Modern Food Culture and Edible Oils Davey McHenry Vice President, - - PowerPoint PPT Presentation

Modern Food Culture and Edible Oils

Davey McHenry Vice President, Consulting Services

Today’s topics:

• 1. The evolution of modern food culture
• 2. Spotlight: fats and oils
• 3. A look to the future

What is Food Culture?

The set of customs, values and behaviors related to eating and drinking in America

Traditional U.S. Food Culture

product = predictable uniformity cooking = chore brand interaction = transactional engagement = low

Modern U.S. Food Culture

product = distinct cooking = discovery brand interaction = playful, engaging engagement = consumer chooses how much

Social, economic and cultural shifts are shaping eating today

decrease in households with kids under the age of 18 (28% of households) rise of single person households (28% of households) men represent a growing number of primary shoppers (47%) shift to service sector means more work hours (from 56 per household in 1969 to 67) we eat more alone (47% of eating occasions) meal rituals have diminished (50% of all eating occasions are snacks) half of grocery trips are to 2+ stores a diversity of channels are shopped (71% shop 5+ channels monthly for food) 63% of food choices are decided within an hour

• f consumption

evolving culture of health + wellness fresh revolution as the symbol of quality in food appreciation for personalized, customized and global foods 1 2 3 1 2 3 1 2 3 1 2 3

Who we Are What we Do How we Shop What we Value

Demographic changes in the size, structure, and “complexion” of American households Economic shifts in the type and amount of work we do and its perceived impact Environmental shift in where we live and the retail and technical landscape around us Cultural shifts in how we define a high quality of life, and perceive high quality food

…and changing how we shop for food

Planning is hard when we eat in the moment according to our moods, whims and ‘schedules’. Even when plans are made

[lunch is brought from home]

we’re likely to upgrade for a better offer because food is everywhere, enticing us. We are shopping up & down the food chain [from Aldi to

Trader Joe’s, Walmart to Whole Foods Market].

More than 50% of “trips” to shop for food/beverage involve going to 2+ stores.

Modern eating culture: fragmentation and upending of tradition

Who:

• Planning, shopping and cooking is

decentralized What:

• Fewer rules about what to eat and drink
• Idealize 3 balanced meals, but rarely eat that

way When:

• Planning, eating and shopping happens fluidly
• Eating on the fly

Where:

• Anywhere and everywhere
• Traditional grocery only one of many

possibilities How:

• Less regular scratch cooking

Consumers are more food literate than ever before

Advances in media and technology have made information more readily accessible Food retailers have created communications vehicles to increase customer engagement However, the freer and faster flow of information means there are more opportunities for (mis)information to spread as well

Three years ago, there was more pop in our house, more junk food, more carbs … Now we buy more nuts, almond butter that’s freshly pressed … fresh produce and meat … a lot more organic. – Lindsey, 31

Expectations of food companies have heightened

64% 46% 44% 43% 42% 36% 33% 27% 22% 22% 16% 15% 13%

What INGREDIENTS are in a FOOD AND BEVERAGE product HOW products MANUFACTURED to assure quality/safety standards How company TREATS ANIMALS used in its products From WHERE company SOURCES ingredients to make products How company treats EMPLOYEES What actions company takes to reduce ENVIRONMENTAL IMPACT WHERE company MANUFACTURES products Whether company GIVES BACK to community WHO OWNS company Locations/TYPES OF SUPPLIERS company uses What CHARITIES/CAUSES company supports To which POLITICAL PARTY/POLITICIAN company donates How DIVERSE company's workforce is

Practices most important for companies to share with consumers to drive trust

Food takes center stage in the pursuit of Health & Wellness

Health & Wellness Food Culture

Fresh, real ingredients Inherent positives Minimal processing Enjoyable taste Fun experience Product narrative/story about people, processing, or place of origin Unique & globally inspired ingredients Safe, environmentally friendly packaging

Enjoying fresh, healthy, and delicious food is the dominant consumer route to H&W today. Food is couched in cultural values of highly personal experiences, customized choices, diversity and variety, discovery and enjoyment.

FOOD TAKES CENTER STAGE

FOOD AS MEDICINE REDEFINITION OF FOOD QUALITY CELEBRATION OF REAL FOOD

> >

Evolution of Healthy Eating in America

recent proliferation of concerns

1950-1970

Weight

1970-1995

Weight Heart Health

1995-2005

Weight Heart Health Purity

2010-2015

Weight Heart Health Purity Nutrient Call-outs Digestive Health Diabetes, Cancer Performance

2005-2010

Weight Heart Health Purity Nutrient Call-outs Digestive Health Diabetes, Cancer

Future

Weight Heart Health Purity Nutrient Call-outs Digestive Health Diabetes, Cancer Performance ?

A flexible, holistic sense of balance is key to feeling healthy and well for almost all consumers

Whether aspirational or achieved, balance is key to feeling well. In the past, balance centered on eating and exercise, but today’s consumers seek balance more holistically. Each component of H&W is actually a set of complementary ideas that require balance – e.g. healthy vs. indulgent eating, energy & activity

• vs. rest & sleep.

Eating Energy Social Emotional

Healthy Eating Indulgent Eating Activity & Exercise Rest & Sleep Managing Stress Getting It All Done Social Connections & Responsi- bilities Time for Self

Physical Mental

55% 55% 53% 52% 52% 51% 49% 48% 48% 47% 47% 46% 43% 42% 41% 37% 31% 25% 24% 22% 20% 20% 20% Saturated fat Sodium/Salt Trans fat Cholesterol Saccharin (e.g., Sweet N' Low) High fructose corn syrup Aspartame (e.g., Equal) MSG Growth hormones Artificial colors/dyes Artificial flavors Refined sugar Artificial preservatives (such as BHT) Sucralose (e.g., Splenda) GMOs Partially hydrogenated vegetable oils Caffeine Corn starch Lactose Simple carbohydrates Wheat gluten Natural sweeteners other than sugar Complex carbohydrates

Ingredients Avoided by Consumers

+12 pts +8 pts

HW15 V3. Please indicate whether you DELIBERATELY avoid/reduce or add/increase any of the following ingredients or nutrients in your daily diet – Avoid/reduce. Base: n varies from 734-793. Items listed above 19% in 2015.

Significant change from 2013 to 2015 at 95% CL

+7 pts +6 pts +5 pts +6 pts +5 pts +7 pts +6 pts +8 pts +7 pts +4 pts +5 pts +11 pts +10 pts

Avoidance strategies are increasing significantly

97% 43%

0% 20% 40% 60% 80% 100% 120% Aware of GMOs Avoid GMOs

Awareness and Avoidance of GMOS

• By Total -

Source: Organic & Natural Hartman Syndicated Study, 2016. Headline source: The Washington Post 07292016 Obama signs bill requiring labeling of GMO foods.

While nearly all consumers are aware of GMOs, industry leaders are also taking steps to spread awareness around GMOs

Under pressure from interest groups and retailers such as Whole Foods, Chobani worked with its suppliers to ensure that its yogurt is made with milk from cows with non-GMO feed.

+3% pts vs 2014

Awareness of GMOs is near total, and avoidance is rising

1.45%

• 0.07%
• 1.38%

Total Packaged Chilled Total Fresh Total Packaged

Change in Share of Per Capita Food Volume Sold 1999-2013

Fresh is now a symbolic attribute: less processed + perishable + feels more real

19% 17% 13% 11% 24% 22% 21% 20%

That are minimally processed That contain

• nly ingredients

I recognize That are locally grown or produced With the shortest list of ingredients

Conceiving Fresh

2007 2015

Sources: Left: “I look for food/beveraes that…”describes me well; H + W Hartman Group Syndicated Study. 2015, n=1562; 2007, n=2978; Right: Euromonitor 1999-2013, Total Per Capita volume (Kg/per capita) of packaged chilled food categories (includes chilled ready meals, processed meat, soups, salads, desserts, snacks, cheese, lunchmeats, seafood, pasta, yogurt, cream)

The Redefinition of Quality -- The Growing Appeal of Fresh

1

Darcy (31)

“I prefer fresh food. It makes me feel better, not lethargic. My stomach feels better. After a meat-potato dinner at my parents’, I feel heavy, tired. I actually feel it. If we eat a couple of meals in winter like Swedish meatballs with gravy or Darcy's Delight, food with more meat and canned food, I need to go back to fresher food. I crave a big salad.”

2 3 4

PURPOSEFUL AND PLANNED

① Greek (orzo, feta) ② Mexican (cilantro) ③ Italian (parsley, eggplants)

INSPIRATION FROM PANTRY

④ “Darcy’s Delight” (childhood comfort food) [ranked in order of preference]

“What’s for dinner for family?”

Fresh is always best, but not always realistic

• HW15. V1. Please read each statement and indicate how well it describes your own behavior regarding shopping for food and beverages. (3 pt. Scale – top 2 box - Describes me well/somewhat well) Base: Total 2010 (n=2,744); 2015 (n=1,562).

74% 67% 65% 65% 64% 62% 60% 52% 50%

That are good for my heart That are locally grown or produced That are minimally processed That contain only ingredients I recognize With added vitamins and minerals That help lower my cholesterol With the shortest list of ingredients Endorsed by health organizations I recognize That are labeled "organic"

Shopping Behavior – I look for food and beverages…

Significant change from 2010 to 2015 at 95% CL

+7 pts +5 pts

• 9 pts

+6 pts +5 pts +10 pts

Consumers are using cues to identify minimally processed items

• Inherent positives: rich in fiber,

protein

• No negatives: preservatives,

HFCS, hormones, antibiotics

• Short ingredient list
• New and interesting:

ethnic flavors, unique ingredients

• Production: organic, pasture

raised, grass fed, wild caught, foraged, non-GMO

• Preparation: baked, uncoated,

not deep fried, made from scratch, fresh prepared, sprouted, fermented, sun dried

• Scale: small batch, local,

artisanal

• Unique distinctions: heirloom,

heritage, terrior, ancient, traditional

• Real people: passionate growers,

producers or manufacturers

• Real source: Local, regional

authentic, transparent

• Direct: farmers market,

community-supported agriculture, buying clubs, group buys, food hubs

• Sustainable: fair supply chain,

stewardship of land

What’s in it? Who made it?

Consumers look to a range of cues to determine “processed” from “fresh” food

How’s it made?

Purity through: Cultured, Sprouted, Raw, Clean Ingredients, Alternative/Slow Carbs, Healthy Fats & Proteins CONSUMER PERSPECTIVE LOOKING TO THE FUTURE (1-3 Years)

63% 62% 60% 55% 54% 52% 51% 47% 42% 38% 37% Fiber Whole grains Vitamin D Calcium Protein Antioxidants Olive oil Omega 3 Green Tea * Fish oil Probiotics

+6 pts +6 pts Significant change from 2013 at 95% CL * new in 2015 +6 pts

Ingredients Adding/Increasing by Consumers Trended Items

Notions of purity and real food are influencing ingredients sought (and avoided) in everyday eating

• throwing out “empty” calories
• foods that are rich and full of life
• foods that can sustain energy and stave off hunger

in the short term

• foods that promote healthy digestion and give the

body the micro nutrients it needs to live well into

• ld age
• moderating sugar overall and eliminating

“artificial and processed” ones altogether

• fiber, protein, good fats
• inherently healthful and flavorful food, full of

variety

Source: Hartman H&W Syndicated Study, 2016.

Nutrient density – via real food – is seen as the route to sustained energy and long-term wellness

Premium represents 10% of the food and beverage marketplace

Today’s definition of quality is being redefined by the contemporary consumer

Open production Imperfectly perfect Chef as arbiter of taste Pride in craftsmanship

Premium today reflects 4 key demand components

Product Symbolism (Implicit & Explicit) Sensory Experience Brand Symbolism Cultural Context

22

15% 7% 2% 0% 0%

• 3%
• 6%
• 8%
• 17%
• 20%
• 15%
• 10%
• 5%

0% 5% 10% 15% 20% Polyunsaturated fat (g) Dietary Fiber (g) Protein (g) Total Fat (g) Saturated Fat (g) Energy (kcal) Monounsaturated fat (g) Carbs (g) Total sugars (g)

2001-2014 Daily Mean Intake Per Capita USDA NHANES1

1 http://www.ars.usda.gov/services/docs.htm?docid=13793, Age 20 and over; Hartman Analysis, 2016.

SUGARS POLYUNSAT

URATED FAT

How we eat is certainly changing, from an increase in “good fats” to a significant decline in sugar consumption per capita

2020 2005 1985… 2015

Fat is bad

Sugar is ignored as diet trends demonize fat.

Sugar is worse

Sugar is demonized, especially HFCS.

Good fats and sugars

Fat is back! Sugar has to be worth it.

Less sweet future

Sugar is precious ingredient to be used sparingly.

Fats are re-surfacing as a healthy and delicious weight management tool

Consumers now know it’s the type of fat that really matters

• Good fats protect your heart and keep you fuller longer
• They are essential to physical and emotional well-being
• And most importantly, good fats make foods delicious, satisfying, and enjoyable

Adopted Adopting To Be Adopted

44% of Core consumers are adding Coconut oil 59% of Core consumers are adding Omega-3

H+W 2013 V3. Please indicate whether you DELIBERATELY avoid/reduce or add/increase any of the following ingredients or nutrients in your daily diet. – Add/Increase. Base: n=2551-Total; n247=-Core

Different fats carry distinct benefits

Key Terms Driver Benefit Fat Type

Non Hydrogenated Health Less processed Use Coconut Oil Instead Trans Fat Free Health Cardiovascular Extra Virgin Olive Oil Palm Oil Free Sustainability Save Endangered Species Use Canola Oil Instead Essential Fatty Acids Health Reduce Inflammation Walnut Oil Conjugated Linoleic Acids Health Weight Management Grass Fed Butter Omega 3s Health Cardiovascular Hemp Oil High Smoking Point Health Less Carcinogenic Duck Fat Non GMO Health + Sustainability Diversity and Flavor Swap Soy Oil for Schmaltz from Free Range Chickens

A look at the consumer perception of canola oil

Mainstream/Midlevel

consumers perceive canola as a healthier neutral oil The more progressive Core consumer largely avoids canola

ADOPTED ADOPTING TO BE ADOPTED

The evolution of fats and oils for cooking

Schmaltz Beef Tallow/Suet Ghee Goose Fat Duck Fat Clarified Butter Lard / Bacon Fat Butter Grass-fed butter ANIMAL FAT VEGETABLE FAT Canola oil Safflower/Sunflower Vegetable Oil Soybean oil Cottonseed oil Olestra Coconut oil Grapeseed Oil Olive oil Sesame Oil Palm Oil Peanut oil Butternut Squash Seed Oil Walnut Oil Cold-pressed Arbequina Extra Virgin Olive Oil Hemp Oil Cocoa Butter Extra Virgin Olive Oil Avocado Oil Margarine Rice Bran Oil Flax Oil Corn Oil Pecan Oil Hazelnut Oil Vegetable Shortening TRENDING DOWNWARD TRENDING NEUTRAL TRENDING UPWARD Smoked olive oil Compound butter (home use) Virgin Cold-Pressed Coconut Oil

Overarching themes cutting across trends: The progressive consumers’ good food philosophy

SOURCING

Ingredients from happy and healthy animals is

• paramount. You are what you eat ate! No

antibiotics, hormones or feedlots.

BEYOND ORGANIC

With USDA certified organic going “Big Ag,” consumers are seeking fresher attributes, such as local, glyphosate-free and biodynamic.

VEGGIES ARE

More seasonal than animal products and more nutrient dense, colorful and versatile than any

• ther food group. They are a cornerstone to

good health.

RECONSIDERING SWEET

Eating more quality fat means less of a sweet

• tooth. Moderate amounts of honey and maple

along with stevia or monk fruit.

FAT IS A MAJOR FOOD GROUP

Not all fats are created equal. It’s about grass- fed butter, ghee, coconut oil, extra virgin olive

• il and clean animal fats.

NOSE TO TAIL + ROOT TO STEM

Waste Warrior consumers are all about super- nutritious cheaper cuts (ox-tail!) and leveraging those broccoli stems.

WITH THE GRAIN

Health-supportive grains are freshly milled from whole, often heirloom varieties. DIY home cooks grind their own for incomparable flavor and better digestion.

SOUND SEAFOOD

From environmentally sustainable sources that respect oceans and human rights.

A final thought to ponder– Does insect oil pose a future competitive threat?

ABOUT THE HARTMAN GROUP The Hartman Group, located in Bellevue, Washington, blends leading-edge customized research and consulting to understand the subtle complexities of consumer and shopper behavior. Since 1989, Hartman Group has provided unique perspectives on the underlying motivations and behaviors that move the needle for our

• clients. To learn more about how Hartman Group stays sharply

focused on how consumers live, shop and use brands and products visit: www.hartman-group.com Sign up for our consumer insights briefing: www.hartman-group.com/hartbeat THE HARTMAN GROUP, INC 3150 RICHARDS ROAD, STE 200 BELLEVUE, WA 98005 TEL (425) 452 0818 FAX (425) 452 9092

Davey McHenry Vice President, Consulting Services davey.mchenry@hartman-group.com