No discussion of trends in food and health would be complete without addressing the economic slowdown. A prolonged economic downturn doesn’t necessarily mean calamity for the nutrition business. Japan’s functional food market, for example, was still embryonic in 1990 when the country entered a 10-year span of little or no growth.
Yet, for the nutrition and health market during that time, it wasn’t a lost decade, and by 2001, the combined retail value of supplements and functional foods in Japan was more than $23bn.
In the west, where 20-25% of consumers are strongly motivated by health, even in tough times health-conscious consumers, whatever their income level, are likely to include at least one healthy choice in their shopping. Making healthy choices has become for many people a part of their everyday lives.
That choice will be based, as it is now, on whether – as Swedish brand strategist Peter Wennström explains – “the product is in the format that matches the consumer’s lifestyle, offers a benefit that they believe is relevant to them, from an ingredient that they can accept, under a brand that they feel they can trust”. It’s more important than ever for brand owners to focus clearly on these four factors of success.
The effect of the current slowdown will be to reinforce the core nutrition trends and sweep away the fads and the peripheral ideas. Many health brands will suffer and some will fail. The brands most likely to succeed are, as now, the those that provide a benefit that the consumer can quickly see or feel. And that means that products such as those for digestive health and for energy are likely to remain strong.
Probiotic dairy products for digestive health enable consumers to ‘feel the benefit’ of better digestive health quickly, thus creating a significant competitive advantage. Similarly, energy drinks deliver a benefit that’s immediately effective and detectable. It’s no accident that in the well-developed Japanese market, the single biggest functional brand is an energy drink from Otsuka Pharmaceutical with retail sales of more than $450m, nor that in Europe and the US, Red Bull has combined retail sales of over $5bn.
Weight management is also an area where, provided companies take a ‘feel the benefit’ approach such as satiety, they can show the consumer that the health benefit of the product represents value for money. This has already proven to be a factor in the success of Campina’s Optimel Control dairy drink in the Netherlands and Germany. A premium-priced product, Optimel is nevertheless successful in its niche in two of Europe’s most price-sensitive markets.
Terms such as ‘free from’, ‘no added’ and ‘all-natural’ on product labels have become key terms of reassurance for consumers in most countries researched, even for those products without an overt health position. Even Coca-Cola has begun to tell people that its famous cola drink has ‘no added preservatives or artificial flavours’.
Fruits also offer significant opportunities, and 10 years from now, if science can substantiate the many benefits now emerging, the term ‘superfruit’ may become redundant and fruit may be a vehicle for delivering a wide range of accepted health benefits to consumers. It’s likely that this market will not only grow but that more sub-segments will appear, targeting more specific health conditions than the current ‘high in antioxidants’ messages that are generally used in the communication of superfruits.
The market for health is generally highly fragmented, and as such most functional, nutritional foods sell in niche volumes. Consumers are bombarded with information about health as never before, from television, magazines, newspapers and the internet, and information on what’s healthy is often contradictory. As a result, consumers’ ways of defining ‘health’ have diversified and become highly personal.
This personalised definition of health parallels the trend to personalisation in general and the ‘me-focus’ that’s influencing most areas of consumer goods, and which has seen the proliferation of multiple niches within the food market. Finding a dominant position in a niche is often easier than breaking into the mainstream, particularly during a recession.
Many companies have also found success by concentrating on creating value added or premium products. To this end, Danone’s Activia brand has grown to be premium and mass-market, as have energy drinks and some fruit drinks. Ultimately, premium pricing is no barrier to success, provided that you deliver the right benefit and that companies package and market products in the best way.
By far the biggest trend in health during the past year is that of digestive health, and in particular probiotics and fibre, which also benefit from the natural trend. Products for digestive health make up the single largest segment of the functional foods market in Europe, Japan and elsewhere and this is likely to remain the case for some time. Digestive health will probably also prevail in the US, where retails sales of probiotic dairy products already amount to over $500m.
In Europe, products for digestive health account for 50% of the functional food and beverage market, and Nielsen estimates that the European digestive health market is worth about €2.2bn. Probiotic brands dominate, and though now a mature market, opportunities for new digestive health niches such as for non-dairy delivery mechanisms still remain. The fibre-fortified market still has unfulfilled potential.
Essentially, digestive health fulfils on the main criteria for the success of healthy products. It offers a wellness benefit, addresses an everyday lifestyle issue, and provides a benefit the consumer can easily and quickly feel. Digestive health is a wellness issue not a death and disease issue (such as cholesterol-lowering). And, as we’ve seen again and again over the past 10 years of development of functional foods, wellness benefits appeal to a wider range of consumers looking for everyday good health, while medical benefits appeal only to a niche who are at fairly immediate risk from a medical condition.
Ultimately, as with Key Trend 2, having a benefit that consumers can quickly feel or see is the surest way to create loyalty for a brand. When people can feel the benefit that’s being offered to them, they can see that they’re getting value for money.
Some of the best examples of ‘feel the benefit’ include the energy drink market, as, like all the best performing functional foods, energy drinks deliver a health benefit that’s immediately effective and detectable.
If the 24-year-olds who want to party all night can feel that benefit, they become loyal consumers. And it’s not only the young ‘nightclubber’ that feels the need for a shot of energy: lack of energy is a key consumer interest globally according to HealthFocus International.
Lack of energy, improved digestive health, ‘keeps you satisfied longer’ (in the case of weight management – Key Trend 3), are all quick and easy communications and direct benefits that consumers can relate to. If a product has a long-term effect, this should be communicated as directly and effectively as possible, as with Danone’s 14-day challenge for its Actimel probiotic dairy drink brand, which asserts ‘feel the difference – or your money back’. So effective was the challenge that Danone sold 9.5 million bottles of Actimel in the UK alone, and only 45 people asked for their money back on the grounds that they didn’t feel any ‘difference’.
For weight loss, Kellogg’s Special K ‘Drop a Jean Size’ promotions offer women the tangible benefit of ‘dropping a jean size’ if they follow the Special K eating programme for 14 days.
All of these products sell at a significant premium. Energy drinks, for example,?are about five times the retail price of colas on a per litre basis. Many probiotic digestive health drinks sell at eight times the price of comparable non-probiotic dairy drinks (measured on a price per litre basis). Although, in tough times, companies will have to work harder than ever to justify premium prices, offering a tangible benefit that consumers can feel is one of the strongest ways of earning a sustainable price premium, and securing a sustainable brand.
This text was extracted and précised from the 10 Key Trends in Food, Nutrition & Health Report 2009, priced at €200.
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