The food and beverage industry is at a crossroads. As consumer preferences evolve toward quality, health, and sustainability, the increasing impact of trade tariffs is reshaping how brands innovate, source ingredients, and price their products.
In this article, we break down the top 10 industry trends for 2025 and how tariffs are influencing everything from product development to market accessibility.
Trend #1: Ingredients and Beyond
- Consumer Preference Shift: Consumers are increasingly seeking high-quality ingredients, prioritizing factors like health benefits, nutritional value, freshness, shelf life, and natural composition when making purchasing decisions.
- Impact on Product Differentiation: As tariffs increase costs, manufacturers may focus on superior ingredient quality to justify higher prices and make their products more competitive in a crowded market.
- Generational Influence: Quality remains a top priority across all generations, though specific preferences may vary.
- Value and Quality Alignment: Economic pressures from inflation and tariffs are pushing consumers to seek better value for their money, which can lead to an increased emphasis on product quality as a selling point.
- Manufacturer Strategy: In addition to improving product quality, manufacturers might employ effective storytelling and visuals to attract value-conscious consumers.
Trend #2: Precision Wellness
- Proactive Health Management: Consumers are increasingly using nutrition to manage health concerns, with personalized nutrition plans gaining popularity.
- Specific Health Concerns: Weight management, women's health, age-specific solutions, and performance nutrition are key areas where consumers are looking for targeted products.
- Product Development Opportunities: Tariffs might raise the cost of certain ingredients, pushing brands to innovate with locally sourced alternatives. There's potential for growth in personalized, functional food and beverages, supplements, and fortified products to meet specific health needs.
- Consumer Demand: The demand for tailored nutrition solutions could drive brands to explore new formulations and product offerings that align with precision wellness trends.
Trend #3: Wildly Inventive Flavors
- Desire for Unique Experiences: Consumers are looking for bold, inventive flavors and food experiences.
- Social Media Influence: The popularity of unique flavor combinations on social media can drive consumer interest and product experimentation.
- Seasonal and Limited-edition Flavors: There's significant growth in products with limited-edition claims. Seasonal flavors can mitigate the effects of tariffs by leveraging local and seasonal ingredients.
- Cross-category Innovation: The trend encourages exploring unexpected flavor pairings and product mashups. Brands can stand out by creating memorable and indulgent flavor experiences.
Trend #4: Gut Health
- Focus on Gut Health: Post-pandemic, consumers are more aware of gut health and its overall impact on well-being.
- Increased Product Launches: There's a notable increase in products with digestive health claims, indicating strong consumer demand.
- Key Ingredients: Fiber, vitamin D, and probiotics are crucial for gut health. Tariffs might impact the cost of these ingredients, prompting brands to innovate with alternative sources.
- Health Claims: Products with claims related to bone health, immune support, and weight management are gaining traction. This presents an opportunity for brands to develop multifunctional products that address gut health along with other related benefits.
- Product Categories: Innovators can expand gut health benefits across diverse categories like sweet biscuits, cereals, energy bars, and coffee to cater to the demand for convenient and multifunctional products.
Trend #5: Plant-based Products
Overview: Consumers desire more natural, less processed, plant-based products with enhanced taste, texture, health benefits, and environmental impact.
Impact of Trade Tariffs:
- Supply Chain Disruptions: Increased tariffs on imports of plant-based ingredients like fava beans, almond, and lentil protein could result in higher costs for manufacturers.
- Product Pricing: Higher costs may lead to increased prices for plant-based products, potentially making them less attractive to price-sensitive consumers.
- Innovation Costs: Companies might face increased costs in their efforts to innovate with cleaner, simpler formulations due to tariffs on essential ingredients or equipment.
Trend #6: Sustainability and Climate Adaptation
Overview: There is rising consumer concern for the planet, advocating for sustainable farming, climate-resilient crops, and novel cultivation technologies.
Impact of Trade Tariffs:
- Cost of Sustainable Practices: Tariffs on sustainable farming equipment and technology imports could elevate operational costs for producers.
- Product Pricing: As the price is a significant concern for consumers, higher production costs due to tariffs may deter some from purchasing sustainable products.
- Access to Alternatives: Tariffs on alternative ingredients or technologies necessary for adapting to climate change could hinder innovation and the availability of such alternatives.
Trend #7: Beauty-enhancing Products
Overview: Consumers, particularly younger generations, are increasingly interested in beauty-enhancing foods and beverages.
Impact of Trade Tariffs:
- Ingredient Costs: Tariffs on vitamins and supplements could increase the cost of products claiming skin health benefits.
- Market Accessibility: Increased prices due to tariffs might limit accessibility for some consumers, particularly younger demographics who are more price sensitive.
- Innovation Hurdles: Import tariffs on new or novel ingredients used in beauty-enhancing products might restrict the pace of innovation.
Trend #8: Authenticity and Tradition
Overview: Consumers want to reconnect with culinary heritage and embrace authenticity and tradition.
Impact of Trade Tariffs:
- Ingredient Sourcing: Higher tariffs on traditional ingredients sourced internationally could increase production costs.
- Cost of Traditional Products: Products made with traditional methods or ingredients might become pricier, potentially reducing consumer demand.
- Innovation Limitations: Tariffs could restrict the ability of brands to explore and introduce diverse traditional flavors and techniques.
Trend #9: Mindful Choices
Overview: There's a growing demand for products that support mental and emotional wellbeing, focusing on ingredients like vitamins and botanicals.
Impact of Trade Tariffs:
- Cost of Key Ingredients: Tariffs on essential vitamins and botanicals used for mood-enhancing products could raise production costs.
- Consumer Affordability: Increased prices might make mood-supporting food and beverages less affordable, limiting market reach.
- Innovation Constraints: Higher costs could restrict innovation and the development of new mood-enhancing products.
Trend #10: Integration of AI
Overview: There's increasing integration of AI in the food and beverage industry to enhance consumer experiences and product innovation.
Impact of Trade Tariffs:
- Technology Costs: Tariffs on AI-related technology and equipment could raise costs for food and beverage companies.
- Product Development: Higher costs might slow down the implementation and advancement of AI in product development and innovation.
- Market Penetration: Increased prices for AI-enhanced products or services could impact their market penetration and acceptance.
Conclusion
Increased trade tariffs can influence consumer trends by making high-quality and innovative products more valuable. Consumers' emphasis on quality, health, and unique experiences suggests that brands should focus on enhancing product attributes and storytelling to justify potential price increases due to tariffs. Additionally, the demand for personalized and functional food products presents opportunities for brands to differentiate themselves in a competitive market. Increased trade tariffs have the potential to significantly impact these food trends by raising production costs, limiting innovation, and affecting product pricing and availability. Brands might need to adjust their strategies, including sourcing locally, optimizing production processes, or passing costs to consumers, to mitigate these impacts.
CBIZ closely tracks executive actions regarding tariffs and will keep you informed in the coming weeks and months to provide additional insights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
