Top Five Stories of 2019

Posted by Denis Storey 

To say 2019 was a big year in the food, beverage, and dietary supplement segments would be an understatement.

Sales in the food and beverage space surpassed $7.8 billion, a 3.8 percent jump over 2018. Perhaps more telling, after years of sluggish growth online, food and beverage is now the fastest-growing e-commerce space.

After a hiccup in 2018, dietary supplements bounced back in a big way in 2019, with usage hitting an all-time in the United States. According to the latest research from the Council for Responsible Nutrition, “77 percent of Americans reporting they consume dietary supplements. Among all age groups, adults between the ages 35-54 have the highest usage of dietary supplements at 81 percent.”

While 2019 sales numbers are still being tallied, U.S. sales exceeded $42.5 billion in 2018, driven by increased consumer awareness and demand for weight-loss solutions, healthy living, and overall better fitness. Analysts expect 2019 sales growth of about 7 percent.

So, what drove revenue – and conversations – in the food, beverage, and dietary supplement sectors in 2019?

CBD and Hemp

After the latest farm bill made it through Congress late last year, legalizing industrial hemp, CBD and hemp products set the market ablaze. “CBD: Cannabinoids Escape the Dispensary,” a report published by Arcview Market Research and BDS Analytics, predict CBDs will become a $20 billion market over the next four years – in the United States alone. And while dispensaries still make up the bulk of the market, “General retail stores (food, drug, mass and others) will account for 63 percent of CBD spending in 2024, as the legal issues around selling CBD as a food additive or supplement are resolved.” This market is already huge – and it’s only going to get bigger as the larger players get involved.

Tariffs

President Trump’s back and forth with China over tariffs have rippled across the economy, most notably in the food and beverage sectors. Dietary supplements have been hit especially hard, since so many of the ingredients used in these products are imported from China. Analysts estimate – at least for now – that the tariffs could cost U.S. supplement makers as much as $2.4 million. Most expect this trade war to extend well into the new year.

Plant-based Foods

If there’s any market niche that rivals CBD these days, it’s the growing mainstream appeal of plant-based protein products. Even fast-food giants such as Burger King have started putting Impossible burgers on their menu. Just this month, grocery heavyweight Kroger’s rolled out a plant-based meat pilot program in partnership with the Plant Based Foods Association. The program targets 60 stores in Illinois, Indiana, and Colorado for a four-month trial run. But the plant-based protein craze isn’t limited to meat. While alternative dairy and egg products have been increasingly popular, some companies have started making plant-based desserts, proving this is more than a passing fad.

Consumers Take Control

Online grocery shopping really took hold in 2019, proving that consumers are firmly in the driver’s seat. Whether, it’s delivery or pick-up, a growing health food market, or so-called “clean labels,” consumers are steering the direction of the food and beverage market in a way we’ve never seen before. Store to door is the new farm to fork. Even Coca-Cola, plans to roll out a test subscription service in the new year. But it’s not just about what products they want, or how they get them. They care about how they’re made and packaged, too. Consumers are calling the shots now, and manufacturers are listening.

Dairy’s Dive

This past year was a tough for the dairy business. In short, production is up, and sales of traditional milk products are down. Consumers are increasingly skipping past the traditional milk bottles and buying from the growing selection of milk alternatives. As a result, the number of dairy farms has fallen, too. Dairy’s not dead, by any means, but the industry faces some tough choices in the years to come.

Honorable Mention: Popeye’s Chicken Sandwich

If this list were based on social media traffic alone, the controversy over the nascent chicken sandwich wars would have topped it, hands down. As entertaining as the online spat was, the story offered a couple of object lessons. One, it further illustrated the power of social media when it comes to 21st century marketing. But, as Popeye’s restaurants across the country sold out ahead of long lines of unhappy customers, it underscored the importance of a strong supply chain – especially if you’re going to throw shade at your competition on Twitter.

 

Mike HubbardSVP Revenue, TRACEGAINS will present ‘Utilizing the Power of AI and Automation to Accelerate Innovation’ at Future Food-Tech on March 20.