Canada's natural health products and functional foods market is changing rapidly as companies migrate into an industry buoyed by ever-growing demand. Kelley Fitzpatrick surveys the scene.
The Canadian natural health products (NHP), nutraceuticals and functional foods industry has garnered much attention in recent years. Health Canada's Food Directorate began deliberations on the industry in the mid 1990s, a move that resulted in a proposal for more accurate definitions of nutraceuticals and functional foods. Despite this initiative, Health Canada has maintained its narrow classifications until now.
The regulations defined a nutraceutical as any "product that has been isolated or purified from foods and generally sold in medicinal forms not usually associated with food," or that had been shown "to exhibit a physiological benefit or provide protection against chronic disease."
These classifications have been included in a proposed regulatory overhaul of Canada's NHPs. In September 2001, the NHP Directorate of Health Canada proposed that NHPs include products manufactured, sold or represented for use in:
- the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, in humans;
- restoring or correcting organic functions in humans;
- maintaining or promoting health or otherwise modifying organic functions in humans.
Specifically, these products will include homeopathic preparations, substances used in traditional medicine, minerals or trace elements, vitamins, amino acids, essential fatty acids or other botanical-, animal- or microorganism-derived substances. This category is unlikely to include foods.
In late 2001, Health Canada announced that it will not require a new regulatory definition for functional foods to permit health claims for foods under the Canadian Food and Drugs Act. This makes sense given that the term functional foods has been used extensively in Canada to describe foods with demonstrated physiological benefits and capable of reducing chronic disease risk. (For more information, see www.hc-sc.ca/.)
The Global Context
US-based Nutrition Business Journal (NBJ) has identified the primary global markets for natural health products and functional foods as the US, Europe and Asia, which represent more than 92 per cent of the global market. These regions also represent the principal export markets for Canadian products.
Canadian market data is difficult to interpret because historically much of it has been extrapolated from US sales and adjusted downwards to take into consideration the perception that US consumers are more conspicuous users of dietary supplements than Canadians. NBJ estimated that Canada's total nutrition industry in 2000 was almost US$4 billion, based predominantly on manufacturer sales. This included US$1.2 billion in supplements, US$760 million in natural and organic foods, US$360 million in natural personal care products and US$1.6 billion in the broadly inclusive category of functional foods (all foods containing additives for health benefit). Overall growth in these markets is 5-7 per cent, according to NBJ, with Canada's US$4 billion industry representing about three per cent of the US$144 billion global nutrition market in 2000.
Inside The Canadian Industry
The Canadian functional foods and nutraceuticals industry is evolving rapidly; there is little up-to-date information and operations in the food processing and pharmaceutical industries overlap. A 1998 paper commissioned by Agriculture and Agri-Food Canada estimated the Canadian industry consists of about 120 companies, many of which are in the processing and retail sectors. However, these figures are conservative and focus on larger Canadian companies. According to KPMG Consulting, they do not include the hundreds of companies producing, processing and distributing NHPs, functional food ingredients and nutraceuticals on a small to medium scale.
For example, approximately 50 companies were identified in the western Canadian province of Saskatchewan with sales of up to US$50 million in 1998. Many of these companies were start-ups entering the industry as part of a farm diversification strategy to increase rural incomes. Coastal provinces are following suit by encouraging companies to focus on NHPs, functional food ingredients and nutraceuticals as a way to diversify their fishery operations.
The fastest growing segment of the Canadian industry is the manufacturing sector. According to the Canadian Health Food Association, approximately 70 per cent of Canadian manufacturers import ingredients or whole nutraceuticals and functional foods to complement their production. Of those surveyed, 43 per cent said all their imports came from the US. About 48 per cent import herbs and 31 per cent import dietary supplements. Approximately 65 per cent of Canadian manufacturers export nutraceutical and functional foods products, these being predominantly dietary supplements and herbal products. (See www.nutranet.org for a further description.)
Natural Resources Are Mainstay
Canadian companies produce a wide range of natural health products, nutraceutical and functional food products. Canada's prairies and forests provide an abundant source of wild herbs. According to a 1999 Saskatchewan Agriculture and Food report, the province's growers produced more than 70 different herbs and spices. Canadian manufacturers in various parts of the country also produce NHPs and cosmetics derived from elk antler, such as elk velvet capsules, powders and tinctures, as well as emu oil.
Canadian companies have developed expertise in formulating and manufacturing an array of essential fatty acid supplements (EFAs) from a variety of sources, including evening primrose, borage, flaxseed, hemp and marine animals, as well as herbal/EFA condition-specific combination products. Canola and soy phytosterols and flaxseed lignans blended with oil are sold in the health foods market in capsules or as food components.
The food and food ingredient sector has become an important part of the Canadian nutrition industry. The types of food and food ingredients produced by Canadian companies are diverse and include eggs with increased levels of omega-3 fatty acids; cereals and grains, including wheat, oat and barley and fenugreek products with enhanced amounts of dietary fibre (soluble and insoluble); modified fatty acid vegetable oils; vegetable proteins from soy, canola and hemp; legumes; and fruit products. Dairy-based NHPs and functional food ingredients, in particular pre- and probiotics, are in development primarily in the eastern provinces of Ontario and Québec.
Coupled with the regulatory liberalisation being instigated by Health Canada, a climate of innovation is developing in a nation that seems destined to become a major player in the NHP, nutraceuticals and functional foods industry.
Kelley C. Fitzpatrick,
Saskatchewan Nutraceutical Network
105 North Rd.
Saskatoon, Saskatchewan S7N 4L5
Tel: +1 306 652 2782