rose 63%.

Gluten-free foods that taste good are particularly in increasing demand as incidences of food related allergies rise. Alternative grains such as quinoa, amaranth, buckwheat, spelt and kamut can replace gluten ingredients. Options for sufferers of celiac disease are expanding to lunch meat, bread, donuts, frozen dinners, cookies, cereals and pasta. Sales of gluten-free products have more than doubled since 2005 among major consumer packaged goods companies. Gluten-free beer is expected to be a hot trend in 2010 according to 60% of respondents of the NRA's chef survey.

More than 60 million Americans are lactose intolerant and there are few milk substitutes that taste like real milk. Valoi, a Finland based company, is launching its re-engineered line of lactose-free products, "Real Goodness" in the U.S.. Canadian-based 'Almond Fresh' is another milk replacement beverage made from almonds. There's opportunity for producers to expand in this market by offering lactose-free products that taste as similar to real milk products as possible whether they be made with soy, rice or almond products.

Simplicity

As the U.S. economy recovers from recession, consumers crave comfort and simplicity. Simplicity is associated with reducing physical and informational clutter and complexity in life. Consumers desire more simplicity in their life to boost energy and reduce stress, so simplistic foods are growing in popularity. Also, simple foods are associated with growing demand for natural and healthy foods.

Short Ingredient Lists

Simplicity in food translates into short and recognizable ingredient lists. Consumers prefer familiar ingredients rather than chemical ingredients. Shorter ingredient lists make products appear healthier. Staggering health claims on the label of a product do not prove to customers the product is actually healthy; shorter lists of recognizable ingredients provide reassurance that health claims are valid and create greater transparency. Since consumers may have trouble deciphering a health snack on the go, short and simple ingredient lists simplify the process. Manufacturers use the term 'simple' to indicate their products are less processed than others, which is desirable for the consumer of 2010.

Authentic Food and Ingredients

Authentic food and ingredients are growing in popularity as consumer rebel against society's increasing commoditisation of culture. Authentic food encompasses lengthy creation, free range animals, respect for tradition, traditional artisanship, using only the best raw materials, and motivated by love and care not profit. It opposes modern day production style, which uses chemical ingredients, modern technology and optimized processes to save money and time. This trend corresponds with the growing demand for locally sourced foods.

Artisanal cheeses, black garlic, ancient grains, flat bread, house-infused spirits, locally sourced meats and produce and home-made ice cream are hot food items emerging from this trend. Authentic foods are making their way into street food venues where they can attract consumers with lower prices since they have lower overhead than restaurants. Free range poultry, pork and beef will be promoted in restaurants and retailers across the U.S.

Nostalgic Foods

Natural and simple foods reminiscent of years past are increasing in popularity as consumers attempt to escape the stress of the economic downturn. Consumers describe imperfections in foods such as unevenly shaped pizzas and mashed potatoes as natural and comforting like a home cooked meal. However, many are unwilling to spend the time cooking themselves. That drives demand in ready-made meals, processed meats and restaurants. Thus, chefs this year will be cooking familiar favourites such as burgers using simple and rustic ingredients. In 2009, the burger was the top new menu item, and this trend is likely to continue in 2010 as consumers seek out foods that are 'back to the basics'.

Some retro or 'brown' flavours such as butterscotch, toffee, caramel, honeycomb, pralines and brittles are increasing in demand. Another nostalgic trend is offering breakfast items such as waffles and French toast as dessert.

Local Sourcing

Three of the top five hottest trends voted by 1,800 chefs in the NRA's "What's Hot in 2010" survey were related to local sourcing. Locally sourced produce, meats and seafood, and wine and beer were considered hot trends by at least 79% of respondents. Therefore expect to see more restaurant grown ingredients listed on menus and farm branded products in grocery retailers in 2010.

A survey released by IGD Retail Analysts reveals the most popular reasons consumers purchased local produce in Britain. The survey results revealed 30% of consumers purchased locally produced products during the month of January 2010; double the amount in 2006. Fifty-seven percent of respondents claimed they purchase local foods because it was perceived as fresher having travelled a shorter distance. Other top reasons were the desire to support local producers and retailers (54% and 34% respectively) and to keep jobs in the local area (29%). These percentages at least double their respective 2006 levels. Providing local foods can build closer relationships with customers; it can be an effective public relations campaign for big retailers that are perceived as pushing out local competitors. Similarities between the U.S. and British consumers and farm support programs support these observations and provide insight into motives behind American spending on local produce.

In the U.S., consumers crave home-cooked meals so restaurants are shifting to a home-grown approach to cater to this demand. Increasing supply of artisan breads and cheeses, house-infused spirits and locally sourced meats and produce are becoming more apparent on restaurant menus. Restaurants are including season food menus that incorporate fruits and vegetables that are ripe at that time of year. In retail, grocery stores are using locally sourced products as a differentiation point. As the U.S. economy recovers, consumers value products that support local producers.

The United State's Department of Agriculture (USDA) 'Know Your Farmer, Know Your Food' project launched a new pilot program to establish high tunnels, also known as hoop tunnels that enhance growth of local produce in a conservation friendly way. The technology helps producers extend the growing season making their opportunities for profit growth expand. These efforts show the government's commitment to increasing the availability of locally sourced produce to supply growing demand.

Sustainability

Sustainability was ranked the third hottest trend in the 2010 NRA chef survey. Sustainable and environmentally friendly practices are appealing to restaurants, retailers and consumers for many reasons including freshness, minimal transportation and supporting local communities and businesses. Consumer awareness of ethical food production has risen rapidly in recent years and consumers want to know how their food is produced before purchasing it. Average consumers are paying closer attention to issues such as human, social and environmental costs of domestic and international food production. Major brands such as Pepsi Co. are getting on board this trend, which signals its growing popularity. Furthermore, consumers perceive 'natural' products as healthier. The expanding availability of 'green' certified, fair trade, locally sourced and organic foods makes a sustainable lifestyle easier to live. This does not mean 'green washing' products to appear sustainable without providing marginal benefits. American consumers are paying attention and taking responsibility; companies and people are looking to make a difference.

Organic food sales remain strong despite the economic downturn. A survey conducted by Mintel showed that only 3% of consumers have stopped buying organic foods outright, while 40% say that their spending on organic products has not changed. Heavy users of organic products were the group most likely to trade down to less expensive organic products; however, infrequent buyers of organic foods said they have not changed their organic spending behaviour. As the certification process for organic foods gains credibility, spending on organic products is expected to rise. Mintel's survey showed that 45% of participants trusted the term 'organic', while 33% trust the term 'natural'. J. Walter Thompson, an advertising agency released a list of top food trends and noted that organic products had become "the new hook in quick service eateries". Chains such as Organic to Go, Naked Pizza and O!Burger are springing up across the U.S.

There is some debate over the future of organics. There is a trend towards greater spending on high quality, sustainable food items, but end user price sensitivity may slow spending on organic foods. Despite scepticism, many large retailers are supplying more organic products. Once a niche product segment, organics have quickly entered the mainstream food industry.

Ethnic Cuisines

As the U.S. population becomes increasingly diverse, the market for ethnic food grows. Additionally, increased international travel has contributed to Americans' broadening taste palate. In 2010, Americans will want new flavours on which to spend their fewer restaurant dollars.

Regional ethnic cuisine and ethnic fusion are the two hottest trends in the ethnic cuisines and flavours category of the NRA's chef survey. Restaurants are looking to pioneer the next hottest regional ethnic cuisine, which for decades included Italian, Chinese and Mexican cuisines. Restaurants are now exploring flavours from regions such as Tuscany, Brazil, and Morocco as well as American favourites such as North Carolina BBQ to develop tomorrow's favourite regional ethnic foods. Ethnic fusion refers to incorporating ethnic flavour into traditional comfort foods, for example adding curry and sweet potato to shepherd's pie. This is another trend to expect in restaurants and retailers across the U.S. in 2010.

The Muslim population in the U.S. is more than 8 million and most follow the Islam halal dietary laws, but many do not have access to halal food products. Sales of halal foods in the U.S. have grown 70% since 1995 and the market was valued at US$12 billion in 2008, so there is potential to supply a sustainable market. Furthermore, many major American brands such as Oscar Meyer, Cargill, ConAgra, and Tyson have halal food lines.

Beverages

Alcoholic Beverages

Locally produced wine and beer is the hottest trend in 2010 among alcoholic beverages. Organic, gluten free, craft, seasonal beers, cocktails and liquors are all expected to be hot trends in 2010. Bar chefs and mixologists are increasing in popularity as well. It is important that beer exporters focus on the value proposition in the after effects of the recession. Although alcohol is considered 'recession-proof', as the U.S. economy emerges from recession, consumers are spending less and are looking for added value in their purchases.

Light and Flavoured Beer

Americans are buying less imported beer, which cannot be fully attributed to the economic downturn. Volume sales of imported beer in 2008 were 286 million cases, a 5.4% drop from 2007 levels. Americans are switching to light beers, light flavoured beers and seasonal drinks, which haven't been offered by many imported brands. Locally produced craft beers are the greatest competition for beer exporters because they are similarly priced. Craft beers have seen sales increase because they have successfully adapted to changing consumer tastes. Canadian beer exporters would benefit from offering more light and flavoured beers. This trend has created opportunities for companies such as BrewTopia, which produce flavour ingredients for beers. The idea is to allow beer producers to create a range of different beers from the same malt.

Non-alcoholic Beverages

Trends show consumers shifting away from carbonated beverages and bottled water to hot and ready-to-drink beverages. Organic coffee and tea were ranked the hottest beverage trends in the NRA's chef survey for 2010. On the other hand, according to over 55% of respondents, bottled water, flavoured/enhanced water and energy drinks are 'yesterday's news'. However, the term 'shots', in the marketing for energy and relaxation drinks, has doubled in marketing campaigns since 2006.

Relaxation Drinks

Relaxation beverages are expected to be the next big trend in response to decreasing popularity of energy drinks. Consumers are looking for methods to wind down from their fast paced lifestyles. Brands such as Drank, Blue Cow and My Purple Stuff are spearheading the trend in the U.S. using botanical ingredients including melissa balm, chamomile and lavender.

Functional Drinks

Similar to functional foods, functional beverages are growing in popularity as consumers become more conscious of their health. Protein-enhanced exercise recovery beverages may be the next hot niche in the functional beverages category. Beverages such as Cytosport and Muscle Milk are two brands aimed at weight lifters and power athletes that are expected to proliferate in the near future.

Key Resources

• 2009 Category captains – Progressive Grocer – November/December 2009 – p 14-18.
• Anderson, September – Dishing up Ethnic Fare – Foodservice News – September 2009 – p 6.
• Before, During and After the Recession: Changes to American Consumer Behaviour – Agriculture and Agri-Food Canada - 2009
• Consumer Lifestyles in the United States – Euromonitor – 2008
• Fresh Foods: A Growing Opportunity in the North American Convenience Store Sector – Agriculture and Agri-Food Canada – January 2010
• Glass Half Full – Progressive Grocer – November/December 2009 – p 76-78.
• Global Halal Food Market – Agriculture and Agri-Food Canada – June 2008
• Hartsook, Christa – USDA Launches High Tunnel Pilot Study to Increase Local Foods – January 2010.
• Hirsch, Jerry – Organic Products show resiliency in recession – December 2009
• Industry Outlook 2010 – Sunbelt Foodservice – January 2010 – p 8-10.
• Kaltsounakis, George – Pasta Perennial – Western Grocer – November/December 2009 – p 13-20.
• Organics, whole foods and super foods – Consumer Trends – Summer 2009 – p 24.
• Major, Meg – Priced to Move – Progressive Grocery – January/February 2010 – p 44-46.
• Mark, Ken – Halal Market Growing Globally – Food in Canada – Jan 2010 – p 15.
• Marquis, Isabelle – Global food innovation – 2010 on the Menu – Food in Canada – Jan 2010 – p 12.
• McCrorie, Vicky - Simple Ingredient Foods Case Study – Datamonitor – Feb 2010
• Montague-Jones, Guy – Americans fall out of love with imported beer – Beverage Daily – Jan 2010
• Montague-Jones, Guy – Wind up or down? 2009 welcomes relaxations drinks – Beverage Daily – December
• Montague-Jones, Guy - Symrise enters mainstream beer market with new flavours – Beverage Daily – Sept 2009.
• Morrell, Liz – The benefits of local sourcing – Retail Week – February 2010
• NASFT's Live "Trendcast" Offers Popular Flavours, Food Fads – Sunbelt Food services – January 2010 – p 9.
• New Consumer Study Reveals Channel Shifts, Increased Shopping Trips – Progressive Grocer – March 2010
• Peters, Carly – Morning Madness – Western Grocer – January/February 2010 – p 15-22.
• Rodgers, Mandy – Pizza Remains Popular Comfort Food – Sunbelt Food services – November 2009 – p 8-12.
• Scott-Thomas, Caroline - 2010 trend forecast: Authentically ethical food – Foodnaviagtor – USA – December 2009.
• Scott-Thomas, Caroline - Kids' food trends in the spotlight – Foodnavigator – USA – Feb 2010
• Scott-Thomas, Caroline – Sodium reduction trend to gain momentum in 2010, says Mintel – Foodnavigator-USA – November 2009
• Scott-Thomas, Caroline - US organic sector stays strong – Foodnavigator-USA – Dec 2009
• Sherwood, Nicole – Digesting a New Lifestyle – Western Grocer – November/December 2009 – p 57-60.
• Stones, Mike – Big growth forecast for US children's healthy drinks market – Beverage Daily – Sept 2009
• Ten trends to watch in packaged goods in 2010: USA – FoodWeek Online – Jan 2010
• United States – CIA World Factbook – 2009
• Valio expects to dominate US lactose-free market – Beverage Daily – Sept 2009.
• Weston, Joe – Let it Pour – Progressive Grocer – January/February 2010 – p 56-58.
• Wood, Donna – Think Globally, Eat Locally – Foodservice News – September 2009 – p 12.