FoodNavigator-USA has revealed in a report the top five factors likely to have the greatest influence the US food and beverage industry in the new year.
1. The Dietary Guidelines for Americans 2010
The guidelines are yet to be published, but according to the comprehensive Advisory Committee draft document released in June, the food industry should be ready for some important changes.
In particular, the guidelines are expected to reflect for the first time a US population that is predominantly overweight or obese, and therefore at increased risk for a number of health complications and illnesses, including type-2 diabetes, heart disease and hypertension.
And while two-thirds of Americans are overweight, nearly 70 per cent have high blood pressure, or are at increased risk of developing high blood pressure. This is likely to lead to a lowering of the recommended maximum daily amount of sodium, from 2,300mg to 1,500mg.
As a result, industry is likely to find itself under even greater pressure to formulate healthier foods that the updated guidelines. There are myriad opportunities for businesses that manage to meet the challenge of creating healthier products without sacrificing taste, especially as the burgeoning ‘Baby Boomer’ demographic becomes increasingly concerned about health and wellness.
2. New food safety legislation
New legislation looks likely to be signed into law in the early part of 2011 after passing through Congress late last year. It will require extra work from food manufacturers as it becomes more important than ever to keep a close eye on supply chains to ensure quick recalls are possible if necessary – as well as the ability to prove the use of proper food safety practices.
Hopefully, more products recalled before they reach consumers will also translate into fewer cases of foodborne illness – definitely good news for industry.
However, the funding required over the next four years to implement the bill has not been set aside, so the hardest job – translating legislation into change on the ground – may be only just beginning.
Some of the US$1.4bn cost of the bill is intended to increase the number of food safety inspectors by 2,000 to increase the frequency of inspections, but with current budgetary pressures it is still possible that this bill could lack the muscle that its supporters had hoped for.
Expect food safety to get caught up in scrabbling over limited federal funds in 2011.
3. Continuing M&A activity
Last year saw some huge deals on the mergers and acquisitions (M&A) front. Among a host of others, Kraft paid US$21bn for Cadbury, making it the world’s largest confectioner; the European Union approved the €3bn buyout of Cognis by BASF; PepsiCo agreed to pay an eventual US$5.4bn for Russian juice and dairy company Wimm-Bill-Dann; and a trinity of investment firms led a US$5.3bn buyout of Del Monte Foods.
Indications are that companies that remained strong during the recession are now looking to expand. But with economic growth still sluggish in North America, US food companies looking for acquisition opportunities are increasingly likely to look to emerging markets for deals that could represent a faster return on investment.
And not all the traffic will be one-way, as exemplified by recent rumours that Brazilian beef giant JBS was seeking to buy out Sara Lee.
4. Front-of-pack labelling recommendations from the FDA
The Food and Drug Administration (FDA) said in 2010 that it is considering introducing standardized, science-based front-of-pack nutrition labelling to deal with a proliferation of labelling systems in the US that may have the potential to confuse consumers as much as they inform.
With this in mind, the agency has tasked the Institute of Medicine (IOM) with a comprehensive evaluation of front-of-pack labelling systems and phase II of its work is expected to be published in fall this year.
The panel’s initial findings advised that front-of-pack labelling systems would be most useful to consumers if they focused on those elements that consumers should limit, such as calories, saturated fat, trans fat and sodium.
And it has been suggested that the IOM’s final recommendations – which are also due to consider consumer understanding of nutrition labels – could propose a traffic light system similar to the one in use in the UK.
Whatever its final advice, any standardised system will have huge implications for the way industry markets and even formulates its products.
5. Focus on preventing weight gain and healthy eating
Formulation of “better for you” products will continue in 2011 spurred to a large degree by heightened awareness of the obesity problem in the US. And it is the approach of Michelle Obama’s Let’s Move campaign that looks set to take hold, focusing on balanced lifestyles from childhood, encompassing healthy eating and physical activity.
After all, consumers are increasingly aware that it is harder to lose weight than it is to prevent weight gain, and are looking for ‘lighter’ versions of their favourite foods and smaller portions, as fad diets and food restrictions are on the wane.
The food industry has already proven that it can make huge strides in product reformulation. While 2010 was marked by a host of pledges from major manufacturers to cut saturated fat, added sugars and sodium, this year will see smaller players get on board, and further innovation from industry.
