Data Monitor Functional Food

New Consumer Insight:
Functional Food & Drink Consumption Trends

How To Target Self-Medicating Consumers With High-Nutrient Products
Growing concern for health across all ages, demographic groups and countries has led to heightened consumer interest in and spurred demand for health-related food and drink products. Manufacturers must respond to this demand with products based on credible functional claims, building trust and aiding in the education of consumers about the health and lifestyle benefits of nutraceuticals.
Reference Code: DMCM2982 Publication Date: 01/2007
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Executive Summary
CHAPTER 1 EXECUTIVE SUMMARY
The hot topic

Health is a vital and growing concern for consumers across all ages, demographic groups and countries. In turn, this has led to heightened consumer interest in the link between diet and health, and spurred demand for health-related food and drink products. This has been furthered by a rise in healthcare costs, and an aging population. Yet, while consumption of functional food and drink products are growing in both Europe and the US, growth has been restricted due to lack of consumer trust in products' health claims. Furthermore, while health awareness is increasing, a significant portion of consumers do not act on the belief that they need to adopt a healthier lifestyle, largely due to time pressures. In order for manufacturers operating in this market to maximize potential, they will need to address such issues.
The future decoded

Health issues are becoming increasingly important as a result of an aging population
An aging population has prompted a consumer which is becoming increasingly concerned with health matters due to a desire to both look and feel good. The accompanying number of complaints associated with the aging process, and the incidence of specific, chronic health conditions such as osteoporosis (weakened bones) and hypertension (high blood pressure, potentially leading to heart attack) are increasing, driving demand for functional healthy food products. This provides an attractive opportunity for manufacturers.
Functional Food & Drink Consumption Trends Datamonitor (Published 01/2007) This report is a licensed product and is not to be photocopied
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Executive Summary
Functional food consumption is growing fast

The interest in nutraceutical products those which are formulated to have specific health benefits has been fuelled by a desire for convenience, as well as health. This is because busier lifestyles mean that it is harder to meet nutritional requirements using traditional food and drinks. The opportunities presented in the functional food and drinks market is evident by the fact that in both Europe and the US, all categories are achieving strong sales growth. Of these, the dairy category is the strongest performer, largely due to the popularity of probiotic drinks and yogurts. The US market was worth US$21.3bn in 2006, with annual sales growth averaging 6.5% over the 2001-2006 period. Growth is expected to slow in the forecast years, displaying yearly growth of 5.0% between 2006 and 2011. Despite having an overall population size larger than the US, in Europe, sales only reached US$8.0bn, less than half of sales achieved in the US. This is reflective of the European consumers' preference for natural, unprocessed food, and highlights the untapped potential in European markets. It also partly explains why growth in Europe is comparable to growth in the US market, with this pattern expected to continue in the forecast years. Indeed certain categories are outstripping the US market both in historic growth and future potential.
Consumers have an attitude-behavior gap concerning healthy eating

There is an obvious disparity between consumers attitudes towards health and healthy eating, and their actual behaviors relating to this. Consumers acknowledge the importance of leading a healthy life, but, their actions do not often reflect these beliefs, as consumers who are constrained by time neglect these basic needs. However, as people become more aware of the correlation between eating healthily and improving overall health and wellness, the attitude-behavior gap is constricting.
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Executive Summary
Functional foods offer a solution to time-pressured consumers

While the provision of functional food and drink products addresses the health megatrend, opportunities exist to satisfy consumers needs where other mega-trends are concerned. Consumers are increasingly seeking out products that ensure convenience, as well as overall well-being. With greater time spent commuting encouraging multi-tasking while traveling and increased propensity for eating and drinking on-the-go, nutraceuticals offer an attractive option for those who wish to act on health concerns but have limited time. Underlining the importance of convenience and the growing trend towards on-the-go consumption, food, nutrition, over the last few years the greatest growth in the functional category has been in individual consumption and single-serve products.
Consumers are wary of health-related claims on food and drink products

Consumers are often cautious about health claims made by food and drink manufacturers, as people are all too aware that claims made do not always reflect the actual product. Consumer distrust has been fueled largely by the fact that many of the health claims made by functional foods have never faced any scientific analysis, and without any strict guidelines imposed in the future, this situation is likely to impede the category further; especially given the growing interest in natural and better-for-you products. Endorsement by perceived credible sources such as recognized health organizations will aid in curtailing consumer skepticism about information provided by food producers.
The increasing availability of health information has seen consumer awareness on health issues grow
Health issues are increasingly pushing their way to the forefront of people's minds and forming a part of everyday life. This has been furthered by the fact that such issues are beginning to receive more attention in the press and from influential governmental bodies, whilst the Internet continues to gain pace as a valuable resource for health-related information. This has yielded better-informed consumers, which in turn has benefited food and drinks manufacturers operating in the nutraceutical sector, as these consumers have responded to health concerns reported on in the press.
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Executive Summary
Action points
The recommended action points are centered on building and maintaining consumer trust and addressing the evident attitude-behavior gap: Develop trust as a cornerstone of your nutraceutical proposition Alter the ingredient make-up of typically unhealthy products Target children with functional products that address parents concerns over health and nutrition Educate the consumer sufficiently about the health benefits derived from the consumption of a particular product Source natural products and incorporate them into functional offerings Use the Internet to promote products Consider whether your offering is better than alternative solutions
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Table of Contents
TABLE OF CONTENTS
CHAPTER 1
The hot topic
EXECUTIVE SUMMARY
3
3 3 6
The future decoded Action points
CHAPTER 2
Introduction
THE FUTURE DECODED
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Defining functional foods and drinks TREND: Health issues are becoming increasingly important as a result of an aging population The Senior demographic cannot be targeted as one group TREND: Lifestyle diseases are becoming more common TREND: Functional food consumption is growing fast The US functional food and drinks market is larger than in Europe The European functional food and drink market is growing at a similar rate to the US The rising success of naturally functional food and drink poses a threat and opportunity to the functional market INSIGHT: Parents are increasingly concerned about their kids health Parents are taking more control of their kids eating habits INSIGHT: Time pressures drive consumers to nutraceuticals
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35 39 39 41
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INSIGHT: Consumers are wary about health related claims on food and drink products The lack of credible backing may inhibit a health foods success INSIGHT: The increasing availability of health information has seen consumer awareness on health issues grow Health issues are increasingly being reported on The Internet has proved a useful tool in making consumers more health aware INSIGHT: While health is becoming increasingly important taste remains paramount Conclusions
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CHAPTER 3
Introduction
ACTION POINTS
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52 52 53 53 54 55 56
Develop trust as a cornerstone of your nutraceutical proposition Act in a socially responsible way Seek endorsements from reputable organizations Extend health brands that consumers already trust Consumers must understand products to trust their claims Alter the ingredient makeup of typically unhealthy products Target children with functional products that address parents concerns over health and nutrition Case study: Danino utilizes 'junk food' design cues to appeal to children as well as adults Educate the consumer sufficiently about the health benefits derived from the consumption of a particular product Source natural products and incorporate them into functional offerings
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Use the Internet to promote products Consider whether your offering is better than alternative solutions
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CHAPTER 4
Supplementary data Definitions
APPENDIX
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66 71 73 73
Research methodology How to contact experts in your industry
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LIST OF TABLES
Table 1: Responses to the question: To what extent have you done the following in the past year? Used nutritional information on packaging to help make food and drinks choices, 2006 Table 2: Population by age group (m), Europe and US, 2001-2011
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Table 3: Consumers suffering from bone health problems (m), Europe and US, 2001-2011 Table 4: Consumers suffering from heart health problems (m), Europe and US, 2001-2011 Table 5: Consumers suffering from gut health problems (m), Europe and US, 2001-2011 Table 6: 2011 US functional food & drink market value (US$ m), by category, 2001-
20
22
25
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Table 7: US functional food & drink market value (US$m), by claimed health benefit, 2001-2011 Table 8: Europe functional food & drink market value (US$ m), by category, 2001-2011 Table 9: Europe functional food & drink market value (US$ m), by claimed health benefit, 2001-2011 Table 10: Europe functional food & drink market value (US$ m), by country, 2001-2011 Table 11: Table 12: Overall green tea values (US$ m), US & Europe, 2000-2010 Key influencing factors in children's snacking needs
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33
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34 36 62
Table 13: Functional bakery & cereals market value (US$ m), by category, Europe 2001-2011 66 Table 14: Functional confectionery market value (US$ m), by category, Europe 2001-2011
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Table 15: 2011
Functional dairy market value (US$ m), by category, Europe 200167
Table 16: Functional savory snacks market value (US$ m), by category, Europe 2001-2011 Table 17: Functional soft drinks market value (US$ m), by category, Europe 2001-2011 Table 18: Functional other food and drinks market value (US$ m), by category, Europe 2001-2011 Table 19: Europe functional food & drink market value (US$ m), by claimed health benefit, 2001-2011 Table 20: Definitions of disease types covered
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LIST OF FIGURES
Figure 1: Figure 2: Figure 3: Figure 4: body Cholesterol lowering products are more relevant for Early Seniors Examples of products which use calcium as a selling point Examples of products which are said to help maintain a healthy heart Examples of products which have received backing from an influential 24 19 21 23
Figure 5: Probiotic product innovation is ten times greater in yogurts than its closest category across Europe and the US, 2001-06 Figure 6: Yogurt is the leading product category for prebiotic food products, 2001-2006 Figure 7: An example of a prebiotic bakery product
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Figure 8: The extent to which European consumers have used nutritional information on packaging more or less in 2006 compared to 2005, to help make food and drinks choices Figure 9: benefits Figure 10: at babies A growing number of products incorporate pomegranate for its health
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38 Functional and fortified food products are increasingly being targeted 41
Figure 11: The extent to which European and US consumers sought food and drinks which are both convenient AND healthy more or less in 2006 than 2005 Figure 12: Examples of single-serve beverage products which satisfy both the health and convenience mega-trends Figure 13: The Internet has changed the way consumers relate to health information, physicians, companies and other consumers
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Figure 14: Sirco is an example of a product which has received backing from a professional body Figure 15: Examples of confectionery products which offer a healthy option
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Figure 16: Functional and fortified products need to be heavily promoted to parents, but equally accessible and fun to Kids
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The Future Decoded
CHAPTER 2 THE FUTURE DECODED
Introduction
Health is a vital and growing concern for consumers across all ages, demographic groups and countries, especially as the world's population is growing older. In turn, this has led to heightened consumer interest in the link between diet and health, and has resulted in a growing number of consumers looking to receive health benefits from their food and drink consumption.
The consumer is more aware of food and dietary issues and also nutrition and health promotion." Dr Catherine Stanton, Teagasc Moorepark research scientist, cited in the Irish Times, August 31, 2006
Consumers awareness of nutrients in food and drink was found to be increasing across most of Europe and the US as they are more likely to factor that into their purchasing decisions now than a year ago (see Table 1). More than half the adult population in Italy, Spain, the UK and the US are noting nutritional content in food and drink more frequently before buying it.
Table 1:
Responses to the question: To what extent have you done the following in the past year? Used nutritional information on packaging to help make food and drinks choices, 2006 FR DE IT NL ESP SW UK US
% Respondents More The same Less Overall
42% 37% 53% 42% 57% 46% 60% 58% 53% 54% 42% 52% 38% 45% 37% 37% 4% 9% 5% 6% 4% 9% 3% 5% 100% 100% 100% 100% 100% 100% 100% 100%
DATAMONITOR
Source: Datamonitor Consumer Survey 2006
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The Food Standards Agency's 2005 Consumer Attitudes to Food survey supports the suggestion that consumers are developing a more active interest in food and diet, with increasing numbers of consumers checking labels and stepping up efforts to eat more fruit and vegetables. According to the survey of 3,000 respondents in the UK: 53% of people now check labels for salt/sodium content (up from 22% in 2000) 48% say they check the sugar content (up from 28% in 2000) 60% say they check labels for fat content (up from 42% in 2000)
In fact, according to a UK study carried out by the Institute of Grocery Distribution on corporate social responsibility (CSR), developing healthy eating ranges was scored as the second most desirable element of a CSR strategy for the food industry (after supporting local food producers).
Health is regarded as the most important consumer trend among manufacturers

The importance of incorporating health benefits into food and drinks products and of offering health benefits to consumers in general was recognized in a recent global 2006 Datamonitor Industry Opinion Survey that revealed that health was considered the most important consumer trend for food and drink manufacturers business. Even before the trend claimed the top spot among food and drinks industry players, Nestle outlined a plan to realign operations, and transform itself into a company with a focus on health. Nestle has also made a number of strategic acquisitions, such as the Jenny Craig branded line of self-prepared diet foods, purchased in June 2006, so further strengthening its positioning in the health arena. The focus on health among consumer packaged goods players was aptly summed up by Nestle as follows:
"We are moving from an agrifood business to an R&D driven nutrition, health and wellness company" Luis Cantarell, head of Nestle's nutrition, cited in The Economist, December 2003
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The desire to enter the functional sector has led to an increasing level of investment in research and development, and this, alongside a number of extensive advertising campaigns, has further boosted demand for functional food and drink products.
Defining functional foods and drinks

As manufacturers have worked hard to incorporate certain health-promoting ingredients into their product make-up, there has been a blurring between the food and pharmaceutical industries. These products, which have specific health or medical benefits, have been dubbed with a variety of terms, most commonly nutraceuticals or functional foods / drinks. Datamonitor's definition of functional foods and drinks goes further considering that they are "products that contain specific physiologically active components that provide increased health benefits over regular nutrition (the term nutraceuticals is interchangeable with the term functional food and drinks)."
TREND: Health issues are becoming increasingly important as a result of an aging population
Across Europe, countries are experiencing an aging of their populations and even in the US, where large numbers of immigrant young families are helping to restore growth to younger demographics, there is a growing body of older consumers. As a result of an aging population, the accompanying number of complaints associated with the aging process, and the incidence of specific, chronic health conditions such as osteoporosis and hypertension are increasing, driving demand for healthier food and drink products. This provides an attractive opportunity for manufacturers to not only offer healthier food and drink products, but also offer those that actively influence health and target specific health problems. This is especially true since food and drink manufacturers have not yet directed much of their marketing spend at the Senior demographic (50+ years olds).
The proportion of Senior consumers is growing

The aging population, resulting from a global rise in life expectancy and declining birth rates, will cause an increase in age-related ailments. In both Europe and the US, the growth of the Senior population outstripped the rise in the population as a whole between 2000 and 2005, and will continue to do so between 2005 and 2010. As the
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The Future Decoded
percentage of consumers over the age of 50 will continue to grow, this group will become an increasingly important target group for manufacturers.
The Senior demographic cannot be targeted as one group

The longer people live, the less practical it is to categorize Seniors as one demographic group. This is because there will be a significant difference in lifestyle between centenarians and people who have just turned 50. As a result, it is important to recognize that within the Senior demographic, there are two noticeable groups, both of which have differing needs: Early Seniors (50-64-year-olds); Late Seniors (those aged over 65).
Early Seniors will lead increasingly active lives as retirement age rises
Across Europe and the US a significant proportion of Early Seniors fall below retirement age and are typically still in employment. Furthermore, there are plans to raise the retirement age in numerous countries across Europe and in the US, which will enhance disposable income in this category, making for an increasingly attractive target group as the population in this age range swells. In the US, while the retirement age currently stands at 65.5, there are plans to increase this to 67, and will be applicable to all citizens born after 1960. In fact, a poll by the American Association of Retired Persons found that 80% of Americans aged 45-64 plan to work after the age of 65 due to financial insecurities. In Italy, the retirement age is to change from 57 to 60 in 2008. By 2046 workers in the UK will be expected to work until they reach 68, according to the country's work and pensions secretary, John Hutton, cited in the Guardian, May 2006. Across Europe in general the dependency of older people on the younger population, and the lack of pension funds available, means it is becoming increasingly important to promote a longer working life as people across Europe will need to work until they are 70; this is up to 10 years above the current average retirement age of most European countries. According to the European Commission, Employment and Social Affairs: Creating a policy
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framework that allows and encourages older workers to remain in employment longer is crucial. As a result of these trends, a growing number of Early Seniors will not only be in active employment but also less likely to be nearing the stage where they are winding down their careers but will still be working as hard as before. As such there will be greater need for energy, alertness and mental sharpness. As well as having higher-than-average disposable incomes, Early Seniors lead active lifestyles. People in the Late Seniors group however tend to be retired, have a limited income and are less mobile.
Table 2: Millions Europe: 0-17 18-24 24-49 50-64 65+ Overall US: 0-17 18-24 25-49 50-64 65+ Overall
Population by age group (m), Europe and US, 2001-2011 2001 2006 2011 CAGR 01-06 CAGR 06-11
76.7 32.4 139.8 66.6 62.5 378.0
74.2 31.6 139.3 69.8 67.2 382.1
71.8 30.9 136.4 75.0 70.9 385.0
-0.7% -0.5% -0.1% 0.9% 1.5% 0.2%
-0.6% -0.5% -0.4% 1.5% 1.1% 0.2%
72.5 28.1 105.5 43.7 35.3 285.0
73.5 29.7 106.0 52.1 37.2 298.4
74.9 30.5 105.7 59.8 41.0 311.9
0.3% 1.1% 0.1% 3.6% 1.0% 0.9%
0.4% 0.5% -0.1% 2.8% 2.0% 0.9%
Source: Datamonitor Base Drivers Database
DATAMONITOR
Functional health needs vary across the Senior demographic

Due to the disparity in lifestyles, the health demands of the two differing groups within the Seniors bracket vary greatly: Early Seniors have a greater need energy and preventative health measures;
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Late Seniors have a greater need for disease maintenance.
Early Seniors tend to live reasonably active lifestyles but are beginning to experience the effects of aging. In order for this group to have a general feeling of wellness, a pro-active approach to health is needed, and this can be achieved through improving consumers diets to ward off potential future health concerns. Examples of products which offer a pro-active approach to health are cholesterol-lowering products such as PrimaLiv YoghurtShot and gut health products such as Yakult and Actimel.
Figure 1:
Cholesterol lowering products are more relevant for Early Seniors
The PrimaLiv YoghurtShot from Skanemejerier is made with Diminicol, a plant sterol ingredient which has been proven in clinical trials to lower cholesterol by 9 percent.
Source: Datamonitor Productscan Online Database
DATAMONITOR
Consumers at the upper end of the Seniors age demographic are more likely than Early Seniors to suffer from serious and debilitating health problems, and live rather less active lifestyles. This, coupled with the fact that this generation of consumers are less responsive to new and unfamiliar product offerings, means that, collectively, this group is not a key consumer group for the pro-active functional food and drinks companies. Instead their specific health needs are focused on one particular disease or illness which is normally addressed by medical treatment.
TREND: Lifestyle diseases are becoming more common

Lifestyle diseases, such as cancer, diabetes and heart disease, are becoming increasingly common, concurrent with the rise in life expectancies. Diet, lifestyle, and the environment can all have an impact on the likelihood of developing these diseases, and as a result, a number of functional food and drinks products have been introduced onto the market, aimed at minimizing the chance of these occurring. Three main areas which companies are targeting through functional food and drink products are:
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The Future Decoded
bone health; heart health; gut health.
Bone health problems are on the rise and affect many consumers
The number of consumers suffering with bone health problems, such as osteoporosis and osteopenia, has increased by an annual average of 1% in Europe and 2.4% in the US over the 2001-2006 period. The growth in bone health problems has outstripped growth of the population across Europe and the US and demonstrates that an aging population has contributed to this rise. This is because deteriorating bone health is linked to the aging process.
Table 3:
Consumers suffering from bone health problems (m), Europe and US, 2001-2011 CAGR 01-06 1.5% 1.0% 0.9% 1.0% 1.1% 0.4% 0.9% 0.9% 1.0% 2.4% 1.5% CAGR 06-11 1.4% 1.2% 0.9% 1.9% 1.2% 2.1% 1.0% 1.2% 1.2% 2.4% 1.7%
Millions France Germany Italy The Netherlands Spain Sweden UK Other Europe Europe US Overall
Source: Datamonitor analysis
2001 10.5 16.0 11.8 2.5 7.3 1.7 10.8 9.5 70.2 41.5 111.7
2006 11.4 16.8 12.4 2.6 7.8 1.8 11.3 9.9 73.9 46.6 120.5
2011 12.2 17.8 12.9 2.9 8.2 2.0 11.9 10.6 78.4 52.5 130.9
DATAMONITOR
A significant number of products aimed at ensuring good bone health are marketed on the inclusion of calcium - a recognized ingredient in achieving strong bones. Examples include calcium enriched yogurts and orange juice. Often such products
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The Future Decoded
are also fortified with vitamin D, as this vitamin is essential for the absorption of calcium.
Figure 2:
Examples of products which use calcium as a selling point
Nestles Lean Pockets line of Frozen Stuffed Sandwiches, available in the US is packaged in a box containing 2 individually wrapped Lean Pockets. The label copy states that the product is a good source of calcium & protein."
Muller Dairy UK has introduced Muller Little Stars Fromage Frias. The Fromage Frais is a natural source of calcium, and made of real fruit puree and whole milk.
A new calcium-enriched Kasesnack (cheese snack) was recently introduced onto the German market under the La Vache Qui Rit Pik & Croq Maxi brand name. The product consists of crunchy breadsticks and a soft cheese for dipping and is touted as being great for snacking on-the-go.
DATAMONITOR
With bone health problems rising there is increased medical research and interest in this area. It is important for manufacturers to keep pace with these findings as they will eventually filter down to the public. For example, according to the National Institute of Arthritis and Musculoskeletal and Skin Diseases, up to 90% of peak bone mass is acquired by age 18 in girls and age 20 in boys, which makes youth the best time to invest in your bone health. As a result there is an opportunity to target children with bone fortifying products via concerned parents.
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A rise in heart problems has prompted a rise in the number of products addressing this need
Increasing stress levels and obesity play a huge role in the rising number of people experiencing heart problems, such as hypertension or high blood pressure. In Europe, hypertension is more of a problem than in the US at present. This is largely due to the higher number of people in the Seniors demographic, and suggests that the number of sufferers will increase in the US as this country's Seniors group continues to grow, more closely reflecting the trends apparent in Europe.
Table 4:
Consumers suffering from heart health problems (m), Europe and US, 2001-2011 CAGR 01-06 1.1% 0.9% 0.8% 0.8% 1.0% 0.2% 0.8% 0.7% 0.9% 1.6% 1.2% CAGR 06-11 1.1% 0.9% 0.7% 1.7% 0.9% 1.9% 0.9% 1.0% 1.0% 1.6% 1.2%
Millions France Germany Italy The Netherlands Spain Sweden UK Other Europe Europe US Overall
2001 15.8 23.8 17.1 3.7 11.0 2.6 16.0 14.1 103.8 66.8 170.6
2006 16.6 24.9 17.7 3.8 11.5 2.6 16.6 14.6 108.4 72.3 180.6
2011 17.6 26.1 18.4 4.1 12.0 2.8 17.3 15.3 113.7 78.1 191.8
DATAMONITOR
The rise in sufferers has prompted product innovation in this area, with products focused on limiting the risk of high cholesterol levels and hypertension, and including ingredients which have some role in addressing these needs such as soya, omega-3 fatty acids, and phytostanols and phytosterols. Yet, according to Datamonitor research, the market for functional heart health products indicates that regular consumers total less than one per cent of those diagnosed with heart health problems. This clearly demonstrates that there is real potential for manufacturers.
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Figure 3:
Examples of products which are said to help maintain a healthy heart
Flora Omega 3 Spread is a spread which contains Omega 3 from fish to help maintain a healthy heart. Omega 3 from fish is more effective as it does not have to be converted in the body and can be put to use straight away".
Barbara's Bakery Crunchy Organic Granola Bars have been introduced in the USA and "contain no artificial flavors, colors, preservatives, cholesterol, hydrogenated oils or trans fat." Label copy states, "Wheat free - Good source of fiber Whole grain - Heart healthy - No trans fat."
New Soy Bites under the Kallo So Crispy brand name are claimed to reduce cholesterol level and help maintain a healthy heart,. The bites are also said to be free from gluten, wheat, dairy, and genetic modification and to be low in saturated fat.
Source: Datamonitor
DATAMONITOR
While some manufacturers publicize the fact that a product contains cholesterollowering properties, and are marketing products as heart healthy, others have gone one step further, and have sought approval from an external body. Since the Food and Drug Administration (FDA) has allowed "qualified health claims" to appear on the product packaging of health products, this has become increasingly popular. Food companies, such as Pepperidge Farm and Kellogg's, display an American Heart Foundation stamp of approval on the packaging of some of their products, offering further credibility to claims that the product is "heart-friendly". As lack of credibility can prove an inhibitor in this market, receiving approval from a governing body is likely to prove valuable.
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Figure 4:
Examples of products which have received backing from an influential body
The Pepperidge Farm Whole Grain Bread is available in the US. The label copy reads, "Made with 100 percent whole wheat flour - 3g of fiber - 0g trans fat." Labeling also features the American Heart Association logo.
Kellogg's Smart Start Healthy Heart Cereal is touted in literature as "the only national cold cereal with oat bran, potassium and low sodium - ingredients that can help lower both blood pressure and cholesterol." and is certified by the American Heart Association's Food Certification program. The literature also states, "Doing more for your heart never tasted so good! This cereal may not only help to lower both your cholesterol and blood pressure as part of a healthy lifestyle, but also makes your taste buds happy too!"
DATAMONITOR
More people are targeting gut health but dont view it as a serious medical concern
While the number of people suffering from digestive disorders appears to have been increasing, the number of serious medical conditions affecting the gut is minimal. However, while the levels of people seeking help for digestive disorders is rising, this is most likely to be because increasing awareness has reduced the taboos and embarrassment surrounding topics related to a person's bowel movements, leading people to act on their concerns. Although many consumers buy functional gut health food and drinks it is not considered a serious medical concern. Concerns regarding digestive diseases and conditions came second to last (2%) in a 2004 UK survey of illnesses, which was commissioned by Gut Week, which suggests that many people do not seek medical advice regarding digestive discomfort. Table 5 shows the number of consumers with gut health problems relating to inflammatory bowel disease (IBD), which exists both as ulcerative colitis and Crohns
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disease. There are over half a million Europeans who have been diagnosed with IBD, while in the US the figure reaches 1.15 million.
Table 5:
Consumers suffering from gut health problems (m), Europe and US, 2001-2011 CAGR 01-06 20.5% 10.8% 5.6% 7.5% 8.3% 7.0% 4.4% 7.1% 7.7% 1.7% 3.4% CAGR 06-11 9.8% 6.8% 4.3% 5.8% 5.7% 5.6% 3.5% 5.7% 5.5% 1.5% 2.9%
Million France Germany Italy The Netherlands Spain Sweden UK Other Europe Europe US Overall
2001 0.02 0.04 0.08 0.02 0.04 0.01 0.11 0.05 0.38 1.06 1.44
2006 0.06 0.07 0.11 0.02 0.07 0.01 0.14 0.08 0.55 1.15 1.70
2011 0.10 0.09 0.14 0.03 0.09 0.02 0.16 0.10 0.72 1.24 1.96
DATAMONITOR
Dairy is the most popular category in addressing gut health

There is a wide range of dairy products which are touted as supporting intestinal wellness. Dairy products, such as fermented milk and yogurt drinks, dominate the range of products catered towards achieving a healthy gut, and these products typically include either prebiotics (food that promotes the growth of beneficial bacteria. This includes fiber, the indigestible material that provides essential throughput and food for beneficial bacteria within the gut) or probiotics (product populated with beneficial bacteria for the gut) or both (a synbiotic) in their product make-up. Leading brands in this arena Yakult and Danone Actimel have advanced consumer knowledge in this area through investing heavily in consumer education campaigns, and this has undoubtedly spurred demand as consumers become better informed. For example, Yakult distributed more than 350,000 "Guide to the Gut" leaflets in Europe which outline how to improve and maintain intestinal health.
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Dairy products also dominate the probiotic sector

The probiotic market globally is largely dominated by dairy products. This is highlighted by the fact that yogurt products account for a significant share of all new product launches in the probiotic sector between 2000 and 2005, as recorded by Productscan, and shown in Figure 5.
Figure 5:
Probiotic product innovation is ten times greater in yogurts than its closest category across Europe and the US, 2001-06
400 350 300 No. of SKUs 250 200 150 100 50 0

uc ts D es se rts C an di Sn es ac k Ba rs M ea t C er ea ls C he D ai es ry Sp e re ad s Yo gu rt O th er s
DATAMONITOR
Fo o Ba b y Br e ad
The probiotic sector is bigger than the prebiotic sector

The new product tracking database, Productscan, reported the release of 517 new probiotic products between 2001 and 2006, compared to just 202 in the prebiotic sector. The global prebiotic market, while not as big as the global probiotic market, is beginning to witness an upsurge in demand as consumers recognize the benefits of these products (reduced level of LDL cholesterol, a strengthened immune system and a reduced chance of colonic diseases). Demonstrating the same trends as witnessed in the probiotic market, yogurt is again the leading product category in this market, as shown in Figure 6.
ro d
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Figure 6:
Yogurt is the leading product category for prebiotic food products, 2001-2006
60 50 No. of SKUs 40 30 20 10 0
Fo od Br Pa ea s d Pr ta od uc De ts ss er ts Ch Ca ip nd s ie & s cr ac ke Sn rs ac k Ba rs Ce Da re al iry Sp s re ad s Yo gu rt So up O th er s
DATAMONITOR
As shown in Figure 6, bakery products have not yet realized the full potential of prebiotic ingredients. Yet, bakery products provide an opportunity for growth as consumers already recognize bread as a valuable source of fiber, aiding in general good digestive health.
Figure 7:
Ba by
An example of a prebiotic bakery product
Made with inulin, which Warburtons claims acts to improve digestion, Warburtons Healthy Inside Bread is marketed as a prebiotic, wholemeal bread.
DATAMONITOR
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Prebiotic products have also reached the drinks segment, with prebiotic water signaling a continued branching away from dairy focused gut health products. UKbased Works with Water is one company which has embraced the trend, introducing a line of bottled waters containing prebiotic fiber onto the market in September 2006. As evident on the packaging, the product claims to contain the required level of Beneo prebiotics per serving to have a beneficial effect on the body, primarily the gut, and promote the growth of good bacteria in the gut.
TREND: Functional food consumption is growing fast

Sales of functional products are rising across all food and drink categories in the US and Europe alike, and growth rates continue to outperform growth in the food and drink categories overall. The interest in functional foods and drinks has been fueled by a desire for convenience, as well as health. This is because busier lifestyles mean that it is harder to meet nutritional requirements using traditional food and drinks.
The US functional food and drinks market is larger than in Europe

The US market was worth US$21.3bn in 2006, with annual sales growth averaging 6.5% over the 2001-2006 period. Growth is expected to slow in the forecast years, displaying yearly growth of 5.0% between 2006 and 2011. Despite having an overall population size larger than the US, in Europe, sales only reached US$8.0bn, less than half of sales achieved in the US.
The dairy sector is set to overtake soft drinks as the largest category in the US functional food and drinks sector
In the US, soft drinks are currently the leading category within the functional food and drinks category, marginally ahead of dairy. The soft drinks sector, with sales of US$6.0 billion in 2006 and annual sales growth of over 8% a year between 2001 and 2006, has been bolstered by the growing success of energy and sports drinks. In turn, this has been driven by the fact that, according to Food Technology, two in every three people in the US have concerns regarding their energy levels, with energizing benefits becoming the main reason for functional food consumption.
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However, the dairy sector looks set to eclipse the soft drinks market in the forecast years, with a predicted annual growth rate of 5.8%, in comparison to the estimated 5.5% in the soft drinks category. Dairy food has benefited from its strong association with health as most adults have been brought up to believe that milk forms an essential part of a healthy diet; this association has been encouraged by marketing campaigns such as "Got Milk" which promotes the nutritional benefits of milk, and involved a wide array of stars sporting a "milk moustache". The cast of stars involved in the "Got Milk" campaign included Britney Spears, Naomi Campbell, The Backstreet Boys, and tennis stars Serena and Venus Williams.
Functional yogurts have been a key growth driver in the dairy segment
The success of functional yogurt products has been the key growth driver in the dairy segment, largely as a result of its connection with three major food trends: convenience, portion control and health. This has prompted an influx of functional yogurt products, with manufacturers keen to launch innovative new offerings that stand out from the crowd, offering products that appeal to specific consumer groups. Danone exploited this area of opportunity with the launch of its Cardivia and Danino yogurts, with both products aimed at different groups; Cardivia is targeted at adults seeking heart health products, while Danino is aimed at parents and their children. Although Cardivia and Danino are tailored for two different types of consumer, both products are suitably sized to appeal as a healthy snack and, with the inclusion of omega 3, have been formulated to have functional health benefits.
Savory snacks suffer due to their perception as an unhealthy product

The savory snacks market underwent the least growth between 2001 and 2006, and this trend looks set to continue in the forecast years. This is because savory snacks are generally considered unhealthy. As a result, the consumption of such a product to achieve a specific health benefit may appear counter-intuitive, and therefore people opt for other products which are more obviously associated with health.
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Table 6:
US functional food & drink market value (US$ m), by category, 2001-2011 CAGR 01-06 7.1% 6.2% 6.7% 1.6% 8.3% 3.3% 6.5% CAGR 06-11 5.7% 4.4% 5.8% 1.4% 5.5% 2.4% 5.0%
US$m Bakery & cereals Confectionery Dairy Savory snacks Soft drinks Others Overall
2001 2,923 1,134 4,279 470 4,036 2,728 15,570
2006 4,127 1,530 5,911 508 6,016 3,206 21,298
2011 5,435 1,899 7,852 543 7,844 3,605 27,179
DATAMONITOR
Energizing products continue to dominate the US market

As already highlighted, energizing products are popular in the US and the demand for these products is key in driving nutraceutical sales in the US. In 2006 alone, American consumers spent US$7.4 billion on energy-boosting products, and this figure looks set to rise further, with estimated sales of US$9.5 billion expected in 2011. Commanding an impressive 34.7% of the functional food and drink market at present, the energy sector is set to improve its share further over the next five years to represent 35.1% of the total market in 2011. That is not to say that heart health and bone health are insignificant by comparison; these categories accounted for US$4.7 billion, and US$3.4 billion respectively in 2006. While gut health is by far the smallest category in the US, it is this category that is displaying the most growth. Displaying double-digit growth of 17.6% annually between 2001 and 2006, this level of growth is expected to continue into the forecast years. This has occurred as consumers here are becoming more accepting of such products after previously displaying a reluctance to trial such products. The American consumers knowledge and acceptance of the direct correlation between the beneficial bacteria in their gut and overall wellness lags behind our international counterparts. Linda Douglas, scientific affairs manager, GTC Nutrition
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Table 7:
US functional food & drink market value (US$m), by claimed health benefit, 2001-2011 CAGR 01-06 5.5% 7.4% 17.6% 6.6% 5.2% 6.5% CAGR 06-11 4.4% 5.5% 10.2% 5.2% 3.9% 5.0%
US$m Bone health Heart health Gut health Energy Other Overall
2001 2,625 3,299 271 5,377 3,997 15,570
2006 3,429 4,719 610 7,400 5,140 21,298
2011 4,248 6,175 990 9,549 6,217 27,179
DATAMONITOR
The European functional food and drink market is growing at a similar rate to the US
The European functional food and drink market is less developed than in the US; despite having an overall population size larger than the US, in Europe sales only reached US$8.0bn, less than half of sales achieved in the US. This highlights untapped potential in European markets. It also partly explains why growth in Europe is comparable to growth in the US market, with this pattern expected to continue in the forecast years. Indeed certain categories are outstripping the US market both in historic growth and future potential (as discussed below). Although the European market is small in comparison to the US market, consumers are increasingly using nutritional information to determine choices relating to food and drink consumption, as shown in Figure 8, and this should boost interest in the functional category.
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Figure 8:
The extent to which European consumers have used nutritional information on packaging more or less in 2006 compared to 2005, to help make food and drinks choices
3.4% 2.5% 17.9% Much more Slightly more The same Slightly less
46.0%
30.2%
Much less
DATAMONITOR
Soft drinks is the leading category in the functional food and drinks market in Europe, commanding annual sales of $3.6 billion in 2006, driven predominantly by energy drink sales. However, in the 2006-2011 period, this category is expected to display the least growth, with perceived annual growth of 4.9% CAGR.
Europeans consume a significant amount of functional confectionary

The functional confectionery market is experiencing rapid development. Following the rapid uptake of functional gum, energy bars and chocolate products, the confectionary segment has increased its share of the functional market from 10.1% in 2001 to 12.3% in 2006. Furthermore, as a result of its expected double-digit annual growth in the forecast years, it looks set to increase share further to 14.2% in 2011. Some of the functional confectionery products available include prebiotic fruit gums (e.g. Wellness Gummibonbons from Mederer Suesswarenvertrieb) and St Johns Wort hard candies (e.g. Giulia Kalibra from La Giulia), and there has been a recent wave of zinc infused confectionery products being offered due to its link in strengthening the immune system.
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Table 8:
Europe functional food & drink market value (US$ m), by category, 2001-2011 CAGR 01-06 6.3% 10.7% 6.0% 8.9% 5.3% 6.1% 6.4% CAGR 06-11 4.7% 8.0% 4.4% 6.7% 3.7% 5.0% 4.9%
US$m Bakery & cereals Confectionery Dairy Savory snacks Soft drinks Others Overall
2001 616 590 661 435 2,796 767 5,865
2006 834 983 883 666 3,615 1,032 8,013
2011 1,052 1,446 1,098 922 4,327 1,318 10,163
Note: For full country-by-country breakdown please refer to the Appendix

DATAMONITOR
Energy products dominate functional food and drinks in Europe

The most important health benefit for European functional food consumers is energy, accounting for US$2.9 billion of sales in 2006, demonstrating the importance that consumers place on mental and physical energy boosts. The second most important benefit area is gut health. While serious diagnosed gut conditions are rare, products aimed at maintaining healthy digestive systems are increasingly popular, and will continue to be the most important category for the foreseeable future. Table 9: Europe functional food & drink market value (US$ m), by claimed health benefit, 2001-2011 CAGR 01-06 7.5% 7.2% 7.3% 5.5% 6.1% 6.4% CAGR 06-11 5.8% 5.5% 5.7% 3.9% 4.6% 4.9%
US$m Bone health Heart health Gut health Energy Other health needs Overall
2001 613 1,029 1,118 2,216 889 5,865
2006 878 1,454 1,588 2,897 1,196 8,013
2011 1,162 1,905 2,090 3,508 1,499 10,163
Note: For full country-by-country breakdown please refer to the Appendix

DATAMONITOR
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Germany and the UK account for the most significant portion of Europe's functional food and drinks sales
Germany accounts for a significant share of Europe's functional food and drinks market, accounting for 24% in value terms. Furthermore, the Germans are set to marginally improve on this share in the forecast years, even in a European marketplace which is currently displaying annual average growth of around 6.6%. This reflects the Germans fondness for self-medication and health maintenance, and the key development of the probiotic dairy market in Europe. Elsewhere, the Italians have stepped up consumption, leading to average annual sales growth of 9.0% in the historical period. In France, growth has fallen below the European average, largely because the market here is approaching maturity, however, most of the product development in this country has been in the areas of probiotic yogurt and drinks, with little focus on opportunities in the prebiotic market. Growth in the UK has also been stifled by a lack of confidence in the health claims of manufacturers. However, confidence in the benefits of functional dairy products is growing; a June 2005 study, conducted by Food Manufacture magazine in the UK, indicated that of the 1,792 grocery shoppers questioned, 48% of women and 35% of men considered that products such as probiotic yoghurts and calcium enriched drinks play an important part in achieving overall good health. Table 10: Europe functional food & drink market value (US$ m), by country, 2001-2011 CAGR 01-06 5.0% 6.6% 9.0% 4.7% 8.3% 9.0% 5.0% 6.7% 6.4% CAGR 06-11 4.3% 4.9% 6.5% 4.0% 5.1% 6.6% 3.9% 5.2% 4.9%
US$m France Germany Italy Netherlands Spain Sweden UK Rest of Europe Overall
2001 598.6 1,374.7 677.1 216.3 401.2 139.6 1,564.7 892.9 5,865.0
2006 764.4 1,889.6 1,042.3 271.8 597.5 214.8 1,997.5 1,235.3
2011 941.3 2,397.8 1,427.7 330.9 764.9 296.0 2,415.9 1,588.6
8,013.4 10,163.1
DATAMONITOR
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The rising success of naturally functional food and drink poses a threat and opportunity to the functional market
While there will be an obvious demand for functional foods as the health trend grows, this sector faces competition from naturally functional foods i.e. everyday whole foods that are increasingly having their health profile raised as more is discovered about them, such as soy, cranberries and green teas. Over the last decade, there have been a number of notable food scares, and this has seen some consumers revert back to the consumption of more natural foods. Furthermore, some people anticipate that functional foods cannot achieve the same health benefits because the view that that they are impure or lack certain micronutrients due to processing: "No functional foods can ever replace the full range of nutrients in fruits, vegetables and whole grains, nor can they overcome the detrimental effects of diets that are not healthful. The primary beneficiaries are most likely to be the companies that make them. The degree of benefit to the public is much less certain." Marion Nestle, professor of Nutrition Studies at New York University, and author of Food Politics, The Guardian Newspaper, 2006
Naturally functional food consumption will be boosted by rising interest in 5-aday consumption and general healthy eating patterns
Consumers are embracing the belief that the consumption of five portions of fruit and vegetables a day is important for overall health. According to the Food Standards Agency's sixth Consumer Attitudes to Food 2005 survey, 67% of the 3,000 UK consumers questioned are now aware that we should eat at least five portions of fruit and vegetables a day, up from 43% in 2000. This has prompted an increase in the proportion of consumers claiming to eat more of these products, and a rise in the number of people who say they never eat ready meals. Furthermore, statistics published by the international not-for-profit Institute of Food Technologists, in Food Technology, April 2006, showed that a quarter of all consumers say they eat fruits or vegetables to prevent disease, with one in three eating them to feel healthy, and almost nine in ten eating to stay healthy.
Green tea: a naturally functional beverage

The popularity of green teas is being boosted by its purported health benefits, as a result more food and drink players are seeking to offer or incorporate it into product
Functional Food & Drink Consumption Trends Datamonitor (Published 01/2007) This report is a licensed product and is not to be photocopied DMCM2982 Page 35
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offerings. Starbucks, for example, introduced a green tea frappuccino in 2005. As evident in Table 11, sales of green teas have been rising steadily across Europe and the US and look set to continue growing in the forecast years.
Table 11:
Overall green tea values (US$ m), US & Europe, 2000-2010 CAGR 00-05 1.6% 1.1% 1.3% 1.4% 2.2% 0.6% 6.0% CAGR 05-10 1.4% 2.0% 1.2% 1.6% 2.0% 1.7% 5.8%
US$ m France Italy Netherlands Spain Sweden UK US

2000 24.4 2.1 1.2 2.5 3.3 34.9 112.5
2005 26.5 2.2 1.2 2.7 3.6 36.0 150.4
2010 28.3 2.5 1.3 2.9 4.0 39.3 199.1
DATAMONITOR
While the US Food & Drug Administration (FDA) has rejected the health claims linked to green tea consumption, results from a Japanese study released in September 2006 contradict this viewpoint. The study, conducted by the Tohoku University School of Public Policy, and reported in the Journal of the American Medical Association, shows that adults who consume three or more cups of green tea per day have a reduced risk of death due to cardiovascular disease. The study analyzed the drinking habits of 40,530 Japanese adults, aged between 40 and 79 years, with no history of stroke, coronary heart disease or cancer, beginning in 1994. Furthermore, green tea was cited as the top food and drink product for ensuring healthy looking skin on online information resource, NewsTarget. As consumers are becoming increasingly aware of appearance, this is likely to ensure future growth in the category. Rich in antioxidants which reduce inflammation and protect cell membranes, green tea has demonstrated the ability to reduce sunburn damage, thus lowering the risk of skin cancer.
Superfruits: a key growth area in naturally functional foods

The emergence of superfruits (fruits that are increasingly found to have more powerful and specific health benefits) has attracted the interest of the consumer. According to the Center for Culinary Development (CCD) in the US, these nutrient-
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rich fruits are growing in popularity due to consumers desire to eat healthily while sampling new and exotic tastes.
Pomegranates: superfruits Pomegranates are a prime example of a so-called superfruit. This fruit contains naturally high levels of polyphenols compounds that aid in the fight against various health maladies ranging from premature aging to certain types of cancer. The popularity of pomegranates has rocketed in the light of favorable research, with one study indicating that pomegranate juice provides a heart-healthy option for people suffering from diabetes. This study, carried out in Israel, found that although the fruit is known to have a relatively high sugar content, consumption did not worsen diabetes disease parameters in patients, and instead reduced the risk of atherosclerosis (a disease affecting the arterial blood vessel, commonly referred to as a "hardening" or "furring" of the arteries), which, in turn, can lead to cardiovascular disease. The results of the study, which was lead by Professor Michael Aviram of the Rappaport Family Institute for Research in the Medical Sciences and Rambam Medical Center, Haifa, Israel, were published in the August 2006 issue of the journal Atherosclerosis. Other recent studies relating to the fruit have uncovered that pomegranates have a positive effect on heart health, prostate cancer and arthritis all of which have advanced retail sales of the juice, with a 300% rise in sales in the UK from the start of 2005 up until September 2006, according to online information source, NewsTarget. Unsurprisingly, manufacturers have responded to the rise in consumer interest with an influx of new products containing this newly recognized superfruit.
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Figure 9:
A growing number of products incorporate pomegranate for its health benefits
In 2005, a new Chicken Pomegranate Sausage was added to the Jody Maroni's Sausage Kingdom line. The product contains pomegranate molasses & fresh basil and was launched in the US in December 2005
Optima Health & Nutrition Ltd has launched its Optima Pomegranate Juice in the UK. This liquid supplement is made from pure, filtered pomegranate juice, a naturally powerful antioxidant.
Mangajo Drinks Company has combined two naturally healthy products, pomegranate and green tea, in its new product - The Mangajo Pomegranate & Green Tea - launched in July 2006 in Australia, Ireland, France, Belgium, Iceland and the UK.
Source: Datamonitor
DATAMONITOR
The pomegranate trend has even transferred to the chewing gum sector; In September 2005, Ford Gum & Machine Company introduced its Pomegranate Power Sugar Free Chewing Gum, a gum made with natural pomegranate extract.
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INSIGHT: Parents are increasingly concerned about their kids health

Parents are becoming increasingly concerned with their children's weight and health due to the much publicized rise in childhood obesity.
Parents are taking more control of their kids eating habits

Consumers of parenting age are trying to eat more healthily and this has a knock-on effect
A Datamonitor consumer survey conducted in July 2006 found that 78.8% of Midlifers aged 25-49 (the age cohort that the vast majority of parents of 5-13 year olds fall into) had done more to eat healthily in the previous 12 months. The prevalence to eat more healthily was high throughout all countries. This has obvious knock on effects in that their family shopping habits and by implication the products kids consume are also affected as evidenced by other research: Recent research conducted by Kids and Youth across Europe has revealed that mothers and children's attitudes and behaviors towards food and drink products have changed markedly. There is a pan-European movement in raising the issue of childhood obesity and the link with poor diets. This is leading mothers to feel increasingly guilty about giving their children 'unhealthy' food, and making the compromises they were previously willing to make. ESOMAR, Age Matters Conference, London January, 2005 There are a number of surveys which have highlighted how parental attitudes are increasingly health orientated: A 2004 survey carried out by Engine House, an international business consultancy specializing in healthcare, food and nutrition, highlighted that almost two thirds of parents surveyed (64%) harbored concerns about their children's overall diet, with 50% worried about the level of their junk food intake. The Sodexho UK Schools Survey, 2005, found that 94% of parents said it was very important or important that their childs school provided a healthy meal at lunchtime. A further 62% of parents said it was important or very
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important for the school to provide an opportunity for them to be involved in their childs plan for healthy eating. According to a US survey conducted by Panera Bread in May 2006, 77% of parents say they try to make lunches that are nutritious, even though it may not be their children's favorites.
Household eating rules set by parents are important to developing childrens healthiness
The increasing role of parents in influencing children's food choices was highlighted in the Journal of the American Dietetic Association, 2006. In a bid to establish the most important predictor of the eating habits of adolescents, the University of California and San Diego State University assessed 878 children between the ages of 11 and 15. Participants were asked to note down everything that they ate for three days and answered questions about why they chose certain foods. One of the specified reasons, household eating rules, which encompassed the accessibility of healthy foods in the home and parental limitation of unhealthy foods, was consistently linked to eating more fruits and vegetables, and less fat. Household rules were most influential in choices made by children at the younger end of the age range questioned and highlights the fact that parents can have a positive effect on the food choices of their offspring, and in shaping future behavior of older children as they take control of their own food consumption. While much of the attention has been focused on school children, some manufacturers have sought to achieve a competitive advantage through targeting consumers even earlier; acknowledging parental concerns regarding the health of new additions to the family, a range of products designed specifically for babies have become available.
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Figure 10:
Functional and fortified food products are increasingly being targeted at babies
Yoplait has introduced its Tout Petits Filous brand of Yaourt Onctueux (smooth yogurt) in France. The product is aimed at babies of at least five months of age and is said to be rich in iron, calcium and vitamin B12.
Nestle has recently launched a new range of baby food in Spain - Papillas Bienestar (Wellness Baby food). It is said that Papillas Bienestar are "the first range of functional baby foods (wellbeing baby foods) with prebiotics, probiotics and ingredients specifically for babies. These baby food products are designed to relieve and help solve minor digestive problems and they are also suitable for feeding babies as part of their regular diet or as a variation".
DATAMONITOR
INSIGHT: Time pressures drive consumers to nutraceuticals

While the provision of functional food and drink products addresses the health megatrend, it is also imperative that manufacturers understand the other mega-trends which determine purchase choices made by the consumer. Consumers are increasingly seeking out products that ensure convenience, as well as overall well-being, as shown in Figure 11. The convenience mega-trend has grown in importance due to increased time pressures, as a result of faster-paced lifestyles. Furthermore, greater time spent commuting has encouraged multi-tasking while traveling and increased the propensity to eat and drink on-the-go.
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Figure 11:
The extent to which European and US consumers sought food and drinks which are both convenient AND healthy more or less in 2006 than 2005
Much more Slightly more The same Slightly less Much less
1.9% 38.3% 1.9% 21.4% 35.2%
2.0% 1.6% 24.4%
36.6%
36.7%
Europe
US
DATAMONITOR
Underlining the importance of convenience and the growing trend towards on-the-go consumption, food, nutrition and health journal NewNutrition, reported that over the last few years, the greatest growth in the functional category has been in individual consumption and single-serve products. That fact that global drinks manufacturers Unilever and Danone embraced the concept of single-serve drinks, through developing their own range of daily dose products such as Unilever's Knorr Vie and Danone's Actimel, further identifies that this is one key area of growth potential. Due to time pressures, a drink such as Vie, which contains half the recommended daily amount of fruit and vegetables may be an attractive option for consumers who are health-conscious but do not have the time or motivation to consume the required amount of fruit and vegetables. Unilever report that it is not their intention to steer people away from natural foods, but consider that it is difficult to consume 200g of vegetables plus two pieces of fruit every day, suggesting that many people only eat half of that.
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Figure 12:
Examples of single-serve beverage products which satisfy both the health and convenience mega-trends
Claimed to provide half of the daily fruit and vegetable needs, Knorr Vie shot drinks are smoothie-style drinks are made from concentrated fruit and vegetable juices and purees. They don't contain any additives and satisfy the convenience as well as the health megatrend. The drinks are available in the Netherlands, Belgium, the UK, and Spain.
Pomegranate is the newest variety to have been added to the Danone Actimel range, displaying the rising popularity of this superfruit. Claimed to strengthen the immune system and to be free of preservatives and artificial colors, Actimel is presented in 100g plastic bottles.
DATAMONITOR
INSIGHT: Consumers are wary about health related claims on food and drink products
Consumers are often cautious about health claims made by food and drink manufacturers, as people are all too aware that claims made do not always reflect the actual product.
People are increasingly skeptical about corporate health claims

Manufacturers have responded to consumer skepticism by supplying consumers with increasing amounts of information, through adding various logos, claims and endorsements onto their packaging. By doing this, companies hope to draw attention to the specific health benefits that can be derived from the consumption of their product. Consumers will generally be more susceptible to a products health claims if
The Future Decoded
they understand how the product works, and the length of time it takes before effects begin to show; therefore manufacturers need to educate consumers. Due to concerted efforts by food and drink manufacturers to set themselves apart from other products on the market, the breadth of claims has increased substantially, helped by the low level of restrictions in the marketplace. However, it is this lack of governance which has fueled consumer distrust, largely due to the fact that many of the health claims made have never faced any scientific analysis, and without any strict guidelines imposed in the future, this situation is likely to impede the functional foods category further; especially given the growing interest in natural and better-for-you products. "You are looking at an early phase where regulation isn't as tight as it is going to be. You have a number of foods that make spurious claims where scientific discipline was not really applied to the functionality of the particular product. That would have done some damage to the market, I believe." Prof Gerald Fitzgerald, University College Cork's professor of food microbiology, cited in online journal Biotechnology Journal (Aug 2006)
This situation may change with new plans outlined by the European Parliament, which has already passed legislation that requires all foods displaying health and nutritional claims to meet specific profiles approved by the FSA and its European counterpart. It has also advised a ban on endorsements made by individual healthcare professionals. This has been passed over to the European Council, which is currently assessing the legislation.
The lack of credible backing may inhibit a health foods success

Skepticism about functional food products will continue to exist, however the damaging effects of this can be severely reduced by educating the consumer, and highlighting external support for products by respected bodies. Endorsement by perceived credible sources such as recognized health organizations will aid in curtailing consumer skepticism about information provided by food producers. Products displaying trusted seals and symbols of quality appeal to consumers as they recognize such items as superior. Furthermore, a 2006 survey of consumer shopping habits commissioned by ConAgra Foods showed that 95% of consumers in the US would contemplate such indicators when conducting their food shop. Compared to
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2005, four times as many of the 1,023 people questioned reported that they are more likely to consider purchasing foods based on trust marks.
Advanced packaging technology may reduce skepticism

A concern that may increasingly arise in the future, and that manufacturers should consider, is the failure of some functional products to produce the benefits they claims on the label, as a result of packaging inefficiencies. This can be because products often degrade somewhere between the manufacture and storage of the product. According to online trade magazine New Scientist, the industry is investigating new ways of packaging products to prevent the breakdown of these valuable components. Some ideas have focused on encasing the ingredients in protective capsules, and on new packaging technologies which seal the functional ingredient separately until the food is opened. This is particularly relevant to the probiotic sector; In July 2005, Consumer Reports magazine reported on recent findings that discovered that three out of four liquid supplements examined contained significantly less bacterial counts than labeled.
Studies have shown that most probiotics on store shelves simply fail to meet label claim and many, in fact, have no viability at all by the time they reach consumers. The final delivery form, packaging and handling of probiotics are critical factors affecting probiotic shelf-life. In order to ensure viability for the consumer, probiotics must be produced, formed and packaged in a way to heighten shelf-life and achieve gastric acid bypass, independent of the strains involved. This involves both manufacturing processes and delivery technologies. Tim Gamble, vice president of sales and marketing, Nutraceutix Inc.
INSIGHT: The increasing availability of health information has seen consumer awareness on health issues grow Health issues are increasingly being reported on
Health issues are increasingly pushing their way to the forefront of people's minds and forming a part of everyday life. This has been furthered by the fact that such
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issues are beginning to receive more attention in the press and from influential bodies such as the US Department of Health and Human Services who backed a Childhood Obesity Prevention campaign in the US.
Health issues are receiving increased coverage in the media

Over the last decade, there has been a rise in health-related news, spurred by public interest in nutrition and food safety issues. Health issues are also increasingly becoming central to many mainstream television shows and films, such as the worldwide hit Supersize Me which examined the effects of eating a diet exclusively based on McDonalds meals. In the UK, celebrity chef Jamie Oliver embarked on an assault of school dinners after discovering that many schools failed to meet basic health and nutrient requirements. Jamie Oliver cited Turkey Twizzlers as one of worst offending items, and, in the wake of the bad publicity, the frozen food category suffered a decline in sales, according to The Grocer. Furthermore, he launched a campaign to remove junk food from the menu of Britain's schools which culminated in the delivery of a 270,000 strong petition to Downing Street, requesting better nutrition in UK schools. In response, the government made a pledge to support the cause and improve standards. This has yielded a consumer who is better informed, which in turn has benefited food and drinks manufacturers operating in the nutraceutical sector, as these consumers have responded to health concerns reported on in the press.
The Internet has proved a useful tool in making consumers more health aware
The Internet is a useful tool in expanding health awareness and has yielded a more knowledgeable consumer. It has also advanced the number of self-medicating consumers in the wake of rapidly increasing healthcare costs, and the realization that certain dietary habits are linked to the development of many diseases, as supported by scientific evidence. The increasing amount of adults using the Internet as a source of information for health related inquiries has been encouraged by the level of convenience involved with this method of self-diagnosis. The Internet plays host to a whole library of information information which would be relayed to the patient by a doctor should they opt for medical advice, but which would take more time, so offering a less attractive alternative.
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The Internet is also likely to offer a more detailed analysis of any given illness, providing advice on what treatment is needed and if the sufferer should indeed call for medical assistance. According to a 2005 study commissioned by Readers Digest and the Proprietary Association of Great Britain (PAGB) in order to gain an up-to-date idea of consumers' approach to daily health matters, 61% of all consumers interviewed said that they used the Internet for assistance on health related matters. Furthermore, this channel of communication proved more popular than television or radio. However, there are some inhibitors to the usefulness of the Internet as a tool, such as credibility and quality. According to the Health On the Net Foundation, who have tracked the opinions of Internet users of health information, their latest online survey carried out in 2005 indicated that respondents, patients and health professionals alike, thought quality of information' was the most important issue facing the quality and usefulness of health websites. Other notable areas of concern were ease of finding information/navigation, trustworthiness/credibility and accuracy of information.
Consumers are increasingly relying on self-diagnosis

The Internet has caused a shift in human behavior in the healthcare market, from a passive patient to informed consumer, and has accelerated the trend towards selfdiagnosis.
Consumers are increasingly comfortable with self-medication According to a 2001 survey, consumers in the US are more reliant on self-analysis than physicians, with 59% of respondents stating that they are more likely to treat their own health condition now than the previous year. A July 2005 study, from Harris Interactive, found that 57% of US adults who use the Internet for sourcing health information have discussed this information with their doctor at least once. Among this set of consumers, 96% enjoy obtaining health information from the Internet and 78% said ensuing discussions with their care provider were helpful because it improved doctor-patient communication, a huge increase of 40% compared to 2002.
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"Nationally, the demand for a wider range of healthcare products, both food and non-food, is on the increase. Customers are telling us they want to take more responsibility for their own healthcare and buy products, particularly food products, that offer taste and nutrition but also have greater functional benefits as well." Jennifer West, Tesco Healthcare
Self-diagnosis has been buoyed by increasing Internet access Before the Internet became widely available, communication between pharmaceutical companies and consumers was restricted and was, to a great extent, a one-way exchange, with companies providing information that cast them in a favorable light in the hope of influencing consumer choice. With limited access to more in-depth health information, consumers were forced to make an uninformed decision about whether or not to respond to such health messages. However, the rise of the Internet has allowed consumers to access independent and unbiased medical information resources, including the opinions of their peers. Figure 13: The Internet has changed the way consumers relate to health information, physicians, companies and other consumers
DATAMONITOR
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The growth in Internet use for self-medication has been in line with the growth of home Internet access, enabling patients to cross-check information that they have obtained from traditional resources, such as health professionals or the library, against information found online using search engines and websites. According to Eurostat, across the EU25, 52% of households had access to the Internet during the first quarter of 2006, compared to 48% during the first quarter of 2005, and 32% had a broadband connection, compared to 23% in 2005. Manhattan Research, a healthcare marketing information and services firm, carried out a 2002 study on the level of health care practice supported by electronic processes and communication, or eHealth as it is commonly referred to, and found that the number of eHealth consumers in the US was growing at twice the rate of the overall online population. Furthermore, a more recent study (Health Information Online: Pew Internet & American Life Project) carried out in 2005 by Susannah Fox, suggests that 80% of American adult Internet users have researched at least one health related matter via this forum, and, more significantly, in 2004, 51% of Internet users had searched for information relating to diet, nutrition, vitamins and supplements in 2004, compared to 44% in 2002. This is quite a considerable increase, especially since the figure is likely to grow further as people become more health aware given the substantial level of growth experienced over these two years. In turn, this suggests that there will be an increased interest in functional food and drinks products. Another US study, carried out by RAND Corporation in 2005, discovered that 69% of adults used the Internet more frequently than any other source of health information, while also showing that 72% of adults sought information for advice on methods of treatment on the web. This indicates that once a consumer discovers the Internet as a source of health information, it fast becomes a consumers favored source of health information.
INSIGHT: While health is becoming increasingly important taste remains paramount

Consumers are unlikely to select healthy products which they do not like the taste of as people do not like to compromise on taste. While health matters are increasing in importance, taste is still the most persuasive factor, with price acting as another influential factor. This viewpoint is supported by the food and health survey: Consumer Attitudes toward Food, Nutrition & Health, 2006 (US), which revealed that taste and price win
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out over healthfulness as top factors impacting on food and beverage purchases. A representative from ingredients giant, Tate & Lyle also cited taste and price as decisive factors in consumer choice and suggested that this should signal a warning to functional food and drink manufacturers: "American consumers have a good understanding of what constitutes healthy eating' yet there is a disconnect between what they know and believe and what they actually do in terms of eating. "This suggests consumers focus on taste and convenience over health and that there are significant opportunities for food and beverage manufacturers to make more healthful versions of their products. While these new options must be convenient and readily available for consumers across purchase locations, they must also be as tasty as regular products." Harvey Chimoff, Marketing Director, Tate & Lyle, 2005
There is a belief among many consumers that healthy foods do not taste great
Aware of consumer perceptions that functional foods do not taste great, Kashi, a natural foods company, has set out to abolish this viewpoint and prove that health foods can taste great. In September 2006, the company began giving away complimentary TLC Chewy Trail Mix granola bars to customers who accessed their website (www.kashi.com), and challenged that if the general consensus shows that people weren't impressed with the product, they will be able to view footage of Kashi's head food developer, Jeff Grogg, eat the box the bars are packaged in. If he does have to eat the box, the film will air on the Kashi Web site.
Functional ingredients restrict ability to meet consumer flavor preferences

As taste is a decisive factor, functional food and drinks face challenges in relation to formulation issues as considerations about how the flavoring reacts with the functional components need to be taken into account in order to produce something that tastes edible / drinkable.
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If consumers cannot justify the price premium of a functional offering, this will prove to be an inhibitor
Functional offerings tend to be more expensive than the more mainstream products, for example, for a typical tub of own-label sunflower spread it would cost the consumer GBP0.38 per 500g, while for a brand that is "clinically proven" to reduce cholesterol, such as Benecol Light, the consumer can expect to pay 13 times as much, according to UK newspaper The Guardian, February, 2006. As a result, manufacturers have to work hard to persuade consumers that the difference in price reflects a difference in quality. The ability to demand a higher price will be reflected in how well educated the consumer is. If consumers are unable to understand the benefits of consuming a particular product, they will not be able to justify spending more. In a UK study carried out by market research company HI Europe, in June 2006, and involving 1,792 grocery shoppers, almost a third of all respondents (29%) were willing to pay extra for functional foods, with 50% not prepared to pay more and 21% not specifying. The data also shows though that there are still a significant number of people who are not willing to pay more for added health benefits, and recognize that in some cases it is possible to receive the beneficial ingredients from cheaper alternatives. Hence, the ever present threat of substitution from natural whole foods, such as fruit and vegetables.
Conclusions
As the Senior population continues to grow, the level of interest in functional food and drinks products is likely to continue growing accordingly, especially since consumers across all age categories are increasingly demanding products which address their specific health concerns. Scientific advances have also spurred growth in the sector, prompting a surge of innovations. Consumers are also increasingly seeking out information and taking a more active interest in measures to improve health through diet. This continues to be fuelled by media coverage and governmental messages. In order to maximize potential however, manufacturers must overcome problems relating to lack of trust and taste issues, and a missed opportunity will result in loss of market share, particularly in the light of growing interest in the natural and better for you categories.
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CHAPTER 3 ACTION POINTS
Introduction
Two of the main concerns facing manufacturers involved in the functional food and drink sectors are how to address the skepticism surrounding manufacturer claims and how to bridge the gap between attitudes and behaviors. If manufacturers are able to overcome such issues, then they are positioned well to benefit from the growing trend towards healthy eating. However, there are some other impacting points to consider, such as the overriding persuasive factors of taste and convenience in purchase decisions. Overall, the recommended action points are centered on overcoming all these concerns: Develop trust as a cornerstone of your nutraceutical proposition Alter the ingredient make-up of typically unhealthy products Target children with functional products that address parents concerns over health and nutrition Educate the consumer sufficiently about the health benefits derived from the consumption of a particular product Source natural products and incorporate them into functional offerings Use the Internet to promote products Consider whether your offering is better than alternative solutions
Develop trust as a cornerstone of your nutraceutical proposition

Gaining trust is a significant factor in achieving success in the functional food and drink market, largely because firms operating in this field demand a price at the premium-end of the market. In demanding a higher price, companies must earn trust through educating consumers about what they can expect to receive for the increase in cost.
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Ways in which a manufacturer can build trust include: acting in a socially responsible way; receiving endorsement from an influential body; extend brands that consumers already trust.
Act in a socially responsible way

As consumers become more health aware, manufacturers need to demonstrate that they understand the health concerns of their audience. More specifically, manufacturers need to educate consumers on healthy eating and how their products cater to these requirements. Through providing information on healthy eating and living, companies can develop a relationship with customers that in turn builds trust. Any data provided should be: unbiased, accurate; preferably backed up by independent research.
This will enhance the level of trust in the brand and ensure that the company's product claims meet the expectations of the customer. By providing scientific evidence to support their claims, being open and honest in communications and working towards corporate social policy goals, manufacturers can hope to grow trust in the overall company brand. In turn, this will improve consumer trust in product health claims, largely because the company is being seen to act in a socially responsible way.
Seek endorsements from reputable organizations

In the functional food and drinks market, receiving endorsement from an external body is a powerful marketing tool, as it helps distinguish a product from other entrants onto the market. This is because endorsement by health professionals and other influential parties, such as an independent research institute, helps reassure consumers that product claims are genuine.
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In May 2006, Provexis, a nutraceutical company that develops functional and medical foods, announced a scientific endorsement for its chilled fruit juice product Sirco; two scientific papers, which detailed the clinical efficacy of Sirco, were published by the American Journal of Clinical Nutrition (AJCN), an internationally recognized journal in the nutrition field. This followed the 2005 announcement of a three-year collaboration with registered heart health charity, Heart UK, which allowed Provexis formal approval for its Sirco product, allowing Sirco to wear the Heart UK logo on its packaging. Under the deal, the two parties are to take part in joint research and educational activities designed to increase awareness of family heart health issues. Receiving backing for a product is all the more important due to the lack of regulation in the market, as people look for other quality cues.
Figure 14:
Sirco is an example of a product which has received backing from a professional body
Sirco is a fruit juice drink which is touted as the first heart health product to contain the patented Fruitflow technology. According to manufacturers Provexis, Fruitflow is a natural bioactive extract from tomato that works by reducing blood platelet aggregation within hours of consumption. Platelet aggregation plays a significant role in the formation of a thrombus (internal blood clot) which can cause a heart attack or stroke.
DATAMONITOR
Extend health brands that consumers already trust

Companies with a well-established health brand are often able to successfully extend their existing offerings as a result of the products' association with a respected and trusted brand. This is because trust is a major factor in determining purchases, especially in the functional food and drink sector, and through extending and promoting brands that already possess considerable consumer goodwill, it increases the chance of overcoming skepticism.
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For a company to successfully expand its product line to include functional food and drink offerings, it needs to ensure that it possesses a significant level of differentiation from its existing offerings, and from other offerings available on the market. As the trend towards functional food and drink products grows, it would make sense for manufacturers operating in the health food arena, already offering better-for-you products such as those which are low in calories, to branch out and build on their existing association with health to grow their nutraceutical portfolio. Global heavyweights could benefit from the existing strong brand loyalty displayed in other areas of the food and drink market. However, a company cannot rely on existing brand loyalty alone. Should the newly introduced product fail to impress, it could have a detrimental effect on brand reputation, and while having the backing of a strong brand will gain attention for the product, manufacturers also need to consider the other important elements in the success of a product; factors such as taste, price, and consumer confidence that the product delivers what it promises are just as important as source credibility.
Consumers must understand products to trust their claims

Consumers are overloaded with information and conflicting reports on what is healthy. One day fat is bad, the next it's carbs and now it's trans fat. Instead of empowering consumers, this abundant amount of information is confusing them, Julie Chmielewski, M.S., R.D., co-author of the study and business analyst, FIND/SVP, Inc. In order for consumers to adopt a preferential opinion regarding functional food and drinks, they need to be educated about how certain behaviors relate to overall health. In order to achieve this, manufacturers need to ensure that their audience has access to as much information as possible, and players involved in the industry are working to improve awareness. For example, Unilever and Flora Pro-active sponsored a four month long UK-based campaign to increase awareness about heart health which began in May 2006. In addition to the free blood pressure and cholesterol screening offered, everyone tested received a Complete Guide to Heart Health pamphlet.
Realistic and focused claims will benefit the sector

While consumers are wary about health claims, many are keen to expand their knowledge and actively seek out information on what are the best choices for their needs. This is beneficial to the sector as an increase in understanding will only further
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growth in this area. With this in mind, manufacturers functional claims need to be both realistic and focused if they are to gain acceptance from cynically-minded consumers. Credible, supportable claims and tangible evidence of functional benefits are essential. Consumer confidence and trust in the nutraceuticals industry has suffered following the release of a number of functional foods and supplements that had undergone little testing and did not provide the benefits promised. Furthermore, in highlighting the benefits of functional ingredients, manufacturers must take care not to confuse consumers or cause them to lose trust in product efficacy. Making too many health claims at once may make consumers wary of all health claims associated with the product. As such, manufacturers should consider noting specific health benefits on each product, highlighting those that cater to the needs of the target demographic only. For example, noting only the prevention of arthritis on an omega-3 product targeted at older consumers would appeal to their health needs, while noting the mood-enhancing benefits on supplements aimed towards younger consumers would address their needs as well without confusing either group. In addition to spending money on education of consumers (and also trade professionals), this needs to be done jointly with consumer health organizations to increase credibility and prevent false, or unproven, health claims that undermine consumer trust.
Alter the ingredient makeup of typically unhealthy products

Substitute unhealthy components with more healthy ingredients
A key way of developing better functional products is to substitute less healthy ingredients with more wholesome, natural and hence healthier versions. One of the most notable product trends that demonstrate this formulation change in food products is the introduction of wholegrain versions of existing grain based products, such as bread, cereals and biscuits. This delivers on a crucial and increasingly important consumer insight: consumers are increasingly interested in what nutrients they are putting into their bodies as well as what they are cutting out. There are two key benefits for reformulating functional products to be based on healthier and more wholesome base ingredients:
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the functional food or drink may benefit from additional functional health benefits inherent in the more healthy base ingredient; functional products can benefit from the healthy halo association with a healthy base ingredient, for example there is a growing trend of incorporating yoghurt into a variety of food categories the healthy credentials of which help to boost the overall health image of the product.
Marry functional benefits to highly indulgent product categories

There are inherent difficulties in incorporating healthy ingredients in large quantities into certain highly indulgent product categories, such as sugar confectionery. However, these are ideal categories for developing more functional products through the addition of active ingredients to create specific health benefits, such as fat-burning or energy-boosting, to create healthy-indulgent products. This is the approach that JavaFit from the Javalution Coffee Company has taken, which is described as a gourmet coffee with a benefit. To add further appeal, a longterm weight-loss study was conducted to allow JavaFit to say it can actually help (the consumer) lose weight, as put be Javalutions president Scott Pumper. Five varieties comprise the JavaFit range: Lean with Calcium, Burn and Energy, the latter two with Extreme varieties boasting 150mg of caffeine. Lean has calcium, potassium, super Citrimax and Garcinia cambogia, the latter ingredient also found in Burn and Energy. Burn includes chromium polynicotinate and Citrus aurantium, while Energy adds niacin and green tea extract. All of them have been proven to increase fat burning (by 5%) and time to exhaustion (by 30%), as well as help with suppressing the appetite. Despite investing into the functional health benefits of the products, the taste element is not being neglected. According to the company the coffee is based on a gourmet, grade-A bean, based out of Costa Rica, with almost zero taste of the supplements in it. A major goal of the company is making JavaFit part of an enjoyable lifestyle, something the consumer will be loyal to based on taste as well as the health benefits.
Pick your functional benefits to target the broadest range of occasions for the greatest growth potential When investigating adding healthy functionality to indulgent products producers should assess very carefully which occasions and consumer groups they will be targeting. To maximize their market opportunities, manufacturers should consider functionality that offers benefits which a broader range of people require on a more regular basis;
Action Points
for example, the need for fresh breath, clean teeth, mental alertness or relaxation. This contrasts past examples that have been somewhat niche in focus, for example Jelly Belly Sports Beans, which were promoted as being energizing sugar confectionery for sport and were supposedly targeting a niche audience athletes and sportspeople at a niche range of occasions when those consumers exercise. Rising health awareness amongst consumers is also providing an impetus for manufacturers of products labeled as unhealthy to adapt. In some cases this can take the form of altering the make-up of their products and adjusting their product claims accordingly. For example, savory snacks and confectionery are generally perceived as unhealthy treats, and therefore adapting these products to include more healthy ingredients (functional products) or by reducing the amount of "bad" ingredients (better-for-you products), provides an opportunity to manufacturers.
With any reformulation, manufacturers must factor in the impact on taste As noted in Datamonitors Trends in Novel versus Traditional Food Flavors, flavor and taste are crucial in achieving success with reformulated products. Consumers are increasingly discerning where taste and flavor are concerned with evidence demonstrating that healthy reformulations that fail to account adequately for any alterations to the flavor profile of the food will be met with declining sales as consumers defect to other brands, regardless of their previous loyalties. Flavor is a definitive judge of quality, which can trump both brand and healthy attributes. If the difference between the healthy and the unhealthier versions is noticeable it will defeat the objective as it would ultimately be an entirely different product, and is likely to discourage repeat purchases. It is therefore essential that manufacturers place strong emphasis on maintaining the definitive taste/flavor characteristics of a specific product during any reformulation on health grounds.
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Figure 15:
Examples of confectionery products which offer a healthy option
Newtree has launched a line of NewTree Chocolate Bars which are available in Belgium, France, Germany, Japan, Spain, the UK and the US. Literature for the products states that the products fuel your body and well-being, and are very rich in antioxidants and polyphenols.
A new range of Healthy Fruit Gums has recently been launched in Europe under the licensed Fit For Fun brand. These Fruit Gums contain 30% less sugar than normal fruit gums, have no fat and are rich in vitamins and minerals. They come in three varieties: the Jogurt Mix contains prebiotic fibers "for an active metabolism and smooth digestion"; the Vitamin Mix contains pure fruit juice, vitamins, magnesium and calcium, and the Energy Kick contains taurin and guarana which are said to aid concentration and revitalize the body.
Source: Datamonitor
DATAMONITOR
Target children with functional products that address parents concerns over health and nutrition
As parental concern regarding their kids food intake has increased in the light of growing childhood health concerns and rising child obesity rates, there is an opportunity in the marketplace to develop products catering towards this age group. It is important that with the consumer trend towards better-for-you products parents especially mums - feel confident about what they give to their Kids. Parents are increasingly acting out these concerns in their roles as gatekeepers of family grocery purchasing, suggesting that marketers must address parental concerns in all marketing. Functional food and drinks are one of the ways in which marketers can help meet parents needs for their children.
Develop child specific functional products

Developing functional food and drinks products aimed at children provides a key area of potential, especially since a significant number of parents believe that there is a limited number of products which address their children's needs; according to a study conducted by UK-based sugar giant Tate & Lyle, 90% of parents said they try to
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ensure their children have a nutritious, balanced diet, but that they find it difficult to find healthy products with child-appeal. The study, involving 532 American adults, was completed in 2005. The nutritional needs of children will be different to those of adults as will the benefits they require. This creates significant opportunities for functional food and drink products to capitalize. Indeed, functional foods, especially products such as active health drinks, have experienced substantial growth over the past few years but most products are created for adults rather than children. Developing functional/fortified variants specifically for children should resonate with more discerning parents although it is important to recognize that parents will reject brands that don't have the credibility and the right science behind them. In Europe, Danone has been targeting its Actimel probiotic dairy drinks at the childrens market, with special packs flagging up the products' benefits for youngsters. In the UK, Tesco also recently launched a functional own-label porridge for its Tesco Kids range, which includes the probiotic ingredient inulin, a model that is likely to be more widely repeated in many categories. Figure 16: Functional and fortified products need to be heavily promoted to parents, but equally accessible and fun to Kids
Develop functional/fortified variants specifically for Kids
Minute Maid Just 10 Fruit Punch is a low calorie youth beverage made with 5% real fruit juice [that] comes in cool, easy-to-open pouches to provide hassle-free refreshment for kids. Said to be a good source of calcium, it is fortified with 100% daily value of vitamin C (and) has only 10 calories and 2 grams of sugar.
Develop functional/fortified variants specifically for Kids

Japan is a rich source of innovation for functional food and drink products catering to the specific needs of both the elderly and Kids. Frente: Pinky Monkey Soft Candy contains sanphenon, a green tea catechin that helps to suppress dental caries.
Make functional products accessible by using licensing or other kid-friendly packaging cues Nestle
Pokemon Yogurt LC1 launched in Asia in 2006 is a functional probiotic yogurt Nestle LC1 is now launched in cups featuring the popular Pokemon characters.
Develop products geared to towards mental health and performance launched by Unilever in the Netherlands, Blue
band idee, is a margarine that claims to promote mental development in children. The product is enriched with DHA and other nutrients that support mental health.
DATAMONITOR
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As with any health orientated kids products, manufacturers should ensure that products provide an overall healthy proposition i.e. they should have reduced or no fat, salt, sugar and additives. E numbers and additives are now turning a number of parents off as they search for healthier alternatives: In my recent work with a parents panel we found parents were deeply concerned with additives, sugar and salt. They want additive free, reduced sugar and salt. They also like to see vitamins added on the box. Dr Carrie Ruxton, Author and Nutritionist, Datamonitor Interview, October 2006
Case study: Danino utilizes 'junk food' design cues to appeal to children as well as adults
In order to appeal, functional products directed at children need to have a high visual impact, and Danone is one manufacturer which depicts how to successfully target this age bracket. Packaging for Danone's Danino brand, targeted at children, is brightly designed with cartoon characters, mimicking design cues of 'junk-food' brands, so that kids will feel more comfortable trying a product with a health positioning. A 2003 report by advertising agency Dragon in the UK highlighted that the kind of packaging usually associated with 'junk-food' brands, uses brightly colored boxes and bottles which are highly appealing to children. This suggests that adult-orientated brands would make greater inroads into the youth market if they adopt the design cues and formats of 'junk-food brands'. In the case of Danone, Danino shows a predominantly adult orientated brand venturing into healthy children's yogurts with its own take on 'junk-food' styling. As well as 'junk-food'-like styling, Danone utilizes other ways to make Danino more appealing to younger consumers, some of which conform to the key influencing factors in kids' snacking needs, as set out in Table 12. By observing some of these snacking needs, as shown in Error! Reference source not found., Danino has a better chance of appealing to kids.
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Table 12:
Key influencing factors in children's snacking needs How this is applied by Danino
Influencing factor Description
Control and Maturation
Children desire control over their snacks in order to mimic the behavior of older children and adults. They like to feel they can exercise control over how they use and prepare products. Children, especially younger kids, like novelty foods which have extreme and whacky flavors. Taste and texture especially influence their snacking choices. However, older kids in their early teens, are more interested in fun and irreverent humor in their snacks. Children and tweens snacks are driven by the brand concept and image more so than any other group. Between the ages of 6-9 years is when children develop the strongest need to fit in with their peer groups.
Danino is easy for a child to open and eat alone. It has a similar formula to the adultorientated, Cardivia, which may appeal to children's desire for maturation.
Sensory stimulation and interactivity
Danino does not come in whacky flavors, but the familiar fruit flavors of strawberry; raspberry; peach; and banana. Although it contains fish oils, Danone states Danino has no fishy taste which could be offputting for children. The yogurt also comes in bright, stimulating packaging. Danone is not known for its children's foods, so may not be familiar to younger consumers. However, Danino's bright packaging imitates other foods for children, which could further help it become established among kids' peer groups.
Coolness and belonging
DATAMONITOR
Educate the consumer sufficiently about the health benefits derived from the consumption of a particular product
It is not enough to simply launch a functional product and expect it to have an immediate effect. Manufacturers need to educate the consumer and ensure that people recognize the health benefits derived from the consumption of their product. In 2005, Nutrilaw launched a bread product containing selenium. While this nutrient has displayed valuable health traits, the consumer is not yet fully aware of its
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capabilities, and as a result, the product, which was the first mainstream food to be marketed on its high selenium content, was eventually pulled from the shelves of British supermarket chain, Waitrose. The data provided needs to be clear and easy to understand. This should be supported through various channels, such as the Internet and via leaflets, through which product claims can be explained in greater detail.
Source natural products functional offerings
and
incorporate
them
into
While the success of the functional food and drink sector may be challenged by the success of naturally produced food and drinks, the functional sector could fend off such a threat through incorporating naturally healthy products into their product makeup. For example, the Brazilian acai fruit could prove to be a valuable ingredient, largely because this rainforest berry is another 'good for you' tropical fruit which reportedly holds 50% more antioxidants than pomegranates. To date, the number products containing acai is minimal, however, over recent months the rate of new launches including this product has improved dramatically, offering promising future potential. Innovation is the key to developing a leading position in the market. Being the first to define and carve out a niche can lead to a strong identification in consumers minds between the brand and the health issue. This first-mover advantage is a vital strategy in the functional food and drinks market.
Use the Internet to promote products

In order to establish the link between a certain product and its health-related benefits, one idea would be to create a website, which allows the consumer to calculate their daily intake of nutrients and calories, and outlines a suitable diet incorporating its own health products. This could be provided by using an interactive calculator, which details the required daily intake for each individual and the areas in which they are receiving too much or too little. As consumers' are increasingly abandoning commercial diets in favor of self-tailored diets, and with ehealth proving to be an increasing phenomenon, an Internet website incorporating the recommended consumption of a company's own products could
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ensure success. In doing this, a company would be demonstrating a corporate commitment to health and wellness. Furthermore, the fact that Food & Health Survey: Consumer Attitudes toward Food, Nutrition & Health Calories, showed that 90% of consumers are unable to give an accurate estimate of their recommended daily caloric intake, and nearly half would not even offer a guess, suggests that consumers would respond to such a site given that people are increasingly seeking out health information. Quaker Oats is one company who has already put the idea of using "eCalculators" into play. At present, its site includes a BMI (body mass index) calculator which outlines the ideal weight for each individual, a calorie burn calculator, and a target heart rate calculator. In addition, the company provides information on health-related issues and has a site specially catering for healthcare professionals. This helps strengthen the connection between Quaker Oats and healthy eating.
Consider whether your offering is better than alternative solutions

Before investing in haste it is worth bearing in mind that any functional product is often up against established substitutes (after all if manufacturers cannot solve consumers problems they often find their own fixes) In many cases your functional product will be up against alternatives that are: more credible more efficacious cheaper, or more pleasurable for consumers to use.
This makes it essential to consider carefully who is in your competitor-field, especially from non-food and drink categories and how a product can be leveraged to avoid unfavorable comparisons with other solutions. This can be achieved through aligning products closely with best-fit occasions and considering the competitive landscape and targeting underdeveloped areas (thus limiting conflict with more established functional or conventional alternatives)
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It is important to be a better alternative at the right occasion

Functional foods are best positioned when they offer the stronger alternative for particular occasions. For example, teeth cleaning chewing gums are a better solution for dental care between-occasions when snacking on-the-go than the alternatives, i.e. taking no action, or carrying around a toothbrush or mouthwash. This is one of the key success factors behind those products.
Does your offering really provide a better consumer solution than existing options?
Often your product will be up against strong functional competitors and also established conventional solutions to consumers functional needs. For example: Medical functional food/drink versus over-the-counter medicines Energy boost food/drink versus coffee Anti-stress functional food/drink versus cigarettes and/or alcohol
Consequently it is essential that the competitive landscape is considered seriously as quite often new functional foods may not be in a position to challenge conventional solutions. This underlines the need to avoid investing in haste.
DMCM2982 Page 65
Appendix
CHAPTER 4 APPENDIX
Supplementary data
Table 13: Functional bakery & cereals market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 8.3% 3.8% 7.7% 4.4% 6.0% -1.1% 9.2% 5.6% 6.3% CAGR 06-11 6.0% 3.7% 4.4% 4.0% 3.8% 0.8% 6.6% 4.6% 4.7%
US$m France Germany Italy Netherlands Spain Sweden UK Rest of Europe Europe
Source: Datamonitor
2001 72.9 148.8 112.7 21.0 58.1 21.4 89.6 91.3 615.8
2006 108.4 179.7 163.0 26.1 77.7 20.2 139.3 119.7 834.2
2011 145.0 215.8 202.4 31.7 93.6 21.0 192.1 150.1 1,051.7
DATAMONITOR
Table 14:
Functional confectionery market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 9.9% 5.9% 12.5% 8.7% 19.6% 8.3% 12.5% 12.1% 10.7% CAGR 06-11 7.2% 4.8% 8.1% 6.7% 12.9% 5.6% 8.7% 8.9% 8.0%
Source: Datamonitor
2001 72.2 178.3 77.5 21.5 50.5 16.4 91.4 82.6 590.4
2006 116.0 237.0 139.7 32.6 123.2 24.4 164.4 146.1 983.5
2011 164.0 299.6 205.8 45.2 226.6 32.0 249.2 223.6 1,446.1
DATAMONITOR
DMCM2982 Page 66
Appendix
Table 15:
Functional dairy market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 6.8% 7.8% 6.2% 5.7% 2.6% 6.7% 4.3% 5.7% 6.0% CAGR 06-11 5.0% 6.0% 3.8% 4.8% 1.1% 4.7% 3.6% 4.4% 4.4%
Source: Datamonitor
2001 87.3 168.2 99.1 21.3 80.3 15.3 94.2 95.4 661.0
2006 121.2 245.4 134.1 28.0 91.2 21.1 116.3 125.7 883.1
2011 154.9 328.2 161.5 35.4 96.5 26.6 138.6 155.8 1,097.6
DATAMONITOR
Table 16:
Functional savory snacks market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 8.0% 8.4% 13.6% 6.3% 6.6% 10.0% 6.5% 9.2% 8.9% CAGR 06-11 6.0% 6.3% 9.5% 4.9% 5.0% 7.6% 4.9% 7.2% 6.7%
Source: Datamonitor
2001 57.6 108.4 69.7 13.5 44.1 11.8 70.2 59.4 434.6
2006 84.8 162.5 131.7 18.4 60.7 19.1 96.2 92.2 665.5
2011 113.7 220.4 207.5 23.3 77.3 27.5 121.9 130.6 922.3
DATAMONITOR
DMCM2982 Page 67
Appendix
Table 17:
Functional soft drinks market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 5.8% 6.3% 4.7% 3.7% 6.0% 7.5% 4.8% 5.2% 5.3% CAGR 06-11 4.5% 4.0% 4.8% 3.1% 0.2% 5.3% 3.4% 3.6% 3.7%
Source: Datamonitor
2001 155.0 578.1 246.8 119.3 112.7 53.2 1,082.7 448.6 2,796.5
2006 205.5 784.4 311.0 143.1 150.9 76.5 1,366.4 577.2 3,614.9
2011 256.2 952.8 392.8 166.5 152.5 99.0 1,617.6 689.6 4,327.2
DATAMONITOR
Table 18:
Functional other food and drinks market value (US$ m), by category, Europe 2001-2011 CAGR 01-06 -3.5% 7.8% 17.9% 3.7% 11.0% 20.1% -3.4% 8.6% 6.1% CAGR 06-11 -3.5% 6.3% 9.6% 3.9% 4.8% 10.9% -3.5% 6.5% 5.0%
Source: Datamonitor
2001 153.5 192.9 71.4 19.7 55.6 21.4 136.7 115.6 766.7
2006 128.6 280.6 162.9 23.6 93.7 53.6 114.9 174.4 1,032.2
2011 107.4 381.0 257.6 28.7 118.4 89.9 96.4 238.8 1,318.2
DATAMONITOR
DMCM2982 Page 68
Appendix
Table 19:
Europe functional food & drink market value (US$ m), by claimed health benefit, 2001-2011 CAGR 01-06 5.3% 4.9% 5.1% 7.9% 3.9% 5.0% 8.0% 7.6% 7.6% 5.1% 5.7% 6.6% 9.6% 9.0% 9.4% 8.1% 9.5% 9.0% 7.8% 7.4% 7.8% 2.7% 5.3% 4.7% 7.4% 7.3% 7.7% 11.5% 6.8% 8.3% 7.2% 8.8% 8.6% 10.6% 7.2% 9.0% CAGR 06-11 4.7% 4.4% 4.6% 6.8% 2.2% 4.3% 5.5% 5.4% 5.4% 3.1% 4.5% 4.5% 6.5% 6.0% 6.4% 7.1% 6.9% 6.5% 6.4% 6.1% 6.7% 2.3% 3.9% 4.0% 5.6% 5.5% 5.8% 5.0% 4.8% 5.1% 5.5% 6.4% 6.8% 7.3% 5.5% 6.6%
US$ m France France France France France France Germany Germany Germany Germany Germany Germany Italy Italy Italy Italy Italy Italy Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Spain Spain Spain Spain Spain Spain Sweden Sweden Sweden Sweden Sweden Sweden
Benefit Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall
2001 98.3 161.6 177.2 35.9 125.6 598.6
2006 126.9 205.6 227.7 52.4 151.8 764.4
2011 159.6 255.2 284.6 72.7 169.2 941.3
148.2 217.4 284.8 275.2 396.5 515.0 292.9 422.1 548.3 437.2 561.9 654.0 221.1 291.7 363.7 1,374.7 1,889.6 2,355.8 92.9 146.7 201.2 127.4 195.7 261.9 128.0 200.5 273.4 183.3 270.0 381.2 145.6 229.6 320.1 677.1 1,042.3 1,427.7 10.6 26.5 31.9 121.3 25.9 216.3 55.4 89.8 99.1 86.2 70.7 401.2 16.8 24.7 34.1 47.2 16.8 139.6 15.5 37.9 46.4 138.5 33.5 271.8 79.1 127.9 143.6 148.9 98.1 597.5 23.7 37.7 51.5 78.2 23.7 214.8 21.1 51.0 64.3 154.8 40.7 330.9 104.0 166.9 190.3 189.8 124.0 764.9 31.0 51.4 71.6 111.1 31.0 296.0
DMCM2982 Page 69
Appendix
Table 19:
Europe functional food & drink market value (US$ m), by claimed health benefit, 2001-2011 CAGR 01-06 6.2% 6.2% 6.1% 4.5% 4.4% 5.0% 8.2% 7.7% 7.9% 5.4% 6.4% 6.7% 7.5% 7.2% 7.3% 5.5% 6.1% 6.9% CAGR 06-11 5.4% 5.3% 5.2% 3.2% 3.4% 3.9% 6.6% 6.5% 6.4% 3.7% 4.9% 5.2% 5.8% 5.5% 5.7% 3.9% 4.6% 5.1%
US$ m UK UK UK UK UK UK Other Europe Other Europe Other Europe Other Europe Other Europe Other Europe Europe Europe Europe Europe Europe Europe
Benefit Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall Bone health Heart health Gut health Energy Other health needs Overall
2001
2006
2011
101.8 137.6 179.0 171.0 230.9 299.1 188.5 253.9 327.7 949.8 1,184.4 1,388.6 153.6 190.7 225.4 1,564.7 1,997.5 2,415.9 88.7 131.4 181.1 153.3 222.0 304.1 165.9 242.0 329.8 355.1 462.9 555.5 129.9 177.0 225.1 892.9 1,235.3 1,588.6 612.6 1,029.5 1,117.7 2,215.9 889.2 5,434.3 878.2 1,454.3 1,587.8 2,897.1 1,196.0 7,579.8 1,161.8 1,904.5 2,090.0 3,507.7 1,499.1 9,701.0
Source: Datamonitor
DATAMONITOR
DMCM2982 Page 70
Appendix
Definitions
All demographic, economic, survey and product data for Europe includes France, Germany, Italy, the Netherlands, Spain, Sweden and the UK broken out explicitly, with Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg and Portugal aggregated together as Rest of Europe. Only these 15 countries plus the US are covered. All consumption data covers retail channels only (foodservice is not included). This report focuses on functional food and drinks and all data is specific to functional food and drinks, although fortified/enriched and naturally functional products may also be discussed. The term nutraceuticals is used interchangeably with functional food and drinks. Functional food and drinks refers exclusively to products containing active ingredients that products that provide more benefits than basic nutrition due to specific physiologically active components for example, Benecol cholesterol-reducing spread for heart health. It does not include food and drinks containing added nutrients, vitamins and minerals which are generally beneficial to health but have no specific active ingredient.
Table 20: Term Heart health
Definitions of disease types covered Definition This covers hypertension which was chosen because, unlike acute cardiovascular diseases, it is amenable to treatment through functional foods. The definition of hypertension used is that of the JNC guidelines of May 2003: Systolic Blood Pressure greater than 140mg or Diastolic Blood Pressure greater than 90mg. This covers Inflammatory Bowel Disease (IBD). IBD stems from two diseases: ulcerative colitis and Crohn's disease. Food allergies are not considered as part of the definition of gut health because they are difficult to diagnose and the American Medical Association (AMA) estimates that less than 1% of people in the US suffer from an allergy, while 33% of Americans believe that they do. "Bone disease" refers to both osteoporosis and osteopenia. The figures only include those aged over 50 (in line with the medical studies on which these figures are based).
Gut health
Bone health
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Appendix
Table 20: Term Prebiotic
Definitions of disease types covered Definition A food that promotes growth of beneficial bacteria. This includes fiber, the indigestible material that provides essential throughput and food for beneficial bacteria within the gut A product populated with beneficial bacteria for the gut A combination of a prebiotic and a probiotic Includes functional health products specifically marketed as having health benefits as related to the heart. This does not include healthful products that are naturally functional, nor does it include products that may have some heart health benefits but do not mention them in the promotional literature or on the packaging. Includes functional health products specifically marketed as having health benefits as related to the gut. This does not include healthful products that are naturally functional, nor does it include products that may have some gut health benefits but do not mention them in the promotional literature or on the packaging. Includes functional health products specifically bone or joint health benefits but do not mention them in the promotional literature or on the packaging. Includes functional health products specifically marketed as having health benefits as related to energy. This does not include healthful products that are naturally functional, nor does it include products that may have some energy health benefits but do not mention them in the promotional literature or on the packaging. Includes functional health products specifically marketed as having health benefits not related to heart, gut, bone, or energy health, such as general multivitamins, beauty aids, or products aimed at improving mental health. This does not include healthful products that are naturally functional, nor does it include products that may have some health benefits but do not mention them in the promotional literature or on the packaging.
Probiotic Synbiotic Heart health benefit products
Gut health benefit products
Bone health benefit products Energy benefit products
Other benefit products
Source: Datamonitor
DATAMONITOR
DMCM2982 Page 72
Appendix
Research methodology
Secondary sources trade and specialist publications were extensively examined, along with business and academic journals. Other sources included newspaper and periodical articles and websites. Online consumer surveys Datamonitor conducted a set of detailed consumer surveys across France, Germany, Italy, the Netherlands, Spain, Sweden, the UK and the US for the purpose of New Consumer Insight research. Respondents were selected to provide a demographically representative sample, and answered a mix of open and closed questions. Industry opinion research opinion based interviews with leading CPG marketing practitioners were conducted via an online survey. Market data data on food and drink spending in this report are taken from Datamonitors Interactive Consumer Database, which covers 55 countries globally. Base drivers population data, including breakdowns by age and gender, are taken from Datamonitors global Base Drivers database. New product development data on new products and specific case studies are taken from Productscan Online, Datamonitors new product development database.
How to contact experts in your industry

If you have any queries please contact us: Garth Stirling Marketing Manager, Consumer Business Unit Europe Giles Watts Account Director, Consumer Business Unit Europe Sarah Person askcm@datamonitor.com +44 20 7675 7000 askcm@datamonitor.com +44 20 7675 7000 askcm@datamonitor.com
DMCM2982 Page 73
Appendix
Product Manager, Consumer Business Unit US Richard Watkins Vice President of Sales, Consumer Business Unit US
+1 212 686 7400 askcm@datamonitor.com +1 212 686 7400
DMCM2982 Page 74

Data Monitor Functional Food

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Data Monitor Functional Food

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New Consumer Insight:

Functional Food & Drink Consumption Trends

Reference Code: DMCM2982 Publication Date: 01/2007

CHAPTER 1 EXECUTIVE SUMMARY

The hot topic

The future decoded

Functional food consumption is growing fast

Consumers have an attitude-behavior gap concerning healthy eating

Functional foods offer a solution to time-pressured consumers

Consumers are wary of health-related claims on food and drink products

The future decoded Action points

THE FUTURE DECODED

Research methodology How to contact experts in your industry

Table 15: 2011

Functional dairy market value (US$ m), by category, Europe 200167

38 Functional and fortified food products are increasingly being targeted 41

The Future Decoded

CHAPTER 2 THE FUTURE DECODED

% Respondents More The same Less Overall

Source: Datamonitor Consumer Survey 2006

The Future Decoded

Health is regarded as the most important consumer trend among manufacturers

The Future Decoded

Defining functional foods and drinks

The proportion of Senior consumers is growing

The Future Decoded

The Senior demographic cannot be targeted as one group

The Future Decoded

76.7 32.4 139.8 66.6 62.5 378.0

74.2 31.6 139.3 69.8 67.2 382.1

71.8 30.9 136.4 75.0 70.9 385.0

-0.7% -0.5% -0.1% 0.9% 1.5% 0.2%

-0.6% -0.5% -0.4% 1.5% 1.1% 0.2%

72.5 28.1 105.5 43.7 35.3 285.0

73.5 29.7 106.0 52.1 37.2 298.4

74.9 30.5 105.7 59.8 41.0 311.9

0.3% 1.1% 0.1% 3.6% 1.0% 0.9%

0.4% 0.5% -0.1% 2.8% 2.0% 0.9%

Source: Datamonitor Base Drivers Database

Functional health needs vary across the Senior demographic

The Future Decoded

Late Seniors have a greater need for disease maintenance.

Cholesterol lowering products are more relevant for Early Seniors

Source: Datamonitor Productscan Online Database

TREND: Lifestyle diseases are becoming more common

The Future Decoded

bone health; heart health; gut health.

The Future Decoded

Examples of products which use calcium as a selling point

Source: Datamonitor Productscan Online Database

The Future Decoded

The Future Decoded

Examples of products which are said to help maintain a healthy heart

The Future Decoded

Examples of products which have received backing from an influential body

Source: Datamonitor Productscan Online Database

The Future Decoded

Dairy is the most popular category in addressing gut health

The Future Decoded

Dairy products also dominate the probiotic sector

400 350 300 No. of SKUs 250 200 150 100 50 0

Source: Datamonitor Productscan Online Database

The probiotic sector is bigger than the prebiotic sector