Nutrition industry consultant Julian Mellentin identifies seven key trends for the year ahead — from the mainstreaming of healthy and GI foods, to the boom in bars and beverages, and more
One of the least-noticed developments of 2003 was also one of the most significant pointers to the future. The event was the announcement by BASF, one of the world?s leading ingredients companies, and Fonterra, one of the world?s biggest dairy groups, that they were to jointly fund a $4 million research programme called POSIFoods (Point Of Sale Individualised Foods) to create a system that, Fonterra says, ?will allow customers to choose a snack that meets particular health needs such as low-fat for calorie management, low-cholesterol for heart health, high-calcium for osteoporosis, or low in sugars for diabetics. Consumers will be able to receive a healthy, nutritious snack with a specified nutritional benefit and the convenience of instant vending.?
Personalised nutrition such as this — currently in the form of the choices people make in the supermarket rather than at the vending machine — is already the dominant trend of the nutrition business and its dominance can only increase. The runaway success of brands such as Yakult and Danone Actimel, the energy drink Red Bull, and energy bars such as PowerBar and Balance Bar is not unconnected with the fact these brands are all sold in single-serve packages and targeted at individual consumption.
Longer working hours and the growth of single-parent families and single-person households are the main culprits, according to Andrew Cookson, managing director of the Paris-based market research firm GIRA. These factors are leading to the disappearance of traditional meal occasions and to more and more meals and snacks taken alone and/or on the run.
At the same time, consumers are being bombarded with information about health as never before — from TV, magazines, newspapers and the Internet — so it isn?t surprising to find consumers admitting they find information about health confusing. In response, consumers have decided to make up their own minds about what they think actually works best for them, customising their nutritional choices in a way that matches their individual perceptions of health and their lifestyle needs.
So we shouldn?t be surprised at the popularity of, for example, high-protein, low-carb diets, or of the growth in wheat-free products. Nor should we be surprised that the majority of nutritional brands sell at the niche level. Companies that think they can create new brands that rapidly achieve mass-market scale will be sorely disappointed.
Health is the future of food
Consider the following: In 2003, American per-capita consumption of carbonated soft drinks declined for the fifth consecutive year, to 53.8 gallons.
The percentage of restaurant orders that included French fries peaked in 1997 at 27.2 per cent, since dropping to 23 per cent of orders in 2004, according to NPD Food World.
Kraft Foods revealed in its most recent quarterly results that it saw a decline in sales of desserts, reflecting ?consumption softness in sugar-based varieties, partially offset by continued growth in sugar-free products.? Meanwhile, its salty snack revenues were up high single digits ?as the category continued to benefit from the positive nutritional profile of nuts.?
General Mills, America?s third-biggest food company, recently announced its intention to reformulate its entire breakfast cereal portfolio and make all of its brands with whole grains, enabling them to carry an FDA-approved heart health claim.
Brock Leach, PepsiCo?s vice president of innovation, has forecast that ?wellness will be for the next 15 years what convenience was for the last 15.? In short, the momentum toward health cannot be doubted, and health — or wellness — is becoming the new standard for the industry. Foods and beverages with health benefits can no longer be viewed as some special separate category — every product must have some positive nutritional values.
There?s a case for saying that the food ingredients that will benefit most are those that could be said to be intrinsically healthy — or are perceived by consumers to be. Cranberries, for example, have a positive image for their intrinsic ability to fight urinary tract infections and Ocean Spray has cleverly leveraged this into the supply of cranberries as a health ingredient in a wide array of nutrition bars, breakfast cereals and drinks.
Bars and beverages
This trend to individual consumption has helped drive the rapid growth of nutritional bars and beverages. If you look at where the big growth in nutritional products has been in recent years, it?s in bars and single-serve beverages — products consumed by individuals who are on the go, in a hurry and most often eating alone.
That?s why bars and beverages together account for approximately $14.3 billion of the $22.7 billion sales of functional foods in the US in 2003, according to Nutrition Business Journal estimates. The reasons for the beverage boom aren?t hard to find: Most health-oriented drinks are based on carriers that have an intrinsically healthy image with consumers — juice or yoghurt, for example. What?s more they offer convenience: The most successful brands are usually also ultra-convenient, single-serve, on-the-go products that you can grab for a morning or afternoon snack and that don?t require you to change your eating habits.
Hence, if your company is developing or marketing a new functional ingredient, you need to be able to demonstrate to your brand-owning partners exactly how your ingredient can be formulated into beverages and nutrition bars; even then you could be excluding yourself from (at least) half of your potential marketplace. And if you?re a producer of consumer foods, you should be asking yourself — as some already have — where beverages and bars might fit into your product portfolio.
Daily dose innovation
When companies like Danone and Unilever take up an idea and make it central to a number of significant product launches, it?s time to sit up and pay attention.
The experience of Europe?s probiotic daily dose market shows what is possible when you bring together packaging innovation and marketing based on simple wellness messages. It?s a market that didn?t exist in 1994 — and, in 2004, is worth, at retail prices, around $1.2 billion in sales, Europewide.
Europe?s probiotic daily dose market was created by Japan?s Yakult Honsha, which launched its 65ml product in the Netherlands in 1994, soon followed by French dairy giant Danone with its 100ml Actimel drink. These small bottles were an innovation back in the mid-1990s — and one that many believed wouldn?t work in the European market (rather as many today say they won?t work in the US). What?s more, small bottle beverages are almost a ?market standard? in many countries, particularly in Asia, and in Mexico, for example, Yakult sells one billion of its little bottles each year.
The success of the probiotic daily dose has spawned in 2004 many new ?daily dose? brands with new health propositions, marketed in distinct small bottles that provide servings of 65ml-125ml. One of the most dynamic companies in exploiting the daily dose packaging format is Danone, with two major launches ongoing.
Zen is a fermented dairy drink. Each 100g bottle — a highly distinctive spherical shape that is itself an innovation and a world-first — delivers a 90mg dose of magnesium, equivalent to 30 per cent of the RDI. The product label and promotional materials discuss the benefits of magnesium as an ingredient for relaxation. Taken together, the pack design, the choice of ingredient and the health benefit represent three types of innovation in one product. Marketed in Belgium and Ireland, Zen is slated for Europewide rollout.
Danacol comes in 100g bottles, containing 1.6g plant sterols in each bottle and is marketed with statements such as ?help to significantly reduce cholesterol? and ?Consuming 1.6g of these plant sterols per day, as part of a healthy diet?inhibits the absorption of cholesterol in the bloodstream?. Danacol launched onto the French, UK and Irish markets, with a pan-European rollout of the product due to take place in the near future.
And these are not isolated examples: Unilever, too, this year launched a cholesterol-lowering daily dose product, delivering a single 2g dose of plant sterols, and Benecol-branded products have taken the same course, with 70ml dairy drinks delivering 2g of stanol esters — a big improvement over getting them from three servings a day of Benecol spread.
This may just be the beginning and a few years from now we could all be drinking 100ml bottles of juice, soy milk, yoghurt drink or water delivering benefits ranging not only from cholesterol-lowering, stress relief and gut health listed above, but eye health, joint health and many, many more.
On the verge of a GI frenzy?
Another development that could signal a new trend is the decision by Tesco, one of the world?s biggest food retailers, with stores in markets as far-flung as China and the Czech Republic, to have 250 of the own-label products it retails in the UK tested and labelled as low or medium GI. Tesco believes that GI will be a valuable tool not only for diabetics but for everyone interested in weight management — a company spokesperson referring to it as ?the new Atkins?.
Ron Bailey, an acknowledged expert on the Japanese functional food market, noted in a recent conference address that there has recently been an upsurge of interest in Japan in products that control blood glucose and highlighted that, in 2003, an unprecedented 12 per cent of the products granted health claims under Japan?s FOSHU regulatory system were for the claim, ?Good for those who have high blood pressure.?
On the other side of the world, Markku Patajoki, general manager of the oat business unit of Finn Cereal, Finland?s biggest cereal company, recently told New Nutrition Business that the future for oats lies in the GI concept; hence his company had made a strategic decision to focus on promoting its oat ingredients with the GI concept, putting the better-known cholesterol-lowering message into second place.
In the US meanwhile, the appearance of a number of ?low GI? bars at the recent Natural Products Expo East tradeshow in Washington, DC, notably those of Alberta, Canada-based Solo GI Nutrition, provoked a frenzy of interest among visitors to the show.
In a sense GI makes a logical locus of interest, particularly in the wake of America?s low-carb frenzy, since many low-carb diets are in effect also low-GI diets, even if only as a result of avoiding all carbohydrates, even those with low GIs. Where GI communications seem to score is that the term ?low GI? can be said to be, according to professor Jeya Henry of Oxford Brookes University: ?a shorthand for healthy foods? — an easy-to-understand symbol for foods that contribute to a healthy diet.
It?s worth reminding ourselves that the origins of many of the most successful functional brands and functional product concepts lie in Asia, and in particular Japan. Probiotic dairy drinks, energy drinks, enhanced waters — these have all been long-established in Asia. Red Bull, for example, was on the market in Thailand for many years before an Austrian company licensed the concept. And soy may seem like a high-growth wonder-food in the West, but it has for centuries been part of the Asian diet.
Asia is also the origin of the ?daily dose? product packaging concept, which has since swept the world and looks set to become as everyday in Europe as it is in Asia. Even America will not be immune. Indeed the idea that diet is an integral part of good health, the underpinning of the functional foods concept, is also an Asian idea. Anyone looking for new trends, new product ideas and new technologies could do worse than to look for them in Asia first.
But as well as ideas coming out of Asia, there?s also the scope to take great ideas there and achieve results on a scale that might only be dreamed of elsewhere. To give just one example, Swedish R&D-based company BioGaia may be located just outside Stockholm but that hasn?t stopped it from generating a third of its sales in Asia — a proportion that?s likely to rise since one of China?s biggest dairy companies decided to commercialise BioGaia?s probiotic drinking straw, a delivery system for the company?s patented probiotic strain.
Down the supplements aisle
Two years ago, we highlighted that an increasing number of ingredients found only in the dietary supplements aisle were beginning to find their way into beverages — take note, in beverages, not foods yet — and that this signalled a bigger trend. As an example of this we used the San Francisco-based company Joint Juice, which offers per bottle some 1,500mg of glucosamine, which had hitherto only been available in supplements.
We believe that the trend is still there, but the penetration of many — perhaps most — health ingredients in foods and beverages has been even slower than we believed at the time. Marine omega-3s are a very good example. They continue to grow impressively in supplements — according to Nutrition Business Journal the value of sales of marine omega-3 supplements was over $200 million in 2003, a 40 per cent rise on the previous year, thanks to the efforts of companies like Ocean Nutrition Canada, Omega Protein and DSM Nutritionals.
Yet in foods and beverages, progress has been slight. In Europe, for example, just 50 food products are fortified with omega-3s — and half of these use the much less efficacious flax-based vegetable oil form of omega-3. Most of these brands sell as ultra-niche products, held back by the fact that although measured consumer awareness of omega-3s may be high, awareness isn?t the same force as a motivation to purchase. It?s a similar story in the US.
Lutein is another good example of the problem of moving beyond supplements. Kemin Foods, the market leader in lutein, has secured a place for its ingredient in more than 1,000 dietary supplements, yet in the last three years has only been able to get lutein into but a handful of beverage brands.
CLA has been shown to have an effect of reducing body fat by up to five per cent. Recognising that the active ingredient is unfamiliar to the Spanish consumer, CAPSA makes a considerable effort to communicate the new product range, but the emphasis of the communications is not on science but on convenience, good looks and slimness — wellness benefits that would interest most people.
It wasn?t very long ago that ?explosive growth? was being forecast for plant sterols, omega-3s, lutein and the like. The reality, however, is of very slow growth in foods and beverages, with some ingredients enjoying much greater success in dietary supplements.
If you want to accelerate the movement of your health ingredient into a market beyond dietary supplements, you might be wiser to market wellness benefits rather than those connected to disease, and ensure that your brand partner markets the ingredient in a product that is a single-serve beverage (perhaps a daily dose type, of 100ml bottle size). You might also be more active looking for partners in the more innovative Asian markets than in some Western countries.
Julian Mellentin is editor of New Nutrition Business, director of The Centre for Food & Health Studies, and co-author of The Functional Foods Revolution. Respond: firstname.lastname@example.org All correspondence will be forwarded to the author.