Functional Foods – Dysfunctional?
Analyzing terms and the evolving European market.
By Tage Affertsholt
In a recent article, The Economist magazine suggested that if Hippocrates had been a marketing man rather than a doctor, he might have dreamed up the terms “functional foods,” “nutraceuticals” or “designer foods.” From a European perspective, and as a marketing man, I suggest that all these terms are bad marketing and not at all consumer friendly.
As was mentioned in the July/August issue of Nutraceuticals World, European consumers’ awareness of the term functional foods is fairly low, with only approximately 20% having heard of the term. A recent report by Dragon UK stated that consumers find the term unfamiliar and unappealing—and perhaps more surprisingly—perceive functional foods as only mildly healthy. Consumers also don’t like scientific messages about functional products or ingredients. They prefer natural language, natural ingredients and good old natural healthy products, such as yogurt, cereals, bread and juice, as carriers for functional messages/claims. If the claims are supported by well known brands from credible companies, so much the better.
Recent research in the Scandinavian countries has also shown consumers to have a healthy skepticism towards the concept of functional foods. Skepticism at the product level was significantly reduced and turned more positive when the products were backed by health claims properly controlled by official regulatory authorities. It seems we are better off reserving the term functional foods and the like for our professional circles. In short these products should be positioned as normal healthy products, backed by science and claims endorsed by regulatory authorities.
The Economist article goes on to claim that so far functional food has been a flop. I do not share this conclusion. Admittedly we have seen many new functional product failures; however this also happens to many new products. The CEO of Raisio said it best when ex-plaining the company’s “Benecol” product: ”We are dealing with a totally new market area. Functional foods are not an area where there are good case studies about novel innovation or how to deal with clinical and efficacy issues. With Benecol we are in the middle of a totally new market with many new parameters including even terminology.”
Indeed, many different market studies and market forecasts predict positive nutrition or healthy eating will continue to be high on consumers’ agenda well into the next century. We will see two categories emerge:
• Healthier versions of many normal food products for health maintenance for broad segments of the population marketed with generic health claims.
• Specialized products for disease management with disease risk reduction claims for different segments of the population.
There has also been a continuous high level of product launches in the European market and the commitment of two giant European food companies, Nestlé and Unilever, in this area. The impression at Nestlé that ”nutritional enhancement” of products for all age groups is a high priority was recently confirmed by the company’s CEO Peter Brabeck-Letmathe: ”Our nutritional division is a major, major growth driver for the future. It transforms commodities vulnerable to private label competition into high-priced premium products.”
With regards to Unilever we have all seen its determination in launching “Take Control”/“Flora pro.activ” worldwide. According to press reports, the launch in Europe is held up by EU regulatory problems and it seems unclear if it is the EU Novel Foods Committee or various national authorities that are causing the problem. The lack of an EU-wide safety agency has been mentioned by Unilever as a problem. However the key message is that Unilever is determined to play an important role in the functional foods market.
The announcement that Novartis is entering this market with its “Aviva Life Foods” seems another good indicator that life science companies with their scientific expertise and experience satisfying regulatory bodies are also committed to exploiting market opportunities. The competition with food companies is obvious. The Novartis Consumer Health Business Unit encompassing OTC, Health & Functional Nutrition and Medical Nutrition will be launching the products, which will initially cover three nutritional areas: heart (cholesterol reduction), bone (osteoporosis) and gut (diarrhea and constipation) health. The range will contain finished products including drinks, biscuits and bars.
In an interview,Thomas Ebeling, Novartis Divisional Director announced that the company is developing a different strategy, i.e., to create special nutrition shelves in supermarkets, onto which Novartis would put its umbrella brands. The product launch is planned for the end of this year or first quarter of 2000.
Not only big multinational firms are actively introducing healthier products in Europe. New products are being launched continuously within individual national markets, mostly in the dairy products category. In Scandinavia, Arla, Valio and MD Foods regularly introduce new products. Smaller companies like BioGaia are also very progressive; BioGaia has among many new initiatives started commercial activities in the U.S. market with its well researched lactobacillus reuteri.
On the ingredients side, Danish-based Chr. Hansen, one of the major global players in probiotic lactic acid bacteria, is also pushing the concept of functional foods. Recently the company announced the formation of a new division called the Human Health Group to focus on the growing functional foods and nutraceuticals market.
We also expect to see an increased interest in functional ingredients from the new Danisco-Cultor merger. Before the merger Danisco had already bought Wiesby, a bacterial culture producer, and Cultor had been actively involved in the business mainly through its Cultor Food Science division with products like xylitol. The newly formed company could get further involved, perhaps in the sweetener derivatives area. One might speculate that Danisco-Cultor could have an interest in acquiring parts of the NutraSweet business that Monsanto has decided to sell off.
In Denmark the ingredients division of MD Foods is equally active. The product line includes a large range of milk and whey protein derivatives as well as milk sugar derivatives including the sweetener D-tagatose, which is reported to have prebiotic effects.
The Regulatory Situation
Given all these commercial developments, the outlook for the functional foods/nutraceuticals industry in Europe is fairly optimistic. However, one element that could be very beneficial for further industry development is the establishment of a new EU-wide regulatory framework for health claims.
Last year a survey was undertaken by FoodGroup Denmark regarding the regulatory situation/labyrinth for health claims in Europe. In cooperation with Leatherhead Food RA the survey has just been updated; “Functional Foods–International Regulatory Trends and Developments” clearly demonstrates the lack of European harmonization regarding regulatory practice for health claims. By definition all EU countries operate under the jurisdiction of the Labelling Directive 79/112. In reality the use of pan-European claims is not possible and must be handled on a country by country basis, making life for the industry fairly complicated.
The EU Commission is aware of this problematic situation. The European Parliament has recommended disease risk reduction claims based on sufficient and recognized scientific findings. Consumers want the EU to come forward with relatively strict regulation. The European industry has worked out a proposal for the future regulation of health claims including generic type claims, similar to the U.S., and product specific disease-risk reduction claims. Finally, the EU Commission sponsored a Functional Foods Science in Europe project and in its consensus report, supports health claims, i.e., so-called enhanced function claims and reduction of disease-risk claims.
The EU Commission has also just completed a claims study in all 15 EU countries, so it seems reasonable to expect new EU initiatives. In the meantime, quite a number of EU countries have developed, or are in the process of developing, their own codes of conduct for the use of health claims in marketing of functional foods.