Rebecca Madley-Wright06.01.04
The number seven has extraordinary significance in the world today-there are seven days in a week, seven wonders of the ancient world, seven seas, seven dwarves, and seven companies deemed innovative enough to be profiled in Nutraceuticals World's Industry Innovators review. The companies selected this year represent a nice cross section of the nutraceuticals industry: (1) Amerifit Nutrition, Bloomfield, CT, is a finished product manufacturer with recognizable brands, such as Estroven, Vitaball and Acutrim; (2) Cargill Health & Food Technologies, Minneapolis, MN, represents itself as more than a supplier to the nutraceuticals industry; (3) Linguagen, Cranbury, NJ, is a biotechnology company specializing in taste modification; (4) Martek, Columbia, MD, is a supplier of essential fatty acids, including docosahexaenoic acid (DHA) and arachidonic acid (ARA); (5) NutraCea is a nutraceutical company focusing on the production of stabilized rice bran products; (6) Ocean Nutrition Canada (ONC), Halifax, Nova Scotia, Canada, is a fast-growing company in the marine products area; and last, but not least, (7) Tropicana, Bradenton, FL, is one of the largest not-from-concentrate juice makers, which pioneered the area of juice fortification-bringing "function" to functional foods.
The companies profiled in the following pages are worthy of the Industry Innovator title because they found a way to deliver, despite a sluggish economy, regulatory uncertainty, negative press and falling consumer confidence. Instead of focusing on extenuating circumstances, these Industry Innovators looked toward the future and worked to create opportunity. The recipe for innovation is different for every company. As most companies in this review pointed out, innovation is not necessarily about launching new products; sometimes it is finding a new way to communicate health messages to consumers or finding a new way to deliver a nutritious ingredient. One thing is certain: this year's Industry Innovators are not interested in short-term gains; they have worked long and hard to make sure their long-term future is secure in the nutraceuticals market.
Amerifit Nutrition came together in 1999 as a result of a merger between two companies-AmeriFit and Medical Foods-marketing well-known brands such as Estroven, Vitaball and Acutrim. The company positions itself as a product development, marketing, sales and distribution company, which sells products to consumers, and plans to become one of the most prominent health and wellness product companies in North America.
According to Peter Vitulli, president and CEO, the company is patterned after a Fortune 100 consumer packaged goods company. "In this vein, Amerifit Nutrition's primary focus is the consumer first and we work our way back from there," he said. "In our industry, most ideas are generated from the ingredient and then [companies focus on] finding a way to sell it. We do exactly the opposite." As part of that model, Amerifit Nutrition remains brand-based. "Everything we do is focused on building trust and relationships with the customer. The value of our company is within the brands we have built," he said. "The ability to build sustainable brand franchises is not easy or cheap. Unfortunately, a lot of companies in this space don't have the know-how, the will or the resources to [build brands]."
One of Amerifit Nutrition's key assets, according to Mr. Vitulli, is the company's management team, which is made up of several high level executives that came out of the consumer packaged goods arena and have expertise in building brand franchises. Another asset, said Mr. Vitulli, is the company's mass market distribution network. "We are in well over 60,000 retail stores with our Estroven product and cross several channels of distribution. To get new products out there relatively quickly is difficult, but we do it well."
Since its inception, the company has grown at a compound annual growth rate (CAGR) of 33%. "Even during the years when the industry was doing lousy, we were doing really well. The reason for that, I believe, is because of our business model and the fact that we have an extremely experienced senior management team-they have been together since the company was formed," Mr. Vitulli said. "That stability has helped build a very strong organization overall."
Amerifit Nutrition uses six guiding principles in its business. First, it concentrates on building the company through brand scale, not SKU scale. "We want to have the maximum size with the fewest number of SKUs," he explained. Second, Amerifit believes in establishing solid science. "Never over promise or under deliver, which, unfortunately, this industry does a wonderful job of," he said. "This alienates consumers and regulators, and is one of the most frustrating aspects of operating in this industry." Third, the company rarely makes a move without knowing how consumers will react. "All of our actions flow from a deep understanding for our customers. Too many companies treat consumers too cavalierly with bad quality products and outrageous claims, which is a recipe for disaster," he said. "We spend a lot of time with consumer focus groups and conducting quantitative research. It is constantly a learning experience." Fourth, Amerifit Nutrition aggressively pursues distribution channel increases. Although the company is pleased with its distribution successes, Mr. Vitulli said, "We are far from satisfied." Fifth, the company focuses on leveraging its infrastructure to drive as much efficiency and impact as possible. "It is very painful to get a new position approved, so we are growing by putting more time and money into researching our customers, rather than creating more overhead in our organization," he commented. The last principle relates to building and refining the culture within Amerifit Nutrition itself. This principle, Mr. Vitulli says, drives a results oriented culture as aggressively and thoughtfully as possible.
In terms of innovation, Mr. Vitulli said, there is a hint of it in every Amerifit Nutrition product. "There is piece of innovation in each one of our products, whether it is in the packaging, the delivery, the messaging points or the positioning. Innovation is not necessarily about launching new products," he said, adding, "Everybody can participate in innovation. I don't want innovation to be solely the responsibility of the marketing team; I think everyone within the organization definitely has a role to play in innovation, small or large, every day."
So what advice does Mr. Vitulli have for companies interested in the nutraceuticals market? "If you are going to do it, do it right. You better have a real focus on quality and a reason for being here. The last thing the industry needs is a bunch of companies selling variations of the exact same ingredient, and they should avoid this if they want to last in this market," he said. "Companies should have some type of innovative approach. Really understand what this is all about from a consumer perspective. Don't get excited because there is a new technology because there are all sorts of innovative technologies that can't be sold."
In summation, Mr. Vitulli said the nutraceuticals market will continue to evolve, and it may be painful at times for some companies. In the end, he said, "I think change is good because it will weed out the players that refuse to play by a fair set of rules. Until the industry truly gets its act together, the negative publicity will not go away." He continued, "If we do things the right way, you will be amazed at the change in publicity and the way regulators look at this industry. The nutraceuticals market is a wonderful place to be for those companies that take it seriously and have more of a concern for the consumer than for themselves."
A few years ago, most suppliers in the nutraceuticals industry functioned as raw material peddlers, and full service suppliers offering marketing, regulatory and research and development support, were certainly in the minority. These days the nutraceuticals market is making increasing demands on its suppliers, who will be required to be more than that in the future. Well, for Cargill Health & Food Technologies (HFT), the future is already here.
Playing on the consumer level is not typical for a company like Cargill, but through its initiative called Food Systems Design, it has been developing ingredient brands over the last several years that it hopes will resonate with consumers. The impetus behind this initiative, according Steve Snyder, vice president of sales and marketing, is to bring nutraceuticals more mainstream. "We are very much focused on creating differentiated, effective, health-related and specialty functional products. The health piece is a primary driver for us," he said. "We have built a set of capabilities that are among the strongest in the industry to ensure that we have a solid consumer focus and innovative product applications."
Innovation includes being consumer relevant, which Mr. Snyder thinks is the most underutilized part of that concept. He also said that innovation has to do with offering novel products designed to meet consumer needs, formulated in a way that meets consumer acceptance. He highlighted the latter part of that statement as being the most important aspect of innovation for Cargill HFT. "Most of the innovation we are involved with has a lot to do with making products acceptable," he said, adding, "While innovation is very much tied to the success of a product or company, it doesn't always have to come in the form of a new product or ingredient; it could be a new way that ingredient or product is delivered."
For example, Mr. Snyder offered, "Formulating an orange juice to contain phytosterols, as was the case with Minute Maid, was something that had never been done before, so we had our work cut out for us." However, while Cargill had cleared one hurdle in gaining consumer acceptability for the phytosterol-fortified juice, it still had to work out the regulatory details. No doubt, what moved the Cargill/Minute Maid relationship along was FDA's ruling to expand the phytosterol health claim to apply to a broader range of foods and beverages. "Prior to launch, Cargill was the first company to receive FDA clearance expanding the sterol claim to other categories, beyond just spreads, yogurts and salad dressings," explained Pam Stauffer, marketing programs manager. "We worked very closely with FDA to make that happen. The FDA clearance needed to take place in order for the juice to go to market."
To take this a step further, Minute Maid, along with a grant from the National Institutes of Health (NIH), funded a study at the University of California at Davis (UC Davis) to examine the effect of the fortified orange juice on cholesterol levels. For the study, researchers enrolled 72 healthy volunteers, ages 20-73, with mildly elevated cholesterol levels. The volunteers were asked to eat their normal diet, but to drink a cup of juice along with whatever they had for breakfast and dinner for 10 weeks. Half of the group consumed the phytosterol-fortified orange juice, while the others drank regular orange juice. Fasting blood tests were taken before and after the study to determine total cholesterol, total triglycerides, LDL (bad) cholesterol, HDL (good) cholesterol and apolipoprotein B levels. According to UC Davis researchers, volunteers who drank the phytosterol-fortified orange juice had over a 7% decrease in total cholesterol, over a 12% decrease in LDL cholesterol and nearly an 8% decrease in non-HDL levels, compared to baseline and to the group that received the non-sterol orange juice.
With the inclusion of its CoroWise phytosterol ingredient in Minute Maid's HeartWise orange juice, Cargill hopes to make similar examples of its other branded ingredients in mainstream products in the supplement and food sectors. If the company can accomplish parallel goals with its other branded ingredients, if feels that nutraceuticals will finally become mainstream.
Whatever the ingredient, Cargill HFT is also going to make sure that every segment of the population becomes familiar with its offerings and the health benefits. "We are also reaching out to healthcare professionals by sponsoring high profile medical meetings and holding physician education seminars," said Ms. Stauffer. In addition, Cargill HFT is even sponsoring athletic events, such as the Life Time Fitness Triathlon, and appearing in mainstream publications. "It is pretty unique for a large ingredient company like Cargill to be reaching out to consumers and getting PR placements in magazines like Cooking Light, Self and Runner's World," said Ms. Stauffer.
All of the business unit's products have been launched within the last three to four years, and focus on at least one of the following health platforms: heart health, obesity, diabetes, women's health, energy, digestive health and joint health. Very briefly, its brands include: CoroWise phytosterols, AdvantaSoy soy isoflavones; OptaFlex chondroitin sulfate; Regenasure glucosamine; Ascend trehalose and Oliggo-Fiber inulin. On the horizon, Cargill HFT hopes to bring to market another ingredient called Betafiber, which is derived from barley. It will be positioned alongside oat products due to its high concentration of beta-glucan. A primary advantage of the ingredient, according to the company, is that it can be used in beverages due to its formulation benefits.
In conclusion, Mr. Snyder said he has noticed increasing energy in the nutraceuticals market, and he thinks it's on an upward swing. "We at Cargill have a very positive outlook on what the future holds," he said. "In order to bring healthy growth back to the industry, we need to make sure that the consumer is number one. We must also make sure that we are not doing anything to tarnish the industry."
A few years ago, most suppliers in the nutraceuticals industry functioned as raw material peddlers, and full service suppliers offering marketing, regulatory and research and development support, were certainly in the minority. These days the nutraceuticals market is making increasing demands on its suppliers, who will be required to be more than that in the future. Well, for Cargill Health & Food Technologies (HFT), the future is already here.
Playing on the consumer level is not typical for a company like Cargill, but through its initiative called Food Systems Design, it has been developing ingredient brands over the last several years that it hopes will resonate with consumers. The impetus behind this initiative, according Steve Snyder, vice president of sales and marketing, is to bring nutraceuticals more mainstream. "We are very much focused on creating differentiated, effective, health-related and specialty functional products. The health piece is a primary driver for us," he said. "We have built a set of capabilities that are among the strongest in the industry to ensure that we have a solid consumer focus and innovative product applications."
Innovation includes being consumer relevant, which Mr. Snyder thinks is the most underutilized part of that concept. He also said that innovation has to do with offering novel products designed to meet consumer needs, formulated in a way that meets consumer acceptance. He highlighted the latter part of that statement as being the most important aspect of innovation for Cargill HFT. "Most of the innovation we are involved with has a lot to do with making products acceptable," he said, adding, "While innovation is very much tied to the success of a product or company, it doesn't always have to come in the form of a new product or ingredient; it could be a new way that ingredient or product is delivered."
For example, Mr. Snyder offered, "Formulating an orange juice to contain phytosterols, as was the case with Minute Maid, was something that had never been done before, so we had our work cut out for us." However, while Cargill had cleared one hurdle in gaining consumer acceptability for the phytosterol-fortified juice, it still had to work out the regulatory details. No doubt, what moved the Cargill/Minute Maid relationship along was FDA's ruling to expand the phytosterol health claim to apply to a broader range of foods and beverages. "Prior to launch, Cargill was the first company to receive FDA clearance expanding the sterol claim to other categories, beyond just spreads, yogurts and salad dressings," explained Pam Stauffer, marketing programs manager. "We worked very closely with FDA to make that happen. The FDA clearance needed to take place in order for the juice to go to market."
To take this a step further, Minute Maid, along with a grant from the National Institutes of Health (NIH), funded a study at the University of California at Davis (UC Davis) to examine the effect of the fortified orange juice on cholesterol levels. For the study, researchers enrolled 72 healthy volunteers, ages 20-73, with mildly elevated cholesterol levels. The volunteers were asked to eat their normal diet, but to drink a cup of juice along with whatever they had for breakfast and dinner for 10 weeks. Half of the group consumed the phytosterol-fortified orange juice, while the others drank regular orange juice. Fasting blood tests were taken before and after the study to determine total cholesterol, total triglycerides, LDL (bad) cholesterol, HDL (good) cholesterol and apolipoprotein B levels. According to UC Davis researchers, volunteers who drank the phytosterol-fortified orange juice had over a 7% decrease in total cholesterol, over a 12% decrease in LDL cholesterol and nearly an 8% decrease in non-HDL levels, compared to baseline and to the group that received the non-sterol orange juice.
With the inclusion of its CoroWise phytosterol ingredient in Minute Maid's HeartWise orange juice, Cargill hopes to make similar examples of its other branded ingredients in mainstream products in the supplement and food sectors. If the company can accomplish parallel goals with its other branded ingredients, if feels that nutraceuticals will finally become mainstream.
Whatever the ingredient, Cargill HFT is also going to make sure that every segment of the population becomes familiar with its offerings and the health benefits. "We are also reaching out to healthcare professionals by sponsoring high profile medical meetings and holding physician education seminars," said Ms. Stauffer. In addition, Cargill HFT is even sponsoring athletic events, such as the Life Time Fitness Triathlon, and appearing in mainstream publications. "It is pretty unique for a large ingredient company like Cargill to be reaching out to consumers and getting PR placements in magazines like Cooking Light, Self and Runner's World," said Ms. Stauffer.
All of the business unit's products have been launched within the last three to four years, and focus on at least one of the following health platforms: heart health, obesity, diabetes, women's health, energy, digestive health and joint health. Very briefly, its brands include: CoroWise phytosterols, AdvantaSoy soy isoflavones; OptaFlex chondroitin sulfate; Regenasure glucosamine; Ascend trehalose and Oliggo-Fiber inulin. On the horizon, Cargill HFT hopes to bring to market another ingredient called Betafiber, which is derived from barley. It will be positioned alongside oat products due to its high concentration of beta-glucan. A primary advantage of the ingredient, according to the company, is that it can be used in beverages due to its formulation benefits.
In conclusion, Mr. Snyder said he has noticed increasing energy in the nutraceuticals market, and he thinks it's on an upward swing. "We at Cargill have a very positive outlook on what the future holds," he said. "In order to bring healthy growth back to the industry, we need to make sure that the consumer is number one. We must also make sure that we are not doing anything to tarnish the industry."
Interestingly, the founding of Martek had nothing to do with nutrition, at least here on earth. In fact, the company's beginnings stem from a U.S. government-issued grant to study algae as a renewable plant source for space travel. Established in 1985 by a group of phycologists (scientists who study algae), Martek was the result of a spin off from Martin Marietta-the aerospace company given the original government grant to research algae. Facing a possible takeover, Martin Marietta decided to divest its non-core activities, and unfortunately, or fortunately, its algae research fell into the non-core group. As a result, the scientists developing the algae technology bought it from Martin Marietta and started Martek, whose mission ever since has been to research and create high value products from algae.
These days, Martek's Nutritional Products Group keeps itself occupied with the research and development of fatty acids, specifically docosahexaenoic acid (DHA), an omega 3 fatty acid, and arachidonic acid (ARA), an omega 6 fatty acid. These fatty acids, of late, have become quite the "nutrition superstars", especially in the area of infant nutrition and overall human health. The company produces its DHA and ARA from natural vegetarian sources. Crypthecodinium cohnii, an alga, is a naturally high producer of DHA, while Mortierella alpina, a fungus, is a naturally high producer of ARA. These vegetarian sources are grown under strict manufacturing conditions in facilities that follow FDA current Good Manufacturing Practice (cGMP) regulations.
Martek was officially put on the map in the late 1980s when the science, in which the company played a significant role, pointed to a need to supplement the diet with DHA and ARA, particularly in pre-term and term infants. Also noteworthy, in the early 1990s, several organizations throughout the world began to call for the supplementation of infant formulas with DHA and ARA. Several studies, recommendations and patents later, Martek launched its patented blend of DHA and ARA oils (Formulaid) for pre-term infants in 1994 on the European market, followed by a product launch for term infants in Israel three years later.
In the U.S. market, Martek jumped its most significant hurdle in 2001 when it receivedgenerally recognized as safe (GRAS) status for its DHA and ARA ingredients for use in infant formula. Following this achievement, two major infant formula companies, Mead Johnson and Ross Laboratories, launched new infant formula products supplemented with DHA and ARA in 2002.
Today, Martek is engaged in license agreements with 13 infant formula manufacturers who represent more than two-thirds of the world's wholesale infant formula market. Formulas containing Martek's oils are now available in more than 60 countries worldwide, including the U.K., Mexico, China, the U.S. and, most recently, Canada. In the U.S., over 50% of the infant formula business supplements with DHA and ARA-thanks to Martek. "The infant formula market has gone from zero to 50% DHA/ARA fortification in two years," said Angela Tsetsis, executive director of marketing. "All of the DHA and ARA material being used is ours because we are the only ones that have FDA clearance for infant formula."
Infant nutrition aside, the company has always had an eye on the dietary supplement and functional food market as well. "Going for infant formula was the first step," said Ms. Tsetsis, "But it became clear when looking at the U.S. food records, that the American diet is very deficient with regard to DHA status, and it is getting worse every day. We felt that we not only needed to address this issue through infant formula, but also through other means." As such, in 1996 Martek launched a dietary supplement line to capitalize on the bustling supplement business at the time. Although supplement sales have dwindled since then, the company's Neuromins line has maintained its speed due to the rising popularity of omega 3s.
But it doesn't stop there. In February this year, Martek received GRAS status for use of its DHA product in foods and beverages. "We did this because a lot of the larger food companies preferred, and in some cases required, ingredients to have FDA GRAS status in place in order for them to be used in foods and beverages," said Ms. Tsetsis. "We decided it was a smart thing to do, and since we had a lot of experience navigating the FDA landscape with respect to gaining GRAS status for infant formula, we felt it would pay off for us in the long run."
Also enabling Martek's launch into the functional food market was its acquisition of OmegaTech in 2002. "Martek was ready to go to market with its existing technology, however, the cost parameters were not favorable. It was ultimately OmegaTech's technology that enabled us to move forward," Ms. Tsetsis said. "The acquisition of OmegaTech signaled the coming together of two powerhouses in algae research and development. As one company, we had the ability to offer the best of both worlds."
But be careful what you wish for, says Ms. Tsetsis, because, "When a company is an innovator, it needs to be prepared to invent the wheel, so-to-speak. That is what innovation is about." She explained, "We are currently in a situation where demand is outstripping supply on the infant formula side of the business. We can't just tell the shop down the street to make more; we have to make adjustments. When you are leading or innovating in a market, it requires more than just coming up with new products." This situation in particular is what led the company last September to purchase the FermPro facility in Kingstree, SC. "We are in the midst of expanding the capabilities there to a large extent and tripling the capacity through the addition of fermentation vessels and downstream processing," she said. "This is quite a large undertaking for the company and it should be complete sometime this year."
In an economic environment where most companies have been laying off, downsizing or maintaining the status quo, Martek continues to grow rapidly. In fact, according to Ms. Tsetsis, the company has grown from 50 to 500 employees in the last 11 years. "Thankfully, Martek continues to operate like a small company," she said. "Preserving that mentality will secure the company's future success."
Driven largely by an inventor's spirit and a desire to end world hunger, Patty McPeak emerges as chairman and CEO of this year's fifth Industry Innovator, NutraCea. The company was founded four years ago when Ms. McPeak, after six years of investigation, came upon a very large wasted food resource and started doing some digging. Through her research, Ms. McPeak revealed that more than 60 million metric tons of rice bran each year ends up as animal feed or dumped in landfills due to an enzyme-lipase-that renders the bran rancid within hours of milling, making it unfit for human consumption. After this discovery, Ms. McPeak made it her goal to figure out how to shut down the lipase activity in the rice bran in order to save its nutrient dense components. This idea was not new. In fact, she said, "For the past 7000 years, as rice became a cultivated crop, several people have tried to find a way to [deactivate the lipase enzyme] on an economically viable basis and no one had succeeded in doing so." Digging deeper, Ms. McPeak found that the U.S. government had funded the United States Department of Agriculture (USDA) to develop a process for deactivating the enzyme. Naturally, Ms. McPeak felt she should become a partner with USDA and work to develop the equipment to stabilize the rice bran. "From there it took us a number of years to develop the process," she said. "To make this possible, a major breakthrough in advanced extrusion technology was made, which brought about the stabilization of rice bran with all of its vital nutrients preserved."
So why was this wasted food source so valuable to Ms. McPeak? For starters, she said, approximately 65% of the nutrition from the rice kernel is locked away in the rice bran, which, if harnessed, could positively influence health of populations around the world. At this, she began to investigate the possibility of renewing this resource for the purpose of feeding the hungry. But, eventually Ms. McPeak honed her focus toward segments of the population looking to prevent or manage serious conditions, such as cardiovascular disease, diabetes and various digestive disorders.
From NutraCea's work with the stabilization of rice bran, two flagship products emerged-RiSolubles and RiceMucil-and remain the foundation for products that are developed at the company. The RiSolubles product is the water-soluble fraction of the enzyme-treated stabilized rice bran (SRB), which is separated from the insoluble fiber complex following a non-chemical proprietary process. According to NutraCea, it contains hypoallergenic protein, omega 3 and 6 fatty acids, B complex vitamins, phytonutrients and over 100 naturally-occurring antioxidants. The company also developed RiceMucil, which is prepared from SRB following a non-chemical process by which the nutritionally potent fiber is separated from the soluble components into a fine, feathery powder. The company claims that both products maintain potential in the area of proper blood glucose metabolism, liver function, repairing free radical damage, facilitating proper cholesterol metabolism, boosting energy and promoting bowel and colon health.
From the beginning, Ms. McPeak said, "My desire was to create a nutraceutical company in the true sense of the word. A nutraceutical company to me is one that functions similar to a pharmaceutical company, the only difference being that it works with natural products versus synthetics. Therefore, a nutraceutical product must deliver pharmacological benefits in a period of time that is significantly measurable." Delivering the benefits was exceedingly important to Ms. McPeak, but even more important was documenting in a scientific manner something that she could take to the medical community.
The investigation into the health benefits of NutraCea's products began very modestly with Ms. McPeak giving the product to customers and simultaneously compiling case histories. She noticed that LDL cholesterol was dropping and HDL cholesterol was rising. "A lot of cardiovascular benefits were taking place," she said, adding, "And I ended up with so many people on these products that I decided to initiate a double-blind, randomized, crossover clinical trial looking at type I and type II diabetes, measuring all of the cardiovascular risk factors."
This study was published in the Journal of Nutritional Biochemistry and is the company's most significant to date. It was conducted in Pakistan, and it included over 50 subjects with type I and type II diabetes. At the end of the 60-day treatment period, the average fasting blood glucose levels in type I diabetes patients had gone from 174 to 116; a 33% reduction. At the same time, Ms. McPeak said, researchers saw a significant drop in total and LDL cholesterol, triglycerides and apolipoprotein B levels. "At the end of the trial, the subjects were able to cut their diabetes medication by about 30%," she commented. Researchers from the study concluded, "These natural products can be used as nutritional supplements for the control of both types of diabetes mellitus in humans." Due to the positive findings in this study, NutraCea has decided to replicate it in the U.S. and look at a host of other risk factors. A new clinical trial replicating the type II portion of the original diabetes trial, measuring coronary and cardiovascular risk factors, is being designed and implemented at Columbia University and Cornell Weill Medical Center.
Speaking of partnerships, the company is also working with several institutions worldwide to clinically investigate its products, not only in the area of cardiovascular disease and diabetes, but also in the areas of colon health and cancer. Furthermore, the company is focusing on promoting the benefits of SRB through consumer education programs. One such effort will be headed be the Cornell Weill Medical Center, which is developing the Stabilized Rice Bran Information Center to target consumers and the medical community.
As for the role NutraCea plays in innovation, Ms. McPeak offered, "Certainly I think that everything we are doing is innovative. Just the fact that we are doing clinical research and patent work is innovative enough for this space. I also think that converting the largest wasted food resource on Earth into a highly effective medical food is innovation of the highest order." As for the impact she hopes the nutraceuticals industry as a whole will make in the future, she commented, "I think the industry has enormous potential to change the way medicine is practiced because we have a broken healthcare system; we are only treating symptoms. I think true nutraceuticals treat the root cause of a disease because they address underlying factors involved in the degenerative breakdown of the human system. I am so excited about being in the nutraceuticals industry because I think it will be mainstream medicine in five years."
"We only know how to do things one way; the right way," said Robert Orr, president of Ocean Nutrition Canada (ONC), when describing how its business functions. "If you do things with integrity, it will matter to the marketplace. We want to be here for a very long time, which is why we have taken a long range, high investment approach to the market because we don't think anything else will get us there." Whether it is by accident, or the fact that this Industry Innovator didn't know any better, ONC has certainly made a big splash in the nutraceuticals market by "doing the right thing" since its inception.
ONC began as a startup seven years ago with just two employees. Today, the company hails from Halifax, Nova Scotia, with nearly 250 employees guiding it through the dynamic nutraceuticals marketplace. "We started out as an idea from our parent company, Clearwater Fine Foods, which is one of the largest seafood companies in North America," said Mr. Orr. "Our parent company felt there was an opportunity to look at marine byproducts much in the same way the agricultural industry looks at byproducts from its processing." Mr. Orr, who came out of the mainstream food industry, was charged with the responsibility of developing a business plan for the startup. "I said to myself, if we wanted to create a business serving the dietary supplement, health food and functional food industries, what would it look like? At the end of the day we came up with key corporate strategies that would be necessary for long-term success," he said.
Research naturally became an integral part of the equation for ONC because Mr. Orr felt the company would not achieve success unless all of its products were grounded in science. As it turned out, being anchored in Halifax offered the company significant resources and access to the third largest marine science community in the world. The region is equipped with four universities, whose main concentration is marine education and research, and is also home to one of the largest institutions dedicated to marine research, The Canadian National Research Council's Institute of Marine Biosciences.
In 1999, ONC opened its first manufacturing plant, and one of the first commercialization areas was omega 3 fatty acids from fish oil. Mr. Orr offered, "Our R&D was focused on developing technology for refining omega 3 fatty acids, which the company has been successful at doing. We subsequently expanded that plant three times. Now ONC is the world's largest processor of omega 3 concentrates."
In addition to developing proprietary technologies and products, which have made the company what it is today, it also makes strong efforts to remain more environmentally friendly than any of its competitors, according to Ian Lucas, vice president of marketing and new product development. "All of the waste products from our omega 3 concentrate plant are used as biodiesel," he said, adding, "In fact, there are 20 buses in Halifax that run on a blend of fish oil waste product and traditional diesel, which reduces their negative emissions by about 30%." The impetus behind its environmental efforts goes back ONC's owner and primary investor, who once said, "At the end of the day, ONC wants to be able to leave behind more than it took." Mr. Orr believes it is this kind of thinking that guides the company today.
While growing up in the omega 3 business, ONC initially worked with waste product from the fishing industry, however, it soon expanded its focus to include other sustainable resources, such as seaweed and microalgae. Its Respondin product was discovered from a microalgal source and has been the focus of research looking into its ability to modulate the immune system. "It will help prevent colds and flues, or any other attack the immune system might be dealing with," said Mr. Orr. "At the same time, it also has the ability to build up the immune system to handle allergies. It has a dual function, which is very unusual."
ONC also produces a fish peptide ingredient and an extract from seaweed, which have indications in the area of blood pressure. Mr. Lucas said these products fit perfectly into the natural products marketplace and have significant opportunities in the area of blood pressure lowering, specifically for a condition referred to as pre-hypertension. Addressing this condition, he said, is not just about substituting natural products for drugs, but modifying the diet to prevent high blood pressure or delay the need for consumers to take blood pressure-lowering drugs.
ONC has built a solid reputation in the supplement world, but now it is aggressively pursuing the functional foods sector with its patent-protected microencapsulated powder technology, which can turn omega 3 oils into a tasteless, odorless powder for application in a wide range of foods. Also helping this along is ONC's recently received FDA generally recognized as safe (GRAS) status for these powders and oils.
ONC, particularly Mr. Orr, has also played a significant part in the establishment of the Omega 3 Working Group, along with other major omega 3 companies, under auspices of the Council for Responsible Nutrition (CRN), Washington, D.C. As a category, Mr. Orr felt that the omega 3 space would be ruined if actions were not taken from a self-regulatory standpoint to rid the market of the lesser quality omega 3 products. Consequently, it became the responsibility of the group to more fully develop the omega 3 category. The solution, Mr. Orr said, was to create an omega 3 monograph, which would establish quality and purity standards. After doing most of the legwork on the monograph, the Omega 3 Working Group forwarded its recommendations to USP. "We subsequently forwarded the monograph to USP, and hopefully in the fall, it will publish a monograph built around the one we created. This final monograph will set a national standard for omega 3 EPA and DHA oils," said Mr. Orr.
Innovation is a primary objective for ONC-just look at its tagline. But, Mr. Orr said, companies must be careful how they interpret innovation and turn it into success. "A lot of people think that innovation and creativity are synonymous, and I don't find this to be the case. Innovation is the application of creativity, and in ONC's case, the commercialization of creativity. There are a lot of good ideas out there, but you have to get them to the marketplace and apply them in order for them to be considered innovative," he said. "It is easy to see our approach to innovation through our marine products because we are taking materials from the ocean and using a pharmaceutical model to screen those materials and look for new products. However, the trick is not just discovering them but figuring out an efficient way to extract, process and market them. The problem solving and application aspects of innovation are critical to moving innovation to a successful level."
Fifty years ago, Tropicana came to market with a not-from-concentrate juice product and a mission to provide consumers with the best tasting, nutritious beverage around. Today, this juice behemoth has become one of the most frequently referenced success stories when it comes to functional foods. But its role as an Industry Innovator has nothing to do with adding fancy new ingredients or launching new products, rather Tropicana took the best of what nature had to offer and highlighted it for consumers-some will say, it put a new spin on an old product-and it worked! "We like to call our Pure Premium juice nature's first nutraceutical because without doing anything to orange juice, you get the most nutrients from orange juice than any other juice," said Carla McGill, PhD, RD, nutrition scientist. "Where Tropicana has been very successful has been in highlighting the intrinsic benefits and nutrients of orange juice, along with adding functional benefits that consumers really need, want and understand, such as calcium."
Tropicana made its debut in the fortified beverage category in 1995 with its original calcium and vitamin-fortified products, called Tropicana Pure Premium Plus. The company also debuted a fiber product at the same time, which was unsuccessful. Although the other products were relatively successful, the formulations needed some work. A couple reformulations later resulted in a second launch of the calcium and vitamin-fortified products in 1998 and 1999, respectively. The second time around, sales for the calcium-fortified beverage skyrocketed because the company incorporated a more palatable form of calcium called FruitCal, which it licensed from Procter & Gamble.
Discussing the reason for adding calcium to orange juice, Ms. McGill commented, "From a nutrition science perspective, we have long known that calcium is a nutrient that consumers do not get enough of across all ages. There was also a concern with the proliferation of other beverage choices that consumers would move away from the traditional calcium delivery vehicle-milk," she said. "Our Tropicana with Calcium product was launched to give people more options in order to get more calcium in their diet."
The latest entry for the company on the new product front is its Essentials line, which serves as an umbrella for five of its juice products specifically geared toward wellness. Jeff Kjome, senior brand manager, discussed the details. "As you shoot ahead to 2004, calcium is almost a mainstay in several of the Pure Premium varieties, and now we have Tropicana Essentials. The line includes five different items, each of which provides a specific value-added benefit to the consumer-Low Acid Orange Juice, Healthy Kids, Immunity Defense, Healthy Heart and Light n' Healthy," he said.
The Essentials line was a necessary development, according to Mr. Kjome, because consumers were looking for individualized nutrition in their beverage choices, especially within the orange juice category. In addition, he said, consumers have become extremely confused when shopping for orange juice. "We created this line to more clearly communicate, via packaging, that there is something similar in all of these products in that they all provide a value-added benefit."
The most touted of the line has been the Light n' Healthy variety, which is the first light orange juice product to launch in over a decade-Citrus Hill was the last light orange juice but was pulled from the market by Procter & Gamble in 1992. Prompted by public health concerns over diabetes and obesity, and the desire to be able to provide a reduced-sugar option, Tropicana felt it was in a perfect position to take advantage of those trends. That said, some experts feel the new low calorie orange juice could be detrimental to sales of regular orange juice by inferring that regular orange juice is high in sugar.
The company continues to evolve. At the heart of its strategy when it began fortifying its juices, was to call out the ingredients, so that consumers would become familiar with them. Now the time has come, said Ms. McGill, to focus on highlighting the benefits. "Through the name and the messaging we want to communicate the benefit(s), as opposed to highlighting the ingredients in the product. Consumers want to know as much about the benefits, as they do the ingredients." In addition, Mr. Kjome, said "As we continue to introduce products that meet consumer needs, once you get away from base calcium and vitamin C, there is a little bit of consumer confusion as to what benefit other ingredients can provide. As we continue to add ingredients, we need to make sure as a manufacturer that we are clearly communicating what the end benefits are to consumers."
Central to Pure Premium's success when it started adding ingredients was the decision not to increase price. "We have not increased price as we have added ingredients," said Mr. Kjome. "Although we are adding significant benefits by adding these ingredients in our different varieties, we felt it very important to continue to align price." Ms. McGill agreed, adding that, "If you look at consumer surveys, including HealthFocus, price is among the top three factors consumers consider when deciding whether or not to purchase a product. It usually goes in order of taste, nutrition and price. While they are looking for added benefits, they don't necessarily want to pay a lot more."
Discussing innovation from an R&D perspective, Ms McGill said it is important, but "we also don't want to ignore the intrinsic benefits of our base product." She added, "To me innovation is not necessarily a new product; it may be a new communication about a benefit that has always been there. And since the science is always changing, a learned new benefit is always likely to emerge, as well as finding a new way of talking about it to consumers."
Adding his thoughts on innovation, Mr. Kjome said, "I think innovation is a contributing factor to success, but we can't be so singularly focused on innovating that we forget why consumers came to us in the first place. With that in mind, as we continue to look for new packaging and products, as well as new consumer messaging points, we can't take our eye off what we started with."
So what lessons has Tropicana learned over the years? "I think there were two things that had an impact," said Ms. McGill. "First was the switch from our first calcium source to FruitCal, which improved taste and absorption; those benefits really rang true with consumers. You cannot ignore the taste message. When people tell you not to mess with their juice, listen to them. Second, a perfect example of highlighting an intrinsic benefit had to do with our work on getting the potassium claim approved. We completed this work in the fall of 2000. That was really a good lesson for us because even though we thought consumers knew the benefits about orange juice-like one 8-oz glass contains as much potassium as a banana-it was news to over 90% of consumers."
The companies profiled in the following pages are worthy of the Industry Innovator title because they found a way to deliver, despite a sluggish economy, regulatory uncertainty, negative press and falling consumer confidence. Instead of focusing on extenuating circumstances, these Industry Innovators looked toward the future and worked to create opportunity. The recipe for innovation is different for every company. As most companies in this review pointed out, innovation is not necessarily about launching new products; sometimes it is finding a new way to communicate health messages to consumers or finding a new way to deliver a nutritious ingredient. One thing is certain: this year's Industry Innovators are not interested in short-term gains; they have worked long and hard to make sure their long-term future is secure in the nutraceuticals market.
Amerifit Nutrition came together in 1999 as a result of a merger between two companies-AmeriFit and Medical Foods-marketing well-known brands such as Estroven, Vitaball and Acutrim. The company positions itself as a product development, marketing, sales and distribution company, which sells products to consumers, and plans to become one of the most prominent health and wellness product companies in North America.
According to Peter Vitulli, president and CEO, the company is patterned after a Fortune 100 consumer packaged goods company. "In this vein, Amerifit Nutrition's primary focus is the consumer first and we work our way back from there," he said. "In our industry, most ideas are generated from the ingredient and then [companies focus on] finding a way to sell it. We do exactly the opposite." As part of that model, Amerifit Nutrition remains brand-based. "Everything we do is focused on building trust and relationships with the customer. The value of our company is within the brands we have built," he said. "The ability to build sustainable brand franchises is not easy or cheap. Unfortunately, a lot of companies in this space don't have the know-how, the will or the resources to [build brands]."
One of Amerifit Nutrition's key assets, according to Mr. Vitulli, is the company's management team, which is made up of several high level executives that came out of the consumer packaged goods arena and have expertise in building brand franchises. Another asset, said Mr. Vitulli, is the company's mass market distribution network. "We are in well over 60,000 retail stores with our Estroven product and cross several channels of distribution. To get new products out there relatively quickly is difficult, but we do it well."
Since its inception, the company has grown at a compound annual growth rate (CAGR) of 33%. "Even during the years when the industry was doing lousy, we were doing really well. The reason for that, I believe, is because of our business model and the fact that we have an extremely experienced senior management team-they have been together since the company was formed," Mr. Vitulli said. "That stability has helped build a very strong organization overall."
Amerifit Nutrition uses six guiding principles in its business. First, it concentrates on building the company through brand scale, not SKU scale. "We want to have the maximum size with the fewest number of SKUs," he explained. Second, Amerifit believes in establishing solid science. "Never over promise or under deliver, which, unfortunately, this industry does a wonderful job of," he said. "This alienates consumers and regulators, and is one of the most frustrating aspects of operating in this industry." Third, the company rarely makes a move without knowing how consumers will react. "All of our actions flow from a deep understanding for our customers. Too many companies treat consumers too cavalierly with bad quality products and outrageous claims, which is a recipe for disaster," he said. "We spend a lot of time with consumer focus groups and conducting quantitative research. It is constantly a learning experience." Fourth, Amerifit Nutrition aggressively pursues distribution channel increases. Although the company is pleased with its distribution successes, Mr. Vitulli said, "We are far from satisfied." Fifth, the company focuses on leveraging its infrastructure to drive as much efficiency and impact as possible. "It is very painful to get a new position approved, so we are growing by putting more time and money into researching our customers, rather than creating more overhead in our organization," he commented. The last principle relates to building and refining the culture within Amerifit Nutrition itself. This principle, Mr. Vitulli says, drives a results oriented culture as aggressively and thoughtfully as possible.
In terms of innovation, Mr. Vitulli said, there is a hint of it in every Amerifit Nutrition product. "There is piece of innovation in each one of our products, whether it is in the packaging, the delivery, the messaging points or the positioning. Innovation is not necessarily about launching new products," he said, adding, "Everybody can participate in innovation. I don't want innovation to be solely the responsibility of the marketing team; I think everyone within the organization definitely has a role to play in innovation, small or large, every day."
So what advice does Mr. Vitulli have for companies interested in the nutraceuticals market? "If you are going to do it, do it right. You better have a real focus on quality and a reason for being here. The last thing the industry needs is a bunch of companies selling variations of the exact same ingredient, and they should avoid this if they want to last in this market," he said. "Companies should have some type of innovative approach. Really understand what this is all about from a consumer perspective. Don't get excited because there is a new technology because there are all sorts of innovative technologies that can't be sold."
In summation, Mr. Vitulli said the nutraceuticals market will continue to evolve, and it may be painful at times for some companies. In the end, he said, "I think change is good because it will weed out the players that refuse to play by a fair set of rules. Until the industry truly gets its act together, the negative publicity will not go away." He continued, "If we do things the right way, you will be amazed at the change in publicity and the way regulators look at this industry. The nutraceuticals market is a wonderful place to be for those companies that take it seriously and have more of a concern for the consumer than for themselves."
A few years ago, most suppliers in the nutraceuticals industry functioned as raw material peddlers, and full service suppliers offering marketing, regulatory and research and development support, were certainly in the minority. These days the nutraceuticals market is making increasing demands on its suppliers, who will be required to be more than that in the future. Well, for Cargill Health & Food Technologies (HFT), the future is already here.
Playing on the consumer level is not typical for a company like Cargill, but through its initiative called Food Systems Design, it has been developing ingredient brands over the last several years that it hopes will resonate with consumers. The impetus behind this initiative, according Steve Snyder, vice president of sales and marketing, is to bring nutraceuticals more mainstream. "We are very much focused on creating differentiated, effective, health-related and specialty functional products. The health piece is a primary driver for us," he said. "We have built a set of capabilities that are among the strongest in the industry to ensure that we have a solid consumer focus and innovative product applications."
Innovation includes being consumer relevant, which Mr. Snyder thinks is the most underutilized part of that concept. He also said that innovation has to do with offering novel products designed to meet consumer needs, formulated in a way that meets consumer acceptance. He highlighted the latter part of that statement as being the most important aspect of innovation for Cargill HFT. "Most of the innovation we are involved with has a lot to do with making products acceptable," he said, adding, "While innovation is very much tied to the success of a product or company, it doesn't always have to come in the form of a new product or ingredient; it could be a new way that ingredient or product is delivered."
For example, Mr. Snyder offered, "Formulating an orange juice to contain phytosterols, as was the case with Minute Maid, was something that had never been done before, so we had our work cut out for us." However, while Cargill had cleared one hurdle in gaining consumer acceptability for the phytosterol-fortified juice, it still had to work out the regulatory details. No doubt, what moved the Cargill/Minute Maid relationship along was FDA's ruling to expand the phytosterol health claim to apply to a broader range of foods and beverages. "Prior to launch, Cargill was the first company to receive FDA clearance expanding the sterol claim to other categories, beyond just spreads, yogurts and salad dressings," explained Pam Stauffer, marketing programs manager. "We worked very closely with FDA to make that happen. The FDA clearance needed to take place in order for the juice to go to market."
To take this a step further, Minute Maid, along with a grant from the National Institutes of Health (NIH), funded a study at the University of California at Davis (UC Davis) to examine the effect of the fortified orange juice on cholesterol levels. For the study, researchers enrolled 72 healthy volunteers, ages 20-73, with mildly elevated cholesterol levels. The volunteers were asked to eat their normal diet, but to drink a cup of juice along with whatever they had for breakfast and dinner for 10 weeks. Half of the group consumed the phytosterol-fortified orange juice, while the others drank regular orange juice. Fasting blood tests were taken before and after the study to determine total cholesterol, total triglycerides, LDL (bad) cholesterol, HDL (good) cholesterol and apolipoprotein B levels. According to UC Davis researchers, volunteers who drank the phytosterol-fortified orange juice had over a 7% decrease in total cholesterol, over a 12% decrease in LDL cholesterol and nearly an 8% decrease in non-HDL levels, compared to baseline and to the group that received the non-sterol orange juice.
With the inclusion of its CoroWise phytosterol ingredient in Minute Maid's HeartWise orange juice, Cargill hopes to make similar examples of its other branded ingredients in mainstream products in the supplement and food sectors. If the company can accomplish parallel goals with its other branded ingredients, if feels that nutraceuticals will finally become mainstream.
Whatever the ingredient, Cargill HFT is also going to make sure that every segment of the population becomes familiar with its offerings and the health benefits. "We are also reaching out to healthcare professionals by sponsoring high profile medical meetings and holding physician education seminars," said Ms. Stauffer. In addition, Cargill HFT is even sponsoring athletic events, such as the Life Time Fitness Triathlon, and appearing in mainstream publications. "It is pretty unique for a large ingredient company like Cargill to be reaching out to consumers and getting PR placements in magazines like Cooking Light, Self and Runner's World," said Ms. Stauffer.
All of the business unit's products have been launched within the last three to four years, and focus on at least one of the following health platforms: heart health, obesity, diabetes, women's health, energy, digestive health and joint health. Very briefly, its brands include: CoroWise phytosterols, AdvantaSoy soy isoflavones; OptaFlex chondroitin sulfate; Regenasure glucosamine; Ascend trehalose and Oliggo-Fiber inulin. On the horizon, Cargill HFT hopes to bring to market another ingredient called Betafiber, which is derived from barley. It will be positioned alongside oat products due to its high concentration of beta-glucan. A primary advantage of the ingredient, according to the company, is that it can be used in beverages due to its formulation benefits.
In conclusion, Mr. Snyder said he has noticed increasing energy in the nutraceuticals market, and he thinks it's on an upward swing. "We at Cargill have a very positive outlook on what the future holds," he said. "In order to bring healthy growth back to the industry, we need to make sure that the consumer is number one. We must also make sure that we are not doing anything to tarnish the industry."
A few years ago, most suppliers in the nutraceuticals industry functioned as raw material peddlers, and full service suppliers offering marketing, regulatory and research and development support, were certainly in the minority. These days the nutraceuticals market is making increasing demands on its suppliers, who will be required to be more than that in the future. Well, for Cargill Health & Food Technologies (HFT), the future is already here.
Playing on the consumer level is not typical for a company like Cargill, but through its initiative called Food Systems Design, it has been developing ingredient brands over the last several years that it hopes will resonate with consumers. The impetus behind this initiative, according Steve Snyder, vice president of sales and marketing, is to bring nutraceuticals more mainstream. "We are very much focused on creating differentiated, effective, health-related and specialty functional products. The health piece is a primary driver for us," he said. "We have built a set of capabilities that are among the strongest in the industry to ensure that we have a solid consumer focus and innovative product applications."
Innovation includes being consumer relevant, which Mr. Snyder thinks is the most underutilized part of that concept. He also said that innovation has to do with offering novel products designed to meet consumer needs, formulated in a way that meets consumer acceptance. He highlighted the latter part of that statement as being the most important aspect of innovation for Cargill HFT. "Most of the innovation we are involved with has a lot to do with making products acceptable," he said, adding, "While innovation is very much tied to the success of a product or company, it doesn't always have to come in the form of a new product or ingredient; it could be a new way that ingredient or product is delivered."
For example, Mr. Snyder offered, "Formulating an orange juice to contain phytosterols, as was the case with Minute Maid, was something that had never been done before, so we had our work cut out for us." However, while Cargill had cleared one hurdle in gaining consumer acceptability for the phytosterol-fortified juice, it still had to work out the regulatory details. No doubt, what moved the Cargill/Minute Maid relationship along was FDA's ruling to expand the phytosterol health claim to apply to a broader range of foods and beverages. "Prior to launch, Cargill was the first company to receive FDA clearance expanding the sterol claim to other categories, beyond just spreads, yogurts and salad dressings," explained Pam Stauffer, marketing programs manager. "We worked very closely with FDA to make that happen. The FDA clearance needed to take place in order for the juice to go to market."
To take this a step further, Minute Maid, along with a grant from the National Institutes of Health (NIH), funded a study at the University of California at Davis (UC Davis) to examine the effect of the fortified orange juice on cholesterol levels. For the study, researchers enrolled 72 healthy volunteers, ages 20-73, with mildly elevated cholesterol levels. The volunteers were asked to eat their normal diet, but to drink a cup of juice along with whatever they had for breakfast and dinner for 10 weeks. Half of the group consumed the phytosterol-fortified orange juice, while the others drank regular orange juice. Fasting blood tests were taken before and after the study to determine total cholesterol, total triglycerides, LDL (bad) cholesterol, HDL (good) cholesterol and apolipoprotein B levels. According to UC Davis researchers, volunteers who drank the phytosterol-fortified orange juice had over a 7% decrease in total cholesterol, over a 12% decrease in LDL cholesterol and nearly an 8% decrease in non-HDL levels, compared to baseline and to the group that received the non-sterol orange juice.
With the inclusion of its CoroWise phytosterol ingredient in Minute Maid's HeartWise orange juice, Cargill hopes to make similar examples of its other branded ingredients in mainstream products in the supplement and food sectors. If the company can accomplish parallel goals with its other branded ingredients, if feels that nutraceuticals will finally become mainstream.
Whatever the ingredient, Cargill HFT is also going to make sure that every segment of the population becomes familiar with its offerings and the health benefits. "We are also reaching out to healthcare professionals by sponsoring high profile medical meetings and holding physician education seminars," said Ms. Stauffer. In addition, Cargill HFT is even sponsoring athletic events, such as the Life Time Fitness Triathlon, and appearing in mainstream publications. "It is pretty unique for a large ingredient company like Cargill to be reaching out to consumers and getting PR placements in magazines like Cooking Light, Self and Runner's World," said Ms. Stauffer.
All of the business unit's products have been launched within the last three to four years, and focus on at least one of the following health platforms: heart health, obesity, diabetes, women's health, energy, digestive health and joint health. Very briefly, its brands include: CoroWise phytosterols, AdvantaSoy soy isoflavones; OptaFlex chondroitin sulfate; Regenasure glucosamine; Ascend trehalose and Oliggo-Fiber inulin. On the horizon, Cargill HFT hopes to bring to market another ingredient called Betafiber, which is derived from barley. It will be positioned alongside oat products due to its high concentration of beta-glucan. A primary advantage of the ingredient, according to the company, is that it can be used in beverages due to its formulation benefits.
In conclusion, Mr. Snyder said he has noticed increasing energy in the nutraceuticals market, and he thinks it's on an upward swing. "We at Cargill have a very positive outlook on what the future holds," he said. "In order to bring healthy growth back to the industry, we need to make sure that the consumer is number one. We must also make sure that we are not doing anything to tarnish the industry."
Interestingly, the founding of Martek had nothing to do with nutrition, at least here on earth. In fact, the company's beginnings stem from a U.S. government-issued grant to study algae as a renewable plant source for space travel. Established in 1985 by a group of phycologists (scientists who study algae), Martek was the result of a spin off from Martin Marietta-the aerospace company given the original government grant to research algae. Facing a possible takeover, Martin Marietta decided to divest its non-core activities, and unfortunately, or fortunately, its algae research fell into the non-core group. As a result, the scientists developing the algae technology bought it from Martin Marietta and started Martek, whose mission ever since has been to research and create high value products from algae.
These days, Martek's Nutritional Products Group keeps itself occupied with the research and development of fatty acids, specifically docosahexaenoic acid (DHA), an omega 3 fatty acid, and arachidonic acid (ARA), an omega 6 fatty acid. These fatty acids, of late, have become quite the "nutrition superstars", especially in the area of infant nutrition and overall human health. The company produces its DHA and ARA from natural vegetarian sources. Crypthecodinium cohnii, an alga, is a naturally high producer of DHA, while Mortierella alpina, a fungus, is a naturally high producer of ARA. These vegetarian sources are grown under strict manufacturing conditions in facilities that follow FDA current Good Manufacturing Practice (cGMP) regulations.
Martek was officially put on the map in the late 1980s when the science, in which the company played a significant role, pointed to a need to supplement the diet with DHA and ARA, particularly in pre-term and term infants. Also noteworthy, in the early 1990s, several organizations throughout the world began to call for the supplementation of infant formulas with DHA and ARA. Several studies, recommendations and patents later, Martek launched its patented blend of DHA and ARA oils (Formulaid) for pre-term infants in 1994 on the European market, followed by a product launch for term infants in Israel three years later.
In the U.S. market, Martek jumped its most significant hurdle in 2001 when it receivedgenerally recognized as safe (GRAS) status for its DHA and ARA ingredients for use in infant formula. Following this achievement, two major infant formula companies, Mead Johnson and Ross Laboratories, launched new infant formula products supplemented with DHA and ARA in 2002.
Today, Martek is engaged in license agreements with 13 infant formula manufacturers who represent more than two-thirds of the world's wholesale infant formula market. Formulas containing Martek's oils are now available in more than 60 countries worldwide, including the U.K., Mexico, China, the U.S. and, most recently, Canada. In the U.S., over 50% of the infant formula business supplements with DHA and ARA-thanks to Martek. "The infant formula market has gone from zero to 50% DHA/ARA fortification in two years," said Angela Tsetsis, executive director of marketing. "All of the DHA and ARA material being used is ours because we are the only ones that have FDA clearance for infant formula."
Infant nutrition aside, the company has always had an eye on the dietary supplement and functional food market as well. "Going for infant formula was the first step," said Ms. Tsetsis, "But it became clear when looking at the U.S. food records, that the American diet is very deficient with regard to DHA status, and it is getting worse every day. We felt that we not only needed to address this issue through infant formula, but also through other means." As such, in 1996 Martek launched a dietary supplement line to capitalize on the bustling supplement business at the time. Although supplement sales have dwindled since then, the company's Neuromins line has maintained its speed due to the rising popularity of omega 3s.
But it doesn't stop there. In February this year, Martek received GRAS status for use of its DHA product in foods and beverages. "We did this because a lot of the larger food companies preferred, and in some cases required, ingredients to have FDA GRAS status in place in order for them to be used in foods and beverages," said Ms. Tsetsis. "We decided it was a smart thing to do, and since we had a lot of experience navigating the FDA landscape with respect to gaining GRAS status for infant formula, we felt it would pay off for us in the long run."
Also enabling Martek's launch into the functional food market was its acquisition of OmegaTech in 2002. "Martek was ready to go to market with its existing technology, however, the cost parameters were not favorable. It was ultimately OmegaTech's technology that enabled us to move forward," Ms. Tsetsis said. "The acquisition of OmegaTech signaled the coming together of two powerhouses in algae research and development. As one company, we had the ability to offer the best of both worlds."
But be careful what you wish for, says Ms. Tsetsis, because, "When a company is an innovator, it needs to be prepared to invent the wheel, so-to-speak. That is what innovation is about." She explained, "We are currently in a situation where demand is outstripping supply on the infant formula side of the business. We can't just tell the shop down the street to make more; we have to make adjustments. When you are leading or innovating in a market, it requires more than just coming up with new products." This situation in particular is what led the company last September to purchase the FermPro facility in Kingstree, SC. "We are in the midst of expanding the capabilities there to a large extent and tripling the capacity through the addition of fermentation vessels and downstream processing," she said. "This is quite a large undertaking for the company and it should be complete sometime this year."
In an economic environment where most companies have been laying off, downsizing or maintaining the status quo, Martek continues to grow rapidly. In fact, according to Ms. Tsetsis, the company has grown from 50 to 500 employees in the last 11 years. "Thankfully, Martek continues to operate like a small company," she said. "Preserving that mentality will secure the company's future success."
Driven largely by an inventor's spirit and a desire to end world hunger, Patty McPeak emerges as chairman and CEO of this year's fifth Industry Innovator, NutraCea. The company was founded four years ago when Ms. McPeak, after six years of investigation, came upon a very large wasted food resource and started doing some digging. Through her research, Ms. McPeak revealed that more than 60 million metric tons of rice bran each year ends up as animal feed or dumped in landfills due to an enzyme-lipase-that renders the bran rancid within hours of milling, making it unfit for human consumption. After this discovery, Ms. McPeak made it her goal to figure out how to shut down the lipase activity in the rice bran in order to save its nutrient dense components. This idea was not new. In fact, she said, "For the past 7000 years, as rice became a cultivated crop, several people have tried to find a way to [deactivate the lipase enzyme] on an economically viable basis and no one had succeeded in doing so." Digging deeper, Ms. McPeak found that the U.S. government had funded the United States Department of Agriculture (USDA) to develop a process for deactivating the enzyme. Naturally, Ms. McPeak felt she should become a partner with USDA and work to develop the equipment to stabilize the rice bran. "From there it took us a number of years to develop the process," she said. "To make this possible, a major breakthrough in advanced extrusion technology was made, which brought about the stabilization of rice bran with all of its vital nutrients preserved."
So why was this wasted food source so valuable to Ms. McPeak? For starters, she said, approximately 65% of the nutrition from the rice kernel is locked away in the rice bran, which, if harnessed, could positively influence health of populations around the world. At this, she began to investigate the possibility of renewing this resource for the purpose of feeding the hungry. But, eventually Ms. McPeak honed her focus toward segments of the population looking to prevent or manage serious conditions, such as cardiovascular disease, diabetes and various digestive disorders.
From NutraCea's work with the stabilization of rice bran, two flagship products emerged-RiSolubles and RiceMucil-and remain the foundation for products that are developed at the company. The RiSolubles product is the water-soluble fraction of the enzyme-treated stabilized rice bran (SRB), which is separated from the insoluble fiber complex following a non-chemical proprietary process. According to NutraCea, it contains hypoallergenic protein, omega 3 and 6 fatty acids, B complex vitamins, phytonutrients and over 100 naturally-occurring antioxidants. The company also developed RiceMucil, which is prepared from SRB following a non-chemical process by which the nutritionally potent fiber is separated from the soluble components into a fine, feathery powder. The company claims that both products maintain potential in the area of proper blood glucose metabolism, liver function, repairing free radical damage, facilitating proper cholesterol metabolism, boosting energy and promoting bowel and colon health.
From the beginning, Ms. McPeak said, "My desire was to create a nutraceutical company in the true sense of the word. A nutraceutical company to me is one that functions similar to a pharmaceutical company, the only difference being that it works with natural products versus synthetics. Therefore, a nutraceutical product must deliver pharmacological benefits in a period of time that is significantly measurable." Delivering the benefits was exceedingly important to Ms. McPeak, but even more important was documenting in a scientific manner something that she could take to the medical community.
The investigation into the health benefits of NutraCea's products began very modestly with Ms. McPeak giving the product to customers and simultaneously compiling case histories. She noticed that LDL cholesterol was dropping and HDL cholesterol was rising. "A lot of cardiovascular benefits were taking place," she said, adding, "And I ended up with so many people on these products that I decided to initiate a double-blind, randomized, crossover clinical trial looking at type I and type II diabetes, measuring all of the cardiovascular risk factors."
This study was published in the Journal of Nutritional Biochemistry and is the company's most significant to date. It was conducted in Pakistan, and it included over 50 subjects with type I and type II diabetes. At the end of the 60-day treatment period, the average fasting blood glucose levels in type I diabetes patients had gone from 174 to 116; a 33% reduction. At the same time, Ms. McPeak said, researchers saw a significant drop in total and LDL cholesterol, triglycerides and apolipoprotein B levels. "At the end of the trial, the subjects were able to cut their diabetes medication by about 30%," she commented. Researchers from the study concluded, "These natural products can be used as nutritional supplements for the control of both types of diabetes mellitus in humans." Due to the positive findings in this study, NutraCea has decided to replicate it in the U.S. and look at a host of other risk factors. A new clinical trial replicating the type II portion of the original diabetes trial, measuring coronary and cardiovascular risk factors, is being designed and implemented at Columbia University and Cornell Weill Medical Center.
Speaking of partnerships, the company is also working with several institutions worldwide to clinically investigate its products, not only in the area of cardiovascular disease and diabetes, but also in the areas of colon health and cancer. Furthermore, the company is focusing on promoting the benefits of SRB through consumer education programs. One such effort will be headed be the Cornell Weill Medical Center, which is developing the Stabilized Rice Bran Information Center to target consumers and the medical community.
As for the role NutraCea plays in innovation, Ms. McPeak offered, "Certainly I think that everything we are doing is innovative. Just the fact that we are doing clinical research and patent work is innovative enough for this space. I also think that converting the largest wasted food resource on Earth into a highly effective medical food is innovation of the highest order." As for the impact she hopes the nutraceuticals industry as a whole will make in the future, she commented, "I think the industry has enormous potential to change the way medicine is practiced because we have a broken healthcare system; we are only treating symptoms. I think true nutraceuticals treat the root cause of a disease because they address underlying factors involved in the degenerative breakdown of the human system. I am so excited about being in the nutraceuticals industry because I think it will be mainstream medicine in five years."
"We only know how to do things one way; the right way," said Robert Orr, president of Ocean Nutrition Canada (ONC), when describing how its business functions. "If you do things with integrity, it will matter to the marketplace. We want to be here for a very long time, which is why we have taken a long range, high investment approach to the market because we don't think anything else will get us there." Whether it is by accident, or the fact that this Industry Innovator didn't know any better, ONC has certainly made a big splash in the nutraceuticals market by "doing the right thing" since its inception.
ONC began as a startup seven years ago with just two employees. Today, the company hails from Halifax, Nova Scotia, with nearly 250 employees guiding it through the dynamic nutraceuticals marketplace. "We started out as an idea from our parent company, Clearwater Fine Foods, which is one of the largest seafood companies in North America," said Mr. Orr. "Our parent company felt there was an opportunity to look at marine byproducts much in the same way the agricultural industry looks at byproducts from its processing." Mr. Orr, who came out of the mainstream food industry, was charged with the responsibility of developing a business plan for the startup. "I said to myself, if we wanted to create a business serving the dietary supplement, health food and functional food industries, what would it look like? At the end of the day we came up with key corporate strategies that would be necessary for long-term success," he said.
Research naturally became an integral part of the equation for ONC because Mr. Orr felt the company would not achieve success unless all of its products were grounded in science. As it turned out, being anchored in Halifax offered the company significant resources and access to the third largest marine science community in the world. The region is equipped with four universities, whose main concentration is marine education and research, and is also home to one of the largest institutions dedicated to marine research, The Canadian National Research Council's Institute of Marine Biosciences.
In 1999, ONC opened its first manufacturing plant, and one of the first commercialization areas was omega 3 fatty acids from fish oil. Mr. Orr offered, "Our R&D was focused on developing technology for refining omega 3 fatty acids, which the company has been successful at doing. We subsequently expanded that plant three times. Now ONC is the world's largest processor of omega 3 concentrates."
In addition to developing proprietary technologies and products, which have made the company what it is today, it also makes strong efforts to remain more environmentally friendly than any of its competitors, according to Ian Lucas, vice president of marketing and new product development. "All of the waste products from our omega 3 concentrate plant are used as biodiesel," he said, adding, "In fact, there are 20 buses in Halifax that run on a blend of fish oil waste product and traditional diesel, which reduces their negative emissions by about 30%." The impetus behind its environmental efforts goes back ONC's owner and primary investor, who once said, "At the end of the day, ONC wants to be able to leave behind more than it took." Mr. Orr believes it is this kind of thinking that guides the company today.
While growing up in the omega 3 business, ONC initially worked with waste product from the fishing industry, however, it soon expanded its focus to include other sustainable resources, such as seaweed and microalgae. Its Respondin product was discovered from a microalgal source and has been the focus of research looking into its ability to modulate the immune system. "It will help prevent colds and flues, or any other attack the immune system might be dealing with," said Mr. Orr. "At the same time, it also has the ability to build up the immune system to handle allergies. It has a dual function, which is very unusual."
ONC also produces a fish peptide ingredient and an extract from seaweed, which have indications in the area of blood pressure. Mr. Lucas said these products fit perfectly into the natural products marketplace and have significant opportunities in the area of blood pressure lowering, specifically for a condition referred to as pre-hypertension. Addressing this condition, he said, is not just about substituting natural products for drugs, but modifying the diet to prevent high blood pressure or delay the need for consumers to take blood pressure-lowering drugs.
ONC has built a solid reputation in the supplement world, but now it is aggressively pursuing the functional foods sector with its patent-protected microencapsulated powder technology, which can turn omega 3 oils into a tasteless, odorless powder for application in a wide range of foods. Also helping this along is ONC's recently received FDA generally recognized as safe (GRAS) status for these powders and oils.
ONC, particularly Mr. Orr, has also played a significant part in the establishment of the Omega 3 Working Group, along with other major omega 3 companies, under auspices of the Council for Responsible Nutrition (CRN), Washington, D.C. As a category, Mr. Orr felt that the omega 3 space would be ruined if actions were not taken from a self-regulatory standpoint to rid the market of the lesser quality omega 3 products. Consequently, it became the responsibility of the group to more fully develop the omega 3 category. The solution, Mr. Orr said, was to create an omega 3 monograph, which would establish quality and purity standards. After doing most of the legwork on the monograph, the Omega 3 Working Group forwarded its recommendations to USP. "We subsequently forwarded the monograph to USP, and hopefully in the fall, it will publish a monograph built around the one we created. This final monograph will set a national standard for omega 3 EPA and DHA oils," said Mr. Orr.
Innovation is a primary objective for ONC-just look at its tagline. But, Mr. Orr said, companies must be careful how they interpret innovation and turn it into success. "A lot of people think that innovation and creativity are synonymous, and I don't find this to be the case. Innovation is the application of creativity, and in ONC's case, the commercialization of creativity. There are a lot of good ideas out there, but you have to get them to the marketplace and apply them in order for them to be considered innovative," he said. "It is easy to see our approach to innovation through our marine products because we are taking materials from the ocean and using a pharmaceutical model to screen those materials and look for new products. However, the trick is not just discovering them but figuring out an efficient way to extract, process and market them. The problem solving and application aspects of innovation are critical to moving innovation to a successful level."
Fifty years ago, Tropicana came to market with a not-from-concentrate juice product and a mission to provide consumers with the best tasting, nutritious beverage around. Today, this juice behemoth has become one of the most frequently referenced success stories when it comes to functional foods. But its role as an Industry Innovator has nothing to do with adding fancy new ingredients or launching new products, rather Tropicana took the best of what nature had to offer and highlighted it for consumers-some will say, it put a new spin on an old product-and it worked! "We like to call our Pure Premium juice nature's first nutraceutical because without doing anything to orange juice, you get the most nutrients from orange juice than any other juice," said Carla McGill, PhD, RD, nutrition scientist. "Where Tropicana has been very successful has been in highlighting the intrinsic benefits and nutrients of orange juice, along with adding functional benefits that consumers really need, want and understand, such as calcium."
Tropicana made its debut in the fortified beverage category in 1995 with its original calcium and vitamin-fortified products, called Tropicana Pure Premium Plus. The company also debuted a fiber product at the same time, which was unsuccessful. Although the other products were relatively successful, the formulations needed some work. A couple reformulations later resulted in a second launch of the calcium and vitamin-fortified products in 1998 and 1999, respectively. The second time around, sales for the calcium-fortified beverage skyrocketed because the company incorporated a more palatable form of calcium called FruitCal, which it licensed from Procter & Gamble.
Discussing the reason for adding calcium to orange juice, Ms. McGill commented, "From a nutrition science perspective, we have long known that calcium is a nutrient that consumers do not get enough of across all ages. There was also a concern with the proliferation of other beverage choices that consumers would move away from the traditional calcium delivery vehicle-milk," she said. "Our Tropicana with Calcium product was launched to give people more options in order to get more calcium in their diet."
The latest entry for the company on the new product front is its Essentials line, which serves as an umbrella for five of its juice products specifically geared toward wellness. Jeff Kjome, senior brand manager, discussed the details. "As you shoot ahead to 2004, calcium is almost a mainstay in several of the Pure Premium varieties, and now we have Tropicana Essentials. The line includes five different items, each of which provides a specific value-added benefit to the consumer-Low Acid Orange Juice, Healthy Kids, Immunity Defense, Healthy Heart and Light n' Healthy," he said.
The Essentials line was a necessary development, according to Mr. Kjome, because consumers were looking for individualized nutrition in their beverage choices, especially within the orange juice category. In addition, he said, consumers have become extremely confused when shopping for orange juice. "We created this line to more clearly communicate, via packaging, that there is something similar in all of these products in that they all provide a value-added benefit."
The most touted of the line has been the Light n' Healthy variety, which is the first light orange juice product to launch in over a decade-Citrus Hill was the last light orange juice but was pulled from the market by Procter & Gamble in 1992. Prompted by public health concerns over diabetes and obesity, and the desire to be able to provide a reduced-sugar option, Tropicana felt it was in a perfect position to take advantage of those trends. That said, some experts feel the new low calorie orange juice could be detrimental to sales of regular orange juice by inferring that regular orange juice is high in sugar.
The company continues to evolve. At the heart of its strategy when it began fortifying its juices, was to call out the ingredients, so that consumers would become familiar with them. Now the time has come, said Ms. McGill, to focus on highlighting the benefits. "Through the name and the messaging we want to communicate the benefit(s), as opposed to highlighting the ingredients in the product. Consumers want to know as much about the benefits, as they do the ingredients." In addition, Mr. Kjome, said "As we continue to introduce products that meet consumer needs, once you get away from base calcium and vitamin C, there is a little bit of consumer confusion as to what benefit other ingredients can provide. As we continue to add ingredients, we need to make sure as a manufacturer that we are clearly communicating what the end benefits are to consumers."
Central to Pure Premium's success when it started adding ingredients was the decision not to increase price. "We have not increased price as we have added ingredients," said Mr. Kjome. "Although we are adding significant benefits by adding these ingredients in our different varieties, we felt it very important to continue to align price." Ms. McGill agreed, adding that, "If you look at consumer surveys, including HealthFocus, price is among the top three factors consumers consider when deciding whether or not to purchase a product. It usually goes in order of taste, nutrition and price. While they are looking for added benefits, they don't necessarily want to pay a lot more."
Discussing innovation from an R&D perspective, Ms McGill said it is important, but "we also don't want to ignore the intrinsic benefits of our base product." She added, "To me innovation is not necessarily a new product; it may be a new communication about a benefit that has always been there. And since the science is always changing, a learned new benefit is always likely to emerge, as well as finding a new way of talking about it to consumers."
Adding his thoughts on innovation, Mr. Kjome said, "I think innovation is a contributing factor to success, but we can't be so singularly focused on innovating that we forget why consumers came to us in the first place. With that in mind, as we continue to look for new packaging and products, as well as new consumer messaging points, we can't take our eye off what we started with."
So what lessons has Tropicana learned over the years? "I think there were two things that had an impact," said Ms. McGill. "First was the switch from our first calcium source to FruitCal, which improved taste and absorption; those benefits really rang true with consumers. You cannot ignore the taste message. When people tell you not to mess with their juice, listen to them. Second, a perfect example of highlighting an intrinsic benefit had to do with our work on getting the potassium claim approved. We completed this work in the fall of 2000. That was really a good lesson for us because even though we thought consumers knew the benefits about orange juice-like one 8-oz glass contains as much potassium as a banana-it was news to over 90% of consumers."
