Optimism reigns despite tough economy

Experts believe functional products can ride out financial storm

Tumbling stocks, job losses, frozen housing markets. The economic picture is grim. But how will global recession impact dietary supplements and functional foods?

The Washington, DC-based Council for Responsible Nutrition is taking an optimistic view. Its own research indicated 51 per cent of US supplements users would not let the state of the economy change their supplement-purchasing habits.

Nonetheless, the survey also showed 30 per cent of supplements users thought tougher times would mean that, while they would continue to purchase supplements, price would become more important to them. An additional 13 per cent said they would probably purchase fewer supplements in the future.

Julian MellentinBut a recession doesn't necessarily mean calamity, according to Julian Mellentin, editor of New Nutrition Business, who says it is possible to look to the East for signs of how things might pan out. "People have become conscious of the need to make healthy choices in a way that they weren't in the last recession, in the early 1990s, so in the West there's no lesson from history," he says.

"For that you have to look to Japan. Japan's functional-foods market was still embryonic in 1990, when the country embarked on its 'lost decade,' a financial crisis that led to 10 years of little or no growth. Yet for nutrition and health in Japan, the 1990s were not a lost decade. By 2001, the combined retail value of supplements and functional foods was more than $23 billion. The economy went down and nutrition went up.

"In the West, 20-25 per cent of consumers are strongly motivated by health and will most likely include one healthy choice in their shopping. That choice will be based on whether the product is in a format that matches the consumer's lifestyle, offers a benefit they believe is relevant, from an ingredient they accept, under a brand they trust."

Janne Sande Mathisen, product development director at Norway-based Pharmalogica, which produces omega-3-based supplements and drinks under the Smartfish brand, agrees. "Personal health seems to be an area people continue to care about during recessions," she says. "However, consumers will be more selective in their purchases to make sure products provide value for money. Functional foods with very low levels of active ingredients compared with recommended daily dosages, for example, may suffer as they often seem costly for the limited effect they provide."

Lori CovertLori Covert, VP of marketing and communications at Nova Scotia-based omega-3 supplier Ocean Nutrition Canada, believes the kind of benefit offered by a product could determine whether it rides the storm. "Some industry sectors may feel the pinch a bit more," she says, "the weight-loss category, for example, because there are competing, lower-cost ways to lose weight, such as dieting and exercising. But we do not expect that the omega-3 category will be affected, as it offers several health benefits.

"In a worst-case scenario, if there is a deep recession, weaker players may go out of business and after the recession the market leaders will emerge stronger with bigger market share."

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