Dairy is an inherently dynamic functional foods category. Foods and beverages derived from the milk of cows and other mammals may have built their healthy image on their calcium and protein content, but they are also rich in vitamins and minerals, carbohydrates and essential fatty acids. And that's before any fortification has taken place.
A recent report published in the American Journal of Hypertension found eating 3-4 servings of dairy each day as part of a healthy diet could save the US health care system $200 million over five years.
Dairy foods could play a role in reducing the risk of nine common diseases and conditions, including: obesity, type 2 diabetes, hypertension, coronary artery disease, strokes, kidney stones, osteoporosis, colorectal cancer and pregnancy-related complications. Treating these diseases currently costs the US $264 billion a year. Marginal increases in dairy consumption in a small percentage of the population (less than 15 per cent) could have significant cost benefits, the report estimates. Again, that's just regular dairy—milk, cheese and yoghurt.
A focus for innovation
According to market analyst Euromonitor, a growing awareness of these inherent functional properties is spurring growth in regions such as China and the Far East, and multinationals such as Danone, Kraft and Nestlé are making great strides in this area in the Middle East, Latin America and Africa. Public health programmes have helped their cause.
The functional dairy sector does, however, accommodate a much wider spectrum of products. While it may be inherently functional, it is also highly suitable for fortification. While soft drinks, snacks and spreads have struggled to overcome their less-than-wholesome nutritional images, dairy has maintained its position as the most robust functional foods and beverages category. Not only that, the category is cashing in on the low-carb diet trend.
Dairy products lend themselves to fortification, especially milk and yoghurt. Cheese, cream, ice cream and other chilled desserts are also being used as platforms for fortification, even if they don't have the wholesome image of milk and yoghurt.
It's not surprising then that the dairy shelves of retail outlets have become a focus for innovation. Probiotics and prebiotics, lactose-free or reduced-fat formats are easy to find, but there are also dairy products containing all manner of ingredients from vitamins and minerals to fish oils, fruits and their extracts. Plant sterols and stanols; herbs; and highly specialised milk-extracted protein forms, such as casein and colostrums, are also being used. Selective breeding and feeding techniques are employed to produce specialised milks aimed at increasingly narrow bands of the population.
When size matters
It would be hard to discuss functional dairy without mentioning little bottles. The 70-year-old, Japanese-inspired success story that is Yakult is seen by many as one of the first truly functional foods. Like Red Bull, it has spawned many similar products seeking to cash in on its runaway, pioneering success—in Europe at least, if not yet the US.
French giant Danone's Actimel, premiered in 1994, is the most notable and it now accounts for 65 per cent of European sales in the category, compared to Yakult's 15 per cent. Danone, which owns about 20 per cent of Yakult Honsha and is its biggest stakeholder, recently signed an agreement with the Japanese company that will see the two assist each other's marketing and R&D programmes.
Iceland's biggest dairy, Mjolkursamalan, has had its LGG product (using Finnish dairy Valio's LGG probiotic ingredient) on the market since 1998. Likewise, Valio has had a probiotic daily dose drink, Gefilus, on the market since 1999. Muller has Vitality, a product Mintel noted was "positioned more as a lifestyle brand, intended to widen the consumer base for functional drinks." Even Nestlé has relaunched its failed LC1 probiotic yoghurt drink in Germany, while Danish giant Arla has taken its probiotic Cultura range beyond Denmark for the first time, releasing it throughout Scandinavia.
When it comes to probiotic ingredients, the Scandinavians have few peers. Valio and Swedish companies Bio Gaia and Probi all have patented probiotic strains that are being used by some of the biggest dairy players in the world—including Danone. Scandinavian probiotics also appear in supplements and infant formulas in places as far afield as Australia, Italy, Korea and South Africa.
Bio Gaia has also developed the world's first probiotic straw that has benefits beyond mere product-differentiation and being a neat marketing gimmick. "More people are buying into the probiotic idea," says Jonathan Middlemiss, marketing director of UK-based Farm Produce Marketing, the distributor of Orchard Maid organic yoghurt drinks and the first to use the probiotic straw. "The problem with the little bottles is that you get your bugs, but you don't get a decent drink. We have 250ml yoghurt drinks with probiotic content."
Delivering the active culture via the straw means production problems affecting the liquid component of the product don't apply to the probiotic component. "They heat-treat the drinks to give them an extended shelf-life," Middlemiss says. "This would kill the bacteria. So we put them in a drop of oil in the straw."
Another trend in little bottles goes beyond probiotics, as the packaging format is used as a platform for other ingredients. Mjolkursamalan recently launched a product using another patented Valio ingredient—a peptide/bacteria that reduces blood pressure. Mjolkursamalan's product, called LH, joins Benecol (owned by Finnish dairy group Raisio) and Unilever's pro.activ, which has expanded on its initial stanol- and sterol-based offerings with cholesterol-lowering yoghurt beverages in selected European markets.
All this activity is backed by research group Frost & Sullivan, which reported that the European phytosterols market grew by 20 per cent during 2003, and is currently worth $75 million. Phytosterol use in foods such as yoghurts and ice cream is likely to drive growth up to 15 per cent annually until at least 2010, it predicts.
In the US, the market for probiotic and other ingredient-based, daily dose bottles is considerably less developed than in Europe, but activity is increasing. Danone has launched an Actimel-style product there called DanActive, which is being marketed and distributed through its 80 per cent-owned Stonyfield Farm subsidiary. Others are sure to follow. Sales of drinkable yoghurt, which includes smoothies and yoghurt juice drinks, went from $17.6 million in 1999 to $86.2 million in 2001. By 2006, drinkable yoghurt sales are expected to reach $221 million, according to research firm Packaged Facts.
Targeting market segments
Functionality does not always involve fortification. A UK dairy company is producing a melatonin-rich milk aimed at those with sleep difficulties, which simply requires careful herd and feed maintenance.
"We are not adding anything to the milk at all," notes Mike Hind, Night Time milk's marketing manager. "We've selected milk that is naturally higher in melatonin than regular milk. We do this by understanding why some herbs produce higher levels of melatonin than others. We also get the milk at 5 am because milk produced at night has the highest levels of melatonin."
In Canada, dairy firm Natrel has gone down the fortification route by debuting omega-3-fortified milk in response to a domestic population with chronic cholesterol problems, possibly due in part to low fish consumption. Because of Canada's strict health claims laws, the company cannot make any link between omega-3s and cholesterol reduction, but a company spokesperson said awareness was fairly high of such a link thanks to extensive media coverage. "Canadian consumers prefer the softer approach anyway," the spokesperson told New Nutrition Business. "Canadians don't like companies telling them what to do. They think rather, 'Give me your product, and I will decide if it is right for me.'"
New Zealand dairy producer Anchor has a similar product in its portfolio, one that targets men 35-55 years old who won't purchase skimmed milk because they don't like the taste. Unlike its Canadian counterpart, Anchor's Heart Wise carries low-cholesterol and low-fat messages, as well as an NZ National Heart Foundation-approved logo. A similar product, Mega Milk, is aimed at children, but with the promotional accent on bone health rather than cholesterol reduction or obesity.
One of the oldest and best-selling omega-3 milks is Parmalat's Omega 3, a UHT milk available in much of southern Europe, Latin America and North America. It uses a marine-sourced omega-3 developed in conjunction with a major ingredients supplier. Ireland's Kerry Group also has launched a chilled omega-3 milk.
Supplier success stories
For ingredients suppliers, the dairy market remains a buoyant one, especially with the low-carb factor set to maximum right now. "Our ingredients are going into cultured products such as yoghurt, sour cream, buttermilk, cream cheese and quark, as well as all types of aged cheeses," says Terri Rexroat, business line manager at Wisconsin-based Degussa Food Ingredients.
Despite the low-carb frenzy, many dairy producers maintain conservative policies. "It seems manufacturers want to stick with simple, well-known, low-cost ingredients such as probiotics and calcium," Rexroat says. "We've been selling probiotic cultures for more than 10 years and this concept works well because manufacturers need to use a culture anyway, so they just use one that also has added probiotic strains."In the past year we've started marketing several noncultured functional ingredients such as lecithin/choline for liver health, hydrolysed gelatine for joint health and omega-3 fish oils for heart health."Many consumers have knowledge of these ingredients, which means they don't need to be educated from square one, but these are a tougher sell to manufacturers of dairy products partly due to their higher use cost. Doors are starting to open though."
Arla Food Ingredients in New Jersey has won approval for two health claims regarding teeth and gut health for its Tagatose sweetener. "It's going into many low-carb products at the moment, and will be going into dairy products by the end of the year," says president Jan Jensen. It's a prosperous time to be in the dairy ingredients game, he notes.
Arla also produces other proteins such as whey isolates and casein. "The cow doesn't know which parts of its milk are good for different applications like yoghurt or cheese or milk itself. We go in and isolate these components and then determine which milk components should be used where," Jensen says. "Protein can also add to the flavour, viscosity and mouthfeel. We help our customers with their formulations and sometimes tailor-make ingredients."
Cheese and fruit
While little bottles haven't really taken off in the US, cheese is gaining a lot of functional attention. "There is a whole world of opportunity in terms of what could be added to cheese from a healthful standpoint," states Jeff Van Drunen, vice president of Illinois-based Van Drunen Farms and Futraceuticals. Herbs added for their functional rather than culinary use is one example, he notes. "The cheese industry is beginning to really push cheese as a functional vehicle," adds Rexroath. One example is the presence of Cargill's Corowise sterol ingredient in a soft cheese brand produced by the Lifeline Food Co in California. "As far as taste, the cheeses with phytosterols actually taste creamier than the regular low-fat product because the phytosterol esters imitate," says company president Jone Chappell.
The addition of fruit and fruit extracts is occurring more and more with dairy products. "We are doing a lot of work with fruit antioxidants—especially with berries," says Van Drunen. "Dairy producers could add our ingredient to their yoghurt, for instance, and people would be getting 3-5 times more fruit than a similar fruit yoghurt."
Lee Doleman, general manager at UK-based JO Sims Ingredients division, which distributes for Massachusetts-based fruit extract supplier Ocean Spray, is similarly enthused. "Fruit ingredients like cranberry and blueberry can add new life to traditionally high-fat dairy products such as cheese and ice cream," he says. "While incorporating fruit ingredients to dairy products can be tricky—high fruit acidity can cause milk proteins to curdle—it is mportant to select the right combination of ingredients."