The Power of Near-Real Time Food Trend Volatility Analysis

Is your food company busy addressing rising Vegan, Vegetarian, DASH, Anti-Inflammatory, ABS or Paleo diet trends today? If not, why not? These are among today’s top-10 diet trends driving consumer food choices.

Although Internet and social media analysis techniques are still in their infancy, these “big data” bases should not ignored: they best reflect what consumers think and say about their food choices. Think of the Internet as a very large consumer survey population that can be sampled at-will, at very low cost and on a near-real time basis. Internet chatter analysis also reveals trends not easily discernable using conventional analysis techniques, such as retail product scanning, new product placement tracking and consumer surveys…in near-real time! There is the problem of information clutter, however: the Internet has a very low signal-to-noise ratio and it can often be difficult to discern between what is important or relevant and what is not. Also, Internet search engines are fickle and just finding the most applicable search terms can be challenging.

This post references work undertaken at BEST VANTAGE Inc. (www.bestvantageinc.com) to establish new tools for consumer trends analysis, drawing on techniques developed by the financial industry. Previous work undertaken on this challenge is referenced here and here. In this posting, we demonstrate how volatility analysis, using our VIC™ internet chatter volatility indices, can rapidly prioritize emergent trends not readily detectable using conventional market analysis tools. The earlier warned, the faster that companies can adapt to and capture the high ground of new consumer opportunities.

Why volatility? Volatility is a leading indicator of change. Whether in nature, societies, economies or financial markets, “volatility” marks rapid exchanges of material and information that signal impending change. Internet chatter surges or wanes as individuals adapt to new information and adjust their demands and expectations accordingly. Internet chatter volatility denotes activity and information exchange: it does not explain the underlying reasons for change, which requires a more forensic analysis of the Internet database. Thus, a surge in Internet chatter signals that change is pending and that a more in-depth analysis of the underlying reasons for volatility is likely warranted.

In the chart below, the VIC™ volatilities of the top 9 diet trends (out of 40 analyzed) are presented together. It is clear that, already in late-2009 (six years ago), interest in vegetarianism surged, followed by a surge in vegan diet-related chatter beginning in 2013. These are the markers that should have signaled to the processed food, foodservice and food ingredient companies to closely track these diet trends and adjust their product lines and strategic plans accordingly. This period (2009 – present) also exhibited very significant spikes in Internet chatter volatility pertaining to high-protein, low-carb Paleo and ABS diet-related Internet chatter.

Top-9 Trend Volatility

A look at annualized growth trends in Internet chatter suggests how rapidly these four trends will remake our industry. Between 2013 and 2014 alone, BEST VANTAGE observed the following growth rates (i.e., velocity) in Internet chatter, presented along with 5-year annualized growth rates as benchmarks.

  • Vegan Diet (1-yr: 590%; 5-yr Annualized Growth Rate: 89%)
  • ABS Diet (1-yr: 315%; 5-yr Annualized Growth Rate: 115%)
  • Paleo Diet (1-yr: 159%; 5-yr Annualized Growth Rate: 101%)
  • Vegetarian Diet (1-yr: 152%; 5-yr Annualized Growth Rate: 85%)

Internet volatility and velocity analysis should not be used in place of conventional market tracking techniques. They do offer powerful early indicators of emergent trends, helping companies to know where to look and how to respond to the most volatile index of all, consumer behavior. In a future posting, I will explain the value of using Internet chatter volatility and velocity analyses as strategic decision-making tools.

Gainers and Losers: Dietary Trends and Proteins

Diet trends rank high in consumer consciousness and food and beverage purchase decisions. This can be direct or indirect, as social clusters exchange information and influence each other’s food preferences: friends influence friends. Some diet trends reflect value systems (e.g., veganism); some reflect self-actualization (weight-control diets); some reflect health concerns (e.g. gluten-free diets) and still others draw on scientifically generated, whole-health recommendations (e.g., the DASH diet). Two key questions are: which diets predominate in the consumer consciousness and how will they affect consumer food and beverage choices?

One way to track consumer diet preferences is through the Internet. Internet chatter provides a “big data” measure of what society is talking about, ergo its priorities. On May 5th, Daniel Best of BEST VANTAGE Inc. will demonstrate how Internet chatter analysis, using tools developed by the financial industry to analyze stock market activity, can be utilized to quantify and prioritize dietary trend activity in a presentation titled “Proteins: Quantifying the Odds for Market Success” [Global Food Forums’ Protein Trends & Technologies Seminar, May 5-6 in the Chicago area].

The presentation’s prioritization and analysis of forty diet trends should help companies identify and react to major trend shifts on a near-real time basis and also help them avoid Black Swan events. For example, the graph presented below ranks leading diet trends by their average annual growth rates over a 10-year period. But how should these 10-year trends influence near term-decision making? The tools presented should help quantify and rationalize strategic planning protocols as well as provide guidance on how to better engage in the battle of ideas on the Internet. Internet chatter analysis will provide valuable insights into consumers’ protein preferences, with respect to sourcing, processing and consumption.

10-yr Annual Diet Trends

Taking stock of consumer food trends

Can tools utilized to analyze the stock market be similarly applied to the Internet? Both the Internet and stock market represent large “big data” databases reflective of consumer sentiment and valuation judgments. Food companies’ futures hinge upon their ability to rapidly analyze and respond to continuously evolving consumer trends. However, Internet data is plagued by low signal-to-noise ratios and search engines can be highly erratic. In a presentation titled “Proteins: Quantifying the Odds for Market Success” (Global Food Forums’ 2015 Protein Trends and Technologies Seminar, by Chicago, Illinois on May 5-6), Daniel Best of BEST VANTAGE Inc. will demonstrate how Internet chatter-based volatility analysis can be used as a near-real time tool to red-flag trend shifts for food companies. He will suggest ways to exploit such data to advantage and help reduce Black Swan risks. For example, Internet traffic analysis indicates that while the “Paleo” Diet (unfavorable to dairy, soy, cereal and legume proteins) has been rapidly rising in consumer consciousness, it has also been highly volatile since late-2010, suggesting that major shifts are underway. This contrasts with the gluten-free trend, which has exhibited rapid and steady growth but low-volatility in Internet chatter, an indicator of category stability.Paleo Trend

Daniel Best (BEST VANTAGE Inc.) to address “Gluten Free” Product Development Breakfast Meeting

The Chicago Section IFT is sponsoring a Technical Breakfast Seminar on “Gluten-Free Products” from 7:00 – 10:00 AM at the Mintel Group, Ltd.’s Chicago office on April 3rd, 2014. The Mintel Group is a leading global market research organization. Daniel Best will present on “Gluten-Free Formulation: As Good…or Better?”, describing how the rapid rise of this category offers opportunities to develop products that are qualitatively better than the gluten-containing products that they are designed to replace.

Gluten-Free products may still be early-stage, but they are here to stay and, as was the case with “Organic”, could set new standards for quality that will dramatically expand their appeal. The ultimate success of this category will depend upon the ability of product developers to design added ingredient and nutritional integrity into their products to guarantee their long-term success. This presentation will provide examples of how new ingredients are being used to contribute superior value and performance to gluten-free products.

Additional presentations at this technical breakfast include:

  • The Rise of Gluten-Free: Trends in the US Free-From Market”, by Stephanie Pauk, Global Food Science Analyst, Mintel
  • Expand Your Gluten-Free Formulating Toolbox” by Jennifer Williams, Senior Application Scientist, Penford Food Ingredients

To learn more about this Technical Seminar Breakfast meeting and how to register, please visit this site:

http://www.chicagoift.org/meetings/April32014TechnicalSession.html?utm_source=CSIFT+February+2014+FoodBytes+Newsletter&utm_campaign=Feb.+2014+Newsletter&utm_medium=email

Pulses in foods…summarized.

BEST VANTAGE Inc.’s fourth and final “How To:” Pulse WEBINAR, sponsored by the USA Dry Pea & Lentil Council through a grant conferred by the Idaho State Department of Agriculture, was presented November 7th, with a record number of attendees. All four webinars in this series will be available for review in .pdf and/or presentation format in the near future at the link provided at the end of this post…so please stay posted.RandDTrends3

Although the focus of this webinar was on extruded products, ranging from pasta to puffed snacks, the presentation also reviewed previously addressed bakery, battered and fried products and beverage formulations as well the overall trend toward more pulse consumption in Western societies. Please note also that, whereas these webinars addressed peas, chickpeas and lentils, there have also been significant developments in the use of dry bean (Phaseolus sp.) – derived ingredients.

This most recent webinar #4 addressed the importance of amylose-to-amylopectin ratios in pulse starches and the effects of proteins, dietary fiber, moisture and barrel temperature conditions on the expansion properties of HTST (high-temperature, short-time) extruded snacks and breakfast cereals. The webinar also looked at low-shear extrusion…specifically, the positive contributions of pulse flours on the textural qualities, cooking properties and nutritional value of pasta. Much of this work has been undertaken at the North Dakota State University-affiliated Northern Crops Institute (NCI), which can be linked at www.northern-crops.com

In our view pulses are perfectly positioned to exploit a unique convergence of consumer trends in Western countries, that include: economy-driven price concerns, increased dietary protein consumption; heightened food safety awareness; sensitivity to environmental concerns and growing interest in ethnic-fusion cuisines. These trends will continue to stoke interest in pulses and pulse ingredients for the foreseeable future.

Here is a top-line overview of our four-part series:

 Pulses are going mainstream

Pulses increasingly appear in center-plate entrees, soups, salads and side dishes. New product applications for pulse ingredients include breakfast cereals, nutritional products, sweet baked goods, breads, nutrition bars, extruded snacks, crackers, snack chips, battered and fried goods, beverages and nutritional fitness products. Representative formulations were provided.

Quality standards

Pulses constitute a relatively new growth category in foods and international quality benchmarks have yet to be standardized. North America’s agricultural environment, combined with its production, shipping, handling and technical support infrastructure, has transformed it into a world leader in the production and export of high-quality dry beans, lentils, peas and chickpeas.

Strong consumer drivers

These include: strong demand for high-protein foods; the search for overall improved nutritional value; increased awareness of the importance of Glycemic Index and an aversion to the presence of gluten and other allergenic ingredients in foods. Pulse ingredients do not require allergen warning statements on food packages and examples were provided of how they can replace egg, milk and soy ingredients in a range of food formulations…at (usually) a considerably lower cost. Replacing cereal flours with pulse flours will significantly improve the nutritional profile of products and renders possible nutritional content claims for protein and dietary fiber. Finally, North American-grown pulses are environmentally friendly, as they are used as rotational crops that rejuvenate soils and that require very low levels (if any) of agricultural chemical inputs.

Functional pulse ingredients

Pulses differ from legumes, such as soy or peanut (groundnut), in that they contain significant quantities of starch and virtually no oil. Pulses contain high levels (22-30%) of highly functional proteins (similar to soy proteins) and a significant portion of their starch fraction is in the form of resistant starch. Already, a plethora of highly functional pulse ingredients have been made available to product developers from a growing number of ingredient suppliers, including starches, proteins, dietary fibers, brans and starch-protein combinations. This is only the beginning.

Cost advantages

The relatively low cost of pulses as compared to other protein (milk, eggs, soy) or even starch sources (corn, tapioca) provides a low-cost basis for developing further-processed pulse ingredients. In addition, they exhibit relatively low price volatility, which protects processed foods against commodity price swings. That being said, there can still occur temporary price spikes for the more-highly processed ingredients such as pea protein isolate, which are reflective of rapidly increasing demand outstripping production capacity (as has happened in the last two years with pea protein isolate). Nonetheless, such spikes are temporary and limited to the more narrow pulse ingredient segments. The industry is still catching up to increasing consumer demands for food product attributes that only pulse-based ingredients are best positioned to satisfy. It will take time.

A review of this Webinar #4 was published by Food Navigator and can be found at: http://www.foodnavigator-usa.com/Markets/Pulses-hit-mainstream-with-improved-nutrition-gluten-free-applications

The Link for the four archived webinars can be found at the US Dry Pea & Lentil Council’s website under the “Food Industry Tab” at: www.pea-lentil.com/archives.