Functional ingredients cross-pollinate with foods

The line between food and supplements has begun to blur, making a convergence, if you will, of new products that marketing expert Jeff Hilton dubs "hybrids."

The line between food and supplements has begun to blur, making a convergence, if you will, of new products that marketing expert Jeff Hilton dubs "hybrids." Hilton is co-founder and chief marketing office of Integrated Marketing Group, based in Salt Lake City, and will present at Nutracon 2011 in the Food/Supplement Convergence Track on "Supplement, Functional Food and Beverage Trends in Product Development and Branding."

Fi: Jeff, to get us all on the same page, what is your definition of food and supplement convergence?
JH: I really think it's evidenced by the blurring of the lines separating these heretofore separate categories: foods and supplements. We see foods becoming increasingly functional and delivering supplement-level benefits. We see supplements increasingly being delivered in food form: candies, like Gummy Vites or Gummy Pandas, liquids, shots ­ more familiar consumer vehicles for consumption. So as the two move toward each other there is a blurring of the contrast.

Fi: What categories of products do you frequently see the most convergence in?
JH: The majority of the convergence right now has been in beverage, no question. Beverage accounts for 58 percent of the functional categories, and I think there’s reason for that. Beverages are a more accessible form for consumers. They're easy to understand; they require less education on the part of the manufacturer. Consumers get the beverage idea. I think they are easier to formulate for the manufactures than trying to do a food product. Definitely in 2009 and 2010 beverages have been the lead horse from orange juice to more cognitive enhancement beverages, all the way to energy beverages.

Fi: What opportunities lie ahead for hybrid products?
JH: You know, 2009 was a slow year. A lot of research and development was tabled and funds were pulled from some of these efforts. Then we saw lots of products coming in 2010, which has been a stronger year. I think 2011 will be a boom year in this sector, as the economy hopes to come back. 

There's some maturing as a category that functional foods and beverages needs to undergo. By that I mean sorting out various issues, such as the levels of nutrients and the functional nutrients in products and are they meeting efficacious doses; what's the value of functionality for the consumer; what can you charge; what’s a fair premium; clinical research; consumer education. There's a lot of strategic thinking that has to go into the future of this category.

I think one of the biggest things that is going to be happening is the emergence of some interesting new ingredients. Things like spices and seasonings are new on function ingredients horizon. Also, new superfoods and super fruits like tart cherries for arthritis and gout, and others.

The other area that I think will have tremendous impact is the sweetener category. With the emergence of stevia and other alternative sweeteners, it's really changing beverage formulation completely and changing the profile from a taste, delivery and health claim standpoint. It's still in its infancy, but when you have Coke and Pepsi and others supporting their own stevia brands (and you have a lot of other sweetener alternatives in the market) those are key elements for beverages so it's definitely going to have an impact.

Fi: Ultimately, consumers don't really look for categories of products; they look for solutions to their needs. Given this, what tactics should marketers and branders avoid?
JH: Condition specific is the future and the present. I think the research shows consumers are increasing open to receiving that sort of supplemental nutrition in the form of food verses supplements. The convergence is partly a competition if you will, between supplements and food, because consumers increasingly have multiple ways to get the same benefits, and it’s not all in a capsule. If a consumer can eat a product that they were going to eat before, but now it’s got additional benefits – for example, Corazonas chips or their heart health bar... to fulfill their hunger and still get a phytosterol benefit, then they don’t have to take a supplement.

Two things are important to avoid. One is cure-all products. There's been a lot of positioning, particularly in the beverage area, that make all kinds of claims of rejuventation, renovation, revitalization and general, vague terms. The more specific the products can be in terms of what benefits they technically offer, the better.

The second thing is what I call the bandwagon effect. That is, can you spell acai? All of a sudden it was in everything except my breakfast cereal. Actually, I think it was in there, too. Companies tend to latch onto an ingredient that the consumer seems to be enamored with at the moment and they throw it in everything. Companies need to think through, "What is it we can do to differentiate our food or beverage in the marketplace? Not just take the ingredient of the day and find a way to work it into our product line."

Fi: How does packaging play a role in food and supplement convergence?
JH: Packaging plays a big role, and not just with the LOHAS [Lifestyles Of Health And Sustainability] consumer because of their values-approach to what they buy. When mainstream marketers are upping the game and introducing their plant bottle, a lot of these companies are scrambling to come up with their own innovations. Plant-based material and post-consumer waste material becomes very important. Another form of packaging reduction is a lot of consumers feel if they can buy one product that accomplishes two purposes (a bar that affects their cholesterol and meets their hunger need) then they’ve eliminated the purchase of one product. That in consumer’s minds is a very real benefit. They see themselves as buying one less product to throw in the landfill when they’re done.

Fi: What are some tips for marketers to create loyalty for a brand that exists in multiple categories?
JH: It starts at the product development stage with a differentiated product that really does something unique. You walk into everything from a Whole Foods to a 7-Eleven and you look into the beverage section and you see a lot of “me-too” – a lot of undifferentiated, colorful liquids in bottles. The more companies from the get-go that can development something unique and offer a very specific health benefit to a consumer… I think that pays off in loyalty. The consumer sees it as being different and not something that can be interchanged.

The brand’s story is really critical. If you don’t consciously create a story for your brand you could really get lost in the shuffle.  I think each brand has to have a story that’s compelling to the consumer:  how the product was developed, what it does, how the company started, what the brand accomplishes for the consumer.

Fi: What companies are doing the most convergence?
JH: I think we’re seeing functional innovation on the large, consumer-packaged goods companies. Players like Dole and Tropicana are adding ingredients and making immunity claims. You see it as heart claims on breakfast cereals. Even Progresso has their added-fiber soup line. Then, on the other hand, you have a lot of small companies, like Nawgan, which is a cognitive beverage in a can. The healthy thing is we’re seeing innovation from all sides of the fence.

Fi: And on a more personal note, what’s your daily supplement regimen?
JH: It evolves with the seasons, but I take a product for immunity, omega-3 fish oil, a multi, CoQ10, a strong antioxidant and something for joint support.

Nutracon Highlights: Food/Supplement Convergence Track

Track chair: Mary Mulry, Ph.D., president, FoodWise

For two days, these speakers will converge upon Nutracon 2011 to deliver strategies and best practices for a new breed of natural products. Nutracon is March 9-10, 2011, in Anaheim, Calif., co-located with SupplyExpo and Natural Products Expo West.

  • Greg Stephens, RD, on what’s hot in convergence. Stephens, of the Natural Marketing Institute will present emerging trends.
  • Marc Ullman on regulatory issues. Legal advisor Ullman tackles rules and regulations in "Product Development: FDA and the Food-Supplement Distinction: What Does it Mean For the Functional Foods and Beverage Industry."
  • Deshanie Rai on at risk populations. Learn useful strategies for targeting products and messages to meet the needs of at-risk sub-populations from Rai, senior scientific leader. From National Nutrition Health and Evaluation Survey data from 2003-2008 and recent publications, you’ll see how to help reduce nutrition disparities of the United States.
  • Douglas S. Kalman, MS, RD, FACN, on product development. Kalman’s talk, titled "Product Development: What Does it Mean?" focuses on how to use technology and emerging data to create a product – and a demand for it.
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