New Profit Opportunities in Health and Nutrition to 2009: Changing Consumer Concerns and Market

CONSUMER

NEW PROFIT OPPORTUNITIES IN

HEALTH AND NUTRITION TO 2009

Changing consumer concerns and market influencers in food and drinks

By Helen Lewis

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Helen Lewis

Helen has worked for Business Insights managing the Consumer Goods publishing

division for more than three years. Helen has a strong background in journalism, market

research and analysis and a Journalism BA (Hons) from City University in London. She

has written for numerous lifestyle and food and drinks websites including www.a-z.com

and www.crushguide.com and worked for MORI. Helen is currently studying nutrition

and will be a fully qualified practising nutritionist in mid-2005.

Copyright © 2004 Business Insights Ltd

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Table of Contents

New Profit Opportunities in Health and Nutrition to 2009

Changing consumer concerns and market influencers in food

and drinks

Executive Summary 10

Identifying consumers’ health concerns 10

Profitability hotspots and innovation opportunities 11

New product development 12

Conclusions and profit opportunities by market category 13

Chapter 1 Introduction to the Report 16

Aim of the report 16

Identifying the main health-related issues influencing the food and drinks

industry at present 18

Chapter 2 Identifying Consumers’ Health

Concerns 22

Summary 22

Introduction 23

Obesity 23

A definition 23

The unhealthy facts 24

Nutritional influence 25

Who/what is accountable for the rising levels of obesity? 26

Adults versus children 27

What factors are causing obesity in children? 27

What factors are causing obesity in adults? 28

Obesity case study: Weight Watchers’ reinvention 28

Diabetes 30

A definition 30

The unhealthy facts 31

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Diabetic food and drinks 32

Healthy meal recommendations 32

Breakfast 32

Lunch and dinner 32

Diabetic-friendly products 33

Product opportunities 34

Ingredients 35

Tagatose 35

Chromium 36

Dieting choices – far too many to choose from? 37

The typical length of a diet 38

Low fat/low calorie diets remain the most popular for consumers 39

Promoting a long-standing breakfast product as a diet food 40

Glycaemic Index: the next big thing? 42

What is the GI diet? 43

GI diets and diabetes 45

New Zealand strongly in favour of GI 45

Nutritionists’ expert opinions on the GI diet 47

The small issue of exercise… 48

Over the last six months, how often have you exercised, on average, per

week? 49

The impact of food scares on consumers’ perceptions of the food and

drinks industry 50

GM foods 51

Global snapshot of the GM food market 53

The United Kingdom 54

Asia 54

Russia 55

Africa 56

Australia 56

The United States 57

Are consumers likely to accept GM foods into their daily diet over the next

five years? 57

Chapter 3 Profitability Hotspots and

Innovation Opportunities 60

Summary 60

Introduction 61

Steady market growth expected for the healthy food and drinks market 61

How successful in terms of sales do you believe the next five years

will be globally for the health food and drinks market? 61

Most profitable target audiences for health food and drinks 62

The most successful healthy food and drinks sectors to 2009 65

Functional food and drinks 67

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Future success potential of functional food and drink products 67

With all this activity, are consumers prepared to pay a premium price for

functional products? 68

Functional versus organic 68

Senior consumers are ready and waiting for functional and healthy products

to promote longevity 69

Which organic products do older consumers typically purchase? 71

Glico functional food and drinks – best practice company from a best practice

country 71

Profitability hotspots 73

Profitability hotspots in the healthy food and drinks arena at present 73

Profitability hotspots in 2009 74

Low carb versus low calorie competition assessment 76

Chapter 4 New Product Development 80

Summary 80

Introduction 81

Launching a successful new product is difficult enough, let alone launching a

healthy new product… 81

Which healthy brands/private labels are consumers most interested in? 81

Cadbury’s easily beats the diet products in terms of consumption 82

Retailer private label 83

Foodservice 84

Low carb 85

Industry insight into the next big thing in healthy NPD 86

Drinks 86

Perceptions of healthy drink products to 2009 86

Foods 87

Perceptions of healthy food products to 2009 87

Future forecast: top 10 successful healthy food products to 2009 88

Innovative functional and low calorie product launches 89

Australia: fortified water 89

Australia: nutritional food range 89

Germany: vitamin-enhanced spreads 90

South Africa: the first prebiotic brand in the UK 90

United States: low calorie ready meals 91

United States: fortified berries 91

United States: soy burger to replace veggie burger 91

Anti-ageing products 91

Lessons to be learned by the food and drinks industry from the

growing skincare market targeting consumers’ age concerns 92

Antioxidants for anti-ageing 93

Omega-3 94

The research 94

The health benefits of omega-3 95

Sources of omega-3 96

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Products sold on their omega content 96

Focus on salt reduction 97

Arguments for salt 97

Arguments against salt 98

The food and drink industry’s reaction and future action 99

Sodium reductions already made in some processed food sectors 100

Sid the slug campaign 101

Retailers’ reactions: The Co-op 102

Manufacturer’s reactions 102

Next on the agenda – sugar 103

Vegetarian and meat-free products 104

The future potential for vegetarian/meat-free products in the next five years 104

Branded, high quality, healthy vegetarian products are the way forward 106

Innovative vegetarian/healthy product launches 106

Health is wealth 107

Chapter 5 Conclusions and Profit

Opportunities By Market

Category 110

Summary 110

Introduction 111

Dairy 111

Promoting the probiotics content of dairy products 111

Promoting the benefits of dairy for pregnancy 112

Confectionery 113

Soft drinks 113

Fruit juices related to particular body parts/ailments 114

Vegetable juices related to particular body parts/ailments 115

Alcoholic drinks 115

Bakery 118

Snacks 119

The gluten-free diet 120

What is coeliac disease? 120

Sources of gluten that have to be avoided on a gluten-free diet 121

Manufacturers of gluten-free products 122

Glutano – manufacturing gluten-free products 122

Meal solutions 124

Opportunities for healthy canned meals range with added vitamins

and minerals 124

Canned meat 125

Canned pasta 125

Canned vegetables 126

Definitions 127

Index 129

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List of Figures

Figure 1.1: Highly important consumer concerns with a view to the potential future impact on

food and drink development 20

Figure 2.2: How long is the typical diet? 39

Figure 2.3: What are the most popular diets according to the consumers? 40

Figure 2.4: Is the GI diet set to become the next big dieting trend? 43

Figure 2.5: The Australian GI symbol 46

Figure 2.6: Is exercise as important as dieting to consumers? How often do consumers exercise

per week? 50

Figure 2.7: What impact do you believe food scares such as BSE/CJD and bird flu have had on

consumers’ perceptions of the food and drinks industry? 50

Figure 2.8: Are consumers increasingly likely to accept GM foods into their daily diet over the

next five years? 58

Figure 3.9: How successful in terms of sales do you believe the next five years will be globally for

the health food and drinks market? 62

Figure 3.10: Age groups expected to experience the most NPD activity over the next five years 63

Figure 3.11: What do you perceive to be the most profitable health food and drinks sectors over the

next five years? 66

Figure 3.12: How do you perceive the future success of the following functional products over the

next five years? 68

Figure 3.13: Consumers’ willingness to pay a premium for functional versus organic 69

Figure 3.14: Profitability hotspots in the healthy food and drinks arena at present 74

Figure 3.15: Profitability hotspots in the healthy food and drinks arena by 2009 76

Figure 4.16: Cadbury’s easily beats the diet product examples in terms of consumption 82

Figure 4.17: Have you purchased any of the following retailer’s private label products in the past

12 months? 84

Figure 4.18: Have you purchased any of the following foodservice branded products in the past 12

months? 85

Figure 4.19: Have you purchased any of the following low carb branded products in the past 12

months? 86

Figure 4.20: Future forecast: top 10 successful healthy food products to 2009 88

Figure 4.21: Heinz soup – reduced salt 100

Figure 4.22: Sid the Slug – anti-salt campaign 102

Figure 4.23: Vegetarian-friendly cereals with added health benefits, soya milkshakes and meat-free

pepperoni pizza 108

List of Tables

Table 1.1: Rating the importance of the influence of 11 consumer concerns on the development

of the food and drinks industry 19

Table 2.2: Do you think the food and drinks industry should be held responsible for the rising

levels of obesity in children? 26

Table 2.3: How important do you consider the following factors in the controversial debate on

rising levels of obesity in children? 27

Table 2.4: How important do you consider the following factors in the controversial debate on

rising levels of obesity in adults? 28

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Table 2.5: Prevalence of diabetes in the seven major markets 31

Table 2.6: Which of the following diets have consumers tried in the past? 40

Table 2.7: What impact do you believe food scares such as BSE/CJD and bird flu have had on

consumers’ perception of the food and drinks industry? 51

Table 3.8: How successful in terms of sales do you believe the next five years will be globally for

the health food and drinks market? 61

Table 3.9: Age groups expected to experience the most NPD activity over the next five years 63

Table 3.10: What do you perceive to be the most successful health food and drinks sectors over the

next five years? 66

Table 3.11: Future success potential of functional food and drink products 67

Table 3.12: Profitability hotspots in the healthy food and drinks arena at present 73

Table 3.13: Profitability hotspots in the healthy food and drinks arena by 2009 75

Table 3.14: Low carb versus low calorie competition assessment 77

Table 4.15: Have you purchased any products from the following companies/brands in the past 12

months? 83

Table 4.16: Perceptions of healthy drink products to 2009 86

Table 4.17: Perceptions of healthy food products to 2009 87

Table 4.18: Lessons to be learned by the food and drinks industry from the growing skincare

market targeting consumers’ age concerns 92

Table 4.19: Antioxidants for anti-ageing 93

Table 4.20: Food and drinks companies plans to reduce levels of salt in their products 103

Table 4.21: What is the future potential for vegetarian/meat-free products in the next five years?

104

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Executive Summary

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Executive Summary

Identifying consumers’ health concerns

̌ Many food and drinks companies can work to offer another option to people who

are overweight or obese by clearer labelling, healthier ingredients and intelligent

marketing and promotions.

̌ An unhealthy diet as a child often results in a permanently unhealthy lifestyle

throughout adulthood with 44% of the industry respondents citing this as a very

important factor.

̌ The prevalence of diabetes is rising rapidly, up from 30 million globally in 1985 to a

forecast 300 million in 2005. This reflects growth of the ageing population, adoption

of unhealthy diets, obesity and sedentary lifestyles.

̌ Breakfast is highlighted as a crucial meal for diabetics and as a result, a number of

products such as jam and marmalades have been launched to cater for this market.

̌ Manufacturers and retailers have a responsibility to inform consumers about what

they are eating and drinking, this can be anything from how much sugar and fat the

product contains to the glycaemic index.

̌ Despite the high level of interest in new diet concepts such as Atkins, nearly 60% of

UK consumers surveyed had tried a low fat/low calorie diet.

̌ The Glycaemic Index diet (the GI diet) is expected to increase in popularity over the

next five years with a predicted growth of 18% in terms of ‘high profitability’.

̌ The varying degree of food scares however does mean that some situations remain

at the back of consumers’ minds more than others and nearly a quarter of

respondents stated that food scares do have a long-term negative impact.

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̌ The industry appears to be quite uncertain as to the future of GM foods – the mixed

message is being translated to the consumers.

Profitability hotspots and innovation opportunities

̌ 90% of industry executives believe functional food and drinks are likely to be highly

or fairly profitable over the next five years.

̌ One out of every 10 persons is now 60 years or above; by 2050, one out of five will

be 60 years or older; and by 2150, one out of three persons will be 60 years or older.

̌ Glico Dairy Products in Japan has introduced a new yoghurt that meets the demands

of consumers seeking both healthy and indulgent foods. The company has

introduced a probiotic yogurt with bifidobacterium, made with whole blueberries (a

source of antioxidants), plus five fruit juices (lemon, apple, raspberry, grapefruit and

passion fruit), finished off with white rum.

̌ ‘Low carb’ is the most profitable hotspot at present with 42% of industry executives

believing it to be ‘highly profitable’ and 37% citing it as ‘profitable’.

̌ While low carb is currently regarded as the number one profitability hotspot it is

extremely interesting to note that this trend is not expected to continue with such

high levels of success.

̌ Kids remain the focus in the food and drinks industry – even when it comes to

healthy food and drinks. The ultimate new product for kids would be healthy, loved

by both parents and children and eaten as much as a chocolate bar or packet of

crisps.

̌ In Denmark, Kellogg’s cereals have been under fire, followed by a ban of 12 new

cereals and six energy bars. The Danish Veterinary and Food Administration

(DVFA) rejected the products on the grounds that the levels of iron, calcium,

vitamin B6 and folic acid were too high.

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New product development

̌ All major supermarkets now have their own healthy eating ranges offering

everything from ready meals to biscuits, however, Sainsbury’s is the outstanding

leader according to the UK consumers surveyed for this report.

̌ Of the selected healthy drink products, functional drinks in general are perceived as

being the most successful for the next five years, this is closely followed by energy

drinks which were viewed by 21% of respondents are ‘very successful’ and an

extremely significant 53% think it will be ‘successful’.

̌ Lessons can be learned from Asia Pacific, particularly Japan, which is the most

advanced market in terms of consumer usage and acceptance of functional food and

drinks. For example, Japan’s Snow Brand Milk Products announced in September

2004 that it would shortly announce findings on research that it says will lead to

more functional foods that could provide the same powerful benefits as mother’s

milk.

̌ The personal care market has long recognised the profit potential of targeting senior

consumers; with an ageing population comes a natural desire to prevent the ageing

process, however, it is only recently that the food and drinks industry has started to

recognise this potential and begun to promote the anti-ageing properties of specific

products.

̌ Omega-3 fatty acids are a form of polyunsaturated fats, one of four basic types of fat

that the body derives from food. All polyunsaturated fats, including the omega-3s,

are increasingly recognised as important to human health.

̌ Not all anti-ageing products have to be ‘super-foods’ that are enhanced with new

ingredients and technology. Fresh fruit and vegetables contain many of the

antioxidants, vitamins and minerals that are essential for a healthy balanced (anti￾ageing) diet.

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Conclusions and profit opportunities by market

category

̌ Making health claims can be a legal minefield, with differing rules in different

countries, but highlighting that products contain specific ingredients will be helpful

to consumers who are already increasingly building the knowledge of which

ingredients are linked to which concerns and push your product to the front of their

shopping list.

̌ Dairy foods containing health-promoting bacteria are an important segment of the

functional foods market. Wide ranges of health benefits have been attributed to

specific strains of lactic acid bacteria (e.g., Bifidobacterium, Lactobacillus) or foods

containing these probiotic cultures.

̌ Consumers are often more attracted to the idea of supplementing their diet naturally

than through nutraceuticals and chemically enhanced products/supplements.

̌ Making health claims when promoting alcohol is a controversial and often ill-advised

step for alcoholic drinks companies. In the United States, wine labels promoting

health benefits of moderate wine drinking met strong opposition.

̌ 39% of industry executives believe that gluten-free products will be very

successful/successful over the next five years compared to 32% for wheat-free

products.

̌ Gluten-free diets are not the same as wheat-free diets as consumers on a wheat-free

diet can safely include other cereals in their diet, only excluding wheat. However,

anyone on a gluten-free diet must avoid all gluten in wheat, barley, rye and oats.

̌ Premium canned food may seem like an oxymoron to many people but there is

potential for this market to develop with careful consideration of ingredients,

flavourings and ‘added’ value such as added vitamins and minerals.

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