The masses gathered in the Anaheim Convention Center the other weekend for the 2018 Natural Products Expo West. Always the spectacle, a record 85,000 people visited this year's conference and over 3,500 companies exhibited their products (600 first-timers) -- on the 10th anniversary of us attending, we can't believe how much it continues to grow!  

It's an exciting time in the food and beverage (F&B) space. At a high level, healthy products and supply chain transparency continue to be dominant trends throughout the entire industry, and we only expect this to continue. Beyond this, there are a few trends that we feel are top of mind moving forward, namely:

  • Functional Foods & Beverages

  • Plant-Based [Fill in the Blank / You Name It]

  • Bites (as a delivery format)

We'll cover each in detail and list honorable mentions afterward. But before we dive in, it's worth mentioning that the F&B space is crowded -- very crowded. Competition is at historic highs. As we discuss in our book Shortcut Your Startup, our view is that it's never been easier to launch a product (as evidenced by the number of brands at Expo). Converting these brands into a successful company is another story, one that is exponentially more challenging. It will be interesting to see who rises to the top. Let's get to it.

Function Over Form

The rise of what we call functional products the past few years has been nothing short of meteoric. This broad term refers to food and drinks that serve a greater health goal. Gaining momentum with the likes of Kevita and kombucha (previous M13 investments), we're seeing a passing of the functional foods baton.

Consider the rise of prebiotics. In the arena of gut health, prebiotics are a dietary fiber that enhance the effectiveness of probiotics. Expo West held a seminar on the importance of prebiotics and brands like Seed and Olipop (both launching this spring) are seeking to capitalize on its growing popularity and benefits.

Similarly, adaptogens, or substances that help the body build resistance against stress are gaining popularity as consumers wrestle with their stressors. Ginseng and maca are two types you'd recognize. Today we're seeing brands like Rebbl incorporate these "super herbs" into elixirs and protein shakes. But functional foods aren't just limited to novel ingredients.

Water is in -- specifically enhanced super-premium water. While the movement has been around for a few years, we're seeing an increased rise in alkaline water, or those high on the pH scale as well as other things that differentiate brands within the category. Names like Kona Deep, Generosity Water, or Essentia Water are making headlines in this competitive space.

Remember when mom fed you chicken noodle soup when you had the flu as a child? There's a reason for that: bone broth has immense health benefits. Beyond these homemade recipes, the bone broth and collagen space have made impressive headway in recent months. Ancient Nutrition, the supplier of bone broth protein powders, recently raised $103M in the largest CPG investment of 2018 so far!

Other names, too, are capitalizing on the collagen trends: Vital Proteins provides collagen protein powder, which also speaks to another trend of consumers seeking protein powder outside traditional sources, like whey. Concurrent to the rise of functional food, we are seeing another major trend gaining traction: plants!

Plant-Based Foods

It seems that every meat dish has a plant-based counterpart today. Well maybe not everything. But it's no secret that plant-based diets are becoming increasingly popular. From new takes on tofu, to plant-based protein powders, to almond milk, and everything in between, the space is gaining traction.

Plant-based has established itself in the meat, dairy, eggs, and cheese spaces, but the seafood space has received little attention so far. Good Catch is seeking to change that with its vegetable-inspired seafood menu that includes tuna fish, crab cakes and fish fillets.

Another novel adaptation in the plant-based space is the mixing of fruits and vegetables into bars. Take Aunt Dottie's for example. Its Green Joy Snackable Salad Bar combines pomegranates, apples berries, nuts, and vegetables like kale -- all traditional salad ingredients -- into bar form.

While we may be breaking classification rules, we'll include mushrooms in the plant-based categories, as we're seeing the rise of these fungi. Four Sigmatic is a great example of a brand leveraging the health benefits (including the adaptogen benefits!) of mushrooms as a part of a plant-based diet. From coffee to its superfood blends, Four Sigmatic is incorporating the mushroom kingdom into the modern menu.

The last plant-based topic we'll mention is the shift away from grain and refined sugar. Take The Real Coconut, which is leveraging coconuts and plantains (both of which are enjoying their own heydays) for vegan and grain-free products, such as its coconut flour tortilla chips. As the plant-based movement gains critical mass, look to see these brands drive the space's trajectory into the kitchens of the mainstream consumer.

Right-Sized Bites

We've focused on trends in food types, but what about food format? Yes, we are seeing changes in the physical shapes of of food. Enter the bite-sized snack!  While bite-sized has been around for some time, we are seeing novel adaptations. For instance, Made in Nature is utilizing this form with their mobile and chewy Figgy Pops snacks.

The meat space isn't immune to this format shift either -- just look at jerky. Mobile (both with your phone and food!) is becoming increasingly important, and Union Snacks realizes this. Launched in time for Expo West, they're combining meat, nuts, grains, and fruits into bites, making  for a convenient, nutritious snack. On a similar note, The Biltong Company is capitalizing on the bite trend by incorporating its biltong into trail mix.

Yet another mobile-friendly version in the space is the meat stick. No, not Slim Jim's! Like their jerky bite counterparts, these are catching on for their convenience (not to mention great taste); CHOMPS is a particular example that we like moving forward.

These are just three of the major trends that caught our eyes this past weekend. We could write ad nauseam about the brands, products, and themes that we're following, but hopefully we've whet your appetite (pun intended) for some of the biggest takeaways we had. It's worth pointing out a few more trends that have continued to gain traction in the space. They are:

  • Upcycling -- the overall movement towards waste salvage and reduction

  • Cannabis, CBD, and hemp -- their role only seems to be growing in all kinds of foods and drinks

  • Dehydrated snacks -- dried foods continue to perform

  • Cognitive -- foods, formulas, and drinks that boost (brain) performance are gaining popularity and credibility

With all this said, we're impressed with the state of the F&B industry. The path forward for any young company in the space will be crowded and tough. But we're willing to bet there will be major winners in the areas we touched upon today. We're already looking forward to Expo '19.