The food industry is in the midst of a major transformation. In 2015, the upheaval was marked by a more conscious consumer who continues to demand transparency into the foods and beverages that the line the grocery store shelves. We also saw greater integration of technology into the food experience - whether it be dining out and using mobile payments, or dining in and using one of the many meal delivery services. Where 2016 goes is anyone's guess, but here are four trends the experts predict for the coming year.
Companies Decode Our Gut
Our gut microbiotas are made up of trillions of microorganisms that play an essential role in our overall well-being by supporting digestion, synthesizing nutrients and vitamins and protecting against diseases. While a lot is still unknown, it might be possible to eat our way to a healthier gut. So, food companies like Nestle and Danone are leading the research to understand the influence diet has on this delicate ecosystem. The impact of unlocking the microbiome is potentially huge, and could pave the way for businesses to produce foods that help nourish it. "The microbiome is a virtually unexplored frontier that holds the key to myriad opportunities for innovation," said Will Rosenzweig, dean and executive director, The Food Business School. "Over the next 12 months, I think we'll see some very exciting business ideas come out of research in this area."
Restaurants Get Plugged-in
For a long time the restaurant industry remained largely unchanged, but the last few years have seen tech infiltrating establishments with mobile payments and online ordering becoming the norm. And for millennials and Generation Z, tech isn't only a nice to have, but it is becoming a necessity with many saying it influences their decision to visit a restaurant. While tech is more prevalent in coffee shops and fast-casual restaurants, it has started to move into full-service restaurants that are grappling with how to appeal to digital natives. Some have experimented with the likes of iPad wine menus that offer details about the various selections. "It is an interesting generation to appeal to, because they want a lot of information," said Andrew Freeman, president, Andrew Freeman & Co. "Millennials are driving the bus, and we are all getting on and taking the ride with them."
Food Companies Go Au Naturale
Consumers have doubled down on their demand for natural and less processed foods and beverages. In the coming months companies will be forced to deliver a plan on how they will replace synthetic ingredients with recognizable ones, otherwise they could face backlash. "Artifical is public enemy number one," said Jenny Zegler, global food and drink analyst, Mintel. "Hershey, Nestle and Kraft have made the statement that they are going to reformulate, and that goes a long way with consumers." Eliminating artificial ingredients could also become an imperative with the FDA getting involved. At the end of last year, it requested comment from the public on how natural should be used in food labeling since at present there is no standard definition on the term.
Food Delivery Investments Fizzle
Food tech was arguably one of the most hyped spaces of 2015, with $5.7 billion being poured into the sector. At the center of this groundswell of VC fervor was the meal delivery space inhabited with the likes of Munchery, Sprig, BlueApron and SunBasket. As some of these players get a foothold in significant markets, it could deter investors from participating in additional rounds of funding. "I think there will be fewer investments into pure food delivery companies overall," said Michael Dempsey, former analyst at CB Insights. And there is evidence that the slowdown has taken hold with DoorDash struggling to raise capital at the $1 billion valuation that once seemed probable. Dempsey predicts that some startups could face an even worse fate though. "We could see some companies fail in 2016 that raised in 2015 from overzealous investors as well."