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New Nutrition Business: Key Trends in Food, Nutrition and Health 2010

Each December the globally-respected consultancy, New Nutrition Business (NNB), publishes its annual review of the 10 Key Trends in Food, Nutrition & Health. These are the important trends which it believes will shape the business of food and health not only in the next 12 months but for many years beyond  trends which every company must take into account in developing a food and nutrition strategy.

The focus is not on short-term fads but on the underlying key drivers for our industry. There’s a big difference between a trend and a fad. Many of the forecasts made for functional foods and beverages in recent years have proven to be wrong such as the booming market for beauty foods that were promised, or claims that eye health would be big. Both have turned out to be no-go areas and are likely to stay that way for a long time to come. What have emerged instead are some consistent, long-term trends, each of which presents opportunities for companies to carve out a place for themselves.

Bones and Movement enters NNB’s top-10 trends for the first time. It’s a trend that has been gathering momentum thanks to the increasing number of people over the age of 40, who have more reason to be aware of the health of their bones and joints. It’’s a niche that is getting bigger fast and it’s a significant area of opportunity in every continent and one that has not been fully exploited anywhere except in Asia.

The potential of bones and movement has already got the attention of Europes most innovation-minded companies, where the new ultra-restrictive health claims regime may leave bone health as one of the very few permitted claims.

But, a big but, from NNB’s Julian Mellentin: “Whatever the benefit your brand is offering, its key to make sure there is a clear benefit platform and that consumers can quickly feel or measure or experience the benefit thats how people see theyre getting value for money,’ he observes.

This report draws on material published in the monthly journal New Nutrition Business, which provides case studies and analysis of success and failure in the global nutrition business. It is used by more than 1,700 corporate subscribers in 42 countries.

Herewith a synopsis of NNB’s Ten Key Trends and Seven Micro Trends.

Key Trend 1: Digestive health – a mega-trend moves beyond the tipping point

Activia
Women have a strong interest in digestive health. Bloating is a particularly pervasive issue for many women and addressing the feeling of bloatedness has long been a focus of advertising for brands such as Activia.

Products for digestive health account for the single-largest segment of the functional foods market in Europe, Japan and elsewhere and will remain so for some time to come. Digestive health will probably also become the largest part of the market in the US

The value to consumers of products that can help them maintain good digestive health is reflected in the outstanding sales performance of many digestive health brands even while the global economy was in recession. It has become clear that while consumers are willing to economise in some areas, digestive health is not one of them. This is a testament to the power of feel the benefit (see Key Trend 3).

In probiotic products dairy is the dominant format and we expect it to remain so. However, some non-dairy forms, such as juice, will take a large niche position. No other food forms will have more than a toehold. Dry form probiotics will exist but will be ultra-niche sellers.

Fibre is at last coming of age and added fibre will become an industry standard in many categories such as bread.

However, the biggest opportunity lies in the potential to create fibre expert brands similar to the probiotic expert brands Activia and Yakult which deliver an effective dose of fibre so that people can feel the benefit and are well-supported. The first one to emerge is General Mills Fibre One, which has achieved 20% annual growth even at premium prices and even in a recession.

Product benefit focus will remain on laxation and intestinal transit time. Opportunities exist for health claims for products that can use human clinical studies to demonstrate the effect even in Europe.

Key Trend 2: An intrinsic health benefit that’s also convenient

Innocent Veg
The Innocent Tasty Veg Pot range was launched in 2008 as a four-strong range of vegetable-based ready meals, each of which contains three of the recommended daily intake of vegetables.

Marketing the intrinsic health benefit of a food or food ingredient continues to be the most popular health marketing strategy in the industry.

The message that a food or food ingredient has a natural and intrinsic health benefit has two advantages for innovative food and beverage manufacturers, big or small: it is appealing to consumers, who will accept it without hesitation, and it is one of the best ways to address increasingly restrictive legislation around health claims.

Companies may be forbidden from communicating health benefits to consumers, but there is nothing to stop journalists writing about the natural health benefits of a food or ingredient. Savvy companies will help them to access information about relevant scientific research.

The most successful products with natural and intrinsic health benefits are those that deliver that benefit in a format usually a beverage or snack thats easy for consumers, as the examples of Innocent’s Veg Pots, almonds, and coconut water demonstrate.

Key Trend 3: Feel the benefit the most powerful marketing message

Fiber One
In the US, General Mills’ Fiber One breakfast cereal brand increased its sales by 20%, to over $225 million (€150 million).

One of the biggest marketing advantages a product can have and the surest way to create brand loyalty is to deliver a benefit that the consumer can quickly see or feel. As we predicted last year, offering a benefit the consumer can feel has become even more important in an economic environment in which people are becoming more careful than ever about how they spend their hard-earned cash and more focused on value-for-money.

 Having a benefit that consumers can feel is already the underpinning of many successful brands and the categories that deliver a tangible benefit quickly, such as digestive health and energy drinks, are already the largest segments of the functional foods market, worldwide.

We are not suggesting that a quickly-felt benefit should be your only strategy there are many, many benefits that are not immediate but which motivate consumers strongly and have growth potential, such as the perceived benefits of antioxidants, but a tangible benefit is a good insurance policy.

Products that offer tangible benefits are already able to earn premium prices and this will continue.

In addition to digestive health and energy, products connected to weight management, sports nutrition and joint health all have feel the benefit marketing potential.

If your benefit is longer-term in effect and/or can’t readily be seen, invest in marketing techniques that demonstrate the effect, such as the Anlene Bone Scans.

Key Trend 4: Energy a world of untapped opportunities

Energy Shots
The response of big energy drink brands to the energy shot phenomenon has been to extend their brands into shots, but this oes nothing to address the unserved older consumers and female market, to whom these brands have little appeal.

One of the biggest advantages a product can have is to deliver a benefit that consumers can quickly see or feel (see Key Trend 3). Energy drinks deliver a benefit that is immediately effective and detectable and this benefit explains much of their global success.

The energy drinks market is one of the biggest success stories of the functional food revolution that began in Japan in the 1950s even today in Japan, the biggest functional brand is still an energy drink.

Lack of energy is a key consumer interest for stressed executives trying to stay on top of their responsibilities, for harassed and time-pressed mothers, for older people who want to stay active, or for anyone struggling to get through a sleepy afternoon in the office.

Because of the focus in the West at least of the brands in the established energy drink category on males aged 18-24, there remains a wealth of untapped opportunities. The shot format has still a huge potential to be fulfilled, primarily from creating brands and concepts with better appeal to older consumers and particularly women.

Super-convenient daily dose energy drinks shots are creating a new category in the US and the UK, with the US market alone soaring to perhaps $1 billion (660 million) in retail sales between 2004 and 2009.

There are a wealth of opportunities to develop new product formats, use new ingredients with a higher natural and healthy score than found in the current energy drinks, and to use new carriers something other than caffeinated beverages with better health credentials, such as dairy and fruit juices.

Key Trend 5: Fruit and superfruit the future of food and health

PomX
Pom Wonderful has launched a shot-type product based on its antioxidant PomX, extracted from the peel and membrane of the fruit. Each shot packs a concentrated 1300mg punch of POMx. It is said to have more free-radical fighting power than red wine, grape seed and acai extracts.

Alongside dairy, fruit will be a key driver of the food and health trend. Fruit is becoming one of the most important vehicles for delivering a wide array of health benefits to consumers.

Sales of niche fruits and fruits with some novelty value will continue to grow strongly. Fruits with a health benefit that can be substantiated by science those with the most scientific studies behind them will be the most successful.

Convenience is the key, and only the fruits with convenient and healthy credentials such as blueberries will continue into any growth. Main growth will be in fruit in more convenient forms, such as packaged snacks, and beverages.

Packaging innovation is key to differentiation and market success. Daily dose formats in particular are an area that has yet to be developed.

The fruit drink market will not only grow but more sub-segments will appear, targeting more specific health conditions than the current high in antioxidants message that is used as the standard communication for superfruits.

In Europe, despite the restrictions on health claims, fruit provides the opportunity to create health brands without claims by choosing fruit with a positive health image and ideally an association with specific benefits and delivering them as a snack or beverage in strongly differentiated packaging.

There is an unfulfilled opportunity to create a new category of juices with digestive health benefits, based on fibre or probiotics.

Key Trend 6: Antioxidants: Big in America, dead in Europe?

Antioxidants
Nescafé: now marketed as a source of “Natural coffee antioxidants”.

Messages about antioxidant content have become the most commonly-used messages on food and beverages worldwide. But a year from now this trend while continuing to thrive in most of the world might be dead in Europe, killed off by the new health claims system.

Although very popular and because of its popularity the antioxidant message no longer packs much punch. It has ceased to be a point of difference and though it is a message that benefited the first brands to use it, it now has limited effect in increasing sales. Rather, the antioxidant message has settled down as a broad wellness message interesting to consumers, but not by itself a driver of sales.

To be effective, brands need to move beyond the presence of antioxidants to link directly to a specific benefit such as heart health that is meaningful to the consumer. It is often overlooked that this is the strategy long adopted by the most successful high antioxidant brands such as Pom Wonderful and Ocean Spray, which have long focused on a specific health benefit, supported by science.

Successful brands must also invest in innovative packaging, effective marketing communications and good flavours.

Key Trend 7: Weight management

Kellogg Special K
Kellogg is always creating new interest in its Special K brand. On a price per kilo basis Special K sells at a 150% premium to Cornflakes and a massive 270% to private label products.

Good marketing communications have made Kellogg’s Special K cereal the biggest real weight management success story in Western markets.

Key to Special K cereals success is that consumers quickly feel a benefit, with the drop a jeans size challenge helping to focus their minds on what they’re feeling.

Because their effects are easily felt, products that induce a feeling of satiety or fullness are likely to be the biggest area of weight management. Product formats such as snack bars, savoury snacks and crackers are among those with the most potential, partly because of the existing association in consumers minds between eating such snacks and feeling full.

Soup or other meals that offer a satiety benefit could have promise as consumers increasingly move away from dieting products towards a broader healthy lifestyle they would be normal foods that help them snack less.

Weight management is still an embryonic market with opportunities for companies that are no longer found in more mature sectors.

Key Trend 8: Healthy snacking

Prunes
Today, consumers are increasingly presented with snack product formats and ingredients that would have been unimaginable even as recently as five years
ago.

Demand for snack products is increasing and can only grow more because of the gradual disappearance of traditional meal occasions.

Products which you can grab for a morning or afternoon snack, which fit neatly in your pocket or bag and which don’t require a change in eating habits are the main growth categories.

A focus on building markets for new snack concepts rather than simply following on with predictable products has already led to the creation of some innovative snacking concepts.

Fruit in particular benefits from being delivered in a more convenient form a snack or drink than its natural form, something marketers are beginning to flag up for consumers: one company tags its fruit products Fuss-free fruit. There is a marked trend for snacks to be marketed for their intrinsic, natural healthfulness.

Healthy snack products targeting breakfast have promise because this is one time of day when consumers remember to eat healthily yet are under time pressure.

Key Trend 9: Packaging and premiumisation

Fruit2Day
 Launched in 2004 in the Netherlands, each 205ml bottle of Hero’s Fruit2Day is a healthy snack that delivers two of your recommended daily servings of fruit. With a distinctive bottle that strongly visually reinforces the benefit, its current retail price equates to €5.25 a litre, an impressive 80% premium over a 1-litre pack of Tropicana Pure Premium orange juice. Fruit2Day is thought to have over €30 million in retail sales.

More and more companies are learning to apply two of the key lessons of the last 15 years, which are that: a) packaging innovation is key to success in the business of food and health; and b) so too is focusing on lower-volume, higher-margin niches of loyal consumers rather than targeting the price-sensitive mass market –- these niche consumers are the same ones for whom packaging innovations have most value.

There isn’t much point in putting in a major effort to create a health brand, with all the development costs and higher ingredient costs that often entails, unless youre going to be able to earn superior retail prices and therefore higher profit margins.

Health is an ever-increasing number of niches whose appeal is primarily to the 20%-25% of consumers who are actively health-conscious, who have on average higher educational levels about nutrition, and who are willing to pay to maintain good health.

Companies who target the niches of the most-health conscious consumers find loyal consumers with high levels of repeat purchase 80% repeat purchase rates are common. Brands targeted at the most health-conscious niches have thrived even in recession, even in very price-sensitive markets, even at premium prices.

Key Trend 10: Bones and movement

CalciFort
Launched by Friesland Campina in Belgium, CalciFort offers a dose of 400mg of calcium in each 100ml bottle.

Movement may sound like a strange name for a trend  but it’s a more relevant description than bone health or joint health, neither of which by itself captures the niche opportunity that is emerging in some markets.

For companies that are willing to provide the right marketing support for a product that can deliver an effective dose of the active ingredient in a clinically-proven, ultra-convenient, premium-priced, niche, delicious-tasting form, and are willing to grow the brand slowly (as Anlene and Elations have done) there is scope in many markets, and particularly in those many developed countries with ageing populations, for niche brands with a bone-joint-movement health benefit platform.

Micro-Trend 1: Protein power

The image of protein as a body-builder’s food is changing and protein is making headway in products aiming for a wider consumer audience.

Proteins appeal is growing among normal people with some of the more health-conscious people consuming more protein, but with a focus on leaner and higher-quality sources.

This trend has already helped drive the growth of brands such as Quorn, which uses protein from a novel source.

Dairy and soy protein have gained most attention, thanks to the science behind them and their cost. Research behind proteins is growing and good links have been established to satiety making protein in combination with fibre the most-often used basis for foods with a satiety benefit.

The most popular formats for protein are bars and beverages, because they are so convenient. However, protein is beginning to make inroads into other categories mostly together with fibre as a basis for a satiety claim including yoghurts and breakfast cereals.

Although consumer and industry interest in the benefits of protein is growing no company has yet figured out how to make protein-fortified products taste good enough and have a sufficiently compelling marketing message that they become truly successful. Outside the niche of sports nutrition devotees, many brands have performed poorly, even Kellogg encountering challenges with some of its high protein Special K products.

Micro-Trend 2: Kids nutrition

Despite recession, parents continue to be motivated to buy healthy food for their children, even economising in other areas to afford it.

Being as natural as possible and being able to offer one or more of the benefits of being free from one or more of gluten, wheat or dairy (for example) is essential for any brand targeting children and health-conscious parents.

Digestive health products are an untapped opportunity for kids products regularity is a big issue with kids.

Packaging design, portability and portion size the three Ps are important elements in differentiating a kids product and maximizing its appeal both to parents and to kids.

Micro-Trend 3: New life for heart-health and cholesterol-lowering?

Markets for cholesterol lowering foods are much smaller than forecast 10 years ago, but the rapid ageing of the population is now causing increases in sales.

In Europe in particular, approval for a cholesterol-lowering health claim, together with an ageing population, has boosted sales of these foods in Italy, for example, Danones Danacol cholesterol-lowering brand enjoyed a 28.8% increase in value to August 2009, even while the Italian economy contracted by 6%.

Micro-Trend 4: Probiotics new prospects

Besides their obvious application in products for digestive health and immunity, which we have covered elsewhere in this report, probiotics have promise in a number of embryonic new formats, targeting new consumer groups and new conditions, such as dental health.

Despite the high hopes of many in the industry, probiotics are already performing poorly in solid food formats – as the experience of the European market would lead you to expect and these types of products look set to remain ultra-niche for some time.

Micro-Trend 5: Immunity a great claim thats hard to use

Everyone wants better immunity and it’s a particularly compelling message to parents of young children, which could explain why Numicos infant formula brands experienced a double-digit increase in sales after the company repositioned its brands on an immune health benefit.

Probiotics have received particular attention for their potential immune-boosting effects, although there are few strains with sufficient science to satisfy increasingly demanding regulators.

Regulation poses significant barriers to using immunity claims, particularly in Europe. Danone in the US and the UK, and Kellogg in the US, have both been forced to drop immunity claims. However, Swedish company Skåne Dairy is launching its fruit juice with an immunity claim under regulations that allow it to sell in the supermarket, addressing a defined target audience.

Micro-Trend 6: Fresh start for omega-3?

Until recently hyped as having mass-market potential, in reality omega-3 as an ingredient remains in its infancy, as the omega-3 producers body now admits.

The acceleration of the omega-3 trend will come through following two important strategies:
a) Working out how to deliver an effective daily dose” of omega-3s in a convenient, singleserve drink, with a good taste.
b) Focusing on the potential for omega-3 as an ingredient added to fortify processed fish products  a natural fit for fish oil in consumers minds, unlike omega-3 in dairy, and a way of connecting to the important intrinsic and natural health benefit trend.

Unless urgent moves are made to address these strategies as well as technical issues such as off-taste, omega-3 will remain stuck in a slow-developing niche a success in infant formula, capsules and pills but an also-ran in food and beverage.

In Europe the challenges will be greater, since European health claim regulators have decided to treat marine-source and plant-source omega-3s as equivalent despite protests from scientists that consumers will be misled into thinking they get the same health benefits from both, when the science backs only marine-source omega-3.

Micro-Trend 7: Beauty an ultra-niche opportunity

it’s clear from the examples of Danones withdrawn beauty yogurt Essensis, and the niche sales of Nestles Glowelle drink, that the idea of delivering beauty benefits from a product you ingest has ultra-niche appeal.

Anyone that does tackle beauty-from-inside must make their product a beverage, a pill or a powder. Beauty bars, breakfast cereals, breads and the like are not credible formats.

Inner-beauty products should not sell in the supermarket; other channels of distribution, such as the upmarket department stores that stock Glowelle in New York, allow you to more easily communicate the benefits of your product and provide a more credible and less price-driven environment in which to talk about your beauty benefit.

About New Nutrition Business

1. 10 Key Trends in Food, Nutrition & Health is an annual analysis of the long-term drivers in the business of food and health, published every year since 1995 by New Nutrition Business (www.new-nutrition.com).

2. Julian Mellentin is one of the worlds very few global specialists in the business of food, nutrition and health. He is co-author of The Functional Foods Revolution: Healthy people, healthy profits? and Commercialising Innovation: The Food & Health Marketing Handbook.

3. Julian Mellentin can be reached at julian.mellentin@new-nutrition.com.

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