The start-up era? Curious consumers and online shoppers help, says Mintel

12-Jan-2015 - Last updated on 12-Jan-2015 at 17:48 GMT

For start-ups, there are opportunities in targeting Millennial consumers and the online world, says Mintel research manager Chris Brockman

The start-up explosion in bakery, cereal and snacks will continue as online shopping booms and consumers seek out the extraordinary, says Mintel.

Last year, 2,919 bakery, snack and cereal firms in the EU launched new products – up from 2,615 in 2013 and 2,346 in 2012, suggesting growing activity from smaller or newer companies, according to Mintel. From diabetic bakery products to paleo bars and quinoa-based drinkable snacks, there was certainly a flurry of activity in the global market.

Chris Brockman, research manager for Food & Drink at Mintel, said that while big brands remained leaders in the categories, there had been plenty of activity on the periphery.

“A lot of companies are appearing through online platforms, which is a growth area,” Brockman told BakeryandSnacks.com.

In the UK, four in 10 consumers now shopped online for food and drink, he said, and as many as 50% of younger consumers did so.

5 in 10 young UK consumers shop online for food and drink products

“That’s obviously going to create a lot of opportunities for smaller start-ups to operate via that platform,” Brockman said.

With online, he said start-ups could flourish because it was simple communication without big ad budgets. “You’ll see a lot more internet operations specializing in targeting distinct consumer groups in the coming years.”

Tapping into the curious

A thread many start-ups in the bakery, snack and cereal sector have followed, he said, was tapping into a more experimental consumer base.

“Insect protein bars, for example, are quite a radical idea to the mainstream consumer,” he said.

The target for these experimental concepts, he said, tended to be Millennials, who were most open to experimenting with food and drink concepts and actively playing into lifestyle trends like gluten-free, paleo, high-protein and low-carb.

“People aren’t looking at weight loss as low-calorie or low-fat; it’s more about a personal lifestyle diet,” he said.

Mintel data shows 45% of UK consumers, for example, would like more choice to personalize food.

Consumers are more focused on personal lifestyle and want personalized products in their everyday diets, Brockman says

“This experimentation is a big drive behind start-up success, along with growth of online channels as a whole and the lifestyle approach to dieting and personalization as a whole.”

Big brand fatigue?

Asked if consumers were starting to tire of big brands, Brockman said: “It’s hard to prove that. When we do research by category and ask consumers about what influences their purchase – price, flavor or brand – you often see brand come up highly on those parameters.”

Brands, he said, remained very important to consumers, however the demand for increased variety meant smaller companies also held appeal. “Bread for diabetics is one example we’ve seen which is quite niche but appeals to a significant population in the market.”

However, launching and competing alongside these big brands, Brockman said, was no easy feat.

“The toughest part is probably scaling up operations… That step up from kitchen sink to something slightly more serious – the staffing, extra production capability, more distinct advertising and marketing budgets – all that is where the smaller companies struggle,” he said.

Despite this, the slight improvement in the economy across Europe and the US made for a more hospitable environment for start-ups and should continue to do so in the coming year, he said.