The Institute of Food Technologists (IFT) is a global organization for food science and technology with over 18,000 members worldwide. The current economic downturn has significantly impacted consumer food spending and restaurant visits. Consumers are cooking more at home and trading down to cheaper grocery items. Top concerns for the food industry include the economy, food safety, and corporate responsibility. Major trends include health and wellness, convenience, flavor innovation, and sustainability.

1. © 2009 Institute of Food Technologists New Products and Innovations in Food ALACCTA Costa Rica October 27-29, 2009 Marianne Gillette President Institute of Food Technologists (IFT)

2. IFT is a Global Organization Founded in 1939 More than 18,000 members worldwide 16% of IFT Members are international in more than 100 countries 59 Sections and Sub-sections, 28 Divisions Members come from all areas of the food industry; 85% come from Industry, 13% from Academia, and 2% from Government

3. The Economy has Spawned a New Era of Conscious Consumerism Big increases in food prices, which rose 6.6% in 2008; expected to increase 4 to 5% in 2009 Two-thirds (68%) of consumers cut spending on nonessential grocery items

4. Conscious consumers are buying fewer premium items… 52% purchased fewer organic products 42% gave up favorite brands 30% bought less fresh produce

6. 55% purchased fewer prepared meals at grocery stores

7. Food Spending Steeply Declined in 2008 Consumers are trading down to lower priced items (e.g. private label) and buying fewer items.

8. Home Meals are now approaching the 25-year high of 1992. People want restaurant-quality foods that enable them to sample a world of flavors. Enormous market now for appetizers, snacks, barbecue rubs/sauces, gourmet foods. …And Consumers are back in the Kitchen !

9. Restaurants have taken a hit… ► Consumers are cutting back on restaurant visits and trading down on foodservice purchases ► U.S. foodservice growth in 2009 will dip into negative territory (-2.2% for nominal growth). ► Technomic expects 2009 will be worst year for foodservice since it began tracking performance in 1972 ► To attract customers, restaurants are offering more menu innovation and limited-time offers than usual

10. The Economy is #1 concern for Food Executives Top 10 concerns for 2009 of 600 retail & mfg. decision makers in food and CPG industries in 54 countries 1. Economy and Consumer Demand (ranked No. 4 in 2008) 2. Food Safety (ranked No. 2 in 2008) 3. Corporate Responsibility (ranked No. 1 in 2008) 4. Competitive Landscape (ranked No. 9 in 2008) 5. Retailer-Supplier Relationships (ranked No. 5 in 2008)

11. …and Technology is #9… 6. Retail/Brand Offer (ranked No. 8 in 2008) 7. Consumer Health & Nutrition (ranked No. 3 in 2008) 8. Consumer Marketing (ranked No. 11 in 2008) 9. Technology and Supply Chain (ranked No. 7 in 2008) 10. Human Resources (ranked No. 6 in 2008)

12. Last Year’s Growing Food Trends have changed course… Items consumers consider expendable and which they can live without, given the current economic situation ► Fine dining restaurant 89% ► Organic foods 85% ► Daily cup of gourmet coffee 83% ► Fast casual restaurant 74% ► Casual sit-down restaurant 67%

13. …while some items are less effected Things consumers think are untouchable and they cannot live without, given the current economic situation ► Internet service 81% ► Basic cell phone service 65% ► Basic cable/satellite TV service 60% ► Hair cut/coloring 40% ► Fast food restaurant 37%

14. Consumers don’t appreciate the shrinking packages… ► Only 9% of consumers suggest that manufacturers downsize the package while keeping the price the same ► In 2008, about 30% of all packaged foods lost some content ► Ice cream containers have gone from half-gallon to 1.75 quarts and now to 1.5 quarts

15. Top 10 Food Trends Dr. Elizabeth Sloan, PhD April 2009 Cooking Again In 2008, 242 meals per person were prepared and eaten at home …back to 1992 levels 2.Homeward Bound 88% of Americans say that they are staying home more often, creating untapped food and beverage opportunities.

16. Top 10 Food Trends Gourmetization In 2008, 37% of adults went to restaurants to try new cuisines, 29% to try new flavors. 4.The New Pacesetters 54% of America’s 72 million Gen Y adults (ages 18-32), say they don’t cook well, although they want to eat gourmet everyday.

17. Top 10 Food Trends Little Luxuries Consumers continue to splurge on indulgent luxuries that provide “me time,” or remind them of fun times. Scared Straight Consumer confidence in food safety has plunged in the past year.

18. Top 10 Food Trends Changing Shades of Green In both 2007 & 2008, 36% of Americans claim to almost always or regularly buy green products. Me M.D. In 2008, two-thirds (66%) of consumers made a strong effort to eat fortified foods.

19. Top 10 Food Trends Thirsting for More The overall market for functional beverages is continued to grow to $34 million by 2010. Form Follows Function Four in 10 shoppers (40%) purchased more canned, frozen and boxed foods in 2008.

20. Food Category Winners & Losers in 2008 Food category winners (unit sales growth) ► Sports drinks +7.4% ► Fresh frozen poultry + 4.7% ► Wine + 4.3% ► Frozen plain vegetables + 4.1% ► Breakfast meats + 3.1%

21. Food Category Winners & Losers in 2008 Food category winners (unit sales growth) ► Processed frozen poultry + 3.1% ► Dinner sausage + 3% ► Beer/ale/alcoholic cider + 2.9% ► Dry packaged dinners +2.7%

22. Food Category Winners & Losers in 2008 Food category winners ► Pasta (all categories) ► Energy drinks ► Refrigerated side dishes ► Refrigerated juices/drinks ► Frozen seafood

23. Food Category Winners & Losers in 2008 Food category losers ► Frozen entrees/dinners ► Refrigerated entrees/dinners ► Shelf-stable juices ► Bottled water, but water filter sales soared ► Ice cream ► Carbonated soft drinks

24. Food Category Winner – Private Label ► 77% of consumers agree that store brands are as good, or better than, national brands

25. Private Label an increasing Threat to Brands ► Private label food sales in U.S rose 10% in 2008 to $83 billion; national brands grew about 2.6% ► Private label sales grew most rapidly in 3rd quarter 2008 with consumers earning > $100K ► Retailers embrace private label for several reasons—better margins and it helps to make their stores a destination for shoppers—enhancing store loyalty ► Consumers embrace private label products for cost savings and comparable quality to brands; private label is typically 30% cheaper than national brand

26. ► 30% of consumers say they are buying more store brands products now than a year ago ► Nearly 55% of consumers say they buy private label (PL) frequently; in 1991, only 12% bought PL frequently ► Wal-Mart plans reintroduced its Great Value store brand in July with new packaging and marketing; the store brand accounts for about 10-15% of Wal-Mart’s food sales ► 20% of Costco’s sales are private label, 27% for Kroger, and 17% for SuperValu

27. Manufacturers are innovating their brands to differentiate from Private Label ►Kellogg is test marketing a shorter cereal box that is more pantry-friendly and store shelf-friendly and cuts packaging materials 8%

28. The Economy has shifted the Three Stable Food MegaTrends…

29. The Economy has shifted the Three Stable Food MegaTrends…

30. Consumers still demand HEALTH All Natural / Clean Label Reduced Sodium Naturally Healthful Ingredients Whole Grain Antioxidants Low Calorie Heart Health Gut Health

31. For McCormick customers, the number new products with ‘naturally good in’ is increasing and strong.

32. In these launches, a wide variety of claims are covered: Functional: Antioxidant Benefits Bone Health Brain & Nervous System Cardiovascular Digestive Homeopathic Immune System Other Functional Skin Disorders Weight Control Minus: Low/No/Reduced: Calorie Carb Cholesterol Fat Glycemic Sodium Sugar Transfat Plus: Added Calcium Added Fiber High Protein Vitamin/Mineral Fortified Natural: All Natural Botanical/Herbal No Additives/Preservatives Organic Wholegrain

33. Food manufacturers have responded to the demand for Low Sodium products by: Reducing sodium chloride in existing food products Substituting Sea Salt Substituting mineral salt blends, phosphate ingredients, taste potentiators for salt, and maskers for KCl Using salts with different geometric / surface area properties Using spices such as onion, garlic powder and chili pepper powders in place of salt to boost flavor Combinations of the above to simulate salt.

34. To Lower Calories, the addition of certain functional ingredients is useful… ► Specifically, proteins, fatty acids, and fibers help promote satiety,burn fat, and build lean muscle mass. ► Functional ingredients for weight management include almonds, chromium picolinate, conjugated linoleic acid, oat and palm oils, whey protein, soy protein, red-pepper, and resistant starches. ►Spices and Herbs used to increase sweetness, enhance satiety, reduce fat.

35. Consumers are becoming aware that Antioxidants in the diet can fight multiple diseases… ► Heart disease, macular degeneration, diabetes, cancer, and other health problems are all traceable to oxidative damage. ► Antioxidants such as vitamins A, C, and E, selenium, and lycopene occur naturally in fruits, vegetable, spices and herbs. ► Specific phenolics are beginning to appear on food labels. ►Food manufacturers are harnessing these natural disease-fighters and making them available in food products.

36. Besides weight management, maintaining a Healthy Heart and Digestive System are concerns for consumers. Dietary fiber plays a key role in safeguarding heart health and immunity and promoting digestive health. Forms of dietary fiber : Resistant starch, Dextrins, Beta-glucans, Oligosaccharides, Polydextrose, Soluble cellulose fiber, Whole Grains. Probiotics are popular, despite the class action against Danone… - Specific strains of probiotic organisms - Oligosaccharides such as inulin

37. …and because we don’t simply want to feel young…but LOOK youngBeauty From Within has become an emerging new ‘health’ trend…

38. Convenience will remain a key driver for consumers in the future… Convenience can be shelf stable, frozen, supermarket prepared, fast food or meal kits. Fresh Pre-cut Vegetables Packaging Innovation is a key driver No comprise on flavor quality Authentic, Mininimally Processed.

39. Flavor will always be the Key Driver Consumers want authentic, regional, ethnic flavors Authentic, Fresh, Bright Appearance Complex and Layered Flavors Flavors for Celebration and Entertainment Comfort Foods Away from Home Flavors at Home

40. IFT Trend Tours ► New and productive approach to navigating IFT’s Expo Floor in Anaheim ► Included a series of self-guided tours—each linked to an important and timely ingredient trend—Functional Foods, Weight Management, Naturally Sourced, Flavor & Color Innovation

41. IFT’s Intellectual Property Exchange Session Innovators from academia and industry holding food science and technology intellectual property (IP), serve as presenters. Attendees can learn more about IP that presenters were willing to share or license.

42. Special thanks to Food Technology Magazine Marianne Gillette PresidentInstitute of Food Technologists (IFT)

43. Headquarters 525 W. Van Buren Street Suite 1000 Chicago, IL 60607 312.782.8424 ift.org Washington, D.C. Office 1025 Connecticut Avenue, NW Suite 503 Washington, D.C. 20036 202.466.5980