It's not halfway through the year and it is already time to think about 2023. With a six-month (or more) lead time, this is when many companies are considering what to do for next year and beyond.
"The bigger macro issue everyone is watching is pricing with prices increasing and inflation," says Jeremy Vandervoet CEO of Little Secrets Chocolates in Boulder, Colorado. "Natural products are a premium already. Everyone is already feeling the effects from raw materials, transportation and labor. It's unlike anything we've ever seen. That's what is everyone is watching."
He suggests companies schedule real-time conversations every week, every month. "We're probably not out of the woods yet," Vandervoet says.
To get a pulse on what's happening, New Hope talked to various C-suite executives in the industry about trends and insights brands should keep in mind while considering product innovations.
Consider the war in Ukraine. Beyond the death and destruction, the war in Ukraine is impacting global food supplies. "The situation in Ukraine right now is going to add to the difficulties of farmers," says Zach Adelman, co-founder of Navitas Organics. "And whatever we can do to help support farmers around the world is going to be essential, otherwise there will eventually be a global food supply issue that could impact us here at home."
Ukraine and Russia account for almost 80% of the world's sunflower oil shipments, Bloomberg reports. Since sunflower oil lecithin is in a lot of natural products, the war could affect the industry for a couple of years, Vandervoet says. In addition, Russia and Ukraine supply more than a quarter of world's wheat, The New York Times reports.
Source domestically and find backups. Supply chain disruptions are still a major problem. Having two or three backups for key ingredients will continue to be important, says Jack Acree, executive vice president of Saffron Road, whose product launch cycle is about six months for development and three months for the first production run.
"This past year we had a retail customer request a handheld product because of supply chain issues," Acree says. With 100% in stock, Saffron Road had samples on their desk in less than six weeks and the product nationwide in a couple of months.
Find "as many quality U.S. based suppliers as possible because it will put the burden on them if they are sourcing internationally," Adelman says.
Continue to focus on immune and gut microbiome health. Functional beverages and gut health continue to be top of mind. Postbiotics are also gaining traction. Function beyond nourishment will continue to be important.
"It's not enough to just be full and hydrated with great, clean foods," says Becca Schepps, founder and CEO of Mortal Ventures. "Everything we consume must be multi-tasking."
That means if a product provides hydration, it should also supercharge the brain. "If you're going to eat raw, clean, organic foods, you should also be cleansing your gut and saving the planet," Schepps says.
Offer products in different formats. Companies can help differentiate themselves, position products and gain customers by offering multiple formats including powder, capsule, gummies, liquids or different formulations, says Pam Cebulski, general manager, consumer brands/SVP marketing at PanTheryx, a nutrition and biotechnology company based in Boulder, Colorado.
"Health and wellness are not one size fits all," Cebulski says. Be more personalized and targeted for customers to progress with them as their lifestyles, bodies or ages change.
Expect plant-based, functional ingredients to be as big as ever. "Eating the rainbow or omnivore is going to be a big part of it," Adelman says. Look for more plant-based options to come online.
Adaptogens and mushrooms will continue to be big players in the space. For evidence, see the booths at Expo West: Lifeway MSHRM Oat, the adaptogenic functional mushroom beverage that's made with cultured oat milk, and Tattooed Chef's new bar portfolio that includes an adaptogen-filled oat butter bar.
Design sustainable packaging. The pandemic put many pushes to reduce packaging on hold, but consumers are paying attention to sustainable packaging.
"Packaging needs to be as responsible as the food and beverages inside," Schepps says.
Offering a natural product with packaging that is hard on the environment is counterintuitive, says Stephanie Venn-Watson, CEO and co-founder of Fatty15, a vegan c15:0 essential fatty acid supplement. She says her brand has been "flooded with positive feedback" from its customers because it uses reusable glass containers instead of disposable plastic containers for its supplement.
Consider your brand's impact on everyone, everything. Adopt a B Corp mindset to be a force for good. That means helping the global economy to benefit everyone—people, communities and the planet.
Brands need to think about what impact they are having not just on customer's tastebuds, but on the world, says Kathryn Bernell, founder and CEO of reHarvest Provisions.
This can manifest in many ways. Use upcycled products. Showcase products that drive the growth of underrepresented founders. Or create a business that has a give-back model or supply chains that have regenerative impacts. "The growing natural customer is concerned not just about their own wellbeing anymore," Bernell says.
Be allergen friendly. Michelle Carfagno, CEO and founder of The Greater Knead, which makes gluten-free, top allergen-free bagels, pretzels and flours says she seeing more products push beyond gluten free. Focus on the "top 9 allergen-free foods," Carfagno says. That lineup includes milk, wheat, soybean, eggs, fish, shellfish, peanuts and tree nuts, as well as sesame, the ninth major food allergen that must be declared on food labels starting Jan. 1.
Take a look at ketone esters. These supplements are gaining traction says Patrick Drake, founder of startup Autonome Inc. and co-founder of HelloFresh. "They'll instantly put your body into ketosis so that you're digesting and using fat, using the ketones as fuel instead of carbs," he says. "There's a challenge to bringing ketone esters to market because they generally taste terrible. Some people say it tastes like jet fuel."
Trying to mask the flavor in products customers will tolerate is "really tricky" he says, but those who can create something palatable will do well in the coming year.
Consumers want more sugar-free options. Many in the industry say sugar-free products that taste good and are palatable will be important, especially as consumers look to stay healthy and manage their blood sugar levels.
"Product which are zero sugar are going to be big. That was a key driver behind creating Autonome," Drake says, referring to the company he plans to launch in the third quarter of 2022. Autonome will sell adaptogenic creamers for plant-based, bulletproof coffee.