Report Cites Opportunities for Specialty CPG Innovation
Opportunities abound for disruption in CPG categories such as functional juices, pickles, pasta, and other pantry staples, according to a new report from research firm SPINS.
The CPG Disruption in 2024 report also identifies opportunities for CPG companies to innovate in areas such as sustainability and to leverage consumer interest in global flavors and ingredients.
“Disruption traditionally came from better-for-you brands, but as BFY [better-for-you] becomes the new normal, shoppers are trending toward new/enhanced product differentiation angles,” the report concludes.
In the example of functional juices, the report points out that juice drinks have garnered some negative attention because of their high sugar content, but the category may have an opportunity to reinvent itself much like the soda category has with sugar-free and digestive-health sodas and sparkling waters. Potential opportunities for juice products include focusing on ingredients that provide immunity benefits, for example, or other functional ingredients such as ashwagandha, according to the report.
The pickle category, meanwhile, has gained some momentum because of consumer interest in the gut health benefits of fermented products, such as fermented pickles and kimchi.
“We’ve seen pickle brands get the clue and include callouts to probiotics on their packaging,” the SPINS report says. “With the rise of gut health, playing up the fermented attribute to attract customers might be smart.”
Increasing consumer interest in pickles as snacks, and in premium varieties of pickles, are also supporting opportunities for innovation.
Pasta is another category where health benefits have led to some disruption, with the use of chickpea flour, for example, to reduce carbs and add protein, and the introduction of sourdough pasta with a focus on gut health.
Other pantry staples could follow suit. Pancake mixes with reduced carbs, such as Birch Benders Pancake and Waffle Mix, and baking chocolate chips with reduced sugar, such as Just Date Organic Dark Chocolate Chips, which are sweetened with dates, are two examples.
Growth in Global Brands
Globally influenced products are also potential disruptors in their respective categories. Brands that are dedicated to a specific cuisine type are growing faster than their non-global counterparts, capturing 82 percent of all food and beverage growth in the past 52 weeks, according to the report.
Korean and Indian cuisines in particular are gaining traction, with sales growth of 49.51 percent and 9.89 percent in the past year, respectively. Hawaiian foods and beverages have been another top performer, with sales up 8.89 percent.
Non-specific Asian and Hispanic/South American foods and beverages have also seen sales gains of 9-plus percent in the past year.
In addition, Hispanic products from specific regions, from Venezuela to El Salvador, have seen double-digit growth in sales in the past year, which SPINS attributed to the growing diversity of the U.S. population and their demand for familiar pantry staples and comfort foods.
Global brands have opportunities to innovate by focusing on consumer demands for premium products, better-for-you attributes, and clean labels, the report said, citing Siete Foods, a maker of grain-free chips and tortillas, as an example.
“Savvy premium and better-for-you global brands like Siete are expanding into categories where premiumization and better-for-you gaps exist,” the report concluded.
Other opportunities include global frozen convenience foods, such as pockets, burritos, and breakfast entrées.
Opportunities in Sustainability
CPG brands also have room to disrupt their categories with sustainability initiatives, the report found, including obtaining certifications such as Upcycled Certified and Regenerative Organic Certified, and using sustainable ingredients such as seaweed and honey.
Seaweed in particular can provide both health and environmental benefits. Kelp, the largest subgroup of seaweed, grows in abundance in the ocean and has been linked with several health benefits, including aiding digestion, reducing hair loss, treating ulcers, promoting weight management, and aiding diabetes symptoms, according to the report.
Other forms of seaweed that have potential as CPG ingredients include spirulina, which has been used as a coloring agent as well as an alternative protein source, and furikake, a condiment used in many Asian dishes that has seen a 22 percent increase in sales in the 52 weeks though April 21, according to data from Circana.
Honey is also growing as an alternative sweetener in several CPG products, the report found, citing a 31 percent increase in its use in bottled water and 33 percent increase in refrigerated juices. Honey is also increasingly being paired with another sustainable ingredient, buckwheat, in products such as crackers, and also in honey itself made from the nectar that bees harvest from buckwheat blossoms.
Sustainability will also play a factor in the growth of the beverage categories, according to the report, which cited ingredients such as cascara (made from the coffee cherry) perennial grains such as Kernza, and sustainable seeds such as flax and apricot kernels.
On the packaging front, several broad areas are ripe for innovative disruption, the report found. These include reducing plastic—Celestial Tea removed the plastic wrap from around its boxes last year, for example—and emerging materials such as the wood-fiber-based bottles that have been tested by Carlsberg for beer and Heinz for ketchup, and packaging that is 100 percent recyclable or 100 percent compostable.