Borderless Executive Live: The Podcast

Consumer Demand for Sustainable Nutrition and Health Benefits from Food, in conversation with Juan Aguiriano of Kerry Group

January 17, 2022 Borderless Executive Live Season 2 Episode 9
Borderless Executive Live: The Podcast
Consumer Demand for Sustainable Nutrition and Health Benefits from Food, in conversation with Juan Aguiriano of Kerry Group
Show Notes Transcript

Juan Aguiriano of Kerry Group shares his insights on today's food industry and consumer demand for sustainable, highly nutritious foods with proven health benefits.

Hello, this is Andrew Kris at Borderless Executive Live: The Podcast. Today I'm withJuan Aguiriano and we're going to be spending some time looking at health, especially health post-COVID. And in particular, how nutrition has changed from the area of just simply food to looking at health benefits. Juan is an expert on this topic and is with Kerry Foods, and I'm looking forward very much to hearing what you have to say. Juan, over to you. Hello, Andrew, how are you? Great to be with you today again. So, let's start the discussion with the end consumer and sustainable nutrition for context. And then we'll focus on nutrition and health. The market is undergoing a very rapid change driven by new consumer demands which, in particular post-COVID, are being accelerated, there is a new consumer out there. The end consumer is no longer willing to compromise. The consumer wants it all. And the demands are increasing and becoming more sophisticated. Consumers are seeking food that is great, that are healthy and nutritious, it's not "either, or" it's "and." What does that mean? We talk about proactive nutrition, reduce sugar, salt and fat, clean and natural. And then these products need to be trusted, the products need to be transparent, in the sense the consumer needs to understand where the ingredients come from, where they've been made, all the way back to the farm, and have a meaning, in terms of a brand, and a purpose. They need to be environmentally and ethically sustainable. Last but not least, they need to be "made for me" with a bespoke experience and personalized nutrition easily accessible in today's digital world. So, available digitally, delivered at home, convenient, and in different formats, like a lot of snacking, smaller sizes, etc., and ready-to-eat, affordable. So, if we think about these end consumers that want it all today, I'm going to focus on the nutrition and health aspects of that. So, the first step is really the back to basics, and I will explain what that is, and then a health and focus on self protection. Do you see self protection is an entirely new concept here? It's not something most people have come across. I think that the whole context of COVID has accelerated self protection, and there is a number of consumers understanding that food is nutrition, and then nutrition is health. Eating products that have less chemicals in there or less E letters is perceived to be healthier, having food that has less sugar, salt, or fat has a number of benefits for non contagious diseases, like becoming overweight, or worse, obesity, hyper-tension or cardiovascular diseases because of high salt, and other types of diseases associated with high fat or bad fats. So, the context of taking away things which are not good, either E letters or reducing sugar, salt and fat is a big trend, now driven by consumers. It's also driven by regulatory frameworks, legislation, for instance, in the UK on high sugar, salt and fat products, where manufacturers are now reformulating systematically to produce products that have better and healthier formulations and nutritional value. But it's not only taking away things, it's also adding back, putting the right proteins in the food. For instance, we've seen the boom of plant protein, a lot of that has been driven by health perceptions where the consumer is taking plant protein to replace animal based protein based on the number of health benefits or perceived health benefits that a plant based diet will have versus an animal based diet. In some cases it's true, in some cases perceptions, but definitely the consumer trend is there. And then also having specialized micro ingredients like probiotics, for instance, or fiber being added to the food. This whole spectrum of nutrition is really evolving quickly. And there are a couple of categories of health benefits that have been growing very, very quickly during COVID for immunity, for instance, food that has immunity benefits, traditional types of food that are perceived to be healthier from an immunity point of view, or new, more modern ingredients with consumer tests and claims on the back based on scientifically proven data that adds given health benefits to the food because of a specialized ingredient in there. So let me give you some context here. We talked about self protection. So the overall health and wellness is growing very fast. And the four responses you get from consumers is, "I want to get my overall health and wellness up. I want to get my immunity up. I want to get my mental well being up." Because of confinement, there is a fatigue of being at home and so that mental aspect is also growing and, "I need to control my weight. Maybe I do less activity and I need to watch that." So these are the key four perceived risks and perceived needs from consumers, the leading brands are addressing these needs with very innovative and interesting products. So consumers, if you ask the question, "have you or would you consider immune health products?" In Europe, 65% of consumers are now considering that. And that's not niche anymore. Two consumers out of three are looking for that in the food they buy. And only 52% of EU consumers have indicated they satisfied with their immune system right now. They feel vulnerable to illness and 56% of consumers have made changes to their diets, lifestyles, or the type of food they eat to improve the immune system. The Google searches for "immune systems" has gone up 670%. So the types of products is, for instance, immune health products are products that have a healthier ingredient in it, maybe some kind of red fruits, red berries, etc, if you talk about a beverage, so because of the antioxidant properties that they have. Yeah, antioxidants, etc. But then you add, for instance, a probiotic, which has proven health benefits around immunity or other types of health benefits. If you look at what is the functional beverage and nutritional beverage in any retailer, the huge amount of brands now that are marketing health benefits, and so they would add vitamins, probiotics and fibers, depending on the health benefit you want to claim. It used to be a niche. And now it's mainstreaming quite quickly. So is a lot of your time at Kerry Foods, for example, being spent in helping food producers in that area? Yeah, this is a significant part of our portfolio, which we call "proactive health" and where we help our customers in beverages, but then also in food categories, to define, what are the health benefits that they want to provide through their brand? And what are the key ingredients that they want to use for taste, nutrition and for proactive health benefits? Because it's a total package, right? Just adding one ingredient doesn't give you the solution. It usually needs... It's like a movie, if you want. You need the leading actor, and then you need the support crew. And you need a good scenario for this. So is formulating these now kind of a unique piece of business within Kerry Foods and other producers of ingredients? Yes, it is definitely growing very quickly. For us, it's part of our applied health and nutrition portfolio. And we have a business unit that specializes in this. But as I said, very often it's not only one ingredient, it's a system that you need to put together, right? To meet the the taste, the functionality, the texture, etc. Is all this going to continue, do you think, post-COVID? Yeah, what we see is that consumers want trust and confidence that what they're eating and drinking is going to deliver the real deal. Yeah, so, science backed, branded ingredients are key to building consumer trust. It's not enough to say, "okay, eat a little bit more of these ingredients and you'll be fine." No, show me the data, show me the science. And the consumer is more and more educated and wants to get the data, get the science, get the information. We see that at the consumer level, we also see that at the industry level. Kerry has the Kerry Health and Nutrition Institute where we share the science with the industry. And this is an open platform where we invite everybody in the industry. Indeed, I've taken a look at that in the past. Yeah, so recently, we published a lot of white papers and webinars, etc, to socialize the signs of sustainable nutrition overall, and healthy nutrition in particular. And so it's non commercial, but we share a lot of things there. And basically, we can see that this is growing very, very fast in terms of the number of products that have health benefits with the specific ingredients and the number of products that have a health benefit with a specific ingredient which is branded inside. So in our case, you know, we have two main brands there, but our portfolio is growing. Both of them have clinically backed types of benefits and enable our customers to deliver to the consumer the desired products that they want to have to boost immunity or to boost other types of health benefits. So we've made a number of acquisitions recently where we've gone into botanical extracts, we've expanded our portfolio of probiotics. So this is a growing business for us driven by a growing demand in the market and growing demand. A number of brands and companies formulating products with functional ingredients that deliver health benefits. Do you see the pharmaceutical industry taking an active interest in the food sector, particularly in this area? Yeah, I think there is an interesting dynamic happening where you used to have food, and then you would have dietary supplements, and then you would have pharma, and these worlds were relatively separated. The consumer would eat food, not so worried about the health, then if they had some health concerns, they would take pills. And that was the format for probiotics, vitamins or whatever, as a prevention. And if they had a problem then they would take the remediation type of drug. That continuum is starting to converge. Yeah, there's a real convergence taking place. Exactly. And that continuum, the consumer is saying, eating the right diet and the right ingredients within that diet, so the right quantities and the right quality, is preventing me from falling sick. So it's really prevention versus remediation. And they're asking, "why don't you put the right ingredients in my foods from the beginning, rather than me having to take pills or drugs after the fact?" So that's where a number of companies are looking at that and starting to leverage their capabilities into the space. You have a convergence of a number of players here, developing business units coming from different parts of the industry that are serving the same need. Nestle is an example of that. Yeah you see some of the acquisitions that Nestle has done recently, it's definitely going in that direction, several billions of acquisitions. Unilever, also, buying liquid IV, etc. So definitely converging in that space. And then some pharma brands are partnering in this space. It used to be for niche populations, for instance, infant formula, right? Yes, exactly. But now we say, okay, how do we address healthy aging, or, it used to be the sports population only. Now everybody does exercise. So this is mainstreaming about again. How do I serve the need of specific consumer segments that have specific needs for health? We've talked about immunity, but it could be sarcopenia for healthy aging, or it would be muscle performance for an athlete. Or joint health, that's another area we're looking at. It can be cognitive, we talked about cardiovascular, weight management is still huge. I mean, the amount of people that are overweight, or have obesity, is 2 billion people around the world. It's huge. That's another area where people are looking, okay, how do I help people have a more balanced diet with the right ingredients, because basically that drives to cardiovascular disease, to metabolic syndrome, to a number of other issues. All we've done is kind of scraped the top of this particular subject. But it's an enormous topic. And it sounds like companies like yours, Kerry Group, in particular, have a huge role to play in all of this in the coming years. I think we're going to see the convergence between companies engaged across the whole value chain is going to be one of the more exciting things to observe as businesspeople, but it's doubtless your expertise will be highly sought after to try and make sense of all of this change. You're right, Andrew, I think the key differentiator here is the ability to integrate a solution to meet the needs of the end consumer. If I go back to the beginning, it has to taste great, it has to provide health benefits, and it has to be convenient and affordable. And the whole package needs to be there. It needs to be responsibly sourced all the way back to the farm. So again, the ability to understand that system of solutions and integrate that in a way that does it all in the end is key. And I think Kerry's extremely well placed in this and for delivering that. Yeah, very good. Well, I'm so grateful you've taken the time with us again today. We've discovered a little bit more about health and nutrition. There's some lessons in there, I think, for everybody who's been listening, both from an industry evolution point of view and also from a personal health perspective. I've suddenly made a note of a couple of things that I need to take a very close look at as I open my fridge and go to the supermarket. I'd be happy to provide some personalized advice, Andrew, Thank you so much. It's a great pleasure. Thank you and I look forward to talking again with you. Thank you.