Biggest Functional Food & Beverage Trends in 2023
This is my fifth annual list of functional food and beverage trend predictions. For those that are newer to my content, I only have one big rule for these annual trend prediction lists…
Rule #1 = I don’t allow carryover predictions from previous years.
This makes it more challenging, but also a little strange because trends are typically multiyear in nature…with the strongest ones lasting a decade or more. So, if you have some extra time and want to multiply your insights…I’d suggest checking out my previous annual functional food and beverage trend prediction content pieces. They’re still hugely relevant and packed with value.
2019 = https://youtu.be/h2buDf3Ei3c
2020 = https://youtu.be/lQF0tUteXp8
2021 = https://youtu.be/9oRiiQ9CAn4
2022 = https://youtu.be/dOScS7-P3XA
Which functional food and beverage trends do I predict will be the biggest in 2023? Let’s jump into this year’s list…
Trend #1 - “r^3 Effect”
R^3 Effect = Reshoring, Regenerative, & Recycled
This triangle is partly driven by the CPG business ecosystem looking to manage risk, but also because consumers across the globe are becoming more and more concerned about the state of the environment.
The idea of reshoring or near-shoring closer to the U.S. has been mostly talk for years because the cost-benefit didn’t make sense until now. Elevated geopolitical risks, supply chain disruptions, and export restrictions have gotten to a point where extra costs are worth incurring for the benefits of quicker delivery and more reliable supply chains.
As for regenerative agriculture, this term will start showing up more on product packaging and marketing within the functional food and beverage space. For those looking to pave the way, just be aware that it will take education, as surveys show only one-fifth of consumers haven’t heard the term "regenerative agriculture.” That being said, the same survey showed 70 percent of consumers agree that the food they eat should be grown on farms that use sustainable practices.
Then, recycling (or upcycling technically) consumers are growing more and more interested because these upcycled ingredients are deemed better for the environment in general and help tackle the issue of food waste. This further shows how sustainability and morals/ethics are playing a greater influence on choices across the functional food and beverage space.
Whether its any of the R^3 Effect areas, younger consumers are more willing to change their food choices if they can reduce their carbon footprint. It’s important to remember though that these sourcing elements don’t override other purchase criteria like taste or convenience. But health of the environment is an element that consumers are starting to consider when thinking about holistic health.
Trend #2 - Algae (Inside & Surrounding the product)
I believe algae is going to have a huge year within the functional food and beverage space…both inside and surrounding the products. Seaweed has long been a dietary staple in Asian countries and consumption of spirulina dates to the Aztecs. So, this isn’t new…but utilization of algae within functional food and beverage continues to expand daily. A few reasons I think it’s perfect timing for algae to have its moment:
it contributes significantly to a more sustainable food system
it has a high overall nutritional content and consumer familiarity
it provides promising scalability and cost levels for business integration
Also, as product developers are on the hunt to find better and more environmentally friendly sources of plant-based protein to feed our planet, algae could be the next big thing in alternative proteins. Microalgae is 50 to 60 percent protein, but unlike many soy protein products, where the protein has been isolated from the plant, microalgae is generally used as a whole-food ingredient and retains more than just protein.
The other way I think you’ll see algae more integrated into the space is through product packaging. In a bid to offer sustainable alternatives to conventional packaging, suppliers are looking to natural materials, including seaweed, for inspiration. Because its capable of growing around 60 times faster than land-based crops and sequestering up to 20 times more carbon per acre than forests, seaweed is a sustainability champion. It also happens to be a versatile base for countless packaging applications like flexible film, seaweed paper, and even rigid materials.
Trend #3 - confidentially functional
I don’t want to jinx everything by talking about the likelihood of the “R word”, but probabilities are high…and consumer behavior around will matter a lot. Yes, runaway inflation seems to be under control…but rising economic pressures have increased consumer attention towards being more value conscious in 2023. As a strategist, here’s what I find super interesting to model out though…
If we look look back at the functional food and beverage landscape in the late-2000s during the Great Recession, most categories were super nascent or didn’t even exist. Also, what was the big consumer behavior shift of that time? Trade downs into private label. Fast-forward to today…what’s changed?
immense growth in functional food and beverage categories
supply-chain difficulties
consumer interest in buying goods that are in line with their beliefs
Why do I think this all points towards more private label activity within functional foods and beverages?
demand justifies creation
retailers will be attracted to tighter control over the retail supply chain
retailers have been already adjusting towards private label 2.0, which is moving away from just copying best-sellers and utilizing brand development strategies to appeal to younger consumer cohorts
Trend #4 - Mental Health (From Management to escapism)
So, this is going to be a kind of correlation to a functional food and beverage trend prediction that I mentioned two years ago in the 2021 list. That previous one was dubbed the “Burnout Syndrome” and it related to the tipping point where consumers would prioritize mental health. Basically, I was saying that eating and drinking for mental health would be a huge trend. I would say that materialized into a reality, but here’s where I’m going with this next…that feeling of being in that hamster wheel of competition isn’t going away anytime soon in America. If anything, it’s amplified over the last few years.
These consumers, that have prioritized their mental health for years, are seeing results, but faced with the current economic outlook and possibility of more stress…do they look to escape it? I don’t want that to seem dark and suggest the majority of consumers will turn to vices, addiction, and even worse, but I think seeking out self-soothing functional food and beverage solutions will be a reality. This is the year we see more of society embrace escapism as a legitimate form of mental health management. There are many ways to achieve this, through the benign like nostalgic flavors, middle of the road like mood-enhancing ingredients such as nootropics and adaptogens, to even the more interesting psychoactive plants and compounds…some of which could be federally illegal at the current time.
Trend #5 - Old to New Tech…It’s All Disruptive
It’s my opinion that maybe before the decade is over, commercial-scale precision fermentation facilities will be like data centers, which eventually became ubiquitous. And, like data centers, commercial-scale precision fermentation manufacturing facilities could one day be relied upon to make a vast array of vital products. Not only is precision fermentation tech being explored as a launchpad for cultivating new protein sources, but it’s also highly versatile in its capacity to be tailored toward producing other key food and beverage ingredients for texturizing, flavoring, stabilizing, and preservation.
The new technology that I want to mention is artificial intelligence (AI). For those unfamiliar with the term, AI is defined as a machine’s ability to autonomously perceive, understand, make decisions about, and react to its environment. AI is the heartbeat of the precision fermentation movement. These deep-learning platforms can design ingredients from billions of edible sequences and apply precise fermentation parameters for producing them…it’s mind blowing to be honest. While that’s only one usage for AI, it will undoubtedly revolutionize many aspects of the functional food and beverage space, from agriculture to food safety, concept development to production, marketing to personalization, and through countless other back-of-the-house business use cases.