In Sweden, innovations in healthy foods are facilitated by a union between agriculture, medicine and technology and also by co-operation between government, industry and science. Peter Wennström reports.
A recent study has identified the university city of Lund in southern Sweden as one of the world's top three centres for functional foods development, along with areas in Finland and Canada. Carried out by the London-based Centre for Food & Health Studies, the study came as a surprise to many of the stakeholders in the Swedish industry who, with traditional Swedish shyness, perceived their activities to be "just normal." But what is normal in Sweden could be considered exceptional in other countries. Consider these facts:
- Sweden is ranked as the most knowledge-based economy in the world—judged on the basis of expenditures on R&D, software and higher education as a percentage of GDP;
- has the most advanced IT structure in the world; and
- has the largest investments in R&D as a percentage of GDP in the world.
As a corrollary, the Swedish food industry is more knowledge-based and innovation-oriented than the food industry in most other countries. And with the majority of the Swedish agriculture and food sector located in southern Sweden, literally wrapped around Scandinavia's largest unit for medical research, Lund University, as well as the Swedish Agriculture University (SLU), the area has become known as Medicon Valley.
A large proportion of the Swedish food industry is owned or dominated by farmers. Two basic strategies support agricultural production.
The first strategy is to leverage hidden nutritional assets and health benefits of, for example, oats and whole grains, through research and consumer education.
The second strategy is to create innovative products by developing new categories of products in existing segments, such as cholesterol-lowering spreads, and enhancing the benefits of familiar products, such as adding probiotics to yoghurt.
Product innovation has been supported by research and joint initiatives to help companies, especially small- and medium-sized enterprises (SMEs), to build new businesses both in Sweden and in export markets. Several support organisations are located at Ideon Science Park to both spin off innovations from university research and support new product development projects by established companies and also to help with marketing and other business fundamentals.
In a survey of real innovations carried out by Ideon Agro Food, an agricultural research and development agency, 24 recent innovations were listed, ranging from functional foods products like Oatly (oat drink and oat milk products, developed and commercialised by the research company Ceba) to Life Top Straw, which is a probiotic delivery system for ambient consumer products developed by biotech company BioGaia and packager Tetra Pak.
The close representation of so many different academic disciplines within Lund University and neighbouring university colleges makes it possible to innovate right through the value chain from medical research to a successful commercial product.
Add to this a tradition of innovation in food technology; processing and packaging expertise represented by Tetra Pak, Rexam, Alfa Laval and ABB; together with the presence of both national and international food companies like Unilever Best Foods, Arla, Findus, Procordia, Cerealia, Danisco Cultor and Skånemejerier and you have a fast track from the laboratory to the market.
Several innovations coming out of Medicon Valley represent not one, but several innovations leading to one final product. ProViva, the probiotic fruit drink from functional foods pioneer Skånemejerier, is an outstanding example of the "Lund model." Skånemejerier (Skane Dairy), Sweden's No. 2 dairy with a turnover of around $250 million, is an independent farmers' co-operative that has taken the No. 1 position in the health sector as one of the pioneers of functional foods.
ProViva, which could be described as the world's first probiotic fruit drink, is today a major commercial success. The product is the result of innovations in medicine, microbiology, food technology and food processing. It is protected by a number of patents and supported by eight theses.
Skånemejerier used its expertise in foods and beverages to develop Probi's new fruit drink, guided by its knowledge of consumer preferences. The product, ProViva, was launched in the regional Scandinavian market in 1995, and with an average sales increase of 25 per cent per year, today it represents sales of around 12 million litres a year in its home market, Sweden (with a population of nine million), together with growing sales in export markets Finland and the UK.
Pioneering Health Claims
A joint initiative by the Swedish food authorities, together with the food industry, means that Sweden is the first country in Europe to allow product-specific health claims. The first claim will be carried on Skånemejerier's Primaliv yoghurt, a dual-pack with yoghurt and muesli that contains oat beta-glucans as the active ingredient. The product can claim to 'balance your blood-sugar level and lower cholesterol.' It was approved following assessment and acceptance of scientific evidence by an international panel of experts appointed by the industry's newly formed self-regulatory Code of Practice on health claims, which is governed by the independent organisation Swedish Nutrition Foundation (SNF), also located at Ideon Science Park.
As an example of the close cluster of activities, Skånemejerier prepared its scientific dossier with the active help of Lund University's Functional Food Science Centre, which supplied the company with its world-leading research in blood-sugar response and glycemic index. With its Primaliv yoghurt and cereal products, Skånemejerier is tapping into one of the major health problems in the Western world—diabetes and blood-sugar-level control.
Products and Companies: Fermented Dairy Products
The majority of Swedish functional foods products are yoghurts and probiotic sour milks, as is the case in the rest of Europe. Swedes have a long tradition of eating yoghurt, so the category demonstrates a huge variety, and growth is especially strong in the low-fat and single-serve segments, fuelled by gut health as a familiar secondary selling proposition.
The estimated per capita consumption for 2001 was 33 litres a year. The consumption of fermented milk products has doubled since the mid-1970s. This follows the general European trend of strong growth in probiotic dairy drinks, with an estimated EU market value of E700 million. Even in countries like the UK, where the benefits of probiotics took longer to be understood but where sales in the single-serve probiotic drinks sector are now accelerating, the category is worth £52 million with only eight per cent household penetration.
Products in the functional segment (identified and documented strains) like Dofilus fermented milk and Gaio spread, yoghurt drink and fermented milk by Arla (Swedish/Danish dairy co-operative) and Verum by Norrmejerier (Sweden's third-largest dairy), together with Pro-Viva, have remained niche products. However, the niches are growing, and we see new probiotic products from Finnish dairy Valio, for example, with its Gefilus yoghurts and fruit drinks. Neither Yakult nor Danone Actimel are present in the Swedish market.
Oils And Spreads
The second category with much activity in the Swedish consumer market is oils and spreads featuring the new segment of cholesterol-lowering spreads such as Arla's Gaio (recently renamed Lätt & Lagom with added omega-3s), Benecol from Raisio and Unilever's Becel Proactive. Sales of the latter have increased by more than 100 per cent over the past two years, according to Unilever.
Cereals And Breads
The cereal category is the third with functional foods-related properties, and it is dominated by brands controlled by Lantmännen—the Swedish Farmers' Supply and Crop Marketing Cooperative owned by approximately 60,000 Swedish farmers—with a turnover of $2.6 billion. Lantmännen controls companies like Cerealia, which is the marketing arm, and BioDoc, which is the research and development arm.
The strategy of Cerealia (turnover of $660 million in 2001) has been to leverage the hidden nutritional assets of cereals, like oats, and consumer awareness of the benefits of whole grains, with the help of its brands Axa (cereals), Kungsörnen (baking mixes, pasta, flour) and Skogaholms (bread).
The purpose of Lantmännen's research and development company BioDoc is to combine external know-how and research with internal competence and production facilities to create new products. The first commercial product from BioDoc is Magiform, which is a range of products developed to target serious gastrointestinal problems. The Magiform products are produced according to a patented method for accessing and using the unique properties of cereals that can regulate the digestive system. The company initially launched the product as a medical food but plans to get it listed in national retail chains.
The most successful functional foods product in the bread category comes from the privately owned Swedish bakery group Pågengruppen, with a 2001 turnover of $233 million. The bread, Leva, is enriched with omega-3s and has established itself as one of Pågengruppen's top-10 brands.
In sum, the success of functional foods in Sweden can be attributed to the collaborative, unified approach described at the outset of this article. Add to this culture of innovation the intelligent and health-conscious consumer and you have a dynamic recipe for success.
Peter Wennström is an international branding and strategy consultant based in Sweden. He is co-author of The Food and Health Marketing Handbook, recently published by New-Nutrition Business and sponsored by Tetra Pak. He can be reached at www.wennstrom-integrated.com or via E-mail at [email protected]