North America has a colourful new pasture of functional dairy products. A. Elizabeth Sloan, PHD, categorises this innovative sector.
Remember when milk, yoghurt and cheeses summed up the dairy market? The new functional dairy market is leading the way in product innovation in the United States. Savvy marketers are taking advantage of consumers' interest in calcium to target children, athletes and others and using splashy packaging and new products to appeal to them.
Get a load of these: Old Home Foods' Shakers yoghurt drink carbonates and gets frothy when you shake it. Parmalat's Milk-E is an "inner beauty" milk purported to improve hair, skin and nails from the "inside out." Mac Farms' RPM is one of the first dairy drinks in the fluid replacement/sports sector—lightly carbonated and with potassium and magnesium. Glanbia Ingredients USA's TruCal, which was awarded GRAS status by the Food and Drug Administration, is a natural source of dairy calcium complete with the appropriate balance of minerals for optimum bone health, such as phosphorus, magnesium, potassium and zinc. Squeezable yoghurts are coming on strong, and Marigold Foods' new Spoonz yoghurt replete with an edible cookie spoon won't be far behind. Yoplait has introduced a new form, Whips, which is a low-fat, low-calorie mousse dessert.
In the US, cultured dairy products—yoghurt, cottage cheese, fermented beverages, such as drinkable yoghurt and kefir, refrigerated dips and sour cream—are big business, topping $4.2 billion in retail sales in 2001. Yoghurt has more than 50 per cent share of the category, with $2.9 million in annual sales, a 6.6 per cent increase over 2000. Although still relatively small categories, yoghurt shakes and drinks posted $75.7 million in sales, a massive 270 per cent annual increase; dairy refrigerated shakes and drinks rate $105 million—up 246 per cent; and soy milk increased by 64.7 per cent. Nutrition Business Journal estimated the functional diary product segment at $1.1 billion in 2001 and projects this segment will grow to $3.1 billion in 2005 and $4.0 billion by 2010.
Clearly, one of the major drivers of the US functional dairy market is Americans' continuing perception that they need more calcium. Despite the plethora of calcium supplements, fortified foods and beverages on the market, 36 per cent of adults still feel their diet falls short . Nearly half of grocery shoppers say a "good source of calcium" claim is extremely or very important to them, 45 per cent believe it "helps to build strong bones," and 44 per cent think it "may help to prevent osteoporosis," according to Georgia-based market research company HealthFocus.
In addition, 43 per cent of women are very or extremely concer-ned about getting osteoporosis. The Natural Marketing Institute in Harleysville, Pennsylvania, found that 12.6 per cent of American households had a family member trying to manage or treat osteoporosis.
And the demand will continue. In a recent Prepared Foods Magazine survey, 57 per cent of research and development executives at nutrition companies—and 36 per cent at food companies—believe calcium is gaining in importance. Most importantly, the potential for conversion from supplements to foods is considerable. According to Multisponsor Surveys in New Jersey, 52 per cent of all women took a calcium supplement last year, and one-quarter of doctors recommended to their female patients that they eat more calcium-fortified foods.
The medical community projects that the incidence of osteoporosis will jump 19 per cent by 2010—the sixth-largest increase of all health conditions.
Save The Children!
A new emphasis on children's health will focus media attention on calcium deficiencies. The US Department of Agriculture reports that 71 per cent of girls aged six to 11 years old don't meet their daily calcium requirements—nor do 88 per cent aged 12-19, as well as 62 per cent and 68 per cent of boys in those respective age ranges.
Likewise, three-quarters of mothers of pre-teens believe that vitamins can enhance physical performance; 70 per cent, cognitive ability; 62 per cent, healthy skin; 60 per cent, mental performance; and 53 per cent, hyperactivity/attention span. Targeting kids clearly is a very good idea.
As a result, new dairy ingredients should be in high demand. Sportables yoghurt for active kids is high-nutrient and high-protein. Dannon, originally with Actimel in limited markets and now with Danimals nationally, leads the four-pack mini-yoghurt drink craze, which is squarely aimed at children's lunch boxes. Danimals has a range of cartoon-covered mini yoghurt drinks, high-calcium ice creams and high-protein cheeses. These products provide new premium markets for one of Mother Nature's most natural health-promoting foods.
And, if this June's Institute of Food Technologists meeting is any indication, get set for more. Watch for crackling healthy kids yoghurts with Pop Rocks, yoghurts and snacks containing Watson Foods' coloured glitter and Nuvex's new fruit bits and chips, all encapsulated or infused with health-promoting nutrients.
Although awareness in the US of probiotics and prebiotics is very low, half of those in a Prepared Foods Magazine survey say they are interested in learning more about active cultures. With 230 million adults, the US remains the ultimate battlefield for probiotic products. In the survey, 38 per cent of executives at nutritional companies and 18 per cent at food companies said that probiotics are becoming an important food ingredient. Multisponsor Surveys confirms that 73 per cent of consumers would consider taking a fortified food to promote intestinal health and nearly two-thirds a supplement.
Savvy marketers are responding to the need-for-calcium trend. Health-oriented companies like Stonyfield Farm—now 40 per cent owned by Danone—offers a line containing six strains of beneficial bacteria plus inulin: Yo-Self fortified yoghurt for women, Yo-Baby for infants, Yo-Squeez for kids and O'Soy for a non-dairy alternative.
High-colour, high-gloss, eye-catching small bottles have sent flavoured milk and dairy drink sales soaring—and given dairy never-before inroads in convenience stores, vending machines and sports venues. Yet the traditional functional mini-bottle battle is still in its infancy in the US. New York-based market research firm Packaged Facts posts cultured functional dairy beverage sales at $86.2 million in 2001 and projects a $220.7 million market by 2006.
Lifeway Foods—owned 20 per cent by Dannon—now offers a colostrum kefir and Soytreat, a cultured soymilk drink. Stonyfield Farm has a new organic 10- ounce, shrink-wrapped adult yoghurt drink and will launch one for kids this summer, both with six cultures and inulin, too. Yoplait, in partnership with Glanbia, entered the mini-bottle race with the launch of Everybody, which uses Lactobacillus GG and contains 20 per cent of the RDA of vitamins A, B1, B2, B3, B12, C, D, E, folic acid, biotin and pantothenic acid and 20 per cent RDA for calcium, phosphorous and zinc. Brown Cow Farms' Yoghurt Quencher hit the high-protein market with four active cultures, plus 11g protein and 35 per cent RDA for calcium. Queensboro Farms, in Canastota, New York, makers of E-Moo, also offers PERQ, which is tailored to women, and PERQ-T, designed for the elderly.
The opportunities for mini-bottle beverages are clear. With once athlete-only claims—quick weight loss, short- and long-term energy, recovery from fatigue, fat burning, and builds lean muscle mass—moving mainstream, dairy-based mini-sports beverages will be in high demand by America's 46 million regular exercisers.
Whey To Go: Future Bright
Perhaps the greatest industry opportunity lies in the potential for dairy-based health-enhancing ingredients. The tremendous trend to high protein points to success for whey protein, which has a protein efficiency ratio (PER) of 3.2, compared to 2.6 for casein. Any protein with a PER of 2.5 is considered good quality. (See "Supply Portal" for more on protein.)
Whey peptides offer food-product opportunities related to blood pressure; lactoferrin (recently given FDA GRAS status) helps to increase iron and mineral absorption; lactoperoxidase and lactoferrin are antibacterial agents; and countless other whey ingredients have applications in the sports, immune, dental, heart/hypertension, beauty, antipathogenic and weight-loss segments.
A. Elizabeth Sloan, PhD, is President of Sloan Trends & Solutions, Inc.
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