As we wrap up our research for Nutrition Business Journals’ inaugural Healthy Kids issue, it’s clear to us at NBJ that there are plenty of opportunities for innovators and entrepreneurs to enter and make a splash in the U.S. children’s nutrition market. In fact, Mark Trotter, CEO of Yo-Naturals, a California-based healthy vending company, thinks that the kid’s food market has booming potential right now. “Opportunities are endless for savvy product developers and marketers,” Trotter told NBJ. “Kids are very interested in healthy options. People think that because kids are kids they want to eat Hershey’s bars, but they don’t.”
Still, breaking into and succeeding in the children’s nutrition market remains challenging, particularly for small companies. “For a startup, it’s really expensive,” cautioned Julie Smolyansky, CEO of Lifeway Foods, which manufactures a popular children’s kefir beverage under the brand ProBugs. “The food business is really brutal, very expensive and it’s very hard to get capital. So be extremely aware of what you are getting into.”
Certainly companies are becoming more sophisticated in the way that they formulate and market children’s products, but there still appears to be a substantial gap between what manufacturers are producing and what parent’s desire. As Denise Devine sees it, much of this is due to a lack of true innovation in the children’s nutrition category. “Sometimes bigger companies confuse iteration with innovation,” said Devine, president and CEO of Froose, which makes a new kids drink that is packed with organic whole grains and fruit. “They might add a nutrient or two, but I don’t see a lot of turning product development on its head. If you look at what is happening in the food business, all the innovation comes from small companies. The companies that have the resources, I don’t see them taking the risk to do something very innovative. We are moving along a continuum and anything that’s better is great, but I don’t see that we are moving all that quickly in that direction.”
Financial hurdles will always be present for companies trying to break into the market with a better-for-you food or beverage product, but a down economy may be the best time for smaller, entrepreneurial companies to develop the new products that the larger CPG companies will one day want to buy, Devine said. “Research and development is the first thing that goes with big companies [during a recession]. They ignore new products and focus on their core brands. So when the economy returns, they are looking for new products.” Devine told NBJ that she hopes to turn her startup company into a nationally recognized brand in the next five years.
NBJ’s Healthy Kids issue will feature interviews with Trotter, Devine, Smolyansky and numerous other nutrition industry executives, as well as a complete analysis of the U.S. healthy kids’ food market in 2008. To order a copy of the issue, subscribe to NBJ or download a free 32-page sample issue, go to www.nutritionbusinessjournal.com.