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.

Ireland’s Food Harvest 2020 initiative seeks North American food and beverage investment, targets New Zealand meat and dairy

Ireland Invest2

“Ireland is open for food, beverage and ingredients manufacturing businesses!”, that is.

Ireland has committed to become Europe’s food manufacturing center and gateway to the EU, said representatives of Enterprise Ireland at a well-attended meeting hosted by Enterprise Ireland and the “Food Industry Team” of the Chicago law firm, Freeborn & Peters LLP on November 5th, at Chicago’s University Club.

Ireland’s government and dairy and meat industries, meanwhile, have targeted New Zealand as their benchmark competitor in a decisive effort to transform Ireland into a global, export-driven dairy and meat powerhouse producer, as part of an ambitious plan dubbed Food Harvest 2020. Noting that the EU represents about 25% of the world’s consumer spending power, Enterprise Ireland representatives David Butler and Jonathan McMillan affirmed the Irish government’s commitment to lure American food, beverage and nutritional products manufacturers to Ireland through incentives and bolstered support structures.

“Once in Ireland, you will have full access to the EU”, they noted.

Citing the 2012 IMD World Competitiveness Rankings report, speakers pointed to Ireland’s:

  • No. 1 worldwide rankings for investment incentives, skilled labor, flexibility and       adaptability
  • No. 2 ranking in the world for openness to foreign investment
  • No. 2 ranking in Europe, for overall productivity and business environment.

The organic dynamism of Ireland’s food sector has already been evident in the U.S.: witness the rapid and decisive market share carve outs in the American food and food industry supplier network by Irish companies big (Kerry, Glanbia) and small (Megazyme) that occurred during the 1980s and ‘90s. One must remember that Ireland (pop. 4.8 million) is a country that punches well over its weight.

Ireland offers a natural base for American food and beverage companies, maintained Irish Minister for Agriculture, Food and the Marine, Simon Coveney. Coveney went on to explain that in anticipation of the removal of EU milk production quotas in 2015, Ireland’s 5-Year Food Harvest 2020 Plan will launch a multi-pronged effort to upgrade its agricultural supply chains through government incentives and human capital and food technology investments, with a strong emphasis on sustainable agricultural practices and green technology applications.

Freeborn & Peters attorney John Shapiro noted that the increased confluence of U.S. and EU food quality and safety expectations and regulations will further smooth the entry of U.S. companies into the EU and that the EU is too large a market to ignore. Also, both sides of the Atlantic share similar business environments, cultures and consumer and regulatory trends (e.g., sustainability, increased protein consumption and “clean labels”).

Dairy and meat: high hurdles and major makeovers

Minister Coveney noted that, while Ireland’s milk and meat production lags well behind New Zealand’s, “New Zealand and Ireland share very similar production conditions”. Both countries, for example, rely heavily on pastured herds, which raises the possibility of value-added marketing of the nutritional and environmental benefits associated with pasture (versus intensive feed-based) milk and livestock production. Both Ireland and New Zealand place a high priority on agricultural sustainability and environmental initiatives.

New Zealand produced 19,173 million liters of milk in 2011/2012, versus 5,198 million liters for Ireland over the same period, according to the UK-based DairyCo Marketing Information. That is a high hurdle to overcome.

Food Harvest 2020 delineates aggressive development targets that require increasing milk production by 50% by 2020, together with 40-50% increases in beef, pork and lamb production, said Coveney.

In separate comments made to BEST VANTAGE Inc., Coveney allowed that there were many structural differences that needed to be overcome. Irish dairy herd sizes are still very small, averaging 50-99 head per farm, and milk production efficiency is very low. Plus, pasturage is expensive and underutilized in comparison to New Zealand and EU dairy powerhouses, such as Denmark, Belgium and the Netherlands.

“However, all these hurdles are surmountable. We view this as a great opportunity for growth through structural improvements,” said Coveney, himself a former livestock manager.

Much of the anticipated growth in herd expansion is expected to come from improved land utilization and feed optimization. Given Ireland’s reputation as Europe’s “Celtic tiger”, it would appear foolhardy to underestimate its ability to meet its Food Harvest 2020’s targets.

Asked if the placement of increased “sustainability” burdens on Irish meat and dairy producers and would hamper rather than enhance agricultural efficiencies, Coveney strongly disagreed. “That’s what the farmers thought would happen at first, but when they began to see how sustainability considerations actually improved their efficiencies and saved them money, their attitudes changed.”

— Dan Best is the President of BEST VANTAGE Inc.

For more information:

http://www.teagasc.ie/aboutus/director/DairyUKPaper26June2013.pdf

http://www.teagasc.ie/publications/2011/1004/CompetitivenessofMilkProductionweb230611.pdf

http://www.enterprise-ireland.com/en/

http://www.freeborn.com/industry/food