Natural Foods Merchandiser

Omega-3 fatty acids: Continued growth and innovation

It is well established that dietary omega-3 polyunsaturated fatty acids promote health and prevent disease. Furthermore, a growing body of evidence indicates that omega-3s are essential for maintaining optimal brain health, especially during periods of growth and development. The three most nutritionally important omega-3s are ALA, EPA and DHA, of which DHA is the most commonly associated with proper brain and nerve development.

ALA is found in plant-derived components such as flaxseed, walnuts and dark-green leafy vegetables. Dietary intake of ALA is considered essential because the body is unable to manufacture it on its own. Conversely, by converting ALA, the human body can manufacture EPA and DHA, but the efficiency of the conversion process varies by person and is affected by factors such as age, diet and health conditions. EPA and DHA can also be directly obtained by eating certain fatty fish, including salmon, halibut, sardines and trout, as well as other marine sources, such as algae. In addition, many foods are fortified with ALA, EPA and DHA. Supplementation has also become a popular way to consume omega-3s, with flaxseed oil, a rich source of ALA, and fish oil, a rich source of EPA and DHA, among the most common.

Dollar sales of products containing flaxseed and flaxseed oil grew to $256 million across food, drug and mass merchandisers, as well as among naturals supermarkets, for the 52-week period ending Nov. 3, 2007, representing an increase of 42 percent versus a year ago. Although food supplements (a category containing aloe, bee, cartilage and yeast products, as well as green food supplements, soy supplements, supplement oils, dietary supplements and miscellaneous fruit, vegetables and grains) remains the highest volume-generating category of the flaxseed and flaxseed oil segment, food and beverages with flaxseed as a primary ingredient account for 93 percent of combined-channel growth, with shelf-stable pastas and cold cereals leading in absolute dollar gains. Flaxseed and flaxseed oil product sales vary greatly by channel. In naturals supermarkets, food supplements represent 49 percent of total flaxseed and flaxseed oil dollar sales and contributed $2.5 million to 52-week dollar growth; though with $2.2 million of incremental sales, flaxseed-laden cold cereal is a close second. Conversely, in FDM, shelf-stable pasta generates the most volume, accounting for 24 percent of total flaxseed and flaxseed oil segment sales, with 52-week dollar growth of $21.3 million. Cold cereals gained the most dollar volume versus year-ago sales (178 percent change).

Fish oil is predominantly marketed and sold as a supplement and less commonly as a food and beverage ingredient; food products containing fish oil, which include a relatively small number of salad dressings, condiments, cheeses and breads, contribute less than 1 percent to total segment sales. Cross-channel sales of fish oil food supplements totaled $218.7 million for the 52-week period ending Nov. 3, 2007, representing an increase of 27 percent versus a year ago. Softgels are the most popular fish oil supple?ment form, accounting for 86 percent of combined-channel sales, with liquids a distant second. Newer supplement forms, including powders and chewables, contribute relatively low sales volume but are gaining momentum quickly. FDM outlets generate 70 percent of combined-channel fish oil supplement sales, while naturals supermarkets account for the majority of flaxseed and flaxseed oil supplement sales, comprising 68 percent of the total.

One reason for fish oil's infrequent use in food and beverages is the advancement and marketing of DHA- and EPA-fortified foods. Though still extracted from either fish oil or algae, advances in technology now allow for the production of concentrated ingredients that do not impart a fishy odor or taste. Today, virtually any food or beverage can be fortified with omega-3s, though foods that contain some fat work best. Eggs are the most popular omega-3-fortified food, representing 85 percent of combined-channel DHA product sales. DHA product innovation and sales growth are strong across several categories; in particular, nondairy beverages, as well as the yogurt and kefir category, have respective dollar growth of 21 percent and 59 percent, and together represent 12 percent of combined-channel DHA sales.

Increased consumer awareness of omega-3 products and their benefits will continue to drive sales and new product development. Sales volume generated by omega-3 food supplements continues to rise, and the introduction of omega-3 fortified foods shows no sign of slowing down.

Segment Sales, Food Supplements Category

Natural Supermarkets

Current $(M)

% Change

Absolute Change $ (M)

$ Share

Food Supplements

$222.7

11.8%

$23.50

100.0%

Fish Oil (DHA / EPA)

$66.4

27.6%

$14.38

29.8%

Flaxseed and/or Oil

$36.2

7.5%

$2.53

16.3%

Combination Oils

$14.2

2.9%

$0.40

6.4%

All Other

$105.8

6.2%

$6.19

47.5%


Flaxseed and/or Oil Segment Rank by Category

Natural Supermarkets

Current $(M)

% Change

Absolute Change $ (M)

$ Share

Flaxseed and/or Oil

$73.5

11.3%

$7.5

100.0%

Food Supplements

$36.3

7.3%

$2.5

49.3%

Bread & Baked Goods

$8.6

11.8%

$0.9

11.7%

(Frozen & Nonfrozen)

Cold Cereals

$8.0

37.9%

$2.2

10.8%

Energy Bars & Gels

$4.2

0.5%

$0.02

5.8%

Digestive Aids & Enzymes

$3.0

3.1%

$0.1

4.1%

All Other

$13.4

15.5%

$1.8

18.2%


Fish Oil(DHA/EPA)Segment Rank by Form

Natural Supermarkets

Current $(M)

% Change

Absolute Change $ (M)

$ Share

Fish Oil (DHA / EPA)

$66.4

27.6%

$14.4

100.0%

Softgel

$44.3

27.1%

$9.4

66.7%

Liquid

$16.3

30.9%

$3.8

24.5%

Capsule

$3.4

20.1%

$0.6

5.2%

All Other

$2.4

28.6%

$0.5

3.6%


DHA (Food only) Segment Rank by Category

Natural Supermarkets

Current $(M)

% Change

Absolute Change $ (M)

$ Share

Total DHA (Food Products)

$22.0

14.9%

$2.3

100.0%

Eggs

$17.4

5.0%

$0.8

79.1%

Non-Dairy Beverages

$2.6

23.3%

$0.50

12.0%

Yogurt & Kefir

$1.52

57.2%

$0.6

6.9%

All Other

$0.42

985.6%

$0.4

1.9%


Segment Sales, Food Supplements Category

Conventional FDM

Current $

% Change

Absolute Change $ (M)

$ Share

Food Supplements

$229.0

20%

$38.3

100.0%

Fish Oil (DHA / EPA)

$152.3

27%

$32.0

66.5%

Flaxseed and/or Oil

$17.0

19%

$2.7

7.4%

Combination Oils

$6.7

26%

$1.4

2.9%

All Other

$53.0

4%

$2.3

23.1%


Flaxseed and/or Oil Segment Rank by Category

Conventional FDM

Current $

% Change

Absolute Change $ (M)

$ Share

Flaxseed and/or Oil

$182.2

60%

$68.3

100.0%

Shelf Stable Pastas

$44.4

30%

$10.3

24.4%

Cold Cereals

$33.2

178%

$21.3

18.2%

Conserves & Jams & Nut Butters

$21.1

79%

$9.3

11.6%

Food Supplements

$17.0

19%

$2.7

9.3%

Cookies & Snack Bars

$16.0

53%

$5.5

8.8%

All Other

$50.5

61%

$19.2

27.7%


Fish Oil(DHA/EPA)Segment Rank by Form

Conventional FDM

Current $

% Change

Absolute Change $ (M)

$ Share

Fish Oil (DHA / EPA)

$152.3

26.6%

$32.0

100.0%

Softgel

$144.0

26.6%

$30.3

94.5%

Liquid

$5.5

22.7%

$1.0

3.6%

Capsule

$1.3

6.4%

$0.1

0.9%

All Other

$1.6

60.6%

$0.6

1.0%


DHA (Food only) Segment Rank by Category

Conventional FDM

Current $

% Change

Absolute Change $ (M)

$ Share

Total DHA (Food Products)Eggs

$238.4

20.7%

$40.8

85.1%

Non-Dairy Beverages

$17.5

20.5%

$3.0

6.2%

Yogurt & Kefir

$15.0

59.4%

$5.6

5.3%

All Other

$9.3

1,370.2%

$8.7

3.3%


Natural Foods Merchandiser volume XXIX/number 2/p. 40

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