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Even EFSA Can’t Stop ProbioticsEven EFSA Can’t Stop Probiotics

Latin America & Asia emerge as strong growth markets 

December 15, 2013

9 Min Read
Even EFSA Can’t Stop Probiotics

In the U.S. probiotic market, it’s tough to find much sour news. What was once a niche health aid has stormed into the mainstream in relatively little time. Watch TV for an hour and you’re bound to see a commercial touting some type of probiotic product, whether it’s a supplement sold at the drugstore or a celebrity-endorsed yogurt.
Consumers are buying the buzz, because, as any probiotics purveyor will tell you, these beneficial organisms are not just hype. More and more research supports their ability to promote healthy digestion, optimal cardiovascular function, good mood and more.
Market data shows a healthy U.S. market at $1.1 billion estimated 2013 sales on 19.6% estimated growth, according to NBJ research, and the major probiotics players all report robust yearly increases. “The U.S. market remains strong,” says Kevin Mehring, president and CEO of UASLabs. “The people I speak to in the industry are seeing 15% or higher growth, which is stronger than the 10% typically reported by industry followers. There’s a lot of upside.”
While the American probiotics scene is rocking, that’s not necessarily the story worldwide. Nowhere is the market totally tanking, but in some regions, growth has stalled or falls far short of the U.S.’s rapid pace. Meanwhile, other areas are experiencing comparable—even greater—growth than the U.S.
Driving this global disparity is a complex mix of regulatory and cultural factors. And since the leading probiotics companies operate on a global scale, they must nimbly navigate these many, highly differentiated markets, which is no walk in the park. Here’s a closer look at the current global mosaic by key region.
European Union: stuck
Page37_20Chart.JPGEveryone agrees that Europe has quickly become one of the trickiest probiotics markets, thanks to recent regulatory changes. “The European Food Safety Authority (EFSA) decided that the term ‘probiotic’ in itself is a de facto health claim,” says Mike Bush, senior vice president of Ganeden Biotech and vice president of the International Probiotics Association. “As of December 2012, you can no longer use the term ‘probiotic’ to reference any probiotic-containing product in the EU. You can say only that a product contains a specific strain, and it’s up to consumers to figure out that it’s a probiotic. This has made for quite an interesting year.”
According to Bush, the new regulations put the brakes on a previously flourishing market. “Before EFSA’s ruling came down, most industry players had enjoyed good growth in Europe, but that has slowed significantly,” he says. “Perhaps sales haven’t stalled too much, but product launches have.”
Indeed, EFSA has made bringing new probiotic products to market a huge headache. “If you can’t communicate a product’s benefits, it’s hard to do new launches,” says Lars Bredmose, senior director of commercial development of probiotic cultures at Chr. Hansen. “So yes, new launches are down significantly.”
Beyond what you can’t list on labels, EFSA’s über-strict research stance is also stifling product launches. “If you want to say that a strain supports digestive health, you need clinical data on a healthy population,” says Bush. “But it’s very hard to design a study on healthy digestion. If your study shows that the probiotic improved anything, then EFSA will argue that there must’ve been a problem. These trials cost millions of dollars, and then EFSA just says, ‘nah.’”
Bredmose agrees: “Rather than protecting consumers, this feels like censorship on developing science. In the beginning, we supported EU initiatives, but they took it one step too far.”
Lack of product launches aside, sales haven’t suffered too much, thanks in part to European consumers’ already-solid relationship with probiotics. “Luckily, Europeans are more familiar with and further along in understanding probiotics than consumers in the U.S.,” Mehring says. “That’s the good news. The bad news is you can’t say probiotic on a package, so you better hope European consumers know what a genus and species mean.”
And if they don’t? Good luck getting them to buy your products. “As a marketing company, you want to bring in new consumers,” Bush says. “The current labeling rules makeit difficult for companies to get into the heads of potential customers.”
Still, many insiders point out that sales and growth potential vary by European nation, so not every market has been hurt by EFSA’s rule changes. “Europe is quite different from country to country, even though to the U.S., we look like one big thing,” Bredmose says. “Some countries, such as Germany and Austria, use health claims visibly, so the EFSA ruling has had negative effects. Others, like France, never used health claims. The word ‘bifidus’ is what people have always seen and have associated with health benefits. Since there are no regulations against using ‘bifidus,’ we can continue marketing as before, and there’s been no real impact.”
Scott Bush, vice president of marketing at DuPont, agrees that sales of probiotic supplements specifically have stayed strong in many nations. “Last year growth was somewhat limited in Europe, but this year we’re seeing more growth, especially in Germany, the Netherlands, Italy and the Scandinavian countries,” he says. “It’s double digits in certain countries. Business would probably be even better if we had approvals, but has this ruined the market so far? Not based on sales figures.”
So will things eventually change in Europe? Many insiders think so, but it will take time and effort from the industry. “The key players nationally and globally are carefully watching this issue, and pressure will continue to be exerted toward EFSA, not from EFSA,” says Jim Griffiths, vice president of scientific and international affairs at the Council for Responsible Nutrition.
“The International Probiotics Association, Global Alliance for Probiotics and other groups are all working hard to develop a solution,” says IPA and Ganeden’s Bush. “We’d like to come up with a general descriptor that we hope EFSA will allow. But looking into a magic ball, I don’t know when this will happen.”
Bredmose believes it could happen in the not-so-distance future. “I think in three to five years, the political winds will shift to allow scientific developments in probiotics, and we’ll be able to talk about studies showing health benefits,” he says.
“Right now the issue is a catch-22 for politicians. Any who suggest regulatory changes look like they’re protecting industry and not consumers. That’s political suicide. However, eventually even politicians will see probiotics’ benefits and realize that they make for a healthier population.”
Latin America: booming
While the European market commands considerable attention, Latin and South America also present ample opportunities—and challenges. MostPage38_20Chart.JPG companies concur that Latin America, specifically, is rife with potential. “Latin and Central America are absolutely booming,” says IPA’s Bush. “The amount of interest the industry is seeing in those regions is overwhelming.”
Meanwhile, South America seems slightly slower, but opportunities are mounting. “In South America there are not as many existing probiotic products on the market as food supplements, but we’re getting more requests all the time,” Mehring says. “The regulations have traditionally been tough.” The rigid regulatory environment mostly emanates from Brazil. “Brazil has a very pharmaceutical-driven market, and that filters into other countries,” Mehring adds.
DuPont’s Bush says Brazil’s regulations are tougher than the U.S.’s. “You need to get approval in Brazil before launching products,” he says. “You must have good science. But if you do things right, you can get approval. In my mind, these regulatory hurdles are actually good. They reward companies that do good science and ensure that the products that go to market are solid. We’re going to keep running clinical studies with EFSA in mind, but also Brazil.”
Bredmose concurs that Brazil’s list of preapproved strains and health claims is very hard to change. “It’s a lot of work to get on that list,” he says. “But once you’re on it, you can make bold statements about your products—based on sound science, of course.”
As for the rest of South America, the landscape differs considerably from country to country. Although Brazil has marked influence, “the rest of South America has looked to the EU,” says Bredmose. “They were on the verge of copying EFSA’s ruling but saw how that’s limiting growth. They’re holding it back a bit now.”
Page39_20Chart.JPGAsia: intuitive growth
Asia has become a huge focus for the industry. Consumers in several countries have embraced probiotic supplements and foods wholeheartedly.
Asia offers an interesting market opportunity,” Mehring says. “One reason is that they like U.S. products in general, but also, Japan is one of the biggest markets because it’s the longest running market for fermented foods, which has translated to probiotics. The Japanese get what probiotics are because of kimchi and other foods.” This understanding is also sparking increased interest in probiotic supplements. “They’ve become more open to supplements, as have consumers in other Asian nations, who typically are not pill poppers like U.S. consumers.”
An increase in dairy consumption, especially in China, has also worked in probiotics’ favor. “Ten years ago, nobody in China had fermented milk, and now consumers have it every day,” says Bredmose. “Probiotics come natural to them, so it’s a really good story. They see the need for digestive support and immune boosting.”
As for regulations, it varies wildly by nation. “In some markets there is little regulatory framework, but other countries, like Malaysia, are among the toughest for our customers to get products approved in,” Mehring says.
China is no cakewalk either. “In China there is a demand to prove ingredients work and to submit documents to the government,” Bredmose says. “But that protects the industry by keeping away snake oil, so people will gain more trust in proven products. Regulations are quite tough, and we spend lots of resources presenting science to authorities in China, as well as in Japan, Thailand and Indonesia.”
In search of universal standards
Clearly, probiotics’ global growth potential is exciting. Doors are opening to new markets worldwide. Established markets are either booming or staying somewhat steady—and if they’re not, experts strongly believe they’ll rebound once stagnating regulations evolve. IPA’s Bush believes universal standards would help. “As an industry, we would love global standards for probiotics because we’re rapidly expanding into new areas, and individual countries have their own standards,” he says.
Although it takes time, effort and significant financial investment for probiotics companies to operate in and expand into so many markets, most believe that this keeps everyone on their toes and prevents shortcuts and shoddy products. Plus, it keeps driving new science.
“The biggest positive I see long-term is there’s so much high-level probiotics research being done around the world,” Mehring says. “Experts are building on what we already know—that the gastrointestinal tract is the center of health and affects so many functions of the human body.”
This expanding knowledge base and acceptance will undoubtedly drive business in the coming years. “As documentation keeps accumulating, new benefit areas are discovered and the medical community becomes more embracing, we’re going to keep seeing expansion,” says DuPont’s Bush. “As we’ve seen in the supplements market over the years, hyped ingredients without good science fly off shelves for a year but then peter out. Probiotics are not a flash in the pan. Their growth potential is phenomenal.”

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