State of the Nutra Industry
What do you see as the biggest opportunities for products proclaiming specific health benefits?
Lauren Swann (LS): Heightened interest in self-care and naturopathic approaches to healthcare, increasing publicity and awareness about eating healthfully for normal maintenance (as well as to manage commonly prevalent health conditions, i.e. hypertension, diabetes, etc.), and a savvier consumer marketplace all provide opportunities.
Kurt Stiles (KS): The awareness by bigger brands that they need to establish a clear customer connection with their products, and how can they bundle specific product benefits to help reinforce this "marketplace glue" will be key to success. Another opportunity is establishing creative ways to get products into consumers' regimens via novel delivery mechanisms (fortified foods) and unit-dose servings.
Loren Israelsen (LI): The biggest opportunity for such products is the simple fact that millions of people have specific health concerns or existing problems. We are all solution seekers, which is what condition-specific claims offer.
Tom Aarts (TA): Everyone is interested in feeling and looking better regardless of whether or not they're consumers of dietary supplements or functional foods. The first time someone experiences chronic joint pain, starts to run out of breath with simple exercise or notices a few extra wrinkles, their receptivity to novel solutions increases. As importantly, all of the demographic trending suggests an aging population is embracing wellness products in massive numbers.
Steve Cohen (SC): For companies who allocate adequate resources to create unique natural compounds backed by solid science, including clinical trials, the rewards include long-term benefits of proprietary product niches and lucrative new markets. The novel positioning of a health claim for products without the many constraints of a pharmaceutically based ingredient are what the natural products industry originated from and thrives upon.
What do you see as the biggest obstacles facing products proclaiming specific health benefits?
LS: Assuring consumer trust and confidence within a marketplace flooded with controversial assertions about food, nutrition and health, which tend to overwhelm and cause suspicion among consumers.
LI: The biggest obstacles are the challenges of offering competent proof and evidence of safety and efficacy. The whole concept of condition-specific products is to offer an alternative to the drug option. Consumers would much prefer to use a wellness product than a drug which implies they are sick or diseased. But, of course, consumers then expect results that are tangible enough to continue using these kinds of products.
SC: Opportunistic ventures attempting to duplicate successful, legitimate functional ingredients with arbitrary messages, pseudo-science, and cut-throat pricing undermine real ingredients, products and marketing.
What are some of the more innovative (non-branded) ingredients, products or categories you have seen in the last year, and why do you think they may have a bright future?
KS: Developers are producing a wave of consistent new ingredients to support the "mass natural"? market repositioning (natural and organic) going on worldwide. I am especially intrigued with two new products that developers can use in viscous liquids (beverages) or dry powder applications. Both are soluble dietary fibers derived from the waste streams of the producing food companies.
TA: Capsules and tablets remain classic delivery vehicles for dietary supplements (nutraceutical ingredients). What's fascinating is the emergence of new delivery systems that are easier to consume anywhere and anytime. Single-dose, effervescent nutrient "cocktails,"? individual-portion probiotic drinks and functional beverages fortified with nutrients are experiencing dynamic growth worldwide.
SC: Two areas of great interest are healthy edible oils and a newer class of ingredients that influence--stabilize--blood sugar via optimized carbohydrate utilization. A major chronic, yet preventable, health problem for American consumers is poor selection of fats and sugars.
Functional foods, dietary supplements, medical foods...how do you see these converging, and will they all have long-term market viability or "share of health"?
LS: Long-term market viability and a convergence of these nutra-categories look promising and likely to become a mainstay trend. Examples of the convergence include fortified functional foods and dietary supplements made from food concentrates (not just vitamin/mineral/ herbal extracts).
LI: There clearly is convergence between functional foods, supplements and, to some degree, medical foods. Think of it this way: Dietary supplements are your personal car; functional foods are mass transportation. The strategy is how you distribute the same value-added ingredients (for example, fiber, CoQ10, omega-3s and lycopene). This can be done on an individual dosing basis (supplements) or in breakfast flakes, orange juice, or bagels (functional foods). The competition of the future is in delivery systems.
TA: America is shifting to an exciting new phase in consumer healthcare whereby consumable wellness products—functional foods, dietary supplements, etc.—are starting to capture healthcare dollars. This will have a major impact on consumer lifestyles, as these products are demonstrated to be efficacious. These healthy lifestyle and wellness products will eventually be advocated by the conventional medical industry as money well spent on preventative healthcare.
SC: I see few, if any, finite distinctions between functional foods, dietary supplements and so-called medical foods. The primary distinctions are more of a regulatory or technical nature or, in the case of "medical foods," a segment of the healthcare professional market. They may be defined as separate categories, but they are all intrinsically interrelated. A functional food could have a dietary supplement ingredient added to it, and then how would it be defined? If I took a functional food and did a clinical study related to a specific disease, is it now a medical food? Yes, there are real differences and, at the same time, those differences are (to some degree) a function of marketing.
The Dietary Supplement Health and Education Act (DSHEA) was passed in 1994. How has it impacted the dietary supplement industry; is it under attack, and how will it impact the dietary supplement marketplace in the next few years?
LI: DSHEA transformed the supplement industry. Psychologically, the little guy beat the big guys. Post-DSHEA passage, capital flowed into the dietary supplement market, and there was a dramatic expansion of products into the mass market. At the same time, a level of dysfunction set in as wild claims and unsubstantiated products also proliferated. 2007 could be a critical year for the future of DSHEA with probable new Adverse Event Reporting legislation and a key Good Manufacturing Practices (GMPs) regulation expected. Will it bring order, or will it bring resistance? It's too early to say.
TA: Legislative mandates such as DSHEA tend to run in decade-long cycles of industry-specific practicality and inevitable reassessment. Yes, DSHEA has had a major, positive impact on the dietary supplement industry and, by default, the functional food channels but, going forward, the potential impact of GMP federal level legislation to improve the overall quality of industry is substantial. The forthcoming GMPs (finally, I hope) could well be "the perfect storm" in that they may force lesser-quality ventures into rising up to higher quality standards. This will increase the quality of all nutrition industry products and generally shake up things for the better. One big question remains: who will enforce the GMPs? This is going to be an expensive and complex regulatory service.
Many chefs are more focused than ever on health-nutrition connections, while food formulators are leaning more heavily on culinary skills. The distance between chef and food technologist is closing. What does this mean, and where is it heading?
KS: As recently as the early 1990s, many "good for you" or "healthy"? branded products simply did not taste good. For the most part, chefs traditionally worked in restaurants and food scientists in manufacturing environments. Now, many chefs have entered the manufacturing sector, learning more about the ingredients that food technologists use to obtain functionality, while hoards of food scientists are studying basic culinary techniques to enhance organoleptic appeal of their creations. A chef with food science skills is now called a "Culinologist,"? a word depicting a blending of food and science. The actual word was trademarked by the Research Chefs Association (RCA). The need for properly educating and then validating such a skill-set is so important that there are now several schools offering "Culinology" courses and degrees, and one (Southwest Minnesota State) offers a bachelor's program. These "one degree" Culinologists often start working immediately after graduation, and often within the foodservice or consumer products manufacturing industries. Before, a chef or scientist had to spend several years developing his or her separate food science and culinary skills.
What is the outlook and impact on the organic foods sector with major players such as Wal-Mart coming into the picture?
LI: The entry of Wal-Mart into the organic food sector will be seen as a watershed event in the organic food community. Will it bring new consumers to the organic food section by making previously more expensive foods available to the masses, or will these major players seek a dilution of organic standards to be able to meet supply demands and to push out higher-priced competitors? History would suggest the latter, which would be a great shame indeed.
Whole Foods, Safeway, Trader Joe's and many specialty retailers now carry organic, gourmet and natural foods and dietary supplements, along with more conventional products. With the major retailers carrying such wide offerings, will market share battles come down to price and quality, or are other factors at play?
LS: Other factors will influence the price and quality approach as retailers incorporate holistic lifestyle features within their stores—personalized health assessments, cooking demos, ready-to-eat, ready-to-prepare, spa-like amenities, and in-store, professionally certified advisors. All of these and more relate to marketing and promoting healthful foods.
KS: Deeply increased fuel prices have many consumers planning their shopping trips in advance. If I can get my favorite live cultured yogurt, fortified smoothie, or other functional foods or beverages at my local supermarket instead of a driving to a specialty store, why drive the extra miles? Specialty retailers are going to be pushed exceptionally hard to find creative ways in which to compete against larger counterparts now offering "everything natural" and pricing that ferociously challenges small outlets.
Half of the American population is still deficient in one or more nutrients, and obesity is approaching epidemic proportions. Proclamations by industry to simply eat healthier are simply not working for much of the population. How are Americans going to get healthier without greater consumption of fortified foods or dietary supplements?
LS: Fortified foods and dietary supplements do play a role, but that role is best not "over-played." Nutrients, especially phytochemicals and antioxidants, work best in their naturally occurring food matrices. Although risk-benefit ratios have been shown to be justified for nutrient enrichment of grains, there also have been unintended consequences that emerged years later, i.e., iron enrichment was supportive long-term for the adult female, yet, excess iron in men is linked to cancer and heart disease. A folate-fortified food supply may have links to autism. Manufacturers are advised to first examine the way in which starting materials and finished ingredients occur in nature when producing new products, and specific to making them as nutrient-cohesive and concentrated as practical. The objective is to help ensure that harvesting, storage, distribution and even fortification don't compromise optimum efficacy and safety levels.
LI: America's major health problem is we eat too much and too much of the wrong stuff. Dietary supplements alone cannot fix this problem. So long as there is the mentality that we can eat ourselves into oblivion and then look for a pill to undo it all, we will continue to be overweight.
When creating new products (or menus), does the constant pressure to meet product cost and profit margin objectives impede innovation, or are financial constraints becoming less arduous as management realizes long-term sales sustainability is ultimately locked in with higher quality offerings?
KS: Cost-of-goods "over-focus" always has and always will impede some innovation. I recently worked with a national company on developing a tasty, nutritious energy bar. I was not allowed to use cane sugar because high fructose corn syrup was so much cheaper—even though cane sugar was the right ingredient to fit the product nutrition and positioning models.
TA: As [important as] margin objectives are, science-based substantiation of dietary supplements, functional and medical foods is an ever-increasing mandate for even the smallest industry companies. Most of the industry understands that, without the science, long-term viability is questionable. Yet the industry must remain vigilant against fly-by-night ventures that "hitchhike" on everyone's hard work and investments.
SC: I am still surprised in the natural products industry by how often I see the pressure for bottom-line profits conflicting with the best available product dose, source material or delivery system. The important thing from the viewpoint of being a raw material supplier is to discern the difference from research-backed, useful ingredients versus the enticement of short-term gain offered by less legitimate materials.
How are shifting demographics populations--seniors, Hispanics, â€œtweensâ€?--impacting your industry?
LS: Dietary supplements have been developed to meet nutritional needs specific to certain ethnic and age populations, and nutra-foods (fortified functional foods) can serve a similar supportive role. The emerging science of nutrigenomics likely will reveal more about the genetic pooling within ethnic groups and related health conditions, thereby allowing even greater customization of specialized supplements and, more importantly, healthy foods for everyday consumption.
Do you see greater cooperation between various company departments--marketing, research, senior management, sales--within organizations designing new products and ingredients, or is there a predominance of inter-departmental â€œwrestlingâ€? and lack of alignment inhibiting innovation and expeditious gap filling?
KS: The companies that seem to have the greatest internal conflicts in this area are generally older, recently purchased, or have an inner "ego"? department that is constantly maneuvering to protect individual agendas without keeping the companies' best interests at heart.
What countries do you see taking leadership positions--functional foods, beverages, supplements, medical foods--in the next few years and why?
LI: The countries I am watching closely from a nutra-innovation perspective are Canada, New Zealand, Australia and of course, the U.S. This is primarily from the ingredient perspective and among other items on my top "watch"? list are probiotics , omega-3 fatty acids, novel milk protein derivatives and marine algae products. NS
Lauren Swann, MS, RD, LDN is a freelance writer and president of Concept Nutrition Inc. consulting services specializing in food labeling, marketing communications and cultural food-ways, with an emphasis on nutrition strategies, trends and analyses. She established the regulatory affairs department for Vlasic Foods World, served on the board of directors and chaired committees for affiliate chapters of the Pennsylvania Dietetic Association, American Marketing Association, American Institute of Wine & Food and the Institute of Food Technologists. LS@FoodFactsWork.com, www.foodfactswork.com
Chef Kurt Stiles is the founder of Intelligent Ingredients, a product development company. With 29 years' experience in the food and beverage industry, he has worked with companies such as General Mills, Sara Lee, Land O' Lakes, Jennie-O Turkey, Dole Fruits and Caribou Coffee. Chef Stiles sits on the advisory board at Le Cordon Bleu University, and is an author, speaker and culinary collaborator, providing critical viewpoints on trends and new products at industry seminars and culinary roundtables internationally. Chefmoosehopper@comcast.net
Loren Israelsen is president of LDI Group Inc., a consulting firm that specializes in dietary supplements, functional and organic foods and international regulatory issues. He served as general counsel and then president of Nature's Way; dietary supplement issue manager to the Trans Atlantic Business Dialogue (TABD); and an advisor to the Office of Dietary Supplements on botanical research priorities. As executive director of the United Natural Products Alliance, he was instrumental in the introduction and passage of the 1994 Dietary Supplement Health and Education Act (DSHEA). He is a frequent lecturer and author on policy and commercial issues affecting dietary supplements. Loren@ldigroup.com, www.ldigroup.com
Thomas Aarts is co-founder and executive editor of Nutrition Business Journal (NBJ). He is a founding partner of Nutrition Business Advisors, a leading strategic advisory firm in the natural products industry. NBJ is the â€œjournal of recordâ€? for strategic information and market intelligence in the nutrition and natural products industry. He also is a frequent keynote speaker and chairperson at many of the industry's leading conferences. He serves on several editorial advisory boards and has authored numerous articles in peer-reviewed journals and trade publications. Tom@nutritionbusiness.com, www.NewportSummit.com
Steve Cohen is the founder of Source Connections LLC. He has been active in the natural products industry for over 25 years at the retail, manufacturer and supply levels. Cohen advises companies on the intricacies of nutritional ingredient procurement through end-product strategies and competitive issues. Source Connections services branded and private label food, beverage and dietary vitamin supplement companies within the natural foods and mass market channels. Stevecohen11@comcast.net
Brian Keating is the founder of Sage Group International (Seattle), a natural products industry consultancy providing market and product development services to natural foods, nutraceutical and specialty beverage companies worldwide.