Julian Mellentin11.01.09
The news that French producers of foie gras have had to cut production by 10% should come as no surprise. The global financial crisis has brought with it significant shifts in consumer demand in many countries. But a closer look shows that in health and nutrition, rather than create new trends, the economic downturn has primarily reinforced existing ones. There have been success stories even in the depths of economic uncertainty.
The biggest change in the year ahead will be for companies in Europe, resulting from Europe’s adoption of a new and restrictive health claims system that comes into force in January 2010. (See sidebar below.) With more than 80% of claim petitions rejected so far, and even well-researched products such as cranberry juice barred from discussing their health benefits on labels or in advertising, Europe will lag behind the rest of the world, for a while at least.
One of the strongest trends has been the rise in marketing of foods and beverages for their natural and intrinsic health benefits. There’s a big group of consumers for whom the message that a food is naturally healthy is one of the most persuasive in food marketing. As a result, there is an ever-growing trend of traditional foods reinventing themselves as all-natural foods for health. Oats, almonds, cranberry juice, pomegranate and other superfruits are all examples of foodstuffs touting a health benefit that’s “natural and intrinsic” to the product, rather than coming from an added ingredient.
The idea of health benefits from natural foods is gaining ground in ever-more categories, often in unexpected ways. The emergence of coconut water, for example, a beverage that naturally has as much nutritional power as a formulated sports drink, has happened at lightning speed in just two or three years. But by 2009 both Coca-Cola and Pepsi were ready to invest in coconut water brands—Zico and One, respectively—while Pepsi also bought Brazilian coconut water supplier Amacoco, which supplies both Zico and One.
The emergence of a swathe of would-be superfruits in recent years heralds the most significant development in the “natural benefits” trend—fruit and fruit ingredients as a key component of healthier foods and beverages. The fruit industry is, in terms of science, where much of the ingredients industry was 15 years ago. Little research has been done into the health benefits of fruit, compared to dairy ingredients and omega 3s, but that is starting to change. Paramount Farms in pomegranate and Ocean Spray in cranberry showed the way ahead with millions of dollars of investment in the science of their fruit.
Long overdue investment in science is starting to uncover more and more potential benefits from fruit extracts, and these should drive fruit into a host of new benefit areas. For example:
• Digestive health and immunity: Healthcare group GlaxoSmithKline owns a patent relating to dark-skinned fruit and its effect on encouraging the growth of probiotics in the gut.
• Energy: There is evidence that grapefruit influences caffeine’s effect on the body.
• Inflammation: Pomegranate and other fruit extracts can inhibit chronic inflammation.
• Sports recovery: Some fruit compounds have been shown to accelerate post-exercise sports recovery. The trend has led to the development—using conventional breeding techniques—of new fruits such as the high-polyphenolic, red-fleshed apple Evesse, grown not to eat but to provide extracts for supplements and concentrates for juices.
The other big advantage a product can have, besides being “naturally healthy,” is to deliver a benefit that consumers can feel quickly. When people can feel the benefit, they see that they are getting value-for-money and can understand why they should buy the product again—and again and again.
The best examples of the power of “feel the benefit” are energy drinks, energy shots and products for digestive health. Combined, they represent the largest segment of the functional food and beverage markets in Europe and Asia, and are set to become as important in the U.S. too. Energy drinks deliver a benefit—stimulation—that is immediately effective and detectable. If the 24-year-olds who want to party all night long can feel that benefit, then they will become—as they have done for Red Bull and other energy brands—loyal consumers. In terms of products for digestive health, you can find out very quickly if a product is effective or not and if it gives you better health.
Weight management is a perfect example of a category in which brands should be able to do well by giving a tangible benefit. Thus far only Kellogg’s Special K has succeeded. It is the world’s biggest weight-management brand with more than $1 billion in sales. Its “drop-a-jeans-size” promotion is a perfect example of “feel-the-benefit” communication. It continues to grow worldwide despite the recession. In Australia for example, it increased its sales by 17% in 2009, despite being priced at an 80+% premium to regular cereal brands.
Most companies have yet to figure out exactly how to successfully create, price, position and market a weight-management brand. Many of the possible active ingredients in weight management products are expensive. Working out how to use them to make a product that will sell at a price that people are willing to pay is not proving easy.
European dairies were in the forefront of finding an answer to the problem, right up to the moment when European regulators decided to ban claims even on ingredients that are backed by multiple clinical studies.
One example was Campina’s Optimel Control dairy drink, for satiety, in Germany. Based on Fabuless, an emulsion of oat and palm oil from DSM Nutritionals that has been clinically proven to cause a feeling of satiety, this dairy drink was the best-selling new product in Germany in 2007, even outselling new beers.
In the U.S. the ingredient is used in the SlimShot supplement brand, which is thought to have racked up more than $6 million in retail sales. In Asia, SlimShot has been even more successful.
Digestive health remains, along with energy, the biggest success story in our industry, and is likely to remain so. Even in Japan, where the functional food concept was born 20 years ago, products for digestive health still account for almost 49% of the nearly $3.5 billion (JPY 362 billion) FOSHU market (the portion of the functional food market that makes regulator-approved health claims) and 34% of the non-approved functional foods business.
Digestive health products have continued to prove their strength during the economic downturn. In Italy, for example, although the economy shrank by 6% in the year to August 2009—the worst decline for any major European economy—sales of Danone’s premium-priced Activia probiotic yogurt for digestive health grew 19.5%, to €222.5 million ($325 million), according to Information Resources, Inc. (IRI). Overall, Danone holds a market share of 30% by volume, and since its brands are premium, 40% by value. And on a per capita basis, the Italians are buying five times as much Activia as Americans.
In the UK, another depressed economy, the overall yogurt market was static, yet according to Nielsen data, in the first quarter of 2009, sales of the Activia brand grew 15%, and Actimel, a probiotic brand for immunity, grew 9%.
In the U.S., Activia’s growth slowed from the meteoric growth rate it has maintained since its launch in 2006, but still achieved growth of 8% by value in a category that grew 3%, to total sales of $355 million (€241 million) in the year to August 2009, according to IRI. Activia thus maintained its lead as America’s biggest probiotic yogurt brand—and did so despite selling at a 200% price premium compared to the average yogurt.
Away from dairy, in probiotic juice, the ProViva brand, in Sweden, grew its sales by 8% in 2009, to more than €50 million ($74 million)—an impressive level in a country with just 9 million people—even though consumers could have switched to a 25% cheaper, non-probiotic juice from the same manufacturer. But they did not; the digestive health benefit was compelling enough to keep their loyalty.
In short, brands that create consumer trust and credibility have done best, even when they are premium-priced.
And it’s not just probiotics that have benefited. There are few strong brands based on fiber, but those that exist have done well. In North America, General Mills’ Fiber One breakfast cereal and bars brand grew despite the recession by an impressive 20% in the year to May 2009 (in a category with 3% growth) to total sales of more than $225 million (€153 million), according to IRI. Fiber One products grew between four and 10 times the rate of growth of most categories in which the brand competes, and achieved this result despite selling at a 50% premium over competing brands.
Fiber has been something of a Cinderella ingredient. Its potential to enable companies to create distinctive brands with strong consumer appeal—that also sell at premium prices and grow faster than non-fiber brands, even in recession—has been overlooked.
Fiber’s five advantages include:
• It is one of the easiest food ingredients for consumers to accept and one whose benefits are easiest to understand. Fiber from bread, cereals, fruit and many other foods is a logical and natural connection in the consumer’s mind.
• Modern diets are deficient in fiber (on average Europeans and Americans alike only consume 30% of the recommended daily intake).
• The benefits of fiber in the diet are communicated by health professionals, meaning it has much more credibility than less well-known ingredients, and most people recognize that they need more fiber in their diet.
• It’s easier to formulate fiber into foods and beverages and, as a result of advances in technology, high fiber foods taste better than ever before, with none of the notes of cardboard that marked out high fiber foods in the past.
• If it’s the right type of fiber and it’s delivered in an effective dose, then it can provide a benefit you can feel.
There are opportunities in every country and in many categories for “expert brands,” such as Fiber One, which make the digestive health benefits of fiber their key selling point.
The success of Fiber One is just one of a number of developments that suggest fiber at long last is at the tipping point. Kellogg, for example, is enhancing the fiber content of many of its ready-to-eat cereals in the U.S. and Canada, pledging that nearly 80% of its cereal line will become “at least good to excellent sources of fiber” by the end of next year.
Ironically, Europe’s restrictive health claims regulations, increasingly seen as a restraint on innovation in Europe, may prompt the more far-sighted European marketers to pay more attention to fiber and how to re-create the success of a brand like Fiber One.
In a market in which many health claims will be restricted, fiber is one of the few ingredients European product developers will have at their disposal for which there is no dispute about the benefits and how to communicate them.
Probiotics have recently taken a dent from media reporting of legal challenges to Yoplait and Danone in the U.S. The EU hasn’t helped by denying a raft of health claims for a number of probiotic strains. Journalists don’t know that the strains involved were not the ones with strong science, so the media can be expected to fuel consumer suspicion, in Europe at least, in the years ahead. Brands using clinically proven strains that deliver a tangible benefit will overcome this trend. It’s the experience of the benefit that will overcome consumer skepticism. When the benefit is tangible, you don’t need a health claim.
One idea that will stay stuck in a niche in 2010 is the concept of probiotics in solid foods. The key lesson from 2009 is that people simply don’t find the idea of bacteria on their cornflakes or in their cheese a very attractive one. Kraft Foods made the biggest investment behind this idea, with its LiveActive brand of bars and cheese, based on fiber and one of the better-researched probiotics. Two years out from launch, the range “turned out to be a disappointment for us” in the words of Kraft CEO Irene Rosenfeld. At the other end of the scale, the Attune probiotic bar range has also turned in a modest performance, with annual sales said to be around the $10 million mark.
Unless you can make good money with a niche brand, it’s time to park the idea of probiotic bars and the like in the waste-basket of innovation history. There’s only so far you can go when you defy consumer logic.
The past 15 years of functional foods have shown very clearly that the best way to obtain consumers’ loyalty and generate repeat business is to be “the expert brand,” the brand that’s perceived by the consumer as the most credible source of the health benefit they are looking for.
The most successful brands are the ones that find a clear expert position and stick to it. Red Bull, for example, “gives you wings”; Kellogg’s Special K helps you “drop a jeans size”; and Danone Activia “helps improve digestive transit time.”
Despite the recession, in most countries (and there are a few exceptions) the above brands, which typically retail at premiums of 50% and more to comparable products, have continued to grow even from a strong base, with Activia growing 19% in Italy and Special K growing 17% in Australia.
It’s a testament to Danone’s years of investment in making its Danacol sterol-based yogurt “the expert brand” in cholesterol-lowering that in Italy, Danacol earned €72.7 million ($106 million) in retail sales in the year to August 2009, according to IRI, a 29% increase in value and 25% increase in volume. For a brand that sells at a more than 100% premium, that is quite an achievement.
In the UK too, the “expert brand” in cholesterol lowering, Benecol, also did well against the backdrop of a recession, growing its sales by 14% (in the year to June 2009, according to IRI) in a super-premium priced category that grew 4%.
The rise in sales of cholesterol-lowering brands in Europe also shows that aging Baby Boomers are now becoming a force. It’s a development that is creating new opportunities in unexpected ways.
One brand that has spent years trying to create a new segment of the juice market by targeting joint health is Elations, a brand launched back in 2004 on the premise that drinks using glucosamine and chondroitin would find a market among Boomers seeking relief from joint pain. It’s a hope that seems to be paying off at last, as the Boomers hit their 60s. Elations’ sales are expected to hit $40 million in 2009 and the company is forecasting more than $65 million in 2010.
Elations’ TV ads describe its juice as an easier way to get glucosamine and chondroitin than pills and say in a clear “feel the benefit” message that users should feel improvement in six days.
In Europe, the growing numbers of women over age 45 have spurred Danone to launch a new yogurt, called Densia, specifically targeting their needs.
“An important bet in innovation terms,” is how Danone described its introduction into the Spanish market. Retailed in a four-pack of 125-gram pots, each pot delivers a dose of 400 mg of calcium—twice as much as regular yogurt and 50% of the recommended daily value (DV)—as well as 5 mg of vitamin D, 25% of the DV.
Carrying the claim: “Helps you to maintain your bone density,” (In Spanish: “Ayuda a mantener tu densidad osea”), Densia specifically targets women over 45, the age group most motivated by maintaining bone health. It’s a message that presents no challenges within the EU’s new health claims system.
It’s an opportunity that’s largely untapped in both Europe and the U.S., where there are few good examples of products that deliver an effective dose of ingredients for bone health, and no good examples of marketing the bone health benefit. It’s an opportunity that has been well-developed in Asia by Fonterra, with its market-leading Anlene brand. Anlene has succeeded as a premium niche brand, and Densia could create a similar niche in Europe if it is well-marketed.
One of the key lessons of the last 15 years is that companies that try to jump straight into the mass market with a health innovation usually wind up making their lives difficult. The mass market was reluctant to pay high price premiums for health, even in economic good times, and is more price-sensitive than ever now. Meanwhile, the cost of effective health ingredients means it is difficult to deliver an effective product at low prices.
This was recently affirmed by Steve Demos, the multi-millionaire food and beverage entrepreneur, who said, speaking of his company’s launch of the GoodBelly probiotic juice brand, that: “I thought we’d get the mainstream consumer right out of the gate, but I may have been naïve. It became clear to us that the early-adopter market was extraordinarily strong for us. After zeroing in on the early-adopter market, you build acceptance points so that as the market heats up, you’ve got the opportunity to spread your wings and expand.”
Demos told New Nutrition Business that this need to focus on the early adopter niche was a key lesson for his company after its first year of marketing an innovative probiotic fruit juice.
Rather than aiming at the mass market from day one, it is better to begin by focusing on people for whom health is part of their lifestyle. These people are, at best, only 20-25% of the population in most countries and tend to be older, 40- or 50-plus—the age when people start to notice the changes that life brings to how they look or feel. This is also the age when people have not only the motivation but also sufficient disposable income to spend on maintaining their health.
The years 2007-2009 taught us that foods and beverages for skin and beauty will be ultra-niche, if they exist at all.
The pioneer in the West was Danone’s Essensis yogurt brand, launched in 2007 in France, Belgium, Italy and Spain—countries where women have the highest per capita expenditure on skin and beauty products after Japan. Supported by a significant investment in advertising and merchandising and packaged in an eye-catching shade of rose, Essensis carried the claim that it would nourish your skin from the inside, with the benefit delivered by the ingredient complex “ProNutris,” which contained vitamin E, green tea, probiotics and borage oil.
After a promising launch, Essensis achieved sales around half the target Danone was hoping for and the product was withdrawn in 2009. Among the reasons for its failure:
• “Beauty” and “skin health” from food was a new and unfamiliar benefit to consumers.
• The benefit was not one that you can quickly see or feel.
• The benefit was “me-too” in that consumers would have to substitute Essensis for an existing topically-applied skincare product. Skincare products are mostly strong brands and well marketed. And consumers’ willingness to believe in such products is very high.
• The product was sold in the supermarket alongside the regular yogurt. That’s not a place where a brand can acquire any of the cachet or mystique that skincare products work so hard to create.
A prolonged economic downturn does not necessarily mean calamity for the nutrition business. But it does mean that the key to success in the years ahead is to work extra hard to make sure that your product is the healthy choice the consumer makes. To achieve that, your strategy should incorporate as many of the following elements as possible:
• Focus on being an expert brand—one simple benefit.
• Offer a benefit the consumer can quickly feel (or teach them how to feel it).
• Be well-supported with good marketing and consumer education.
• Focus on appealing to the niche of most health-conscious consumers.
The biggest change in the year ahead will be for companies in Europe, resulting from Europe’s adoption of a new and restrictive health claims system that comes into force in January 2010. (See sidebar below.) With more than 80% of claim petitions rejected so far, and even well-researched products such as cranberry juice barred from discussing their health benefits on labels or in advertising, Europe will lag behind the rest of the world, for a while at least.
‘Naturally Healthy’
One of the strongest trends has been the rise in marketing of foods and beverages for their natural and intrinsic health benefits. There’s a big group of consumers for whom the message that a food is naturally healthy is one of the most persuasive in food marketing. As a result, there is an ever-growing trend of traditional foods reinventing themselves as all-natural foods for health. Oats, almonds, cranberry juice, pomegranate and other superfruits are all examples of foodstuffs touting a health benefit that’s “natural and intrinsic” to the product, rather than coming from an added ingredient.
The idea of health benefits from natural foods is gaining ground in ever-more categories, often in unexpected ways. The emergence of coconut water, for example, a beverage that naturally has as much nutritional power as a formulated sports drink, has happened at lightning speed in just two or three years. But by 2009 both Coca-Cola and Pepsi were ready to invest in coconut water brands—Zico and One, respectively—while Pepsi also bought Brazilian coconut water supplier Amacoco, which supplies both Zico and One.
Fruit: The Future of Functional Foods
The emergence of a swathe of would-be superfruits in recent years heralds the most significant development in the “natural benefits” trend—fruit and fruit ingredients as a key component of healthier foods and beverages. The fruit industry is, in terms of science, where much of the ingredients industry was 15 years ago. Little research has been done into the health benefits of fruit, compared to dairy ingredients and omega 3s, but that is starting to change. Paramount Farms in pomegranate and Ocean Spray in cranberry showed the way ahead with millions of dollars of investment in the science of their fruit.
Long overdue investment in science is starting to uncover more and more potential benefits from fruit extracts, and these should drive fruit into a host of new benefit areas. For example:
• Digestive health and immunity: Healthcare group GlaxoSmithKline owns a patent relating to dark-skinned fruit and its effect on encouraging the growth of probiotics in the gut.
• Energy: There is evidence that grapefruit influences caffeine’s effect on the body.
• Inflammation: Pomegranate and other fruit extracts can inhibit chronic inflammation.
• Sports recovery: Some fruit compounds have been shown to accelerate post-exercise sports recovery. The trend has led to the development—using conventional breeding techniques—of new fruits such as the high-polyphenolic, red-fleshed apple Evesse, grown not to eat but to provide extracts for supplements and concentrates for juices.
A Benefit the Consumer Can Feel
The other big advantage a product can have, besides being “naturally healthy,” is to deliver a benefit that consumers can feel quickly. When people can feel the benefit, they see that they are getting value-for-money and can understand why they should buy the product again—and again and again.
The best examples of the power of “feel the benefit” are energy drinks, energy shots and products for digestive health. Combined, they represent the largest segment of the functional food and beverage markets in Europe and Asia, and are set to become as important in the U.S. too. Energy drinks deliver a benefit—stimulation—that is immediately effective and detectable. If the 24-year-olds who want to party all night long can feel that benefit, then they will become—as they have done for Red Bull and other energy brands—loyal consumers. In terms of products for digestive health, you can find out very quickly if a product is effective or not and if it gives you better health.
Weight management is a perfect example of a category in which brands should be able to do well by giving a tangible benefit. Thus far only Kellogg’s Special K has succeeded. It is the world’s biggest weight-management brand with more than $1 billion in sales. Its “drop-a-jeans-size” promotion is a perfect example of “feel-the-benefit” communication. It continues to grow worldwide despite the recession. In Australia for example, it increased its sales by 17% in 2009, despite being priced at an 80+% premium to regular cereal brands.
Most companies have yet to figure out exactly how to successfully create, price, position and market a weight-management brand. Many of the possible active ingredients in weight management products are expensive. Working out how to use them to make a product that will sell at a price that people are willing to pay is not proving easy.
European dairies were in the forefront of finding an answer to the problem, right up to the moment when European regulators decided to ban claims even on ingredients that are backed by multiple clinical studies.
One example was Campina’s Optimel Control dairy drink, for satiety, in Germany. Based on Fabuless, an emulsion of oat and palm oil from DSM Nutritionals that has been clinically proven to cause a feeling of satiety, this dairy drink was the best-selling new product in Germany in 2007, even outselling new beers.
In the U.S. the ingredient is used in the SlimShot supplement brand, which is thought to have racked up more than $6 million in retail sales. In Asia, SlimShot has been even more successful.
Digestive Health Stays Strong
Digestive health remains, along with energy, the biggest success story in our industry, and is likely to remain so. Even in Japan, where the functional food concept was born 20 years ago, products for digestive health still account for almost 49% of the nearly $3.5 billion (JPY 362 billion) FOSHU market (the portion of the functional food market that makes regulator-approved health claims) and 34% of the non-approved functional foods business.
Digestive health products have continued to prove their strength during the economic downturn. In Italy, for example, although the economy shrank by 6% in the year to August 2009—the worst decline for any major European economy—sales of Danone’s premium-priced Activia probiotic yogurt for digestive health grew 19.5%, to €222.5 million ($325 million), according to Information Resources, Inc. (IRI). Overall, Danone holds a market share of 30% by volume, and since its brands are premium, 40% by value. And on a per capita basis, the Italians are buying five times as much Activia as Americans.
In the UK, another depressed economy, the overall yogurt market was static, yet according to Nielsen data, in the first quarter of 2009, sales of the Activia brand grew 15%, and Actimel, a probiotic brand for immunity, grew 9%.
In the U.S., Activia’s growth slowed from the meteoric growth rate it has maintained since its launch in 2006, but still achieved growth of 8% by value in a category that grew 3%, to total sales of $355 million (€241 million) in the year to August 2009, according to IRI. Activia thus maintained its lead as America’s biggest probiotic yogurt brand—and did so despite selling at a 200% price premium compared to the average yogurt.
Away from dairy, in probiotic juice, the ProViva brand, in Sweden, grew its sales by 8% in 2009, to more than €50 million ($74 million)—an impressive level in a country with just 9 million people—even though consumers could have switched to a 25% cheaper, non-probiotic juice from the same manufacturer. But they did not; the digestive health benefit was compelling enough to keep their loyalty.
In short, brands that create consumer trust and credibility have done best, even when they are premium-priced.
And it’s not just probiotics that have benefited. There are few strong brands based on fiber, but those that exist have done well. In North America, General Mills’ Fiber One breakfast cereal and bars brand grew despite the recession by an impressive 20% in the year to May 2009 (in a category with 3% growth) to total sales of more than $225 million (€153 million), according to IRI. Fiber One products grew between four and 10 times the rate of growth of most categories in which the brand competes, and achieved this result despite selling at a 50% premium over competing brands.
Fiber At the Tipping Point?
Fiber has been something of a Cinderella ingredient. Its potential to enable companies to create distinctive brands with strong consumer appeal—that also sell at premium prices and grow faster than non-fiber brands, even in recession—has been overlooked.
Fiber’s five advantages include:
• It is one of the easiest food ingredients for consumers to accept and one whose benefits are easiest to understand. Fiber from bread, cereals, fruit and many other foods is a logical and natural connection in the consumer’s mind.
• Modern diets are deficient in fiber (on average Europeans and Americans alike only consume 30% of the recommended daily intake).
• The benefits of fiber in the diet are communicated by health professionals, meaning it has much more credibility than less well-known ingredients, and most people recognize that they need more fiber in their diet.
• It’s easier to formulate fiber into foods and beverages and, as a result of advances in technology, high fiber foods taste better than ever before, with none of the notes of cardboard that marked out high fiber foods in the past.
• If it’s the right type of fiber and it’s delivered in an effective dose, then it can provide a benefit you can feel.
There are opportunities in every country and in many categories for “expert brands,” such as Fiber One, which make the digestive health benefits of fiber their key selling point.
The success of Fiber One is just one of a number of developments that suggest fiber at long last is at the tipping point. Kellogg, for example, is enhancing the fiber content of many of its ready-to-eat cereals in the U.S. and Canada, pledging that nearly 80% of its cereal line will become “at least good to excellent sources of fiber” by the end of next year.
Ironically, Europe’s restrictive health claims regulations, increasingly seen as a restraint on innovation in Europe, may prompt the more far-sighted European marketers to pay more attention to fiber and how to re-create the success of a brand like Fiber One.
In a market in which many health claims will be restricted, fiber is one of the few ingredients European product developers will have at their disposal for which there is no dispute about the benefits and how to communicate them.
Probiotics Take A Dent, But Future Still Bright
Probiotics have recently taken a dent from media reporting of legal challenges to Yoplait and Danone in the U.S. The EU hasn’t helped by denying a raft of health claims for a number of probiotic strains. Journalists don’t know that the strains involved were not the ones with strong science, so the media can be expected to fuel consumer suspicion, in Europe at least, in the years ahead. Brands using clinically proven strains that deliver a tangible benefit will overcome this trend. It’s the experience of the benefit that will overcome consumer skepticism. When the benefit is tangible, you don’t need a health claim.
One idea that will stay stuck in a niche in 2010 is the concept of probiotics in solid foods. The key lesson from 2009 is that people simply don’t find the idea of bacteria on their cornflakes or in their cheese a very attractive one. Kraft Foods made the biggest investment behind this idea, with its LiveActive brand of bars and cheese, based on fiber and one of the better-researched probiotics. Two years out from launch, the range “turned out to be a disappointment for us” in the words of Kraft CEO Irene Rosenfeld. At the other end of the scale, the Attune probiotic bar range has also turned in a modest performance, with annual sales said to be around the $10 million mark.
Unless you can make good money with a niche brand, it’s time to park the idea of probiotic bars and the like in the waste-basket of innovation history. There’s only so far you can go when you defy consumer logic.
A Healthy Future For ‘Expert Brands’
The past 15 years of functional foods have shown very clearly that the best way to obtain consumers’ loyalty and generate repeat business is to be “the expert brand,” the brand that’s perceived by the consumer as the most credible source of the health benefit they are looking for.
The most successful brands are the ones that find a clear expert position and stick to it. Red Bull, for example, “gives you wings”; Kellogg’s Special K helps you “drop a jeans size”; and Danone Activia “helps improve digestive transit time.”
Despite the recession, in most countries (and there are a few exceptions) the above brands, which typically retail at premiums of 50% and more to comparable products, have continued to grow even from a strong base, with Activia growing 19% in Italy and Special K growing 17% in Australia.
It’s a testament to Danone’s years of investment in making its Danacol sterol-based yogurt “the expert brand” in cholesterol-lowering that in Italy, Danacol earned €72.7 million ($106 million) in retail sales in the year to August 2009, according to IRI, a 29% increase in value and 25% increase in volume. For a brand that sells at a more than 100% premium, that is quite an achievement.
In the UK too, the “expert brand” in cholesterol lowering, Benecol, also did well against the backdrop of a recession, growing its sales by 14% (in the year to June 2009, according to IRI) in a super-premium priced category that grew 4%.
Bones & Joints Grow As Boomers Age
The rise in sales of cholesterol-lowering brands in Europe also shows that aging Baby Boomers are now becoming a force. It’s a development that is creating new opportunities in unexpected ways.
One brand that has spent years trying to create a new segment of the juice market by targeting joint health is Elations, a brand launched back in 2004 on the premise that drinks using glucosamine and chondroitin would find a market among Boomers seeking relief from joint pain. It’s a hope that seems to be paying off at last, as the Boomers hit their 60s. Elations’ sales are expected to hit $40 million in 2009 and the company is forecasting more than $65 million in 2010.
Elations’ TV ads describe its juice as an easier way to get glucosamine and chondroitin than pills and say in a clear “feel the benefit” message that users should feel improvement in six days.
In Europe, the growing numbers of women over age 45 have spurred Danone to launch a new yogurt, called Densia, specifically targeting their needs.
“An important bet in innovation terms,” is how Danone described its introduction into the Spanish market. Retailed in a four-pack of 125-gram pots, each pot delivers a dose of 400 mg of calcium—twice as much as regular yogurt and 50% of the recommended daily value (DV)—as well as 5 mg of vitamin D, 25% of the DV.
Carrying the claim: “Helps you to maintain your bone density,” (In Spanish: “Ayuda a mantener tu densidad osea”), Densia specifically targets women over 45, the age group most motivated by maintaining bone health. It’s a message that presents no challenges within the EU’s new health claims system.
It’s an opportunity that’s largely untapped in both Europe and the U.S., where there are few good examples of products that deliver an effective dose of ingredients for bone health, and no good examples of marketing the bone health benefit. It’s an opportunity that has been well-developed in Asia by Fonterra, with its market-leading Anlene brand. Anlene has succeeded as a premium niche brand, and Densia could create a similar niche in Europe if it is well-marketed.
Know Your Niche
One of the key lessons of the last 15 years is that companies that try to jump straight into the mass market with a health innovation usually wind up making their lives difficult. The mass market was reluctant to pay high price premiums for health, even in economic good times, and is more price-sensitive than ever now. Meanwhile, the cost of effective health ingredients means it is difficult to deliver an effective product at low prices.
This was recently affirmed by Steve Demos, the multi-millionaire food and beverage entrepreneur, who said, speaking of his company’s launch of the GoodBelly probiotic juice brand, that: “I thought we’d get the mainstream consumer right out of the gate, but I may have been naïve. It became clear to us that the early-adopter market was extraordinarily strong for us. After zeroing in on the early-adopter market, you build acceptance points so that as the market heats up, you’ve got the opportunity to spread your wings and expand.”
Demos told New Nutrition Business that this need to focus on the early adopter niche was a key lesson for his company after its first year of marketing an innovative probiotic fruit juice.
Rather than aiming at the mass market from day one, it is better to begin by focusing on people for whom health is part of their lifestyle. These people are, at best, only 20-25% of the population in most countries and tend to be older, 40- or 50-plus—the age when people start to notice the changes that life brings to how they look or feel. This is also the age when people have not only the motivation but also sufficient disposable income to spend on maintaining their health.
The End of Beauty Foods?
The years 2007-2009 taught us that foods and beverages for skin and beauty will be ultra-niche, if they exist at all.
The pioneer in the West was Danone’s Essensis yogurt brand, launched in 2007 in France, Belgium, Italy and Spain—countries where women have the highest per capita expenditure on skin and beauty products after Japan. Supported by a significant investment in advertising and merchandising and packaged in an eye-catching shade of rose, Essensis carried the claim that it would nourish your skin from the inside, with the benefit delivered by the ingredient complex “ProNutris,” which contained vitamin E, green tea, probiotics and borage oil.
After a promising launch, Essensis achieved sales around half the target Danone was hoping for and the product was withdrawn in 2009. Among the reasons for its failure:
• “Beauty” and “skin health” from food was a new and unfamiliar benefit to consumers.
• The benefit was not one that you can quickly see or feel.
• The benefit was “me-too” in that consumers would have to substitute Essensis for an existing topically-applied skincare product. Skincare products are mostly strong brands and well marketed. And consumers’ willingness to believe in such products is very high.
• The product was sold in the supermarket alongside the regular yogurt. That’s not a place where a brand can acquire any of the cachet or mystique that skincare products work so hard to create.
Conclusion
A prolonged economic downturn does not necessarily mean calamity for the nutrition business. But it does mean that the key to success in the years ahead is to work extra hard to make sure that your product is the healthy choice the consumer makes. To achieve that, your strategy should incorporate as many of the following elements as possible:
• Focus on being an expert brand—one simple benefit.
• Offer a benefit the consumer can quickly feel (or teach them how to feel it).
• Be well-supported with good marketing and consumer education.
• Focus on appealing to the niche of most health-conscious consumers.
Europe’s Health Claim Regime to Bring Innovation to an End?New regulations will stifle clinical research and restrict access to healthy products. For companies selling in Europe, the biggest change in the year ahead will be a new and restrictive health claims system. The likeliest outcome of the new system will be that: • Small companies will flee from using health messages of any kind (hardly a benefit to Europe’s consumers) rather than entangle themselves in the nightmare of the health claims system. • This will leave innovation in health to only a few large companies with the financial muscle to invest in the science at the pharmaceutical level that the EU system is looking for. • The main winners from the new health claim regulations will be PR companies, to whom food manufacturers will turn to find ways of getting their message into the media without using an overt claim. • Europe will slide from being a leader in health innovation. • Sooner or later the food industry will be forced to mount a legal challenge to the regulation. But given the agonizingly slow processes of the EU, that challenge could spend years in the courts. Europe has become a place of contradictions and the lobbyists who want to stop health claims of any kind have succeeded. It will be a place where a face cream can claim that it makes your skin healthier, with almost no science to support it, but a yogurt can’t tell you that it contains bacteria to support your digestive system, even though the science may be a hundred-fold that of a face-cream. It will be a place where fast-food chains can spend hundreds of millions on advertising for products that contain higher levels of saturated fats and salt than are good for you, but you can’t tell someone that cranberry juice contains anthocyanins and what the specific benefits of cranberry juice are. The recent launch of Danone Densia bone health yogurt in Spain is a clue as to the direction that innovation in Europe might have to take. Densia meets a growing consumer need for products that support bone health, but it is an example of how in the future brands might be forced to offer only simple generic benefits. Success will become a matter of providing the benefits in a more concentrated or convenient way than other brands, coupled with marketing and distribution muscle. —JM |