Health Strategy Spotlight: Case Study: BestSweet, Inc.

May 1, 2005

Case Study: BestSweet, Inc.

Business Description: BestSweet Inc. is a family owned and operated business located in Mooresville, NC, with over 70 years of heritage in the manufacturing industry. It produces a series of confectionery products, nutritional supplements and cough drops.

Theme: BestSweet has evolved from a commodity confection manufacturer to a producer of OTC drug/food systems with special nutrient delivery processes. This case study will look at the issue of how close they should move toward the consumer.

Background: The focus of BestSweet is on producing top quality and innovative foods and confections that appeal to a variety of taste preferences. Its reach is global, serving customers in the U.S., Canada, Japan, the Caribbean, the Middle East and Indonesia. It produces a wide range of branded and private label products in a cGMP facility using USP standards. BestSweet has created a separate division called BestHealth, which is dedicated to producing health products in confectionery forms. This division has demonstrated its ability to harness knowledge in mainstream confection production and produce products with health platforms that meet stringent consumer taste requirements. It has expert processing capability, leading technical knowledge and food science. Another key attribute is BestSweet’s ability to use innovation in ways that its competitors find hard to match. Its product range includes calcium soft chews, glucosamine-chondroitin soft chews, multivitamin soft chews, cough drops, zinc lozenges and vitamin C lozenges.

Situation Assessment: Sales of functional bars, candy and snacks continue to experience excellent growth, more than quadrupling between 1998 and 2003. Key to this growth is the simple fact that these products are meeting the needs of consumers across three key dimensions: health, taste and convenience. A considerable force exists in the industry with respect to organic and natural products, versus simply functional, but the market has evolved from a natural/organic “niche” to a multi-channel market that leverages more included functionality, with significant success in the mainstream markets. BestSweet’s strengths can be described in three ways: (1) processing and delivery technology; (2) relationships with retailers; and (3) relationships with pharmaceutical companies. From a business model perspective, it licenses and markets products from leading brands, it performs contract manufacturing and it is now considering doing its own line. Its current business is about 55% confection and 45% health products, but it expects the proportion of health products to grow to 60% in over the next five years. This reasoning is based on a few key issues, such as the fact that health products are generally higher margin business, enabling BestSweet to use its enhanced manufacturing technologies, which typically can be seen with respect to taste, mouthfeel and dosage management.

Opportunities: BestSweet has a strong business but it is continually looking for premium markets versus commodity markets. Functional candy sales accounted for only 2% of the functional bars, candy and snacks segment in 2003. There are not many functional candies available yet, so it is too early to tell how successful the category will be. In some ways, the healthy confection market is under represented, since some healthy confection is not positioned as candy, but rather as dietary supplements and therefore not counted in this category. Crossover products that combine candy and functional attributes seem promising and are expected to grow, but inherently, healthy confection has challenges in its value proposition to consumers. The concept of eating a treat to gain a health advantage may appear counter-intuitive. Not only does a product need to compete with regular candy in both taste and price, it must also be consumed regularly and consistently to provide a health benefit.

Lessons Learned: (1) The demand of consumers varies throughout life, particularly around health needs. Although success may come by creating standalone products, BestSweet needs to view any foray into its own brand around some organizing principles to create a line of products that address a full suite. (2) Although it has the ability to produce products, its challenge will be matching an unmet need in consumers with the product, which may require a new set of skills. Its future may very well depend on its ability to find and source new technologies. (3) The real opportunity here may lie in the incremental improvements of current underperforming products. BestSweet’s heritage has been based on making products better, and this may offer best the company its best shot at success. (4) Additionally, it has knowledge of improving the delivery system for nutrients, and its first steps could likely look at taking existing products/ingredients and improving the delivery, bioavailability and absorption, which will hopefully improve consumer compliance.
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