Casteel took to the stage at Fi Europe 2023 to discuss the shifting tides in grocery retail.

^{Brandon Casteel presenting © Fi Europe 2023 | Steve Burden Photography}

“Food is medicine, and there are some very, very interesting trends that are happening in grocery retail right now,” he said.

Grounded in centuries of tradition, the concept of food as medicine has taken on new life in recent years. While many consumers adhere to this age-old notion, there has been a noticeable shift in how they put this concept into practice. Consumers continue to buy the same foods, but with a twist – they are now opting for products enriched with functional ingredients. This shift reflects an evolving mindset wher people not only seek out sustenance but additional health benefits in the products they incorporate into their daily diets.

The functional ingredients redefining conventional categories

SPINS, a syndicated data company, is at the forefront of grocery retail insights in the US. Casteel highlighted its pivotal role, saying: “Whether its a natural grocery format, a convenience store of vitamins and supplements, specific retail chain, or these larger conventional formats, like [...] a Walmart or a Kroger or a Target for example, theyre releasing their point-of-sale data to us.”

Casteel illustrated how SPINS’ datasets empower lead generation for ingredient suppliers. Using pea protein as an example, he showcased the capacity to pinpoint pea protein manufacturers across the US, opening avenues for ingredient manufacturers to make strategic collaborations and alternative formulations.

Casteel shared an anecdote involving an organic walnut manufacturer, who, through SPINS data, discovered its product was used in plant-based meat alternatives, revealing untapped potential.

From pills to plates: Vitamins, minerals, and supplements transforming everyday foods

SPINS tracks information under various categories. One category it has coined is “health focus”, which Casteel said is “the real or derived benefit or the label claim […] being made from a health-focused perspective”.

Within the beverage sector, Casteel brought attention to unexpected shifts in familiar categories like soda and water, all driven by consumers’ heightened focus on health. Casteel outlined the top-performing health focuses within the beverage sector based on SPINS’ data: energy support followed closely by hydration. The third top performer was digestive health, growing at 21% year-over-year. Digestive health even infiltrated the soda category, wher it was up 102% year-over-year, signifying a significant consumer shift in recent years. Casteel said: “Three or four years ago, I dont think that we would have predicted this, but this is a huge trend right now in the soda category.”

Zooming in on specific functional ingredients, Casteel delved into the trajectory of ashwagandha. While sales in vitamins, minerals, and supplements have plateaued, ashwagandha has found new life in unexpected places, such as shelf-stable tea, with a 52% increase in unit sales year-over-year, along with notable surges in ready-to-drink coffee (47%) and shelf-stable candy up more than 1,000%. Specific products like Perfy, an ashwagandha-infused soda, experienced a sales growth of 2,543% over a 12-week period, according to Casteel.

Melatonin, traditionally confined to supplements, experienced a decline in expected sectors but emerged as a rising star in unconventional categories like water and sparkling beverages. Casteel pointed to specific products like Tru Dream, a melatonin-infused sparkling water.

Collagen, steadily gaining traction, made surprising appearances in shelf-stable cold cereals, boasting a 400% year-over-year growth in sales and units.

“These are interesting implementations, wher you can find a use case for a functional ingredient that may be outside of a normal paradigm. But consumers are very clearly responding and voting with their wallets in these formulations,” Casteel said.

^{© Fi Europe 2023 | Steve Burden Photography}

Navigating the growing market landscape of gut health, Casteel explored trends within probiotics and prebiotics. While vitamins, minerals, and supplements displayed a flattening trend, alternative implementations in products like frozen ice cream, infant formula, toddler nutritional drinks, and soda indicated a broader market penetration. Casteel emphasised the success of Olipop, a prebiotic soda, with 82% of its sales in big-box retailers, which he said serves as a testament to significant consumer adoption.

Casteel highlighted the importance of this data for ingredient suppliers, as it diversifies the manufacturers they could be working with and encourages them to explore unconventional use cases for their products.

Peering into the future of functional ingredients trends

Casteel offered a glimpse into the future, highlighting the impact of viral trends, such as those on TikTok, and seeing how they translate to sales.

Referencing a recent phenomenon, he said: “What you saw towards the end of last year [or] early part of this year was more and more viral videos come out about Berberine and its effects on blood sugar.”

Berberine, a naturally occurring substance found in some plants, gained widespread attention on TikTok, being dubbed ‘nature’s Ozempic’, for its purported ability to reduce blood sugar and aid in weight loss.

SPINS noted a 40% increase in four weeks. He said: “Earlier in the year we were looking at this [thinking] its probably going to fall right back off. It has not, it has actually sustained.”

This influence cycle, shaping consumer buying patterns, is poised to be an important trend in the ongoing evolution of functional ingredients in grocery retail, one that Casteel said he would be watching.