While the low-carb phenomenon has taken the natural products industry by storm—as it has virtually every other segment of the food industry—companies are not turning away from opportunities offered by functional foods that contain health-promoting ingredients. Indeed, many already have found success in this area.

Earth Island Natural Foods (Chatsworth, Calif.) introduced health-oriented, mayonnaise-like Vegenaise with Grapeseed Oil, under the Follow Your Heart brand in 1995. “Although about a third more expensive for consumers, the grapeseed oil-based Vegenaise now outsells our canola-based variety,” says Bob Goldberg, company president.

For others, low-carb simply does not fit with the company's market niche. “We have not wanted to do low-carb. So many of the ingredients needed to formulate a truly great-tasting product are not allowed in organic-certified foods,” explains Sharon Herzog, director of R&D, Country Choice Naturals (Eden Prairie, Minn.).

Opportunities in functional foods and nutraceuticals are legitimate, she believes. “We're looking into functional foods, because we want to address health concerns in addition to what can be offered by organic products.” For Herzog, a key criterion is that any health attributions applied to their product must be supported. “FDA health claims are important,” she notes.

Country Choice Natural's issues are in harmony with the majority of food and nutritional companies in North America. When queried on the greatest product development challenges in entering (or expanding) into the functional foods market, respondents to the 2004 Prepared Foods Functional Foods Trends Survey cited “Lack of scientific validation” as the number-one hurdle. (See “Disincentives” chart.) Regulations have played a great role in this area.

Communicating Value

In the 2004 Prepared Foods survey, “Legal and regulatory environment” landed fourth from the top among hurdles to expanding into functional foods. On the other hand, the growing plethora of food and dietary supplement claims permitted by the FDA has spurred a multitude of products addressing certain health issues. One in particular stands out.

The 2004 Prepared Foods survey asked, “What ingredient characteristics or benefits present the greatest opportunity for your product development efforts?” Two of the top four addressed cardiovascular health. (See “Claiming Health” chart.) The reasons are plentiful. They include a large demographic market of consumers with a known risk for cardiovascular disease and the associated factor of high cholesterol. The FDA allows several health claims addressing this disease. Plus, requirements for heart health or cholesterol claims are met more easily, due to the large array of components that address this health condition.

Using the search terms “cardiovascular,” “cardio” and “heart” (and subtracting those referring to non-health subjects such as heart shape), 115 new products were launched in 2003 in the U.S. and Canada that referenced heart health benefits, according to Mintel International's Global New Product Database (GNPD—Chicago).

For example, Altria Group's Kraft Foods North America (Northfield, Ill.) has clearly positioned its Raisin Bran line for those concerned about heart health. The front panel alone portrays a heart-shaped symbol, adds the note “Helps REDUCE the risk of HEART DISEASE because it is rich in fiber,” and displays the FDA-authorized/required health claim.

If such claims on a product appear to be “beating the consumer over the head” in efforts to communicate its benefits, how much harder is it for less-mainstream ingredients or claims? Although it slipped from its first-place showing in the 2003 Prepared Foods Functional Foods Trends Survey, “Lack of consumer awareness or demand” ran a close second in 2004 as the biggest hurdle to entering/expanding in the functional foods arena.

Earth Island's Goldberg says the health benefits of grapeseed oil were brought to his attention years ago by a business acquaintance. Although he discovered many good studies supporting its benefit, communicating that information to consumers required the use of “hang tags” on the neck of Vegenaise glass jars. The tags very concisely touch on grapeseed oil's use by chefs, educate readers on the difference between HDL and LDL cholesterol, and refer to published studies in literature such as the Journal of the American College of Cardiology. “The tags are very expensive, but also very important in helping people to understand the product,” says Goldberg.

The GNPD notes slightly over 30 new products launched in the U.S. and Canada since mid-1998 that contain grapeseed oil. Most are gourmet foods using the oil for its culinary benefits. Indeed, the most-popular ingredients for functional foods and nutritional products listed on Prepared Foods' survey are used similarly for functions beyond health.

Encouraging Ingredients

Additionally, soy benefits from an FDA-supported health claim. Claims are authorized for a variety of dietary fibers, such as psyllium seed husk, beta-glucan soluble fiber from whole oat sources, and fiber-containing fruits, vegetables and grain products, as well.

A third factor also plays into increased interest in protein, fat or dietary fiber ingredients…the low-carb craze. “Most, if not all, functional foods developed in 2004 will have to have some correlation with a low-carbohydrate diet in order to gain popularity,” noted one survey respondent.

Perhaps one exception to this is the category of “antioxidants.” When those surveyed were asked, “What nutraceutical ingredients, or categories of ingredients, would you like to be better educated on?,” antioxidants came out on top, with almost 52% wishing to know more about these ingredients. Runner-up ingredient categories were omega fatty acids (with 46% of respondents wishing for more information), dietary fiber (with 39%), probiotics (with 37%) and botanicals (with 36% desiring more education on the subject).

Antioxidants are seen as a partial answer to afflictions ranging from cardiovascular disease and cancer to aging. Numerous ingredients possess antioxidant activity—from antioxidant food preservatives BHA and BHT, to isoflavones, to many botanicals, to chocolate.

Although chocolate as a health food would seem a more-esoteric concept, large and small food manufacturers are touting its abilities. For example, Masterfoods USA, a business unit of the food giant Mars (Hackettstown, N.J.) introduced Cocoa Via Crunch Bars and Chocolate Chews toward the end of 2003. “Both these chocolate snacks are made from cocoa plant extracts that have been proven to reduce cholesterol. They also contain natural antioxidants, called flavanols, that promote a healthy heart,” quotes Mintel's GNPD. The label notes “COCOAPRO cocoa powder is produced through a proprietary process guaranteed to help retain the naturally occurring cocoa flavanols.”

Mars hardly stands alone in its “chocolate for health” effort. Ecco Bella Botanicals (Wayne, N.J.) has a Health by Chocolate Edible Beauty Bar that “features organic Swiss cocoa and is said to contain more free radical-fighting antioxidants than most fruits and vegetables,” and Organic Food Bar (Fullerton, Calif.) just launched Active Greens Chocolate: 4,000mg of phytonutrient-rich superfood combined with antioxidant-rich dark chocolate.

To propel such products into the marketplace, companies must believe the health message will resonate with knowledgeable customers.

Additionally, although ingredient familiarity among consumers is vital, attitude and familiarity with specific ingredients among those developing a new product—R&D and marketing—is crucial, as well. The opinions of these two groups are not always in unison.

Of 29 respondents to this question that identified themselves as having primarily a marketing/sales function and 117 with R&D responsibilities, the marketers rated soy protein and calcium to be definitely more important in the next few years. R&D respondents, on the other hand, rated probiotics, high-oleic fats and oils, oligosaccharides, lutein and organic ingredients as more important in the near-future.

Emerging Ingredients

For example, the benefits of probiotics—beneficial bacteria that should reside in the gut—both are supported by solid science and appear better understood by consumers in other parts of the word.

When the search words “casei,” “bifidus,” “probiotic” and “acidophilus” are used to search for global new product introductions on the GNPD, over 1,000 items appear. Just this year, examples range from a new bifidus-containing milk from Harbin HuiJiaBei Foods (China) to Probiotic Sunflower Spread from Tesco (Chestnut, U.K.).

In another example, Groupe Danone's (Paris) Actimel brand is a familiar probiotic dairy item from Brazil to Poland. Dannon (Tarrytown, N.Y.) just debuted DanActive (renamed from Actimel) Cultured Dairy Drink in selected stores around the U.S.

“Immunity,” which appears on DanActive's cardboard sleeve front label, is considered an important attribute by a number of survey respondents. When asked, “What ingredient characteristics or benefits present the greatest opportunity for your product development efforts?” some 19% checked off “immunity enhancement,” an interest that ranked on par with “women's health,” but behind health issues such as “digestive health” (at 32%) or the 44% for “weight loss.”

Some nutraceutical components that are standards for the supplement industry but are working to gain a toehold in foods include components such as L-carnitine, Co-enzyme Q10 and glucosamine.

For example, BioEssentials (Reno, Nev.) introduced a 16oz., soda-like Motion Potion with 1,500mg glucosamine in the summer of 2003. Similar glucose-containing beverages introduced in the U.S. range from Energy Brands' (Whitestone, N.Y.) Glaceau VitaminWater Enhanced Tea-Flavored Water (another Glaceau beverage contains carnitine) to PepsiCo's South Beach Beverage (Norwalk, Conn.) SoBe Sports System.

The Natural Marketing Institute's (Harleysville, Pa.) 2003 Health and Wellness Trends Database states that 29.0% of the general population has purchased glucosamine at some point. Some 19.8% has purchased omega-3 fatty acids, 13.9% Co-Q10 and 4.2% SAME-e.

Loren Israelsen, president, LDI Group (Salt Lake City, Utah), believes that glucosamine is one of a small set of ingredients that will become the “ambassadors” of the dietary supplement industry. Calling this the 95/5 rule or the “Costco Effect,” Israelsen believes that some 5% of dietary supplements will become the gateway through which the American consumer will understand the benefit, value and contribution to quality of life that these particular supplements offer.

These products include black cohosh, vitamin E, Co-Q10, omega-3 fatty acids and glucosamine. The “Costco Effect” means such products will be available in large sizes at very reasonable prices and of assured quality. These same ingredients also will become the “engines” of a new generation of functional food products.

Other opportunities lie within the growing awareness of certain health conditions. For example, Enjoy Life Foods (Chicago) introduced a line of cereals, bagels and snacks high in omega-3 fatty acids and fiber. The sources are flax, rice bran and amaranth, which makes some of company's products “denser” but also has the advantage of creating a greater degree of fullness when consumed, says Cindy R. Kaplan, vice president, marketing, Enjoy Life Foods (Chicago). Additionally, the products contain no gluten or other common allergens, and thus are appropriate for those with Celiac disease and other food sensitivities, a condition that many regard as an emerging health concern.

It has been a number of years since the concept of “functional foods” was first introduced to the industry. Although challenges abound, many companies, both large and small, see great opportunities.

Sidebar 1:
On the Web: GMO Regulations

Home of the Vegenaise product line

September 2003 overview on claims that can be made for conventional foods and dietary supplements

Summary of Qualified Health Claims Permitted (generally applicable only for dietary supplements)