Companies to Watch

By Rebecca Wright | June 1, 2008

Profiling four progressive, innovative companies in the dietary supplement and functional food markets, as well as looking back at four past winners.

NextFoods: Bringing Change by Offering the Alternative

When Steve Demos left WhiteWave in 2005, he didn't leave the industry he loved so much behind, at least in his heart. As he traveled around the world for the next several months, he couldn't stop thinking about where the world of nutrition was headed. What was next?

Upon Mr. Demos' departure from WhiteWave-the company he grew from $10 million in 1999 to nearly $400 million by the beginning of 2005-his friend, and VP of business development and operations at the time, Todd Beckman, told him if he had any business left in him when he returned then he would join Mr. Demos in the new venture.

After Mr. Demos' non-compete agreement ran its course, the industry veterans came up with NextFoods, a company stacked with many former members of the management team at WhiteWave, as well as some powerful and influential friends in the natural products industry. Mr. Demos took advantage of the rich relationships he'd forged over the years to secure investment in the new company.

During his sabbatical from the business world, Mr. Demos started thinking more about the over 40 crowd, the largest segment of the population, comprised of consumers with the most disposable income. He realized that this demographic was thirsting for products that could meet their ever-changing biological needs. "As a member of the Baby Boom generation, we thought we were immortal and could eat, drink, travel and do anything we liked," he ex­plained in a press release. "Then mortality showed up in the form of body aches. It changed our consciousness in terms of diet and our perspective on nutrition." As far as a biological need, Mr. Demos decided to focus on the 40% of the population struggling with digestive issues.

Now that he had his target, he needed to develop a product that would marry the worlds of organics and functional foods, where science would be used to verify the function and efficacy of the product.

For the science, Mr. Demos took the advice of a friend from Tetra-Pak and looked into a Swedish company named Probi, which had developed a unique probiotic strain of bacteria featured in scores of products in the European market. As an added bonus, this strain, also known as Lp299v, happens to be one of the most researched strains of probiotic bacteria today. It even has the blessing of the medical community in Europe, where it benefits from a health claim in Sweden.

Scientists at Lund University in Sweden first started re­searching Lp299v in 1986-it was subsequently patented in Europe in 1988 and in the U.S. in 1991. As researchers looked for ways to reduce the healing time for patients who had undergone gastrointestinal surgery, they ultimately found that Lp299v, when delivered in oats-which is easy to digest-became incredibly well established in the intestine. Lp299v helped restore a balanced intestinal flora and reduce the risk of infections caused by harmful bacteria. Subsequent studies supported improvements in gastrointestinal function, as well as immunity.

NextFoods' flagship product, GoodBelly, was launched this past January. The 2.7-oz. shot features organic fruit flavors, probiotics and vitamins. It is also the only dairy-free, soy-free and wheat-free product of its kind. While a similar product has been sold in Sweden for several years, this is the first time Lp299v is making an appearance in a U.S. food product.

Although Mr. Demos is honest about the obvious advantages of his all-star team of executives, he ad­mits that the road ahead will not be without its bumps. He faces stiff competition from companies like Danone and Yakult, two multinational companies he credits with bringing probiotics to prominence. But for him it is more important to focus on his part of the world right now. "Global mediocrity is not as attractive as dominance in one part of the world," he said.

Challenges aside, Mr. Demos believes GoodBelly will be a blockbuster. "We are offering consumers choice and there is always going to be a sizable portion of the population that is interested in the alternative," he said. Sound familiar? Mr. Demos applied the same theory to soymilk in the 1970s and look where that got him.

Reflecting on innovation over the past several years, Mr. Demos said, "Beyond organic and natural, I think the trends have been fairly vanilla. There wasn't a whole lot until we discovered microorganisms, which offered a whole realm of substances we've never seen before. We've only just scratched the surface of how food will change."

As for why he thinks NextFoods was selected as a "Company to Watch," Mr. Demos commented, "It's not about me. The companies I associate with have a strong history in innovation. It's the roots and leadership of this company that will dictate innovation and success."

Without a crystal ball the future for NextFoods is obviously uncertain, but with a little help from his friends Mr. Demos is certainly off to a good start.

Analysis: Future Issues to Consider
• GoodBelly, although exploiting the rapid increase in awareness of probiotics, is not presented in a format familiar to consumers. Will consumers be able to make the transition from dairy-based probiotic foods and beverages to GoodBelly and still be able to make the health connection?
• The suggested retail price for GoodBelly is $4.49 for a 4-pack of 2.7 fl. oz. juice servings. How will it fare against products like Activia, which retails for $2.49 for a 4-pack of individual 4-oz. cups, and DanActive, which retails for $3.59 for a 4-pack of 3.3-oz. shots? Will the price be too high for mainstream grocery shoppers? Without an extensive ad campaign to help consumers understand why GoodBelly is, well, good for their bellies, how will consumers justify paying up to $1-2 dollars more than the closest competitor for GoodBelly?
-Rebecca Wright, Editor

A look back at…General Mills

When Nutraceuticals World caught up with General Mills in 2000, the company had just launched "GoGurt" yogurt in tubes and was focused on developing more whole grain products as it made moves toward the emerging soy market. Since that time the food giant has been leading the charge to offer consumers more nutritious food choices.

In late 2004 General Mills converted all its cereals into whole grain products, including Trix, Cocoa Puffs and Lucky Charms. At that time, the switch was expected to increase the number of whole grain servings consumed by Americans by 1.5 billion per year.

Also recognizing the health benefits offered by soy, General Mills entered a 2000 joint venture with DuPont, creating 8th Continent, a soymilk company, which it sold in February 2008 to Stremicks Heritage Foods, a branded specialty foods company.

General Mills continues to capitalize on its yogurt brand Yoplait, introducing recent products such as Yo-Plus, which contains the patented Optibalance blend of probiotics and prebiotics, as well as 3 grams of fiber. Its Fiber One yogurt also contains 20% of the Daily Value (DV) for fiber with 5 grams per serving. The Green Giant brand has also stayed strong with products such as Healthy Weight, Immunity Boost, and Healthy Vision vegetable medleys.

The company extended its continued focus on nutrition through its Guidelines for Responsible Advertising to Children, pledging in 2007 to no longer advertise foods containing more than 12 grams of sugar per serving to children under the age of 12. It also added "Nutrition Highlights" on the front panel of cereals in the U.S., which designate the percent of DVs for calories, saturated fat, sodium and sugar.

The General Mills Foundation also developed the Champions for Healthy Kids grant program in 2002, in partnership with the American Dietetic Association Foundation and the President's Council on Physical Fitness. Each year, the General Mills Foundation awards 50 grants of $10,000 each to community-based groups that develop creative ways to help young people adopt a balanced diet and physically active lifestyle.

In an attempt to accelerate innovation efforts, General Mills recently announced plans to team up with outside companies to create the General Mills Worldwide Innovation Network (G-WIN). Through this initiative, the company says it will actively seek partners who can help improve the taste, health and convenience of products.

As one of the largest food companies in the world, General Mills' efforts deserve recognition, as it continues to offer consumers healthy food options and renews its commitment to building stronger, healthier communities.
-Sean Moloughney, Associate Editor

(General Mills was profiled in the very first edition of "Industry Innovators" in 2000; this feature became "Companies to Watch" in 2005. General Mills was also a runner-up for this year's "Companies to Watch" edition.)

Ganeden Biotech: Survival of the Fittest

What's in a name? For Ganeden Biotech, a deeper meaning. "Ganeden" is actually a conjunction of two Hebrew words: "Gan," meaning "garden" and "Eden"-i.e., "The Garden of Eden." The idea behind the company name is that in The Garden of Eden (Gan Eden), there was no sickness or disease. It was a purely healthy existence. Guided by this concept, Ganeden formulates its products to provide the same benefits for consumers today, who are just beginning to take interest in all that probiotics have to offer.

Ganeden's founding goes back to 1997 when Sean Farmer, founder and current CSO, was working in the microbiology field researching probiotics. This is where Mr. Farmer discovered Ganeden's family of bacteria, appropriately named GanedenBC30, which would eventually play varying roles in future product applications.

From the beginning, Mr. Farmer's goal was to model the company after many of the biotechnology firms of the day, with a goal to scale up its probiotic offerings and license the intellectual property (IP) surrounding GanedenBC30-the BC stands for Bacillus coagulans. After receiving the much needed funding, the company was prepared to meet the next milestone.

By the time 2003 rolled a­round, Ganeden was ready for the consumer products arena. Initially it started out with products aimed at irritable bowel syndrome, lactose intolerance, athlete's foot and general wellness. The products fell under brand names, such as Digestive Advantage, Clearly Confident and Sustenex. Since launching its consumer product line five years ago, Ganeden has sold nearly 400 million doses in over 50,000 retail outlets nationwide.

All of Ganeden products are based on the same family of bacteria. What changes in each formula is the inclusion level of the bacteria, as well as the other supplemental ingredients included to support each indication. For example, its lactose intolerance product contains GanedenBC30, as well as the lactase enzyme. Interestingly, some of the products are positioned as dietary supplements, while others like the Crohn's product are considered medical foods.

Working within the food, drug and mass (FDM) channel has been rewarding for Ganeden, but there have been challenges too. "When you are in the FDM channel products obviously get much more visibility. The downside is the expense," said Mike Bush, vice president, Business Development. "You have to be a very well funded business in order to be successful."

Established in 2006, Ganeden Labs is the licensing and development division of Ganeden Biotech, making its proprietary, patented probiotic technology available for use in products across several industries. According to the company, GanedenBC30 and its other patented strains of probiotic bacteria are perfect for use in a broad range of functional food, supplement, animal health and topical applications. Furthermore, the company claims that its self-affirmed Generally Recognized as Safe (GRAS) Bacillus coagulans strains have been shown to be more hearty than other probiotic strains. The bacteria also exhibit excellent stability, offering more flexibility in manufacturing and delivery systems.

Mr. Bush likened GanedenBC30 to taking a probiotic seed. "The seeds themselves remain intact through processing, storage and transit through the gastric environment," he explained. "Once they get past the stomach, these seeds germinate into new vegetative cells that colonize the small and large intestines with good bacteria."

In light of the company's new direction, Mr. Bush discussed Ganeden's return to its biotechnology roots. "Because of our excellent patent coverage, we wanted look outside the consumer products sector," he said. "So two years ago we started selling the bacteria and licensing the associated IP to a variety of companies."

Currently there are no food or beverage products in the market containing GanedenBC30, but Mr. Bush expects that to change very soon. "We're working with several food and beverage companies to launch products containing BC30. By the fall you will see products from Turtle Island Soup containing BC30. You will also see BC30 in a variety of teas, baked muffins, confections and granola bars." Again, the beauty of BC30 is its ability to withstand harsh processing conditions like extrusion, as well as boiling and baking. It doesn't require refrigeration.

The IP surrounding BC30 is ironclad, claims Mr. Bush, who maintains that there are currently 150 pending and issued patents. Also, unlike the majority of nutraceutical companies, Ganeden has a thick substantiation portfolio for its products. In fact, it has spent millions of dollars over the years to complete a dozen clinical trials to support product claims.

Physician education is also important to Ganeden, which spends a lot of time going to medical meetings and dialoguing with doctors about the merits of probiotics in general and BC30 in particular. "Doctors are definitely becoming more open," Mr. Bush commented. "We are delighted to see them recommending products outside of traditional drugs."

According to Mr. Bush, the company has grown 30-40% each year since 2001. Its licensing business, however, is growing at a much faster clip. "I feel highly encouraged about the state of the market. Probiotics are just taking off in the U.S., and for good reason," said Mr. Bush. "Functional foods represent an excellent way to take probiotics. And in the case of probiotics, the more choice the better."

Analysis: Future Issues to Consider
• The believability factor: Will consumers start to question the efficacy of products like pasta containing probiotics when traditionally they've been trained to expect them in yogurt or beverage mediums?
• Staying focused: The company has branched off into many different areas, from consumer products, to physician education, to licensing. It will be very important for Ganeden to remain focused on its core competency going forward.
-Rebecca Wright, Editor

A look back at…Martek

Martek Biosciences, a leading supplier of nutritional oils, has continued to expand into developing markets since Nutraceuticals World tagged it as an "Industry Innovator" in 2004.

The company's flagship products, life'sDHA, which contains the omega 3 fatty acid docosahexaenoic acid (DHA), and life'sARA, which contains arachidonic acid-an omega 6 fatty acid-can be found in over 90% of U.S. infant formulas. Both fatty acids are also added to formulas sold in over 70 countries and, subsequently, have been consumed by more than 24 million babies worldwide.

But since the supplier of vegetarian DHA and ARA oils-sourced from algae-took its first steps with infant formula, Martek has jumped into the functional food and beverage market. Today, life'sDHA can be found in over 40 products around the world, in a variety of applications such as milk, juice, yogurt, eggs and nutrition bars.

Some notable products containing life'sDHA that have launched in the past two years include Minute Maid Enhanced Pomegranate Blueberry Flavored 100% Juice Blend, Horizon Organic Milk Plus DHA, Yoplait Kids Yogurt and Silk Plus Omega-3 DHA Soy Milk.

This year Martek also announced the launch of the first bread product with life'sDHA; Oroweat 9 Grain Bread with life'sDHA from Bimbo Bakeries USA is now available at major retailers in the Pacific Northwest, California, Arizona and Nevada. The company also released a new protein-free powder form of life'sDHA that features a minimum of 100 mg per gram of life'sDHA and contains no soy or milk proteins, making it ideal for food and supplement applications where allergen labeling is a concern.

Martek signed a supply agreement with Kellogg's in 2005-its first such contract with a major food company. While no Kellogg products containing life'sDHA have been launched to date, this partnership could prove to be a profitable one down the road.

Meanwhile, in order to meet growing demand for infant formula containing life'sDHA, in 2005 the company completed a major expansion of its Kingstree, SC, facility for the fermentation and downstream processing of the company's nutritional oils. Today, with more than 525 employees and revenues exceeding $300 million, Martek is in good position to outpace the competition.
-Sean Moloughney, Associate Editor

(Martek Biosciences was profiled as an "Industry Innovator"-Company to Watch-in 2004. It was a runner-up in this year's competition for "Companies to Watch," and has been for the last several years.)

Neptune Technologies & Bioressources: Discovering Buried Treasure

Almost two decades have passed since Neptune president and CEO Henri Harland stumbled upon a new business venture involving a tiny organism from the sea called krill. Through many years of work on the krill research project, he was able to learn a lot about the nutritional profile of this creature. Mr. Harland envisioned that if these tiny organisms could feed whales and survive on the bottom of the ocean, then there had to be something special about them.

Mr. Harland's search for krill began at the St. Lawrence River in the mid-1990s. The adventure prompted him to seek out a laboratory that could help him evaluate the nutritional profile of krill and develop an extraction process. "We knew early on that we didn't want to work with Pacific krill because the contaminants were very high and the nutritional profile was inadequate. We wound up evaluating krill from all over the world just to find the right species," said Tina Sampalis, MD, PhD, CSO. "We finally found what we were looking for in the South Antarctic Ocean, in the designated Zone 48."

Dr. Sampalis claims Zone 48 is the cleanest and purest environment for krill in the world. It also happens to produce the krill with the best nutrient profile. Also important, Zone 48 is strictly controlled from an environmental perspective, so there is always someone keeping tabs on who can fish there, with what method, and how much they can take home.

Neptune as a company was incorporated in 1998. It didn't immediately have product available for the market because its first priority was establishing a scientific basis for the unique ingredient complex it branded Neptune Krill Oil, or NKO. "We didn't want to sell a drop of oil before we confirmed safety and efficacy," Dr. Sampalis said.

By 2000, the company had enough material to initiate clinical trials. So far it has completed phase I, II and IIIa studies, proving NKO's safety and effects in reducing the risk of cardiovascular events. NKO has also been subjected to a battery of tests to assess purity, stability and shelf life.

Neptune has spent a lot of time shoring up its patent protection and gaining the necessary regulatory approvals around the globe. In fact, NKO has been issued "composition of matter" patents in 24 countries in Europe.

On the food side, while Neptune awaits novel foods ap­proval in Europe, it is taking advantage of the recently granted Generally Recognized as Safe (GRAS) status in the U.S. for NKO-both of these safety designations are difficult and tedious to attain. All of this work-preclinical/clinical research, toxicology, creating and commercializing the production process-has cost the company approximately $22 million, according to Dr. Sampalis. "From the very beginning we wanted to make certain we had our intellectual property in place so no one could touch us," she said. "Even if today our intellectual property is airtight, we recognize that protecting IP is a rigorous, dynamic process that we are dedicated to."

At the heart of Neptune's operations, of course, is NKO and its unique nutrient profile. NKO is an oil mainly comprised of phospholipids, which function as carriers for eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). NKO also contains a fair amount of astaxanthin, which serves as its natural antioxidant protector, giving it a three-year shelf life.

In the short term, Neptune's goal is to firmly establish itself in the dietary supplement and functional food markets. With regard to the latter, it has already signed research collaborations with Yoplait and Nestle, which Dr. Sampalis says will eventually result in commercial food and beverage products containing NKO.

After receiving its GRAS notification in January, Neptune voluntarily submitted the assessment document to FDA. With this regulatory clearance for commercialization in food in the U.S., Neptune expects to enter additional food partnerships in the future. "NKO is such a good candidate for functional foods because we've already successfully completed studies of NKO proving significant effects at low dosage levels," Dr. Sampalis explained. "This is of great benefit for any food or beverage company that wants to comply with the strict EFSA (European Food Safety Authority) and upcoming FDA rules for functional food label claims."

On the supplement side, Schiff Nutrition is distributing NKO under the brand name Schiff MegaRed, which promotes cardiovascular and joint health. Schiff MegaRed is currently available in a 300 mg dosage form at nationwide Costco locations in the U.S. Soon it will be available at worldwide locations as well. Also, certain national NKO distributors in Europe have successfully received country-based approval for labeling and commercialization of NKO as a dietary supplement, namely in Sweden, Austria and France.

Lastly, Neptune recently entered into an alliance with Croda Health Care, an omega 3 player that has already launched five "Essentially" products in the U.S. and Europe.

According to Dr. Sampalis, Neptune has a rich pipeline of products at different stages of development, in preparation for the company's entrance into the pharmaceutical sector. In that regard, Neptune recently obtained complementary medicine approval in Australia and New Zealand. In fact, Invida Pharmaceuticals, the holding company of PharmaLink and Inovail-an independently managed specialty pharmaceutical company-has successfully entered the market with OmegaGen containing NKO. Neptune expects other strategic partners in the future.

Having spent many years in the nutraceuticals business, Dr. Sampalis has learned a lot of lessons. Her advice to other companies is to treat their nutraceuticals as if they were drugs. "A lot of companies think they don't need to bother with toxicity and safety studies. Instead, most of them are interested in making fast money," she commented. "The only reason we have been successful is because we've spent a lot of time and money to research every aspect of this product as if it were a drug. For those that have followed Neptune's story, they know the best is yet to come."

Analysis: Future Issues to Consider
• Neptune could face some uncertainty from the consumer regarding the issue of contaminants, even though its source represents purity levels unseen in the nutraceuticals industry. Unfortunately, consumers may not see it that way, especially since krill comes from the same place as fish, which continues to struggle with perception issues.
• Despite its best efforts, Neptune could also face some indirect backlash as consumers start to worry about the environmental impact of fishing for krill, particularly as other players enter the market.
• Neptune's fate in foods seems tied to its success with Yoplait and Nestle. What might happen to future prospective relationships should the Yoplait/Nestle collaborations fail to produce finished products?
-Rebecca Wright, Editor

A look back at…NutraCea

As a world leader in stabilized rice bran research and development, NutraCea has been busy expanding its production capabilities since 2004, and is looking to steer these efforts into new European markets.

This year the company opened its Lake Charles, LA, facility, which added approximately 30,000 tons of annual capacity to U.S. production. NutraCea also completed two expansion phases at its Dillon, MT, facility, increasing annual production capacity of value-added fractions derived from stabilized rice bran from 900 to 2700 tons annually.

It also recently purchased a 124,000 square foot production facility in Phoenix, AZ, which will have an initial capacity of 5000 tons annually when fully operational, and will provide enough room to accommodate up to 10,000 tons of annual production when fully built out.

While the company's rice bran is distributed in Western European markets like the U.K. and Italy, NutraCea believes it can attract new customers in Central and Eastern Europe with its high-fiber, nutrient-rich rice bran products by offering potential cost savings.

Especially since merging in 2005 with RiceX Company, a leading producer of stabilized rice bran using proprietary processing technologies, NutraCea seems well equipped to meet the demands of the global marketplace, intending to build additional facilities in Europe and Southeast Asia.

Alongside its successful RiSolubles, RiBalance and RiceMucil products, NutraCea expanded its baby cereal business in 2007 with a purchase order from Rafferty's Garden in Australia and a private label contract with one of the largest natural food grocery store chains in the U.S. The company has expanded its existing lineup to include multi-grain, fruit-flavored and DHA-fortified cereals.

Undertaking several humanitarian efforts in recent years, NutraCea distributed 80,000 pounds of its RiSolubles product to more than 10,000 orphans through community-based organizations in Malawi, Africa as part of a collaborative effort with Feed the Children, Raising Malawi.

According to NutraCea, RiSolubles support healthy glucose and energy levels and contain more than 100 antioxidants, vitamin E and vitamin B complexes, phytonutrients and essential fatty acids. Such nutrient-rich products could play a major role in feeding the world's hungry, which was part of the original basis for NutraCea's founding and continues to be one of the company's guiding principles today.
-Sean Moloughney, Associate Editor

(NutraCea was profiled as an "Industry Innovator"-"Company to Watch"-in the June 2004 edition. It continues to play an active role in the nutraceuticals industry today.)

Yakult USA Inc.: Bringing its Beneficial'Bugs' to the U.S.

Yakult is a strong global player in probiotics. The company's tagline, "Yakult is probiotics," is fitting, particularly since it was one of the first to start peddling beneficial bacteria more than 70 years ago. Today, more than 25 million consumers around the world drink Yakult on a daily basis.

Yakult has been in the business of probiotic nutrition since the 1930s. In those days, according to the company, Japan was not a wealthy nation, and many children lost their lives to infectious diseases and other maladies brought on by malnutrition. Deeply concerned about these conditions, Yakult founder Dr. Minoru Shirota set his sights on developing a stronger strain of lactic acid bacteria that could colonize the gut in great numbers and reduce the harmful bacteria living in the intestines, thereby improving and maintaining the health of human beings. Familiar with the work of Elie Metchnikoff, a Russian scientist pivotal in starting the relatively modern discipline of probiotics, Dr. Shirota succeeded in culturing and utilizing lactic acid bacteria (Lactobacillus casei strain Shirota).

Dr. Shirota commercialized the strain in 1935 and started selling it as Yakult. Due to his regard for the poor, malnourished people in Japan at the time, he started selling it at a nominal cost. To this day the company doesn't offer coupons because it believes its product is offered at the lowest possible price. "It was Dr. Shirota's belief that everyone in the world should have a high quality of life, no matter what their income level," said Teruo Tabuchi, vice president and COO, Yakult USA Inc.

Perhaps one of the more interesting aspects of Yakult is its distribution system. Indeed, its sales force, aptly named the "Yakult Ladies," is responsible for bringing probiotics to the masses in Japan, similar to the way a doctor used to make house calls in the U.S. In fact, more than 46,000 Yakult Ladies deliver Yakult products direct to their customers and provide them with health information. At the same time, according to Yakult, they fulfill a social role within Japanese society by visiting the elderly citizens living alone to chat with them and check on their safety and well-being.

Although people of all backgrounds consume Yakult today, the formula has not changed since it was developed nearly eight decades ago. What the company has been working to change is the geographic reach of the product.

Over the last couple of years, the company has been busy launching Yakult in a variety of markets in the U.S., most of them in California. Initially it was positioned within Asian and Hispanic outlets due to the high recognition of Yakult by these demographics, but more re­cently it has moved into most general venues within California. As for the East Coast, Yakult can only be found within Asian stores, although there is a plan to make it available in mainstream grocery stores. So far the company has been very deliberate in its approach to the U.S. market. "In most everything we do, we tend to err on the side of being conservative," Mr. Tabuchi said.

The side benefit of being part of this 70-year-old company is the amount of re­search documenting the benefits of the L. casei Shirota strain in a variety of applications. This gives Yakult a definite market advantage when it comes to probiotics, particularly in the U.S. Commenting on the company's strategy, Mr. Tabuchi explained, "Our business model is based on science, not marketing. And our approach combined with the passion of our employees all over the world is what makes Yakult special and unique."

Furthermore, Yakult takes its mission to educate everyone about probiotics very seriously. "Our company is focused on education when approaching any given market," Mr. Tabuchi said. "We like to get out there and explain probiotics face to face. We interface with the medical community on a regular basis. Educating consumers and health professionals about the benefits of probiotics is really a grassroots effort."

Most recently, Yakult initiated a modest ad campaign in California, introducing the product and promoting its international success and long history in probiotics. The International Dairy Foods Association rewarded Yakult for its efforts last year, and sales have more than tripled as a result. And according to Mr. Tabuchi, this is just the beginning. "We have moved beyond informing consumers," he said. "Now we are engaging consumers."

For the future, Mr. Tabuchi remains optimistic not only for Yakult, but also for the probiotic market in the U.S. "There is so much room for growth because functional foods are really starting to take off," he said. "I think Yakult will also continue to grow as we educate people about probiotics and healthy living."

Analysis: Future Issues to Consider:
• While a slow rollout is typical of Yakult, will it be the best choice given the rapid rise of probiotics in the U.S.? Will it be too late when Yakult decides to go mainstream?
• Yakult is based on a singular product in the U.S. market. Will the lack of variety hurt the company in the long run?
• Coupons offer consumers a discount on products, but they can also serve as marketing tools for new products. Will Yakult's reluctance to offer coupons further restrict its access to consumers?
-Rebecca Wright, Editor

A look back at…Stonyfield Farm

Since France-based Danone purchased a majority stake in Stonyfield Farm in 2003, the organic yogurt maker has maintained its small business image and environmental focus, continuing to educate the public and support a variety of social programs, due in part to Gary Hirshberg, chairman, president and CE-YO, who retains majority board control and continues to manage the company independently.

Since it began donating 10% of profits to environmental causes in 1993, Stonyfield Farm has contributed almost $3 million to various groups and projects. It replaced its small cup plastic lid and inner seal with a new foil seal in 2003, reducing solid waste by a net of 106 tons in just the first year.

The company also installed a 50-kilowatt (kW) solar energy system atop its 120,000 square-foot manufacturing facility in 2005, supplying about as much electricity as 10 homes might use on an annual basis. Partnering with NativeEnergy, Stonyfield also purchased Renewable Energy Certificates, or "Green Tags" that provide up-front financing for new wind energy projects.

Other strategic partnerships in recent years have included efforts to install nutritious vending machines at schools around the country and expansion plans for a healthy "fast food" restaurant chain called O'Naturals that offers natural beef and free range chicken sandwiches, along with vegetarian options and fresh, local salad ingredients. Through its organic ingredient purchases, Stonyfield helps to keep over 60,000 farm acres free of toxic, persistent pesticides and chemical fertilizers known to contaminate soil, rivers and drinking water.

As it closed in on its 25th anniversary, Stonyfield converted the remainder of its dairy product line to organic last year. It also changed its 2-a-Day product name to YoCalcium, which contains the prebiotic fiber inulin, vitamin D and 50% of the recommended Daily Value of calcium.

Stonyfield has rolled out several new products in recent years including YoMommy-fortified with folic acid, vitamin D and DHA-to meet the nutritional needs of pregnant, nursing and new moms, along with their growing babies. YoBaby Simply Plain contains organic whole milk that provides calcium and protein along with Stonyfield's six live active probiotic cultures to ensure good intestinal health: L. bulgaricus, S. thermophilus, L. acidophilus, Bifidus, L. casei, and L. rhamnosus. The company's organic smoothies have also gained in popularity, as they contain the six active cultures and are available in Strawberry, Raspberry, Peach, Banana Berry, Wild Berry and Vanilla.

Stonyfield also offers organic ice cream and frozen yogurt; O'Soy soy yogurt, which is a "good source of calcium and protein"; YoBaby Plus Fruit & Cereal with DHA; and Oikos Organic Greek Yogurt in partnership with Euphrates, makers of authentic old-world foods-it is the only nationally distributed organic Greek yogurt on the market today.

Started as an organic farming school, Stonyfield gets an "A" for its efforts over the past quarter century.
-Sean Moloughney, Associate Editor

(Stonyfield Farm was profiled as an "Industry Innovator"-Company to Watch-in the April 2000 edition. Its CE-YO Gary Hirshberg was also profiled as an "Industry Innovator" in the June 2001 edition.)