European consumers don't eat science—they buy trusted food brands. For manufacturers, powerful marketing is critical to achieving success in the heart-health category, says Julian Mellentin.
In 1996, investment bankers at Credit Suisse First Boston were confidently predicting that plant sterol-based heart-health foods would be a $1 billion business by 2001. Forecasts of a booming, high-growth future for heart-health foods and beverages abounded. McKinsey & Company management consultants, with offices world-wide, was so bullish on the idea, it even accepted shares in lieu of fees from one European company developing soy-based heart-healthy ingredients—a company that has yet to launch a single heart-health food or show a profit.
In the late 1990s, 'heart health' was expected to become the hottest new trend in the health and nutrition industry. Thus far, however, it has proven as big a disappointment as an Internet stock. Yet many still hype the potential for foods offering heart-healthy benefits, claiming that Europe's uncertain regulations are holding back the sector.
Blaming industry sluggishness on the state of European Union regulations is mostly just a smokescreen. It is true that some countries, notably Germany and Denmark, are highly restrictive of heart-health and cholesterol-lowering claims. Others, such as Sweden, Finland, Belgium and Spain, have a more accommodating regulatory stance, and in the UK—the most liberal regulatory regime in Europe—foods and beverages carrying heart-health claims are commonplace.
The reality is that the critical success factors in this sector lie in branding, marketing communications and consumer understanding. The companies that have failed to understand these factors will complain the loudest about regulations as they seek to deflect attention from their marketing shortcomings.
Brand Equity Battles
The most successful heart-health brand in Europe has been Unilever's pro.activ cholesterol-lowering spread. The story of pro.activ is a stark illustration of the power of branding.
Flora pro.activ was launched in the UK in the summer of 2000. Less than one year later it had achieved sales of more than $68.6 million, a value share in the UK's $1.26 billion butter and spreads market of 5.44 per cent.
Pro.activ is an extension of the Flora family of spreads (marketed as Becel in some European countries). One of the biggest food brands in the UK, Flora, a spread made with polyunsaturated fats, was first launched in 1968. Since then it has been cleverly marketed as a heart-healthy substitute.
The London Flora marathon seamlessly became the London Flora pro.activ marathon. There is little company communication about the ingredient—the words 'plant sterols' are mentioned only on about page six of the information leaflet. But that is as it should be—Unilever is selling the benefits of Flora, a known and trusted food brand; it is not selling plant sterols, specifically.
In contrast, rival Johnson & Johnson's McNeil Consumer Products group had no pre-existing supermarket brand to extend when it launched the cholesterol-lowering spread, Benecol, in Finland in late 1995 (then owned by Raisio). Benecol, therefore, started out with zero brand equity in the UK. By the time pro.activ joined it on the market, Benecol had garnered $30 million in sales—no small achievement for an entirely new brand—and it held a 0.5 per cent volume share and 2.5 per cent value share.
As the brand creator, Benecol had to set the price point, which it did at seven times the price of regular spreads. In response, Unilever added to pro.activ's competitive advantage by bringing it to market 25 per cent cheaper than Benecol.
Add to these factors the massive brand equity of the Flora name, and it is no surprise that Flora pro.activ is now outselling Benecol in the UK by a factor of almost three-to-one.
Low brand equity was also important in one of the highest profile flops of recent years, the launch by Swiss pharmaceutical giant Novartis of its Aviva range of functional foods, which included breakfast cereals and cereal bars with a heart-health proposition.
Aviva was a new brand, unknown to consumers, from a company unknown to consumers, priced at five times the price of comparable regular products and making a heavy heart-health claim. As the case of pro.activ shows, heart-health messages are more credible to consumers when they come from trusted brands. Yet Novartis expected Aviva to become a mass-market brand. Within six months of launch, Aviva had been withdrawn from the UK, lingering a little longer on Swiss and Austrian supermarket shelves, before its final demise last year.
Leveraging Hidden Nutritional Assets
Contrary to the expectations of companies like Novartis, the future of heart-health products may be determined not so much by new brands as by the strategy of leveraging hidden nutritional assets. This strategy focuses on identifying the intrinsic benefits of existing dietary components and leveraging them through nutrition marketing.
General Mills, the largest US breakfast cereal company, is a practitioner par excellence of this approach. By applying a claim for the heart-health benefits of whole grains to its best-known and most popular whole-grain breakfast cereal brands, notably Cheerios, and heavily marketing their health benefits, General Mills has achieved significant volume growth in both the US and UK markets.
It also has price competitiveness, since it does not incur the cost of expensive added ingredients.
Although soy has been successful in the US, its fortunes in Europe have been mixed. One reason may be that Europe has not yet had the benefit of the industry-backed, decade-long communication campaign for the heart-health benefits of soy. Consumer concerns about soy and GMOs also have slowed growth in many parts of Europe.
UK retailer Marks & Spencer's '&more' range of foods with added soy has been one of the higher-profile soy-based product launches in the past year. Created with the help of DuPont Protein Technologies, it was Europe's (and possibly the world's) first supermarket private-label range of functional foods. Carrying a prominent US Food and Drug Administration heart-health claim, Marks & Spencer launched 14 more products including soups, pasta, pasta sauces, cereal bars and yoghurt.
The story one year later—nine of the original 14 products have been withdrawn. &more's problems were twofold: first, it was sold at unsustainably high-price premiums (the yoghurt was at a 20 per cent premium compared with regular products, and the soup 115 per cent); and consumers do not fully understand or accept the heart-health benefits of soy.
Interestingly, soy is gaining ground not necessarily because of its heart-health benefits but because of soy milk's rapid growth. This is due to the efforts of Belgian producer Alpro attracting America's White Wave into the market with its Silk brand as well as Australia's Sanitarium. Soy milk's primary selling point is as an alternative to dairy. Similarly, soy-based vegetarian foods are advancing as a non-BSE alternative to red meat. Only secondarily does its heart-healthiness come into play.
A Niche Approach
So, can only big brands succeed with the heart-health proposition? In fact, many companies which recognise that heart health is a niche concern are quietly carving out intelligent niches for themselves.
For example, January this year saw Finnish bakery company Fazer, of the 'iLove' brand, make its first attempt to stake a claim in the functional foods market. The Scandinavia-wide launch includes omega-3 bread and oat crisps. Thus far, consumer response has been positive, driven by a combination of the Finnish consumer's high level of trust in the long-established Fazer name and heavy investment in a variety of consumer communications tools. More importantly, Fazer is taking a long-term view of building its brand and is emphasising the food benefits of its products—principally taste and convenience—over health benefits. As Fazer Marketing Manager Leena Lehtelä, explains, "The ideology behind the brand is that our approach is not pharmaceutical."
In the UK, egg producer Dean Foods has taken an impressive three per cent value share of the UK egg market with its omega-3-fortified heart-healthy Columbus brand of eggs, despite selling these at a price premium some 40 per cent above regular eggs.
Wellness Sells In Europe
There is one important way in which Europe differs from the US. While much marketing effort in the US has gone into foods that address diseases—such as heart problems—it is wellness that sells in Europe. Danone's probiotic yoghurt drink Actimel, for example, sold on a simple wellness proposition, achieved retail sales of Euros 500 million last year—vastly more than sales of all European heart-health brands combined.
The days of achieving four- and five-times premiums for cholesterol-lowering foods are fast coming to an end. The companies that will win out in the European heart-health category are the ones that remember that consumers don't buy—or eat—science, they buy trusted food brands. The biggest factor of success in heart health will be creating brands that make sense to the consumer and win their trust.
Julian Mellentin is director of The Centre for Food & Health Studies, a London-based food and health think tank. He is also co-author of The Functional Foods Revolution (www.functionalfoodsrevolution.com). The Centre also publishes New Nutrition Business. www.new-nutrition.com, Tel, +44 208 758 9414, Fax, +44 208 758 9404.