N EW N UTRITION BUSINESS · 2014-03-25 · N EW N UTRITION BUSINESS VOLUME 15 NUMBER 5 –nutrition.com MARCH 2010 ISSN 1464-3308 THE JOURNAL FOR HEALTHY EATING, FUNCTIONAL FOODS

N E W N U T R I T I O N

B U S I N E S Swww.new–nutrition.com MARCH 2010 ISSN 1464-3308VOLUME 15 NUMBER 5

T H E J O U R N A L F O R H E A L T H Y E A T I N G , F U N C T I O N A L F O O D S & N U T R A C E U T I C A L S

Pages 20-24

Continued on page 5

Pages 3-4 Pages 13-16

Retailer debuts high-protein satiety

ready-meal range

German technology re-defines coconut

water market

Functional water takes

a bath

Food and drink companies who put the power of antioxidants at the heart of their marketing strategies are among the biggest losers in the latest wave of Article 13.1 health claims opinions. The European Food Safety Authority (EFSA) has dismissed the validity of tests such as ORAC, which measure the antioxidant potency of a product. There was also bad news for companies marketing food and drink on the basis it has a low Glycemic Index. On the positive side, the latest set of claim opinions represent a milestone since they include the first weight loss claim to receive a positive opinion from EFSA.

On 25 February EFSA, which is assessing health claims under the EU’s Nutrition & Health Claims Regulation, published 31 opinions covering 416 ‘general function’ claims. It was the second batch of the 4,000-plus Article 13.1 claims that will eventually be assessed for inclusion on the Community List of claims that any company can use.

As with the first batch, which came out last October, the majority of claims were rejected – although this time the failure rate was more pronounced, with just five nutrients receiving positive opinions. The normally stoical agency admitted that its NDA panel, which is carrying out the assessments, had turned down most of the claims in the second series due to the “poor quality of the information provided to EFSA”. It listed three major flaws in the dossiers presented for review, as follows (in EFSA’s own words):

• lack of information to identify the substance on which the claim is based, for example, using the term ‘probiotics’

• lack of evidence that the claimed effect is indeed benefi cial to the maintenance or improvement of the functions of the body (such as food with “antioxidant properties”)

• lack of human studies with reliable measures of the claimed health benefi t.

Whereas last time it was the quantity of probiotics-related rejections that caught the eye, this time round that dubious honour went to antioxidants, with EFSA bunching together 169 antioxidant claims and rejecting them in one fell swoop.

EFSA’s stance on antioxidants is interesting, says Nino Binns of Dublin-based NB Consulting, since the agency has already accepted the underlying benefit to health that antioxidants are said to offer, which is one of the major hurdles that must be overcome to gain a positive opinion for a health claim.

“We know they’ve accepted the principle of an antioxidant action to protect DNA, proteins and lipids from oxidative damage, because they approved that claim for vitamin C in the last batch of opinions in October,” she says. The claim she refers to was approved as: “Vitamin C contributes to the protection of cell constituents from oxidative damage”.

In this latest batch of opinions, EFSA also

assessed claims relating to the protection of DNA, proteins and lipids from oxidative damage, but turned these down because of a lack of evidence. It stated: “No human studies which investigated the effects of the food(s)/food constituent(s) on reliable markers of oxidative damage to body cells or to molecules such as DNA, proteins and lipids have been provided… The evidence provided in the animal and in vitro studies submitted is not sufficient…”

Perhaps more significantly for many companies, however, the latest opinions also indicate that EFSA has no inclination to approve general claims that refer to antioxidant effects. It threw out claims relating to “antioxidant activity”, “antioxidant content” and “antioxidant properties” on the basis that “no evidence has been provided to establish that having antioxidant activity/content and/or antioxidant properties is a beneficial physiological effect”. As Binns puts it: “They don’t class having general antioxidant properties as beneficial to health.”

Binns notes that EFSA has given short shrift to tests such as ORAC which measure

European regulators say no to health claims for antioxidants,

ORAC and glycemic indexBy Richard Clarke

Details of all EFSA’s health claims opinions are at: http://www.efsa.europa.eu/en/sdocs.htm.

A guide to how to increase your chances of success when applying for a health claim can be found in the February 2010 NNB.

MARCH 2010 2

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LEAD STORY

1,5 European regulators say no to health claims for antioxidants, ORAC and glycemic index

NEWS ANALYSIS

3-4 Retailer debuts high-protein satiety ready-meal range

6 Japan’s Econa shock: oil withdrawal to lead to health claim review

7-8 CLA dairy debuts in US

9-10 New diet guidelines likely to emphasise “whole diet” over “magic bullet” foods

EDITORIAL

11-12 Total innovation

CASE STUDIES

13-16 INNOVATION: German technology

re-defines coconut water market

17-19 START-UP: Moma takes healthy breakfast from home kitchen to the masses

20-24 STRATEGY: Functional water takes a bath

25-26 MARKETING: Müller axes declining “Healthy Balance” in favour of “healthy bugs”

27-29 LABELLING: Jockeying for position as US changes pack-front rules

NEW PRODUCTS

30-32 Functional & healthy-eating new product launches

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Activia ........................................................25,26Albertsons ........................................................29Aquafina .....................................................22,24Archer Daniels Midland ...................................6Bio Corner .................................................25,26Campbell Soup ...............................................10Capsa..............................................................7,8CJ Cheil Jedang ................................................6Clarinol ..........................................................7,8Coca-Cola ..............................20,21,22,23,24,28Coco Cream ....................................................15Coco Juice .............................................13,15,16Coco Milk ..................................................14,15Cognis ............................................................7,8ConAgra .....................................................10,28Danone ....................................................4,25,26Dasani .............................................................24Delhaize ..........................................................28

Econa ................................................................6Elvir ...................................................................4Enova ................................................................6Food Lion ........................................................28Gatorade .........................................................21Glaceau Smartwater ..................................20,21Glaceau Vitaminwater ..........................20,21,23Green Coco ......................................13,14,15,16Hannaford ..................................................28,29Healthy Balance .........................................25,26Heinz ...............................................................10Innocent Drinks ..............................................18Kao....................................................................6Kellogg ............................................................28Lipid Nutrition ...............................................7,8Marks & Spencer ...........................................3,4Mars ...........................................................28,29Moma Foods .........................................17,18,19

Moma Hodgepodge ........................................18Moma Jumble .......................................17,18,19Moma Oatie ....................................................18Müller .........................................................25,26Naturlinea .........................................................8Nestlé Waters ...................................21,22,23,24Old Home Farm ............................................7,8PepsiCo .......................................21,22,23,24,28Propel .........................................................21,23Pure Life .....................................................21,22Safflower Power .............................................7,8Sara Lee ..........................................................10Simply Fuller Longer .....................................3,4SoBe Lifewater ......................................21,22,23Tonalin ..............................................................8Unilever ...........................................................10Vitality .............................................................26

MARCH 2010 3


N E W S A N A LY S I S

Marks & Spencer, one of the UK’s most famous retailers, has taken the unusual step of launching an overtly functional range of chilled ready meals. The own-label Simply Fuller Longer is a line of 40 new products, including hot meals, salads, soups and sandwiches, which Marks & Spencer says contain high levels of protein and “balanced carbs” to help curb hunger pangs.

In a press release launching the range, Marks & Spencer said the meals were “based on scientific research that shows diets higher in protein result in more effective weight loss”. The company said it had “created an innovative new range with a higher protein content to help control hunger, so consumers can finally enjoy diet food that doesn’t leave them reaching for the biscuit tin”.

Marks & Spencer explained it had developed the Simply Fuller Longer concept over the course of 2009 with nutrition scientists at the Rowett Institute of Nutrition & Health at Scotland’s University of Aberdeen, which the retailer claimed is “renowned for their ground-breaking research on effective weight loss”.

To back the launch, Marks & Spencer has established a web-based menu planner designed to be used as a diet that will help customers lose weight, at (http://health.marksandspencer.com/our-health-ranges/simply-fuller-longer).

Marks & Spencer nutritionist Claire Hughes said: “Losing weight should be simple as basically you need to eat fewer calories than you use. But as we all know it’s not that easy in practice. A lot of diets fail as people feel hungry or deprived, so quickly give up and go back to their old habits. Our Simply Fuller Longer diet is based on the principle that protein keeps us feeling fuller for longer than carbohydrates or fat, thus reducing the temptation to snack after meals.

“Because it is a calorie-controlled diet, we have increased the proportion of calories coming from protein at each meal, so we’ve

included plenty of chicken and fish, for example, plus beans and pulses – which are also great sources of protein – without forgetting a healthy balance of vegetables.”

Alluding to the infamous Atkins Diet, Marks & Spencer said: “Unlike other high protein diets, carbohydrates are not excluded from the plan, and customers are also encouraged to eat extra vegetables and fruit if they do feel in need of a snack. Customers will be able to enjoy many new interesting ingredients and flavours, as the M&S product developers have worked hard to meet the nutritional principles for the range using

a delicious selection of grains, vegetables, beans, pulses and proteins.”

Packs for the new range feature three green circles containing the phrases: “high protein + balanced carbs + calories per pack”, with the last detailing just how many calories there are in the product in question. On the back of the pack, text reads: “We have been working with nutrition scientists to create the Simply Fuller Longer range. It is based on scientific evidence that meals high in protein can help you lose weight by keeping hunger under control on a calorie controlled eating plan. It can also be used in a weight maintenance programme or simply as a delicious healthy option at any time.”

The range has been supported by television advertising. Delivered by the sultry voiceover that has become synonymous with Marks & Spencer’s advertising, against a backdrop of styled food shots, the TV ad says:

“Introducing the delicious new Simply Fuller Longer range from your M&S. It helps you lose weight while still enjoying the food you love. Every mouth-watering dish from the extensive new menu is high in protein so you’ll simply feel fuller for longer and less tempted to snack. The new Simply Fuller Longer range. From your M&S.”

The protein content of the products varies across the range, but here are some examples:

• Coconut & lime chicken noodles with edamame soya beans and pak choi – 33.9g of protein per 390g pack.

• Steak & mushroom pie with luxury mash – 40g of protein per 430g pack.

• Chicken & three mushroom tagliatelle with a creamy chestnut mushroom & marsala sauce – 37g of protein per 370g pack.

The products are relatively expensive, which is of little surprise given the focus

Retailer debuts high-protein satiety ready-meal range

The EU’s health claims system has deterred most companies from making weight loss claims, but not a big UK retailer, whose new line of own-label ready meals makes an explicit “Feel fuller for longer” message. Marks & Spencer believes its high-protein, “balanced carb” meals will enable it to fill a gap in the weight management market. By RICHARD CLARKE.

MARCH 2010 4


on high levels of protein. For example, the Coconut & lime chicken noodles and the Chicken & three mushroom tagliatelle meals both retail for £3.99 ($6.14/€4.54) a portion; the Steak & mushroom pie for £3.59 ($5.53/€4.08). Such prices put them at the upper end of the market for single-portion ready meals.

Marks & Spencer’s Simply Fuller Longer range may be a first for the ready meals category, but it isn’t the first time a product has been marketed in the UK on the basis that it contains protein to reduce levels of hunger. Already available, for example, is Danone’s pot yoghurt brand, Shape Feel Fuller For Longer (previously called Shape Lasting Satisfaction), which contains a blend of milk proteins and fibre in the form of guar gum.

This brand was worth £30 million ($46 million/€34 million) in 2009, according to The Grocer magazine’s most recent Top Products Survey, suggesting there is a market for such products in the UK. However, sales were also down 7.6%, indicating that, after an initially strong start in the wake of its launch in 2006, interest in the proposition may be waning. Marks & Spencer will be hoping it can persuade consumers they do still have an appetite for food that makes them feel fuller for longer.


CLAIMS REGULATION COULD CLIP SIMPLY FULLER LONGER’S WINGS

Whether Marks & Spencer’s Simply Fuller Longer claim will make it through the EU’s Nutrition & Health Claims Regulation process is uncertain, partly because it isn’t even clear whether the retailer has submitted a dossier for a claim relating to the new range (although somebody else may have done so on its behalf).

The only indication of how the European Food Safety Authority might view such a dossier, if it was submitted, can be found in an application assessed as far back as 2008. French ingredients supplier Elvir requested approval for a claim that a blend of milk protein and fibre (from apples and chicory) in a milk-based beverage could reduce a sense of hunger.

The claim was rejected on the basis that cause and effect had not been established. It is always possible that a stronger dossier along similar lines – perhaps from Danone – could be given the nod at a later date. Indeed, Danone has confirmed to New Nutrition Business that it is still awaiting an opinion from EFSA on a claim application specific to its Shape Feel Fuller For Longer yoghurt formulation. Spokeswoman Marie-Liesse Calmejane said: “There is a dossier that has been submitted to EFSA under Article 13.1 on low fat dairy products enriched with protein and with guar gum, claiming to ‘reduce appetite feeling’. The dossier is currently under assessment.”

Nonetheless, the Marks & Spencer Simply Fuller Longer range differs markedly from both the Elvir and Danone cases on two key points: firstly, the products in Marks & Spencer’s range are not dairy products; and secondly they are a combination of protein and the non-specific concept of “balanced carbs”, rather than a combination of protein and fibre.

On balance, Marks & Spencer’s Simply Fuller Longer range will almost certainly have its wings clipped once full implementation of the health claims regulation really begins in earnest.

NUTRITION FACTS, INGREDIENTS AND LABEL MESSAGES

Simply Fuller Longer coconut & lime chicken noodles with edamame soya beans & pak choi

MARCH 2010 5


the antioxidant potency of a product. It has become popular for juice manufacturers in particular to put ORAC values on their product labels to demonstrate their drinks contain more antioxidants than those of rivals. But Binns says: “It’s like a litmus test measuring the pH of something. It’s a measure and in itself it doesn’t mean anything. They’ve written those values off as meaningless.”

There was also bad news for companies marketing food and drink on the basis it has a low Glycemic Index. EFSA rejected a clutch of claims for unspecified carbohydrates said to be low GI because they were poorly characterised. Three more substances – alpha-cyclodextrin, acacia gum and guar gum – were rejected for glycemic-related claims because of a lack of evidence.

Nigel Baldwin, senior scientific and regulatory consultant at Cantox Health Sciences International, describes the opinions as “a wake-up call to the glycemic industry”. He adds: “It seems to me you’ve got a really, really hard job to convince EFSA that any of these carbohydrates have got glycemic benefits.”

Elsewhere there were plenty more rejections for probiotic bacteria – once again mostly because of poor characterisation – and for products designed to aid joint health. In the case of the latter, the issue of EFSA demanding studies conduct among healthy people continues to pose challenges. On the positive side, EFSA accepted claims for the following:

• Vitamin D contributes to the normal function of the immune system and

maintenance of normal muscle function.• Melatonin alleviates the symptoms of jet

lag• Potassium maintains normal blood

pressure and normal muscular and neurological function

• Guar gum reduces blood cholesterol concentrations

• Meal replacements reduce body weight and maintain normal body weight after weight loss.

That last claim, incidentally, represents a milestone since it is the first weight loss claim to receive a positive opinion from EFSA.

Despite the generally grim outcomes, the 416 opinions in general held few surprises.

The industry by now has grown accustomed to the fact that the manner in which Article 13.1 claims were submitted two years or so ago bore little resemblance to the manner in which EFSA wanted them submitted, a factor the industry says was because of a lack of guidance at the time.

The reality is that any company for whom making a functional claim is a matter of commercial necessity will almost certainly not be able to rely on Article 13.1 opinions for a way forward, unless those claims relate to essential vitamins and minerals. Instead, it will either have to submit a new and full-blown dossier through the Article 13.5 health claim process or find a new way altogether of marketing its products.

PRUNE POWER NOT PROVEN – A CAUTIONARY TALE

Many companies – especially those involved in marketing whole fresh fruit and vegetables – increasingly emphasise their health and nutrition strategy in their plans to grow their business. But most whole fruits and vegetables probably have less evidence to substantiate their health benefits than many other food components, thanks to a lack of research by the horticultural industry. The recent negative claim ruling for prunes is likely to be the first of many rulings against health claims for whole foods.

Prunes are traditionally associated with digestive health and are consumed for their laxative benefits. But European regulators reviewed and refused an Article 13 health claim for prunes with the claimed effect that they support “normal bowel function/normal gastrointestinal function/normal colonic function”.

The reason was simply insufficient evidence presented, as follows:• one human intervention study did not find any significant difference between two

treatment groups or between different time-points within each group• one human intervention study showed some effect on faecal bulk but not on stool

frequency or consistency• Another human intervention study cited used another intervention than prunes • the other scientific references in support of the claim provided only background

information and did not provide scientific data that could be used to substantiate the claim.

SOME OF EFSA’S NEGATIVE RULINGS

The European Food Safety Authority (EFSA) issued negative opinions to most of 416 health claim dossiers. The NDA ruled that: • Sugar-free chewing gum does not reduce dental plaque • Xanthan gum does not boost satiety • Green and black tea extracts do not protect DNA, proteins and lipids from oxidative damage; reduce acid production in dental

plaque; maintain normal bone; decrease potentially pathogenic intestinal microorganisms; maintain vision; maintain normal blood pressure; maintain normal blood cholesterol concentrations

• Beta-glucans do not contribute to the maintenance of healthy blood glucose levels • GLA does not benefit joints; weight maintenance after weight loss; maintenance of peripheral blood flow; maintenance of normal

blood pressure; maintenance of normal blood cholesterol concentrations; bone health • C12-peptide does not help maintain normal blood pressure • Lutein does not help maintain normal vision • A range of antioxidant foods and constituents (relating to about 170 dossiers) do not deliver “antioxidant properties” or protect

body cells and molecules such as DNA, proteins and lipids from oxidative damage • Guar gum does not maintain normal blood glucose concentrations; increase satiety; maintain normal blood cholesterol

concentrations • Partially hydrolysed guar gum does not increase satiety; maintain normal body weight; maintain normal blood concentrations of

triglycerides; maintain normal blood cholesterol concentrations; reduce post-prandial glycemic responses; normal blood glucose concentrations

• Fermented whey does not support gut health (insufficient characterisation) • Vitamin D does not benefit cardiovascular health


Continued from front page

MARCH 2010 6



In September 2009 Kao Corporation announced that it would – temporarily – halt sales of 59 products sold under its Econa brand, including Econa Cooking Oil.

The recall was due to the products – which are made from canola and soybean oil and produced using a process that increases concentrations of diacylglycerol (DAG), fats that are said to have limited accumulation in body tissues – containing glycidol fatty acid esters, which occurs as a by-product in the general process of deodorization during the production of fats and oils, and is contained in refined vegetable oils, including palm oil.

Recently some European studies revealed that this component may morph into a suspected carcinogen after it is digested. In response to discussions centering in Europe on the safety of this component contained in fats and oils, Kao conducted an analysis of Econa Cooking Oil in the middle of June 2009. It was confirmed that Econa Cooking Oil contains a small amount of glycidol fatty acid esters.

The Econa brand products had been sold as FOSHU (Food for Specified Health Uses, known in Japan as “TOKUHO”) with a permitted claim related to weight loss and weight maintenance approved by the Ministry of Health Labour and Welfare (MLHW) since 1998. Since 2003, Econa oils have carried a FOSHU health label, and have been marketed as aiding “in the maintenance or loss of weight and fat mass, and helps to maintain healthy triglyceride levels in the bloodstream.”

The company said Econa is perfectly safe based on the numerous scientific assessments and the approvals of sales in 33 countries as a food product. It was reluctant to stop sales at first, but decided to withdraw it from the market temporarily until it reduces

the amount of the problem substance and “people have no reasons to worry anymore”.

WITHDRAWAL CAUSES CONFUSION

However, the problem was not as easy to solve as the company was expecting. This precautionary recall resulted in consumer confusion, with people questioning why Kao refrained voluntarily from selling Econa while at the same time saying it was safe. Kao could not respond to this question. More than 270,000 calls from consumers were placed to the hot line set up by Kao in just one month.

Japan’s Consumer Affairs Agency – which was established in 2009 to focus on a wide range of consumer-related issues including defective products, unsafe foods, mislabeling and fraudulent business practices and which has taken over the approval procedure for FOSHU from MHLW – has announced that it would start procedures to cancel the health label authorization for the Econa range.

But before this could get under way, Kao decided to revoke the FOSHU label of its brand voluntarily and stated that it would file a new FOSHU application, aiming for a new start for the brand. Kao was planning to restart sales in February 2010 after the review of manufacturing processes. But at the time of writing the brand remains suspended. However, since it voluntarily revoked its FOSHU status, it would need another review by the authority if it wanted to market Econa as a FOSHU product, and FOSHU reviews tend to take a long time. It’s unclear when the brand will be back in the market and whether it will be marketed as FOSHU again.

Econa’s discontinuation has hit sales hard. The brand has estimated sales in 2009 of JPY 16,500 million/$180.9 million/€132.9 million (Fuji Keizai) down from JPY 25,500 million/$279.6 million/€205 million in 2008. Earnings in Kao’s Human Health Care business, which deals with drinks, cooking oils (including Econa) and bath/oral care products, were down 5.2% between April-December 2009 compared with the previous year.

FOSHU PROCESS UNDER REVIEW

The Econa controversy has dented consumer confidence in the FOSHU system. Consumer research (Internet research conducted on December 15th, 2009 among 1,000 people aged 20-69 and published in February 2010) reveals that 31.6% “became anxious [about] seeing another similar case as Econa in other products too”, 30.9% said it “had no effect” and 24.4% “lost a feeling of trust in FOSHU products”.

However, 66.3% people said they continue to buy FOSHU products – they may be disappointed with the FOSHU system but that might not affect their buying behaviour.

Nevertheless, prompted by the Econa debacle, consumer groups called for the elimination of the FOSHU system. On November 17th 2009, the Consumer Affairs Agency announced that it would form a committee, which included members of consumer organizations and experts, for further discussions to review or even consider abolishing the whole system of FOSHU approval.

The conclusion is that FOSHU will stay, and discussions now centre on whether to continue with the current system or to make changes. It is possible that the whole system related to health and nutritional products will be dramatically changed in the future.

REPERCUSSIONS SPREAD

South Korean food company CJ Cheil Jedang was also hit by the controversy, and voluntarily stopped sales of its almost identical products – called Litra and Body Fat Reducing Litra – following advice from the Korean Food & Drug Administration (KFDA). Sales of these two brands were thought to have been over 20 billion KRW ($17.4 million/€12.7 million) in 2009.

And in the US, where Kao began selling its oil under the Enova brand name through a partnership with Archer Daniels Midland in 2003, Enova is no longer available.

Japan’s Econa shock: oil withdrawal to lead to health claim review

Japan’s sixth-biggest functional food brand, with annual retail sales of $180 million (€132.9 million), has been withdrawn amid a food safety controversy that has raised questions about the future of Japan’s health claim regulation system. By SACHIKO KAKISAKA and JULIAN MELLENTIN.

MARCH 2010 7



Launched in February, Safflower Power is the name of the first and only yogurt incorporating CLA (conjugated linoleic acid) on the US market. Introduced by Old Home Foods – a regional dairy located in Minnesota, in the northern part of the United States – Safflower Power Yogurt provides a dose of 1.5g per 6oz (175ml) pot of Clarinol CLA, the brand supplied by Netherlands-based Lipid Nutrition. The front of the pack prominently carries the claim:

Increase muscle toneReduce body fat

Communications for the brand further add that:

By eating two 6-oz. servings of Safflower Power yogurt a day, along with a healthy diet and regular exercise, you’ll start to see improved body shape and tone in 8-12 weeks.

Although the benefit is likely to have appeal for consumers, the ingredient is new and unknown, and the product’s marketing is clearly intended to reassure people and position CLA as a natural ingredient. For example, the front of the yoghurt pots carry the message:

Natural yogurt and CLA derived from natural safflower oil

The message is also delivered by the brand spokesperson Chris Freytag, a well-known health and fitness expert and author. With

magazine columns and regular appearances on TV, she has been known to Americans for 20 years. In a promotional video for Safflower Power Freytag reassures people that although CLA is new to them, she has long familiarity with it: “As a personal trainer I have always been a fan of CLA,” says Freytag.

Safflower Power’s supporting messages are that it is naturally sweetened, free-from gluten and high-fructose corn syrup and has around 160-170 calories per 175ml (6 oz) cup. The product also contains Lactobacillus acidophilus, Bifidobacterium lactis and Lactobacillus casei but there is no mention of any benefits from these or the term probiotics. The benefit focus remains firmly on CLA and reducing body fat.

The products have a recommended retail price of 83 cents (€0.61) per 175ml (6oz) cup. This is around the same level as the pricing of “regular” yoghurts, such as Yoplait, which are also sold in 175ml pots. The brand has eight flavours: Strawberry, Black Cherry, Blueberry, Banana-Mango, Marionberry, Peach, Pomegranate-Blueberry and Red Raspberry.

Old Home Foods is a regional dairy, offering a wide range of milks, yogurts and other dairy products, and Safflower Power will initially go into distribution only in its home region of Minnesota.

“This is the first dairy product with CLA on the US market,” John Kurstjens, global

group manager marketing at Lipid Nutrition, which supplies the active ingredient in Safflower Power, told New Nutrition Business in an interview. Clarinol is used in hundreds of dietary supplements in Asia, Europe and the US but hitherto CLA was found in the US only in a small number of meal replacement products, sold under dietary supplement regulation. Smoothie bar brand Jamba Juice briefly offered a fat burner shot with Clarinol.

However CLA gained GRAS (Generally Recognised as Safe) status in the US in July 2008 and is now permitted in fluid milk, yoghurt, meal replacement beverages, nutritional bars, soy beverages and fruit juices. Such products can carry a structure-function claim relating to CLA’s benefits. This has opened the doors for Lipid Nutrition to develop the food and beverage market.

Old Home Foods, said Kurstjens, “wanted to do something really innovative. In yoghurt you can make products low fat, reduce the calories, reduce sugar and they have done all of that and next wanted something really innovative on the market.”

A NATURAL-SOURCE INGREDIENT WITH GOOD SCIENCE

Conjugated Linoleic Acid (CLA) is a naturally occurring fatty acid. It can be obtained only through the diet. Normal dietary CLA intake of CL is thought to vary from 160-430 mg per day.

CLA dairy debuts in USAfter decades of scientific study, conjugated linoleic acid (CLA) is crossing the hurdles of regulatory approval and starting to appear in foods and beverages with a weight management benefit. Safflower Power is the first CLA-fortified dairy product to appear on the US market, using a prominent claim to reduce body fat and a “natural and free-from” message. By JULIAN MELLENTIN.

MARCH 2010 8



CLA is found occurring naturally in human breast milk and food products from ruminant animals such as meat, cheese and dairy products. However, it occurs at only very low levels in meat and dairy. Eggs, however, have a higher concentration of CLA and it is also found at high levels in kangaroo meat.

Commercial CLA – such as that marketed by Lipid Nutrition under its Clarinol brand and also by its competitor Cognis under its Tonalin brand – is derived from safflower oil, which is extracted from safflower seeds. Safflower is one of the oldest crops and was first known to have been cultivated in ancient Egypt. Safflower is flavourless and colourless and nutritionally similar to sunflower oil. It is used in cooking in many countries and the safflower is also used as a source of natural dyes. Today, most safflower is commercially grown in the US, and it is from the US that companies such as Lipid Nutrition source their raw materials. Clarinol is supplied as a liquid, a powder or an emulsion.

It’s safflower’s long history of food use that provides the basis for Safflower Power’s communication message that its active ingredients is “a safe and effective ingredient derived from natural safflower oil”.

CLA has been extensively studied since the late 1970s and today there are more than 2,000 published studies on its benefits. “Of these,” explains Kurstjens, “there are more than 100 human studies, some focusing on immune, some on other properties. But the key is that there are 34 good quality human clinical studies on weight management and a meta-analysis. It is one of the few active ingredients in weight management that has such substantiation.”

The evidence is that when 3g of CLA are consumed daily, body fat can be reduced safely in 8 to 12 weeks by between 9%-20% of body fat (depending on whether physical activity is involved). Lean muscle mass increases.

NOVEL FOOD APPROVAL ON THE HORIZON

In Europe, faced with uncertainties by food companies over the novel foods status of CLA, Lipid Nutrition and Clarinol together petitioned for Novel Food approval and this is expected to be granted in 2010. Kurstjens adds that when that’s granted many companies have indicated that they will start product development projects.

“In the food industry there has been a lot

of hesitation about innovation. In part there is the economic aspect, especially in the last year, but there is also the regulatory situation in Europe,” explains Kurstjens.

“With really innovative ingredients you need to explain them to consumers and if they don’t understand you need to invest a lot in promotions and communications and that’s a risk and not many companies are able to invest in that.”

The CLA suppliers are also optimistic about their chances of securing a health claim approval in Europe with most of the 34 studies submitted as the basis for CLA’s benefit meeting EFSA’s stringent requirements. EFSA has yet to rule on CLA, but even if it is not a positive outcome, “we will make a new claim petition, through the Article 13.5 claim route,” explains Kurstjens, adding: “We have confidence in our data.”

TONALIN UNDERPINS SUCCESS FOR SPAIN’S BODY FAT REDUCTION DAIRY BRAND

Spain is one of Europe’s most innovative food markets and Spanish consumers are willing to try new health products of all kinds. The Spanish – and particularly Spanish women – are also among the most weight-conscious people in Europe (alongside the French) so it isn’t surprising to find Europe’s only “body fat reduction” brand on the market in Spain. Nor is it surprising, given the high level of functional food innovation by Europe’s dairy industry, that it’s a dairy brand.

Launched in 2004, the NaturLínea product range, marketed by Spanish dairy company Corporación Alimentaria Peñasanta (CAPSA), one of Spain’s biggest dairy companies, had retail sales of around €50 million ($79 million) in 2008, according to industry sources – a healthy number in a country with a population of 40 million.

The range, which includes milk, drinking yoghurt, spoonable yoghurt and juice, seems to have found a strong niche amongst 35-45 year old women interested in wellbeing and concerned about their waistline – a key interest for Spanish women. The products carry the claim:

Helps to reduce body fat.

The NaturLínea range uses conjugated linoleic acid (CLA) as its active ingredient. NaturLínea uses the Tonalin brand of CLA, developed by Norway-based fatty acid specialist Natural ASA and marketed by German ingredient company Cognis.

In its fi rst two years on the market NaturLinea was heavily supported but after facing an unsuccessful regulatory challenge over its claim in 2007, advertising has been limited. Nevertheless, sales have held constant over that time.

SAFFLOWER POWER NUTRITION FACTS FOR THE BLUEBERRY-POMEGRANATE FLAVOUR

MARCH 2010 9



The US government’s 2010 Dietary Guidelines are due out later this year, and if early indications hold, they will reveal a new “real-world” emphasis that attempts to help overweight Americans eat better, especially, and that recommends all consumers take a holistic approach to nutrition rather than searching for some sort of dietary magic bullet.

Consumers and the industry heed much of what these guidelines say because they’re considered the government’s most authoritative word on diet. Among the major recommendations of the last guidelines, issued in 2005, were that Americans consume more whole grains, low-fat instead of whole milk, and more fruits and vegetables. Each of those things has become a bigger factor in the US diet than five years ago.

By law, the US Agriculture Department and the Health & Human Services Department must overhaul the guidelines every five years, and the panel of academics, dietitians, government experts and others who have been charged with this revision were scheduled to hold their next major gathering sometime in March. Their initial recommendations are expected by summer, and after public comment they must come up with final guidelines by fall.

But it’s possible to gauge some of the principles on which they’ll base their final decisions because the panel’s proceedings have been open to the public and are webcast. So, many people with stakes in the food and beverage business have been monitoring the committee’s discussions. Relying on the public record as well as these observers’ reports and recommendations,

here are some major themes that are likely to be reflected heavily in the final 2010 Dietary Guidelines:

An emphasis on weight management. Expect the guidelines to provide a significant amount of advice explicitly or at least implicitly aimed at the overweight, including recommendations about consumption of discretionary calories such as junk food, and acknowledgement of both adult and juvenile struggles with obesity.

“The guidelines have always been meant for the ‘average, normal’ American,” said Cathy Kapica, vice president of global health and wellness for Ketchum, a marketing agency that represents several major food and beverage manufacturers. “But now, two-thirds of Americans are overweight or obese, and the definition of ‘normal’ has changed, so the advisory committee is looking at all guidance with an overlay of overweight and obesity.”

Another observer, Cynthia Harriman, director of food and nutrition strategies for Oldways, the Boston-based sponsor of the Whole Grains Council, said the panel seems to be concluding that “everything comes back to this whole issue of how we’re going to control obesity, and that’s where it comes to dietary patterns.”

Yet the proceedings of the panel so far suggest that they’re going to “address behavioural issues through personal responsibility” rather than use the guidelines as a prelude to more regulation or legislation of food marketing and retailing, said Brian Wansink, the Cornell University professor who served as head of the 2010 Dietary Guidelines initiative under the Bush

administration and helped select the panelists.And Wansink said that the government’s

career experts associated with the guidelines will help ensure that the final recommendations don’t go too far in their specific address of overweight. “Suggestions that would assume everyone has a [high] Body Mass Index of 28 and is diabetic would do a tremendous disservice to that 18-year-old girl whose weight is fine; it would move her in the wrong direction.”

Consideration of the whole diet. Harriman said that a strong theme of the proceedings so far has been to move the guidelines away from “the idea of finding a magic bullet part of every food and putting that in a pill and leaving the rest on the table. The committee is really pushing for an emphasis on the overall dietary pattern first of all, whole foods second of all, and individual nutrients a distant third.”

Wansink said that the “whole-diet” emphasis is largely the result of “how unsuccessful the magic-bullet approach has been in the past. Sugar, fat and carbohydrates all have been the villain, but [a singular emphasis on] any of those things hasn’t lasted.”

Director of the Food & Brand Lab at Cornell and a leading expert on the psychology of eating, Wansink said that the panel’s emphasis is on behaviour and implementation of guidelines by consumers. “Concentrating on soy or something else isn’t what behaviour-oriented people will tend to focus on,” he said “People don’t eat ‘soy’; they eat foods with soy in them.”

Wansink said that the selection process

New diet guidelines likely to emphasise “whole diet” over

“magic bullet” foodsThe US government’s new dietary recommendations for Americans, due next fall, seem likely to take a “whole diet” approach, de-emphasising any focus on single, “magic bullet” foods. Experts are still deliberating over their approach to dairy, the amount of protein in the diet (likely to be increased), and whether or not glycemic load affects health. The process is being closely watched by the food industry because the last time the US dietary guidelines were updated, in 2005, it seems Americans listened: they recommended more wholegrains, low-fat milk, and more fruits and vegetables – and since then, these things have all become bigger factors in the US diet. By DALE BUSS.

MARCH 2010 10



attempted to ensure that the makeup of the panel would favour this direction for the new guidelines. “In the past, a lot of the people on these committees have been extreme experts in one or two areas, and their value to the committee was less that they knew about nutrition in practice and behaviour in the real world.”

So, the panel this time includes, for example, Dr. Christine Williams, vice president and medical director of Healthy Directions Inc., and an expert in nutrition and cancer prevention, and preventive cardiology, in children.

Also on the panel is Dr Miriam Nelson, director of the John Hancock Center for Physical Activity and Nutrition at Tufts University.

Salt reduction. Committee members have been discussing a reduction in Americans’ recommended intake of sodium. The 2005 Guidelines called for consumption of no more than 2,300mg of sodium daily, but Americans’ average intake remains about 3,500mg a day. Nevertheless, the panel may consider cutting the recommendation even further, graduating down perhaps to 1,500mg daily over a few years.

“There’s no direct relationship between sodium and obesity, but they’re seeing people eating more salt and [therefore] drinking more beverages,” Kapica explained. “It’s an indirect relationship, so they’re looking at the broader picture.”

A new study led by scientists from the University of California suggests that a 3g reduction in daily salt intake, equivalent to about 1,200mg of sodium, could prevent nearly 100,000 heart attacks and 92,000 deaths of Americans each year and save $24 billion (€17.6 billion) in health-care costs.

And this is one area where it would be incumbent upon food and beverage manufacturers to assist. About 80% of sodium in the American diet is added to foods before purchase, not dispensed afterward from a salt shaker. One panelist has said a priority of the new guidelines should be to “keep kids from developing a taste for sodium”.

Already, some in the industry have been acting on concerns about sodium. Heinz just introduced a new formula of its core ketchup line with reduced sodium. Campbell Soup has seen strong sales for its new low-sodium versions. And now, more food companies, including ConAgra, Unilever and Sara Lee, as well as Campbell, are silently reducing the

amounts of salt in many of their products as well.

Focus on fruits and vegetables. The panel has been paying lots of attention to the crucial role of fruits and vegetables in the American diet. Yet it isn’t a foregone conclusion that they will simply recommend more consumption, especially after the 2005 guidelines and other recent government advice called mainly for big improvements in “compliance” by consumers with the stated need for greater consumption.

And there are doubts among panelists about how much further to push this issue. “We still don’t know if fruits and vegetables are just healthy in their own right, or if they also improve health by keeping you from filling up on something that’s detrimental to health,” said Joanne Slavin, a panelist and professor of food science and nutrition at the University of Minnesota, during the committee’s fourth meeting, in November.

Dairy deliberations. Panelists presented “strong evidence” that there’s no relationship between dairy consumption and body weight – an assertion that the US dairy-products industry has been persistently making for several years. There’s also strong evidence that milk products are good for kids’ bone health.

Yet some committee members were concerned that these notions painted too positive a picture for dairy consumption because, after all, milk products contain a lot of fat – and fat is the focus of their overriding concerns about obesity.

The need to fit dairy consumption into an overall “food pattern emphasis,” instead of looking at milk products in isolation, also is important, some panelists stressed.

Quandary about cholesterol. The committee has tackled hard the issue of cholesterol recommendations. Some have noted that there is consistent evidence that dietary cholesterol doesn’t affect most people, except for diabetics. And yet, panelists stated, there is no “dietary need” for cholesterol, so consumption should be kept as low as possible. There’s also the issue of the protein quality of one of the most popular high-cholesterol foods: eggs.

Higher protein intake. Largely because protein ingestion promotes satiety, the guidelines are likely to call for increasing the intake of proteins that is considered

“normal”, which now is considered between 10% and 30% of all calories. But the panelists will favour sources such as beans and legumes over animal sources of protein.

Glycemic denial. Proceeds of the most recent meeting of the panel indicated that they are “probably not” going to find that the glycemic index and load affects health outcomes. According to Dr. Xavier Pi-Sunyer, a panelist and a Columbia University expert on carbohydrate and lipid metabolism, there’s “strong evidence” that there is no relationship between glycemic measures and body weight and cancer.

Soft-pedaling physical activity. The emphasis of so many government and not-for-profit and even private-sector programmes aimed at childhood obesity lately has been to get kids up and out and involved in more physical activity, whether it be Wii video games or more gym classes at schools.

But the Dietary Guidelines panel cautioned about whether such an emphasis will be all that helpful as today’s children grow up. For one thing, it was noted that “general-life” activities are the ones that have become more sedentary these days, while the amount of kids’ leisure and recreational activities have stayed about the same over the past 30 to 40 years.

“We need to build activity into the whole day, not necessarily get to the gym more often,” said Dr. Nelson.

And Dr. Nelson pointed out that the role of physical activity in helping weight management is easy to overemphasize. “When you’re balancing intake and output,” she said, “intake makes about 75% of the difference and physical activity about 25%.”

This low GI symbol is an international symbol, but it’s far more widely used in Australia – where the concept of glycemic index originated – than the US, where it seems likely the new government dietary guidelines will dismiss the concept that low GI has health benefi ts.

MARCH 2010 11


EDITORIAL

Innovation is something that most companies say is an important part of strategy, but in practice few achieve it, focusing instead on incremental changes. An innovation is not something incremental, it is something that changes the status quo in the market. The story of Green Coco Europe (see Case Study on page 13) tells you everything you need to know about how to innovate and change the status quo.

The Harvard business thinker Joseph Schumpeter – the man who made famous the phrase “creative destruction”, using it to describe a process in which the old ways of doing things are destroyed and replaced by new ways – would have recognised Green Coco’s strategy as truly innovative. He defined innovation in his book The Theory of Economic Development – published in 1934 by Harvard University Press and still in print today – as having five elements. Green Coco Europe meets four of these:

1. The introduction of a new product – that is, one with which consumers are not yet familiar. Coconut water is new and unknown to consumers in Europe (in particular) and the US. The idea of juice from inside a coconut is new, its taste is new and its “all-natural” benefits are new.

2. The introduction of a new method of production, which need not necessarily be founded upon a new scientific discovery, and can refer to a new way of handling a commodity commercially. Green Coco’s business is based on its development of a new method of extracting coconut water and packaging it which is quite different from existing practices and is covered by a mixture of patents and trade secrets.

3. The opening of a new market: No market for coconut water exists in Europe; Green Coco is creating a new category and introducing consumers to a completely new concept.

4. The conquest of a new source of supply of raw materials. To ensure security of supply Green Coco is approaching the raw commodity (green coconuts) very differently from existing players, setting up its own coconut growing and processing in Mexico, far from the existing supply base of Brazil. It is also likely to be the first fully vertically integrated coconut water beverage company.

Green Coco Europe also meets the

innovation criteria of another Harvard Business School professor, Clayton Christensen, who first developed the concept of “disruptive innovation”. He defines such an innovation as a product that overturns the existing status quo in a market.

Disruption occurs, Christensen says, when companies create new markets and it can be seen that in food and health it is products that create new markets that are the most enduringly successful. In particular, it is products that are completely new and unknown to the consumer, which create new categories by creating new demand, which enjoy the greatest success.

Examples of new category creation include the emergence of:

• the “energy shot” category in the US and Europe over the last two years

• energy drinks, led by Red Bull, since 1989

• probiotic dairy, led by Danone and Yakult

What such successful disruptive innovations all have in common – apart from brilliant marketing execution – is that they are strongly differentiated products, each quite unlike anything previously on offer. Coconut water is such a disruptive, new category-creating type of innovation.

Total innovation

Green Coco Europe joins the ranks of companies who have built strategies on disruptive innovation, resulting in the creation of new categories and new brands.

MARCH 2010 12


MAKING INNOVATION WORK

While innovation involves creativity, this is an aspect that is over-emphasized in many companies. Anyone can have creative ideas, but few know how to implement them. Effective innovation requires you to act on the creative ideas to make some tangible difference. In other words, innovation is about successfully putting creative ideas into practice.

Green Coco’s implementation of its creative idea illuminates many of the good practices that business thinkers associate with effective innovation. Here are two examples:

The value of networks: Innovation often happens best not within corporate organizations but through the networking of talented individuals and organizations from a variety of backgrounds. Green Coco Europe is an example of how a team of different people with a range of different skills can be effective – in this case a Brazilian pediatrician, a German beverages expert and an expert in communications and organics.

The value of experimentation: Taking innovative ideas to market requires an experimentation approach if there’s to be a good chance of market success, since new business models and customer experiences with new types of products can’t be tested through traditional market research methods. Indeed classic consumer research can often be the worst basis for making decisions about taking your innovation to market, since consumers very often don’t know how to respond to something truly innovative until they meet it in the supermarket.

Harvard Business School professor Stefan Thomke argues in his book. Experimentation Matters that every company’s ability to innovate depends on a series of experiments – successful or not – that help create new products. That period between the earliest point in the design cycle and the fi nal release should be fi lled with experimentation, failure, analysis, and yet another round of experimentation, he says.

Green Coco has certainly followed this cycle of experimentation, developing its product and process since 2004, upgrading its packaging, conquering quality problems and improving its taste. It has been helped in this experimentation by the wise strategy of beginning its distribution only in early adopter markets such as health food stores. This enables experimentation much less painfully than if your brand was in national distribution in a supermarket and it became

necessary to change it. The lessons learnt in this experimental phase position the company to be more successful and have less risk when it moves into mainstream supermarket distribution.

Successful innovation is of course also subject to availability of suffi cient fi nance. Innovation is not possible without investment, particularly heavy investment in marketing, which needs to be ten times what you invest in the development phase. The founders of Green Coco have invested €2 million ($2.75 million) so far and now are raising fi nance to invest in the roll-out stage. Without a big investment in marketing even the best innovation will not succeed.

It’s not every day that a new category comes into existence: a type of product that is new and previously unknown to consumers, providing a new benefit and marketed under a new brand. The emerging coconut water market is just such an example of new category creation. Green Coco is creating a new category by innovating in every possible aspect of its business:

• in the supply chain• in processing technology• in products

• in taste• in the brand• in consumer benefits

Is such true and multi-faceted innovation the exclusive property of start-up companies?

Senior management at many established companies are too fearful of risk – or insufficiently skilled in the management of risk – to engage in such multi-faceted innovation or to change the status quo. Senior management is often very skilled at finding reasons not to innovate (“that new product doesn’t fit our production process”; “the volume would be too small”; “consumer research says that idea is too new for consumers”; “it will take five years to get to break even – we want to be in profit in year two”).

Start-up businesses have nothing to lose and everything to gain by innovation, unlike established companies. However, unless established businesses start to act like innovative entrepreneurial business – or set up arms-length operations that can – then the biggest prizes will always go only to the risk-taking new category creators.

EDITORIAL

SUPERFOOD: CONTROL OF SUPPLY KEY TO SUCCESS?

As a natural material with all natural health benefi ts – it is isotonic and hypo-allergenic – coconut milk is perfectly adapted to meet consumers’ desire for products that are as simple and naturally healthy as possible. But this is not enough. One factor that is often overlooked in the natural superfoods business is the commercial value of control of supply.

If anyone can access the same fruit, then every competing company can launch a me-too product and your point of difference may be lost and you will find yourself bidding against competitors to secure the available – and possibly restricted – raw material supply.

It’s no coincidence that the biggest superfruits are pomegranate and cranberry and that these markets are defined by dominant companies who control supply – and so have the biggest incentive to invest in the science and the marketing. Paramount Farms dominates pomegranate growing in California and also is behind the consumer brand Pom Wonderful, which gave birth to the pomegranate juice market in the US. Ocean Spray controls 80% of US cranberry supply through a network of growers who are also its shareholders.

Vertical integration gives cost advantages – between 25% and 40%, according to some estimates – compared to companies that are not vertically integrated.

Açaí is an example of a natural superfood whose market growth has been hampered by lack of control of supply. Faced with multiple harvesters and processors of the fruit in Brazil, Sambazon, one of the pioneers of the fruit, eventually had to secure a reliable supply of açaí and opened its own processing plant in Brazil.

Green Coco Europe has addressed the importance of control of supply from the outset, creating its own supply and its own processing in Mexico, far from the Brazilian market where it found itself just one buyer among many.

Source: Successful Superfruit Strategy, Crawford & Mellentin (2008)

MARCH 2010 13


I N N O VAT I O N C A S E S T U D Y

It’s not every day that a new category comes into existence: a type of product that is new and previously unknown to consumers, providing a new benefit and marketed under a new brand. The emerging coconut water market is just such an example of new category creation. The most innovative approach is being taken in Europe by a German company, called Green Coco, which is innovating not just in terms of the product but in every possible aspect of its business:

• in the supply chain• in processing technology• in products• in taste• in the brand• in consumer benefits

What’s more, Green Coco is no fly-by-night start-up with hopeful but inexperienced management. It represents a multi-million Euro investment by its founding shareholders, all of whom bring solid experience to the table.

The genesis of Green Coco came in 2002 when Dr. Antonio Martins, a paediatrician with an interest in sports medicine practicing in Vienna, wanted to respond to mothers who were asking him what they could give their children that was healthy and didn’t have too much sugar. He remembered that in his native Brazil green coconut water is on sale at every street corner and it has been recommended by the United Nations Food & Agriculture Organisation (FAO) as a healthy beverage with outstanding properties.

To help him commercialise his idea Martins engaged some consultants with recent experience in beverages, one of whom was Dr. Stefan Reiss.

“A colleague called saying I have a doctor from Brazil living in Vienna and he wants to

sell coconut juice and I thought ‘Oh my god, what is this!’,” recalls Reiss, today the CEO of Green Coco.

Reiss, a marketing and economics graduate, had earned his spurs by setting up a business with two friends to import innovative beverages into Germany from France, the UK and elsewhere. Among their achievements was making the Purdey brand, a drink made by UK company Britvic, the third-biggest energy drink in Germany. Among the many companies who recognised their skill was Nestlé, which asked Reiss and his colleagues to handle the launch of its then-new RTD coffee drinks business in Germany, Switzerland and Austria. He went on to co-found Reiss & Sohn, one of Europe’s most-respected beverage consultancies.

Reiss looked into the science and the market and saw that coconut water had potential: “The beverage market trend was to healthy beverages in 2002, just as today,

and here was something natural with natural health benefits, that are recommended by the United Nations. And it fit the needs of European consumers.”

Coconut water – the translucent fluid found inside young green coconuts – has been studied for its health properties since the 1940s and has a good nutritional profile (see box on page 16). It is widely consumed in Asia, the Pacific and Brazil. The head of the United Nations FAO agriculture service even described it as “a natural isotonic beverage with the same level of electrolyte balance as we have in our blood. It’s the fluid of life. So to speak.” The UN FAO has not only promoted coconut water both as a health beverage in the developing world and a product that can boost the income of small coconut growers but was first to describe it as a contender in the sports drinks market that could create income for coconut growing countries.

Although the naturally sweet, gel-like fluid inside young green coconuts is often referred to by beverage marketers as coconut water, the UN FAO says it is “really a juice that eventually becomes flesh”. Green Coco has chosen to use the term juice rather than water to describe its product.

PROPRIETARY PROCESS

Reiss and Dr. Martins were joined by Steffen Borzer, a specialist in communications and in the organics business, and the three were the founding shareholders of the business.

“We had a white sheet of paper with an idea…to make coconut water. At that time we had two possibilities,” explains Reiss.

“We could buy it ready-packed from Amacoco in Brazil – but this company was focused primarily on selling coconut pulp and they used water from mature coconuts

German technology re-defines coconut water market

Recent investments by PepsiCo and Coca-Cola in coconut water businesses in the US and Brazil have grabbed the headlines, but it’s in Europe where one of the most exciting developments in the new coconut water category is emerging. A German company, with its own controlled supply of coconuts and a patented production process that gives it cost and quality advantages, has been quietly building its brand presence there. Green Coco Europe may already be the second-biggest coconut water brand in the northern hemisphere, after Vita Coco, even before it expands its distribution to include supermarkets as well as health food stores. By JULIAN MELLENTIN.

Coco Juice is marketed in 500ml Elopaks. The 200 ml glass bottle is used for the foodservice channel and also to make the cost of trial easier.

MARCH 2010 14



as these have more pulp. But the science says only young green coconuts have the water with the health benefits. Or we could source coconuts ourselves, extract the water and pack it in Europe.

“We had also decided,” he added, “to make the product organic from the beginning. It provides a USP and for European consumers it is also a quality aspect.”

To achieve their aims they would need to work with Brazilian coconut farms to gain organic certification. But in Brazil there was already a huge domestic demand for coconuts, meaning that there was no incentive for farmers to supply organic product because they could easily sell their coconuts in Brazil, whether they were organic or not.

It also became clear that packing the product in Brazil wasn’t going to work, since production techniques used in Brazil resulted in product with a shelf-life of just six weeks as well as producing inconsistencies in quality. Not only that, but many Brazilian companies engaged in extracting the coconut juice were

using coconuts that were older than those identified by the UN as providing the juice with the optimum nutritional benefits.

As a result, the company decided to extract the juice in Brazil itself, using only young green coconuts, and pack it in Europe. This produced two new challenges: the first was how to get coconut water out of the nut without contact with air or light, because it oxidizes very fast. The second was how to fill packages in Europe, where no one has experience of coconut water and how to handle it. “You cannot fill a package like you fill it with fruit juice or it creates quality problems later,” observes Reiss.

Between 2003 and 2006 the company developed its own process to extract the water, transport it and pack it, designing and building its own machinery. In Europe the filling process was developed jointly with a German beverage company.

The company patented its process in 2006, but since then there have been a range of developments and this know-how is currently a trade-secret, “kept in a safe in Switzerland”,

jokes Reiss, pending the filing of a new patent that will cover all the additional developments.

The company’s trade secrets – and future patent – cover extraction with their own machinery and the whole process from extraction to filling.

CONTROL OF SUPPLY

The need to ensure an adequate stream of quality raw material led Green Coco to invest in developing control of its own supply, both giving it the capacity to ramp up sales significantly and providing major

In addition to the coconut cream and coconut milk intended for use in cooking Green Coco has also developed a drinking milk as an alternative to soy drinks. Some consumers also have problems with soy milk. The juice of young green coco-nuts, however, is hypo-allergenic – a potentially significant advantage in a world in which more and more people are motivated by “free-from” concerns.

Coconut fruit pulp

Coconut juice

Coconut pulp

Green coconut and mature coconut are very different. Only green coconuts that are 6 months old or younger produce the coconut water that has been defi ned by the UN as providing health benefi ts. Each young green coconut contains about 400ml of water. In Brazil many coconut water products are made from coconuts aged up to 9 months, which have lower nutritional value.

Green coconuts

Matured coconuts

MARCH 2010 15



cost advantages over other coconut water companies which lack its vertical integration.

After trying coconut suppliers in Brazil and Sri Lanka it became clear that a fresh approach was needed. The result is that by 2008 Green Coco had its own extraction facility operational in Mexico, operating under a general manager reporting in to head office in Germany, using green coconuts supplied from plantations covering 13,000 ha rented by Green Coco.

“The advantage is that there is no demand for coconuts in Mexico but lots of coconut plantations which are not used, “explains Reiss. “We have low cost of production, secure supply and a huge ability to increase our supply of raw material under our own control. This is the basis for our further growth.”

SUSTAINABLE PRODUCTION KEY TO COST AND CORPORATE VALUES

As well as being the only organic coconut water on the market Green Coco aims to be a sustainable business with minimum waste. To that end it is using the whole coconut in the supply chain. As well as the coconut water which is the basis for its brand it markets the coconut pulp and makes coconut milk and coconut cream, both organic.

“There is a big increase in demand for Asian cuisine in Europe,” says Reiss; the cream is perfect for this market, as well as being used in pina coladas.

Next steps are to use the coconut fibres. The husk fibres are used in making car seats, while the pith is used for fertiliser by rose and orchid growers.

“We can use the whole nut – that is environmentally and commercially right. If we used only water and pulp we would be left with huge amounts of waste, and that is not sustainable business,” says Reiss.

Green Coco has already earned sustainability certification from the RainForest Alliance and is certified as a carbon neutral producer.

PRODUCTS

The coconut water is marketed under the brand name Dr. Antonio Martins – doctors’ names are trusted by consumers in German-speaking Europe and they are attached to some of Europe’s biggest and oldest brands, such as Dr. Oetker. It is available in three flavours – plain, pineapple/acerola and banana – in 500ml Elopak cartons. Plain

accounts for more than half of sales.“We brought out the flavours because

the original taste is one that people did not expect, so we created flavours to get their acceptance and lead them to the original,” explains Reiss.

Green Coco has worked hard to make its product taste as close to coconut water as you might get it straight from the young green coconut and, says Reiss, the taste is measured as only “1% different from the actual taste of coconut water, owing to the process we have developed”.

“Now in taste tests 70% of people say it is unexpected but good, 30% don’t like it.”

In addition to the coconut cream and coconut milk intended for use in cooking Green Coco has also developed a drinking milk as an alternative to soy drinks. Some consumers have problems with soy milk. The juice of young green coconuts, however, is hypo-allergenic – a potentially significant advantage in a world in which more and more people are motivated by “free-from” concerns.

Launched in 2009, Coco Milk tastes good heated or cold and has a creamy texture and white colour like regular milk, while retaining the nutritional values of coconut water.

Retailing at around €2.79 ($3.65) for a 500ml pack, Green Coco Juice is a premium

product, selling at a more than 100% premium to formulated isotonic drinks such as Coca-Cola’s Powerade, which retails for €1.29 ($1.75) for 500ml. It’s also a price that’s a little too high for consumers to buy the product experimentally, so the coconut water is also marketed in a 200ml glass bottle, which retails at €1.95 ($2.65) each. These bottles were designed for the Horeca channel (an acronym for: Hotel, Restaurant, Café, as the foodservice channel is referred to in much of Europe). In both unit price and quantity of beverage, however, they lower the barrier to trial and have proven popular and effective.

DEBUT IN GERMANY

Green Coco Juice debuted at Biofach – Europe’s biggest organic trade fair – in Nurnberg in 2004. It was the first time that anyone in Europe had encountered coconut water and it became clear, as is always the case with innovations, that it would take time for customers to become accustomed to a new taste experience.

“The response was very interesting,” says Reiss. “People in Germany had known coconut from the Bounty chocolate bar from Mars. When they thought of coconut, they had the Bounty taste in mind, but the taste of

To make use of every part of the green coconut Green Coco also markets a coconut milk for cooking and coconut cream.

MARCH 2010 16



coconut water was completely different from their expectation of Bounty bar.”

The brand got listings in health food and organic stores, but quality problems, which took until 2006 to overcome completely, led to a re-think and in 2006 the brand was relaunched with redesigned packaging. Since then sales have increased steadily.

Thus far the brand has focused on creating a bridgehead among the early adopters, its organic position making it a logical offering for Reform Hausen – the very specific style of healthy food stores found in Germany – as well as organic shops and regular health food stores. But it is now starting to distribute through the bigger retail multiples and is in stage one of its expansion into mass market distribution.

DISTRIBUTION WIDENING

Although Germany, Switzerland and Austria are the core of Green Coco’s business it has been quietly building distribution in specialist stores across Europe, ranging from Portugal to Russia and from Iceland to Greece, with new distribution already outside Europe – it had its the first sales in Australia at the end of 2009.

“And we already have contracts with distributors in other countries which will be activated now that our supply chain is in place,” adds Reiss.

No one doubts that Green Coco is the market leader in coconut water in Europe, a market that has a volume of 3 million litres just in organic in health food stores. At Coco Juice’s current retail selling prices that suggests that retail sales Europe-wide are already in excess of €15 million ($20 million), making it arguably the second biggest coconut water brand after Vita Coco in the US.

CONSUMERS HEALTH-MINDED

The brand has focused so far on the health foods specialist channel in Germany and it is now well-known there, and this is reflected in the current mix of consumers. They are primarily, says Reiss, people who look for healthy products. They include a good proportion of young mothers and other younger women – who choose Green Coco juice because it is healthy and refreshing and contains less calories than other fruit juices. “We also have a big demand from the yoga community,” observes Reiss. The company also finds that people with specific health

problems are using coconut water, often as a result of doctors recommending it as an addition to their medical therapy.

COMMUNICATIONS FOCUS ON PR

The company has no plans to petition for a health claim in Europe, given the cost, complexity and risks inherent in the new EU health claims process, with its stringent requirement for “gold standard” double-blind placebo-controlled research.

Instead Green Coco will rely on PR. With a wide body of publicly-available evidence in favour of coconut water’s health benefits and “all-natural” benefits – which are the type most-favoured by consumers and the media – there is a lot of media interest already and with an intelligent PR campaign that interest can only increase, Reiss believes.

Many consumers do not believe health messages that come through advertising, Reiss points out, preferring to take their information from editorial articles instead.

The messages about Green Coco are

kept simple and factual, says Reiss: “We are organic; we use juice from 100% young green coconuts; isotonic.” Beyond that communications build on factual benefits:

1. That coconut juice is the fruit juice with lowest calorie content – 19-24cal per 100ml, compared to 48 calories for orange juice.

2. The product is very mild and does not have a lot of acidity (“There is a development towards lower acidity of fruit juices in Germany because people have problems with stomach and teeth,” explains Reiss.)

3. The only liquid beside water that is made available by nature ready to drink.

4. Isotonic, with a similar mineral balance to the water in your body, and from a plant, a natural isotonic liquid, nothing added.

The fifth point is that coconut milk is proven to be hypo-allergenic – an increasingly important point of difference in a market in which sales of foods “free-from” significant allergens are on the increase and “free from the eight major allergens” is also gaining ground as a selling message. Some food companies even avoid the use of regular foods such as celery or kiwifruit in their products because of concerns about allergens.

Green Coco’s strategy is already paying off, even as it prepares itself for roll-out into mainstream supermarket distribution.

“Currently we are doing no active selling, but sales are still increasing. We had a 300% growth in 2009 over 2008,” says Reiss. “When we analysed these figures they took us by surprise. There is a kind of dynamic in this product that shows how big its potential is that we are getting such an increase without active marketing. If we invest in communications, how big can it be?”

“A lot of companies talk about beverage innovations and sometimes what they mean is only a new flavour, not a real innovation,” says Reiss. “In my opinion coconut water is a real breakthrough innovation – health benefits and an absence of negative effects.

“Coconut has lots of studies that are positive about its health benefits and the United Nations says there’s nothing better than coconut water – what else do we need?”

GREEN COCO JUICE INGREDIENTS AND NUTRITION FACTS

MARCH 2010 17


START-UP CASE STUDY

Tom Mercer was working as a management consultant in the financial district of London when he decided he’d had enough of going into the office without a decent breakfast, and started to make his own at home to take into work. Five years later, and he’s now sitting on top of a thriving business – named Moma Foods after the Peruvian god of harvests – that generates £1.25 million ($1.9 million/€1.4 million) a year from making that very same breakfast for thousands of other people, too.

Mercer’s tale is a useful case study in how someone with a good idea for a new food product, but not much else, can turn it into a successful enterprise provided they do the little things right from the outset. By starting very small and growing gradually within the confines of a carefully targeted strategic vision, Moma Foods has evolved into a promising business that is beginning to attract the attention of the biggest names in the UK’s grocery retail market.

Like many new businesses in the food industry, Moma Foods came into being because a personal desire for a certain kind

of product revealed that it was missing in the market. For Mercer, this was a healthy, filling, convenient and tasty on-the-go breakfast offering.

“I was pained by the lack of good breakfasts around,” says Mercer. “Like loads of people I used to skip breakfast altogether or just have a coffee, or occasionally a croissant or a muffin. There was nothing out there that was a good breakfast that does what a breakfast should do, which is to fill you up and give you the energy you need, as well as tasting great.

“It was something I was really passionate about, because I knew how much of a difference it made to me when I did have a good breakfast. So I started blending smoothies and oats in my kitchen before work and it made a real difference to my morning. That was why I saw there was a gap in the market, and I took it from there.”

Mercer then set about developing a product concept he believed could plug the gap in the market he was convinced needed filling. Working from his own kitchen, he was inspired by the traditional Swiss bircher,

which is a blend of yoghurt, muesli and fruit. Mercer’s recipe was a blend of oats, low fat probiotic yoghurt, fruit and apple juice. He blitzed the mixture in a food processor to create what would become Moma Foods’ core product, the Moma Jumble. Mercer describes it as “loads of great breakfast ingredients on their own, all put together to create what I think is the ultimate grab-and-go breakfast.”

It is, of course, quite a leap from making your own breakfast in the morning to leaving a good career to set up a business making breakfasts. But Mercer says: “I’d always wanted to set my own thing up, and the concept was there: the idea of getting a really good grab-and-go breakfast out in the market because there wasn’t anything there at the moment.”

In 2005, with a day-job to hold down and no financial backing other than his own personal savings, Mercer began to explore his idea further in a bid to establish whether others shared his disillusionment with the choice of on-the-go breakfasts on sale. “I did quite a bit of research using market reports and I sent an email survey out to loads of friends asking about their breakfast eating habits: where they physically ate breakfast, what sort of stuff they ate for breakfast, what were the important breakfast traits in a breakfast product for them. Healthy, convenient and filling came out on top, all of which were things I thought were really important and what we were trying to target with our breakfasts.

“Then I did some trials in Waterloo [a major London railway station], which were really basic. I went to Tesco, bought a load of water bottles, emptied the water out, peeled the labels off, put my own labels on the outside, spent all night blending fruit, yoghurt and oats in my kitchen, and pouring them into the bottles. I then basically went out into Waterloo station for a couple of mornings and gave out these products to people in exchange for their email addresses. I then emailed them a short online survey and got their responses back. Most said it was good.”

Moma takes healthy breakfast from home kitchen to the masses

Getting his healthy breakfast smoothie into morning commuters’ hands by sharing a newspaper stall in central London train stations was the masterstroke that has seen Moma grow from a home kitchen start-up to a healthy business that’s gaining listings in supermarkets as well as continuing to keep city workers satisfied. By RICHARD CLARKE.

Sharing a newspaper stall in busy train stations in London was an idea that helped to kick-start the Moma business.

MARCH 2010 18


START-UP CASE STUDY

INNOCENT INFLUENCE

If this sounds an eerily familiar tale, it’s because it is. Innocent Drinks, the highly successful fruit smoothie company, started in similar circumstances. In 1998 three friends, believing there was a gap in the market for healthy but delicious food, blended £500 worth of fruit into smoothies, bottled them and took them to a music festival to sell on a stall. Twelve years on, and retail sales of Innocent smoothies in the UK are worth in the region of £100 million ($154.8 million/€113.8 million) a year.

Mercer admits Innocent has had some influence on his approach to business. “A little bit, yeah. I think anybody that has started a new small business in the last six years has taken some influence from Innocent. They’re a kind of the Holy Grail; really held up as an example. I’d heard their story and one of the Innocent founders used to work at the same company I worked at, before I was there.” That last revelation refers to Jon Wright, who founded Innocent together with Richard Reed and Adam Balon. Wright worked at a firm called Bain & Company and established Innocent while still working there. Coincidentally, Mercer was also working at Bain when he had the idea for Moma Foods.

SHARED STALL IDEA A WINNER

Having convinced himself an opportunity did exist for his breakfast concept, Mercer set about researching places he could sell it from. “Half of the business was about the product, and half was about actually getting it to the customers. I thought, with this being a breakfast product, we wanted to sell it in places that were really busy during breakfast time, but not busy during the rest of the day, because we didn’t want to have to come up with lunchtime and evening offerings, which we would have to if we were in the middle of town. So we said, wouldn’t it be great to sell in train stations?”

Choosing to sell in stations wasn’t Mercer’s real masterstroke. It was his idea to sell from the stalls used by newspaper vendors in the afternoon to sell London’s Evening Standard newspaper that really worked in his favour. “It was a big advantage we could offer when pitching our business to Network Rail, who run most of the stations,” says Mercer. “We said: you’ve got a site here, and we could double your revenue by trading on it in the morning while the Evening Standard could trade on it in the afternoons, which is what

they do anyway.”And so Moma Foods’ first stall began

operating in February 2006 in Waterloo East station, an unfashionable corner of the more famous Waterloo station. “It’s not one of the most glamorous stations,” admits Mercer. “It was a real budget way of starting up.”

Mercer personally began selling his products from a filing cabinet onto which he had grafted a branded headboard. Products were kept in the drawers. Besides the Moma Jumble, the stall also sold the Moma Oatie, a bottled and thinner version of the Jumble made with fewer oats and more apple juice to make it drinkable and the Moma Hodgepodge, a blend of cooked fruit and spices, low fat yoghurt and granola.

The stall went down a storm, says Mercer. “We ran it in a real market trader style, so we’d be heckling commuters as they walked past. They loved it. It was something fresh and new, with great customer service, but the main thing was it was a delicious product. So we took it from there and we now have eight stalls trading in central London stations, and that’s half of our business.”

The other half is selling into a variety of other channels, including hundreds of offices, mainly in London but also some nationally. In addition, there are listings for Moma Jumble with online retailer Ocado, in eight Waitrose stores and in upmarket London food hall Selfridges. The company also has a lucrative contract with the Virgin Atlantic airline. From humble beginnings, the business is growing fast. Current annualised sales are running at £1.25 million ($1.9 million/€1.4 million), compared with £800,000 ($1.2 million/€910,000) in the previous year. Having outgrown Mercer’s kitchen a long

time ago, the company now operates from a factory under a railway arch in Deptford in south-east London. Progress has been funded by a bank loan and cash from “several external investors”.

Unsurprisingly, perhaps, Mercer says most of the company’s customers are 25- to 40-year-old commuting City workers. But he adds: “We get all sorts. We sell to old ladies, young kids, labourers – all kinds of different people. Generally it’s people who are interested in having a healthy breakfast in the morning.”

PRICING DICTATES GRAB-AND-GO POSITIONING

The early success of the Moma Foods stalls has left Mercer with a residual problem in that the products have not been designed with retail in mind. In Waitrose, Moma Jumble is merchandised in the chiller alongside yoghurts. Mercer believes this is not their ideal home. “We’re more like a chilled fruity porridge than a yoghurt,” he says.

Mercer believes the only truly suitable location for the Moma Jumble is in a store’s on-the-go section since this is, after all, what the product was conceived as. “It’s a grab-and-go product and it fits in the grab-and-go section,” he says. “Also, price-point wise grab-and-go commands a premium because you’ve got a full meal, whereas at home you’re more likely to make something yourself. And if you’re having a snack, it’s going to be a lower-priced snack.”

The issue of price is at the heart of Mercer’s belief that the Moma Jumble is ill-at-ease in the take-home yoghurts section. A single 235g pot retails for £1.95

MARCH 2010 19


START-UP CASE STUDY

($3.00/€2.22), which is right at the top of the scale in terms of the yoghurt category. For £2.96 ($4.58/€3.37), for example, a shopper can buy six 135g pots of Muller’s new Bio Corner yoghurt (featured elsewhere in this issue), which like the Moma Jumble is also a yoghurt, cereal and fruit blend.

Of Moma Jumble’s price, Mercer says: “We’ve very much tried to remain competitive. Our product is high quality and at the premium end of the scale, but it’s certainly not exclusive in terms of our approach. The price compares really well with a sandwich or fruit salad or muffin or croissant or smoothie, considering that you’re having it for breakfast in the morning and it will keep you going right through to lunchtime.”

Nonetheless, at that price Mercer knows Moma Foods will struggle to persuade many consumers to add the Moma Jumble to their weekly shop for in-home consumption, and the company is already looking at developing multipacks, and 600g bulk packs, that will sit more comfortably in the dairy cabinet. At the same time, he is also hoping talks with another major retailer, Sainsbury’s, will bear fruit because those talks centre on listing Moma Jumble in the grab-and-go section.

SAMPLING, COMMUNICATIONS KEY

Beside price and format, Mercer says the biggest challenge for marketing Moma Jumbles in retail is to persuade people to experiment with what is a new and unusual product for the UK market. “Getting people to actually try the product is the hardest thing. It’s a fantastic product but it’s

quite unique on the shelf, so we do a lot of sampling. Sampling is really effective because once they try it, people really like it. Communicating effectively through the packaging is also key. That’s the biggest thing we’ve learnt and we’re working on that at the moment.”

At present, the retail pack for Moma Jumble describes the product as a “Delicious Oaty Breakfast”. Underneath, the product is described as: “Oats soaked in apple juice with low-fat probiotic yoghurt and real fruit.”

To the side, text reads: “Moma is all about starting the day the right

way! Awesome healthy energy, 100% Natural & Delicious. Moma is:

• Healthy – top quality ingredients that are good for you

• Filling – oats are packed with slow-release energy

• Natural – no colours, fl avours or preservatives• Delicious – well that’s our opinion, see what you

think.”

The recipe remains very close to Mercer’s original kitchen-based concoction, though it has been tweaked, no doubt to reflect the fact it is now a factory-scale manufactured product that requires stability in the supply chain. The ingredients are listed as: low-fat natural probiotic yoghurt from Dorset (35%), pure apple juice from concentrate (22%), oats (21%), mixed berries (14%), agave nectar, rice starch, lemon juice.

Inside the card that surrounds the pot that contains the product is more text written as though it is a newsletter, entitled “Our Story Update”. Here, the pack addresses where Moma Jumbles can be bought, both in retail and on-the-go, and the company’s work in the community.

“We’ve been really proud to support Pump Aid [a water and sanitation charity] since our start-up but we are now turning our attention to breakfast clubs in

London schools. This morning up to 700,000 children arrived at school too hungry to learn! Hungry children are often tired, upset and cannot make the most of their lessons… and that’s where Moma can help out.”

There is, however, no explanation of how. The pack also invites consumers to follow its updates on social networking site Twitter, where it promises to post a special offer every Friday to be redeemed on its stalls.

Moma Foods is yet to invest in any advertising. “Our main form of marketing is our stalls,” says Mercer. “Having eight stalls in central London is fantastic exposure for us and quite a unique position really.” Like many small food and drink businesses, Moma Foods also considers PR to offer good returns on a budget. “We’ve found that to be the most cost effective way of increasing awareness, sales and getting contracts for business which ultimately leads to sales,” says Mercer, who adds by way of warning: “It’s good having PR coverage but unless you’ve got the distribution in the areas where you get the PR it won’t convert to actual sales.”

Moma Foods has also had some good fortune in that Virgin, sponsors of this year’s London Marathon, will be handing out 20,000 packs of Moma Jumble to runners at a pre-race registration event to take place at the ExCel exhibition centre in London’s Docklands.

COFFEE SHOPS IN MOMA’S SIGHTS

Moma Foods’ next target is the big-name high street coffee shops, though Mercer says this will be challenging. “Coffee shops are just a fantastic opportunity for Moma and Moma is a fantastic opportunity for them. But it’s a challenge because a lot of these guys don’t do branded products; they’ll only sell their own label products.”

In the meantime, Mercer is keeping his fingers crossed on the Sainsbury’s deal, which could be a landmark breakthrough moment for the company. “If Sainsbury’s did come off it would be really good because it would take us into the mainstream a little bit more,” he says.

The success of Moma Foods up to this point indicates that, despite the challenges presented by price-point in-store positioning and format, Moma Jumble has a promising future in the UK retail market. “It’s the best breakfast product on the market,” says an enthusiastic Mercer. “And the plan is to take it into more and more places.”

MARCH 2010 20


STRATEGY CASE STUDY

For two years now, the US bottled water market has stagnated due to many consumers’ new-found unwillingness to pay a premium for what they still see as a commodity product. The decline of the bottled-water market actually accelerated in 2009, falling 2.4%, following a drop of 1% the year before, according to Beverage Marketing, a New York-based research and consulting firm. Others put the fall higher – at 5% – in specific channels such as supermarkets. The enhanced waters segment, which is worth about 20% of the total market, fared even worse, sales falling perhaps 9% in 2009.

LIFESTYLE MARKETING ICON FALLS FROM GRACE

The decline in the enhanced water segment was propelled by a spectacular dip in sales of the biggest and best-known brand, Glaceau’s Vitaminwater, whose sales plunged 22% in the year to January 2010, to about $323 million (€238 million) in IRI-measured outlets. This followed an 11% gain in 2008, when Vitaminwater sales rose to $431 million (€318 million), briefly surpassing Aquafina as America’s top-selling bottled water.

The slump brings to an end a decade-long run of extraordinary growth for Vitaminwater, which had sales increases of 127%, then 131%, then 185% in IRI-measured outlets in the three preceding years.

Vitaminwater’s dramatic reversal beginning in 2008 has called strongly into question the wisdom of Coca-Cola’s purchase of Glaceau for more than $4 billion (€3 billion) in mid-2007.

Coke’s pricey gambit raised eyebrows around the world at the time, and Glaceau’s precipitous fall is raising many of the same eyebrows now. “Glaceau seemed to have some natural potential; it wasn’t a gimmick,” said Tom Pirko, president of Bevmark Consulting, a regular strategic advisor to Coke and other major beverage companies.

“But it was a category that wouldn’t go

beyond a certain point in a developed market like the US. I wonder why Coke paid so much money. It’s a category that, to some extent, only had limited appeal. I never thought it would grow big enough to become its own new huge category.”

Vitaminwater, already struggling, ran into trouble in 2009 shortly after signing on as a major marketing partner of the National Collegiate Athletic Association, whose annual “March Madness” basketball tournament has become a huge marketing vehicle. It turned out, the NCAA announced, that a number of Vitaminwater flavours contained ingredients whose consumption might cause athletes to test positive for banned substances, according to Advertising Age. These substances were said to include taurine, L-theanine, green-tea extract and glucosamine.

Then in the UK the advertising regulator in mid-2009 banned a poster campaign for Vitaminwater because it made misleading claims about the drink’s health benefits. One poster, headlined “More muscles than brussels,” seemed to carry the implication that consuming Vitaminwater was equivalent

in its nutritional benefits to eating brussels sprouts, a common UK winter vegetable. The company insisted the slogan, instead, was a reference to Jean Claude Van Damme, the Belgian action-movie star.

One factor that may have hit Vitaminwater, and which has certainly been problematic for other strongly “lifestyle” brands in other markets is that Vitaminwater’s core demographic of 18-30 year-olds is the segment of the population that has been hit hardest by the economic downturn.

Far from giving up on Vitaminwater, Coke executives have been trying to find ways to reinfuse some vitality into the brand (although Coca-Cola declined to comment for this story). For example, Glaceau created an online promotion at Facebook.com which allowed visitors to “create” the next flavour of Vitaminwater. Its Flavour Creator Lab application allowed contestants to design all aspects of their creation, including the flavour and nutritional function as well as design of the bottle. The winner was awarded $5,000 in December.

Functional water takes a bathIn America, the bottled water market has seen sales suffer over the last two years, with all but one of the biggest brands recording double-digit declines in sales. And if the situation in regular water is bad, in functional water it’s worse, with the segment declining by as much as 9% in 2009. The two brands that created the category – Coca-Cola-owned Glaceau Vitaminwater and Pepsi’s Propel – are in trouble, experiencing sales declines above 20%. Only Nestlé seems to have found the key to success in this tough market – offering natural health at an affordable price. By DALE BUSS and JULIAN MELLENTIN.

Coca-Cola-owned Glaceau Smartwater, launched in 2008, grew its sales by 24%, to $95.4 million (€70.7 million) in the year to January 2010. Smartwater is plain bottled water produced with added electrolytes – calcium, magnesium and potassium – and sold under the tagline: Purity you can taste. Hydration you can feel.

MARCH 2010 21


STRATEGY CASE STUDY

And the winning new flavour of Vitaminwater, black cherry-lime, was to be made available nationwide in March 2010. It contains a multi-vitamin blend including Vitamin A and zinc as well as caffeine.

LOW CALORIE CANNIBALISATION?

Perhaps the biggest problem for Glaceau is that it may have simply cannibalised sales of its own flagship brand. 2009 was the first year on the market for a new low-calorie line called Vitaminwater10, which has only 10 calories in each 8-oz (250ml) serving compared with 50 calories in 8oz (250ml). of regular Vitaminwater. The lack of a lower-calorie version of Vitaminwater had been considered problematic for the brand.

As Chart 1 shows, Vitaminwater 10 generated retail sales of $73.6 million (€54.6 million) in 2009, according to IRI data for supermarkets and drugstores. It’s a sales number which almost exactly matches the decline in sales in 2009 of Vitaminwater and suggests that there was significant pent-up demand among its existing consumers for a low-calorie version. Whether the low calorie version can bring in new consumers in 2010 is the big question.

Glaceau’s management doesn’t need to be too despondent about this apparent cannibalization. A Glaceau product called Smartwater, launched in 2008, grew its sales by 24%, to $95.4 million (€70.7 million) in the year to January 2010.

Smartwater is possibly a sign of the times and of consumers’ increasing preference for “more natural” and “more pure” products. It is basically plain bottled water produced with what the company calls a “vapor distillation” process and with added electrolytes – calcium, magnesium and potassium – and sold under the tagline: Purity you can taste. Hydration you can feel.

PEPSI PROPEL DOWN, LIFEWATER UP

Meanwhile, some other new and “enhanced” waters were among the mere handful of brand winners in the category last year. One is SoBe Lifewater. The PepsiCo brand broke into the market in 2008, earning $59 million (€43.6 million) in sales in IRI-measured US outlets, then almost doubled to 2009 sales of $116.7 million (€86 million), helped by the introduction of a zero-calorie version.

On the flip side, however, industry observers believe that all the attention PepsiCo lavished on SoBe Lifewater to get it

off the ground has, among other things, hurt sales of the company’s other major enhanced water brand, Propel.

Sales of the vitamin-enhanced line extension of the Gatorade brand were down 23% for the 52 weeks ended January 24 in IRI-measured outlets to $135.9 million (€100 million), giving Propel the worst relative performance for the period of the 15 top-selling brands in the entire bottled-water segment. That followed a 16% decline in sales of Propel in 2008 and a 1% slip in 2007.

The last three years have brought a dramatic reversal in the fortunes of Propel. It was launched in 2002 with only 10 calories per 8oz bottle, offering 25% of the RDIs of the B vitamins which, Gatorade said, “aid in energy metabolism as part of a daily diet”. Propel also was a self-described “good source, at 10 percent of the daily value, of vitamins C and E”.

With its trendy formula and PepsiCo’s ubiquitous distribution, Propel quickly became the biggest enhanced water in America and the 5th-biggest brand in the entire bottled water category, growing 43% in 2003, 45% in 2004 and 63% in 2005. Even in 2006 it showed 28% annual growth and reached retail sales of $193.2 million (€142.8 million). But by the second half of that year Propel had begun to lose momentum and its sales are still falling.

PepsiCo’s growing marketing attention to SoBe Lifewater is an obvious flipside to its growing inattention to Propel, which seems to have dropped out of sight in TV advertising, at least. “Pepsi put a lot of focus on Lifewater and it’s been successful; it has grown nicely,” said John Sicher, editor of Beverage Digest magazine. “That has been partly at the expense of Propel. The company also has been trying to establish the ‘G’ packaging

of Gatorade the G2 line. And even big, well-financed beveage companies can’t do everything for every brand in one year. They have to pick their priorities.”

Pirko added that a significant cohort of consumers have soured on Propel in part because its ingredient list includes three sweeteners: sugar, aspartame and sucralose. “In a way it’s overloaded with other ingredients in addition to vitamins,” he said. “There’s a lot of sodium too. Maybe there are too many things that present interfering messages; it’s penalizing the vitamin aspect of the product.”

Besides, Pirko said, Propel “is no longer a new brand; there’s some age in it. It’s been out there for some time.”

But Sicher said he’s heard that Propel is in for some significant changes in the months ahead. “I think there will be some sharpening of support and focus on it. Propel should still have a life ahead of it.”

HEALTH AND AGGRESSIVE PRICING HELP DRIVE NESTLÉ’S SUCCESS

The major exception to the general decline has been a smart performance by Nestlé Pure Life, which outperformed competitors by relying on a new national marketing campaign and also steadily increasing distribution.

Nestlé’s attention to “green” aspects of its bottled-water business reflects a determination to grab market share that has been working remarkably well. Pure Life was only a $50 million brand in IRI-measured outlets in 2005, but by 2009 it had grown to a $140 million (€103 million) retail sales brand, achieving an impressive 17.3% growth in 2009 in a declining category. It was the only one of the top-8 brands to show growth in 2009 – on average the other top brands

2009 was the fi rst year on the market for a new low-calorie line from Glaceau called Vitaminwater10, which has only 10 calories per serving compared with 50 calories in regular Vitaminwater. Vitaminwater10 generated retail sales of $73.6 million (€54.6 million) in 2009.

MARCH 2010 22


STRATEGY CASE STUDY

recorded double-digit sales declines.Nestlé executives cite a number of reasons

that Pure Life was able to do so well while other big brands faltered. First, “We’re still an emerging brand,” noted Jane Lazgin, a Nestlé Waters spokeswoman.

Second, Nestlé executives have strongly embraced “value pricing” in relation to competing brands and in terms of their emphasis on building distribution in outlets that consumers associate with low prices, including Wal-Mart Stores. “So we’re well-situated to ride out the [economic] storm,” Patrick J. Huvane, senior marketing manager for Nestlé Pure Life, told New Nutrition Business.

Third, the brand has established strong positioning around health and wellness even though Pure Life is straight, “unenhanced” water. “We’ve put a stake in the ground around family health and wellness,” Huvane said. “Our consumer really is the gatekeeper mom. There’s a lot of buzz about obesity and diabetes in epidemic proportions now. We don’t want to go out and point fingers about it in our marketing, but we are promoting water as the healthiest beverage and the best choice.”

For example, in late 2008, Nestlé broke a TV-ad campaign around an anti-soft drink platform – which came easily to the company because, unlike bottled-water brands owned by PepsiCo and Coca-Cola, Nestlé Waters don’t have to worry about cannibalizing sodas.

“More than 30% of kids in the US are obese,” said the spot. “Drinking water instead of three sugary drinks per week for a year will spare you seven pounds of fat.” The ads broke on Spanish-speaking TV stations in the US before spreading to English-speaking media because the Hispanic community drinks more bottled water than most other ethnic groups.

The simple health benefits of hydration are another part of Nestlé Pure Life’s amplified messaging. For example, in a national TV ad campaign that began last year, Pure Life reminds viewers that their bodies are about 60% water and of the

importance of hydration, using images of children playing.

And there’s more to come. “We are pretty certain” that as of the end of last year, Nestle’s marketing spend on Pure Life was “larger than either Dasani or Aquafina from a volume standpoint – not from a revenue standpoint, because it sells for significantly less,” Kim Jeffery, president-CEO of Nestlé Waters North America, told Advertising Age last year.

A CATEGORY IN DECLINE

If 2007 was the high-water mark for the bottled water business in the US, what has gone wrong since then? And how are big brands and small ones battling the fallout? Several factors have dragged it down: the dismal US economy, certainly, in a number of ways, and also increasing environmental concerns around plastic bottles.

The typical industry view is that bottled water simply got caught in a general downdraft that has afflicted the entire beverage industry. Last year “was a challenging year for many consumer product companies given the economic environment and the fact that consumers are spending less,” said Bart Casabona, spokesman for PepsiCo, which fields the Aquafina and SoBe LifeWater brands.

Hemphill noted that even more

pronounced than the softness in single-serve sales has been a precipitous decline in sales of “jug” waters delivered to homes, offices and other commercial establishments. At a time of stubborn 10% unemployment in the US, fewer workers consuming packaged water on-premises produces a significant drag indeed.

But something else has been going on as well: a general commoditization of bottled water, especially as it relates to consumer purchases. Sales of jug and bulk waters declined by 5.7% during the year to January 2010 in US supermarkets, drug stores and mass merchants (excluding Wal-Marts), according to Information Resources Inc. (IRI). But sales of single-serve bottles fell by even more, nearly 6%.

Reflecting and at the same time encouraging this trend is price discounting, which has been accelerating over the last couple of years. During the fourth quarter of 2009, for instance, Danone said that it cut prices by more than 5% for its water brands in the US and elsewhere, yet global sales of bottled water fell by 1.5%.

The new-found importance of value is reflected in the fact that private-label sales of bottled waters grew by more than 8% in 2009, according to IRI.

Thriftiness also is asserting itself in another, previously unexpected, way in the bottled-water market: more refilling of bottles with tap water after consumers have

“Natural health”, aggressive pricing and the help of Oprah Winfrey’s personal trainer help drive Nestlé Pure Life’s double-digit sales growth.

MARCH 2010 23


STRATEGY CASE STUDY

purchased, opened and consumed the bottle’s initial contents.

“Consumers are refilling bottles more as they look at value alternatives,” said Angela Barile, group marketing manager of regional spring brands for Nestlé Waters. “It could be tap water, or it could be filtered water or even things like iced tea that they’re putting back into the bottles. They’re trying to reuse the container more because the container is what makes a product portable, and that’s where some of the consumption is coming from.”

It’s also likely that there has been some general maturing of the bottled-water market after a decade of torrid growth. The US market was just $6 billion (€4.5 billion) in 2000, according to Beverage Marketing, then grew each of the next six years at rates between 8% and 10% annually.

But in 2007, when an economic slowdown still didn’t seem to be in the cards, sales accelerated by only a little more than 6%, to about $11.5 billion (€8.5 billion), according to Beverage Marketing and the International Bottled Water Association. The bottom fell out in 2008, but only after the association in 2007 had predicted only about 6% growth again the following year.

Because the US recession clearly came into play, it’s difficult to separate to what extent bottled water already had become a mature category. But one additional clue is that, according to Nestlé Waters, about 70% of the increase in sales of bottled water in the US in 2006 came from people switching drinks, especially from carbonated beverages. And it seems reasonable to believe that the market momentum for bottled waters which had been driven by this switch out of carbonated soft drinks was already dwindling.

Once the 5th-biggest water brand in America, and the biggest functional water brand, Propel’s sales have been falling since 2006.

CHART 1: GLACEAU VITAMINWATER STUMBLES AFTER A DECADE OF PHENOMENAL GROWTH (sales shown in $ millions)

TOTAL U.S. - F/D/Mx (Supermarkets, Drugstores, and Mass Merchandise Outlets (excluding Wal-Mart)) Latest 52 Weeks Ending Jan 24, 2010

Sales ($ million)

Source: Infoscan Reviews, Information Resources, Inc. (IRI) - the leading global provider of enterprise market information solutions

0

$25(€18)

2004

50

100

150

200

250

300

350

$70(€52)

2005

$100(€74)

2006

$280(€208)

2007

$431(€320)

2008

$323(€240)

2009

400

450

TABLE 1: US BOTTLED WATER MARKET SNAPSHOT 2009

Coca-Cola’s Glaceau brand and PepsiCo’s Propel and SoBe Life functional water brands have a combined share of 19.6% of the entire bottled water market.TOTAL U.S. - F/D/Mx (Supermarkets, Drugstores, and Mass Merchandise Outlets (excluding Wal-Mart)) Latest 52 Weeks Ending Jan 24, 2010

Dollar Sales % sales change compared to year before

Market share % (by % value share of retail

sales)Total bottled water category $4,807,115,000 (4.51)

Still water in PET bottles $3,800,291,000 (4.99) 100.00

Private Label $768,616,300 8.37 20.23

Aquafi na convenience/pet still water $372,445,500 (12.46) 9.80

Dasani convenience/pet still water $338,598,500 (19.01) 8.91

Glaceau vitamin water convenience/pet still water $323,228,400 (22.66) 8.51

Poland spring convenience pet still water $249,830,300 (8.05) 6.57

Nestle pure life convenience/pet still water $140,051,200 17.35 3.69

Arrowhead convenience/pet still water $139,681,700 (17.14) 3.68

Properl convenience/pet still water $135,971,600 (22.92) 3.58

Deer park convenience/pet still water $130,309,700 (5.68) 3.43

Sobe life water convenience/pet still water $116,699,800 102.12 3.07

Ozarka convenience/pet still water $100,431,100 (5.81) 2.64

Ice mountain convenience/pet still water $97,173,240 (1.40) 2.56

Crystal geyser convenience/pet still water $96,155,410 (9.92) 2.53

Glaceu smart water convenience/pet still water $95,414,400 23.93 2.51

Zephyrhills convenience/pet still water $88,987,260 4.04 2.34

Fiji convenience/pet still water $81,711,540 (7.66) 2.15

Glaceau vitamin water 10 convenience/pet still water $73,621,860 1.94

Spring convenience/pet still water $55,203,620 (31.23) 1.45

Evian convenience/pet still water $53,377,660 (21.15) 1.40

Capri sub roarin waters convenience/pet still water $48,755,400 20.43 1.28

Source: Infoscan Reviews, Information Resources, Inc. (IRI) - the leading global provider of enterprise market information solutions

MARCH 2010 24


STRATEGY CASE STUDY

ENVIRONMENTAL ISSUES

Growing environmental concerns about plastic bottles have had an impact on the market in addition to the tough economy, though the extent is impossible to quantify.

Beginning a few years ago, environmental advocates in the US and worldwide began to express concerns about the toll on the ecosphere from the growth in bottled water sales: energy consumed and emissions created in the production of plastic bottles and transportation of the final product all over the nation and beyond; the disposal of the bottles eventually into landfills; and a widely disputed suspicion that PET bottles leech toxins into liquids if frozen or heated up.

Americans’ cultural appreciation of this concern was captured nicely in, of all things, a recent automobile advertisement. During the Super Bowl in February, Audi aired a TV spot depicting a fictional – but seemingly feasible – US “green police” that fly-specked every aspect of consumers’ lives for environmental profligacy. One prominent scene showed the green police grabbing bottles of water from a startled citizen and emptying them in front of him.

Industry representatives didn’t deny the buzz around the environmental issue but don’t agree that it has a significant sales impact. “There’s little if any measurable evidence that activists have had an impact upon bottled-water sales,” said Tom Lauria, vice president of communications for the International Bottled Water Association, last year. He noted that water bottles make up only about one third of one percent of the US waste stream and that manufacturers do everything they can to enable and encourage recycling of bottles.

Nearly every brand has stepped up its environmental thriftiness by reducing the amount of PET in their bottles, using more recycled PET, disclosing their brands’ “carbon footprints,” and emphasizing local sourcing of brands when it’s feasible:

PepsiCo: Its Aquafina brand introduced its Eco-Fina bottle in the spring of 2009. It utilizes 50% less plastic than Aquafina’s 2002-era bottle. And more than 80% of Eco-Fina bottles are manufactured on-site at Aquafina bottling centers, which curbs gasoline emissions associated with transportation. PepsiCo also committed Aquafina to removing corrugate packaging materials from multi-packs.

Coca-Cola: has introduced the PlantBottle, which it says is made partially from plants, is 100-% recyclable, and will reduce the company’s carbon footprint. It first used the patented new packaging technology with some of its soft-drink products in Denmark, in December, in time for the climate-change talks in Copenhagen. Then, Coca-Cola rolled out PlantBottle for Dasani waters, and other products, for the Winter Olympics in Vancouver, Canada, in February, and in western US markets.

Nestlé: About two years ago it introduced a new bottle that it called Eco-Shape. It is comprised of only 9.3g of plastic resin compared with the 12.4g in the previous bottle. Nestlé said it was the lightest bottle in the market at the time.

In general, Nestlé seems to be attacking the environmental questions surrounding bottled water even more aggressively than its US-based beverage rivals. In addition to the EcoShape bottle, Pure Life rotates a number of green-oriented marketing messages on its packaging. And last year, it began sponsoring the annual Great American Cleanup, a community-based activity of the Keep America Beautiful organization.

A good deal of Nestlé’s sensitivity on this issue is related to the fact that it was singled out in a documentary-style movie, Tapped, for “mining” water and depleting springs and other natural sources for its products, including regional water brands such as Poland Springs. Nestlé executives have pointed out that they preserve plenty of land to protect their 50 spring sites, harvest the water “sustainably,” and monitor water levels.

Nestlé CEO Peter Brabeck-Letmathe also has gone on the offensive to make the company an advocate for global water conservation. Among other things, he told McKinsey Quarterly magazine last year, “We have made huge efforts to reduce water withdrawals for our factories” for production of foods and beverages. “At the same time, we make sure the water withdrawn is returned to nature in good quality.”

MARCH 2010 25


M A R K E T I N G C A S E S T U D Y

Müller Dairy has axed its Healthy Balance Corner yoghurt brand as it bids to shore up its market-leading position in the UK.

The company, whose head office is in Germany, has repackaged the range under a new identity, Müller Bio Corner, as it seeks to fend off French rival Danone’s bid to claim the number one position in the UK’s yoghurt category.

Healthy Balance is a low-fat probiotic yoghurt and cereal blend. It was launched in spring 2005 as a sub-brand of the highly successful Müller Corner range, a twin-pot concept which sees the consumer tip an ingredient from a small corner pot into a larger pot of sweetened yoghurt and mix the two together. In the case of Healthy Balance Corner, the ingredient to add was granola.

The launch of Healthy Balance was an attempt by Müller to tap into fast-growing demand for healthy but tasty products, which was being driven at the time by rising awareness of the link between obesity and the diet. However, it became apparent that it might be struggling when Müller embarked on a £2 million ($3.1 million/€2.3 million)

relaunch of the brand just over four years later, in June 2009, when it introduced a new pack design and a tweaked recipe.

Relaunches are not unusual in themselves, but as well as revamping Healthy Balance Müller also took the step of asking retailers, publicly, to sell the yoghurt alongside other low fat yoghurts in the chiller rather than with other products in the Müller Corner range, as had been done previously. The aim, said the company, was to “reinforce Müller Healthy Balance as a healthier low fat product and raise awareness of the brand amongst healthier yoghurt consumers”.

Unveiling the new-look Healthy Balance in June 2009, Müller marketing and R&D director Chris McDonough said: “We introduced Müller Healthy Balance as a Corner sub-brand offering consumers a low fat option under the Corner brand umbrella, but many consumers currently think that Müller Healthy Balance is simply a different flavour choice within the Corner range.

“Through the re-launch we want to emphasise the healthy credentials of Müller Healthy Balance Corner – the fact that it is low fat and that it’s all from natural ingredients with bio yogurt. Merchandising Müller Healthy Balance Corner alongside other low fat yoghurts will help reinforce this message and bring Müller Healthy Balance to the attention of consumers who shop this part of the fixture.”

The relaunch also signalled a move by Müller to re-position Healthy Balance as a yoghurt particularly appropriate for consumption at breakfast time, mainly courtesy of its granola content. Yoghurt sales in the UK have traditionally under-performed at this occasion: although 91% of households in the UK buy yoghurt, just 3% of yoghurt occasions are accounted for by breakfast.

The initiative failed. Müller admits that in the past year sales of Healthy Balance were in “double digit decline”, with a value of £7.5 million ($11.7 million/€8.6 million) at retail in the year to 26 December 2009 (Nielsen). Officially, Müller attributes this to “half-year dis-investment due to the emergent Bio re-positioning and relaunch”, which suggests, interestingly, that the company was already planning to axe Healthy Balance within weeks of its summer 2009 relaunch.

In any case, despite the collapse in sales of Healthy Balance, it is clear that Müller has no plans to abandon the core concept altogether, and is committed to having another go at making it work. But although it is keeping faith with the exact same Healthy Balance recipes, and is maintaining the emphasis on the breakfast occasion in marketing, Müller has overhauled its branding entirely.

The Corner element of the brand identity, which was previously low-key for Healthy Balance, has been reinstated at the heart of the proposition, reflecting its popularity among consumers. Müller has also backtracked on its previous advice and is asking retailers to revert to marketing the brand with other Corner products.

“BIO” IDENTITY CHIMES WITH CONSUMERS

Perhaps most significant, however, is the new name for the product – Bio. This three-letter word was a fairly minor part of the branding for Healthy Balance, but it has now taken centre stage. To avoid any confusion, it should be made clear that in the UK a ‘bio’ yoghurt is a probiotic yoghurt; bio does not mean organic as it does in some countries. The original Healthy Balance included the description ‘bio yoghurt’ on-pack, but it was discreet. Müller’s decision to increase its

Müller axes declining “Healthy Balance” in favour

of “healthy bugs”It struggled despite a relaunch with a new pack design and recipe, its sales in “double digit decline” over the past year. Now, German dairy group Müller’s probiotic yoghurt Healthy Balance Corner has a completely new identity as Bio Corner. But will the move do anything to increase the gap between Müller Corner, for some years the UK’s number one yoghurt, and Danone’s Activia, which is fast gaining on it? By RICHARD CLARKE.

MARCH 2010 26


M A R K E T I N G C A S E S T U D Y

profile so dramatically reflects the outcome of a major piece of segmentation research conducted just over a year ago among 3,000 consumers. In that research it emerged that even if consumers didn’t know exactly what ‘bio’ meant, it was a word that resonated with them.

“Bio is one of those strange words that evokes lots of positive consumer responses,” says McDonough. “It references wholesome natural goodness; it references breakfast; it references low fat. It’s a word that generates a lot of positive healthy food associations.”

Müller is not misleading anyone: Bio Corner is a live, probiotic yoghurt, so the brand name is justified. “That’s why we reference it,” says McDonough. “But the way we choose to portray that in the design is to maximise the natural, wholesome goodness of the proposition.” This is achieved on-pack principally via the use of two green leaves that sprout out of the ‘B’ in the green Bio logo.

Although Bio Corner is a probiotic yoghurt, Müller has chosen not to use the ‘P’ word anywhere on pack. “We’re trying to make it a softer, mainstream proposition and Bio is a lighter touch to express that – it makes it much more accessible,” says McDonough. “The problem with ‘probiotic’ is that it makes it much more functional. We have certain cultures in Bio, of which some of them are probiotic. But we don’t overtly reference that. We want to celebrate the natural nature of the yoghurt.”

Bio Corner retails for 54p ($0.85/€0.62) for a 135g single pot or £2.96 ($4.64/€3.41) for a six-pack. Listings have been achieved across all the major retailers, as you would expect from such a significant player in the UK’s yoghurt market. The launch will benefit from about £2 million ($3.1 million/€2.3 million) in print and TV advertising support this year.

Target consumers are, says McDonough, an “older female demographic” and, despite Bio Corner’s “softer”, less functional positioning, this arguably pitches it against Danone’s highly successful Activia probiotic yoghurt range, which is sold very much on a functional platform, promising consumers it can make them feel less bloated.

DANONE ACTIVIA SNAPPING AT MÜLLER CORNER’S HEELS

Activia is a powerhouse in the UK; a seemingly unstoppable force. According to The Grocer magazine’s latest Top Products

Survey, which is based on Nielsen data, it is still only the UK’s second largest yoghurt brand. But its growth curve is so steep that it looks only a matter of time before it catches Müller Corner, which has held the number one spot in the UK yoghurt market for several years.

In The Grocer’s 2006 survey, Müller Corner was worth £178 million ($2.79/€2.05 million). Activia, at the time the third largest yoghurt, was worth £90 million ($141 million/€103.7 million). Tellingly, however, Activia had enjoyed growth of 81.5% compared with Müller Corner’s 1.9%.

Fast forward to the latest survey, published in December 2009, and Müller Corner is still number one with a value of £228 million ($358 million/€263 million). However, Activia is just behind at £215 million ($337 million/€248 million). Most significantly, while Müller Corner enjoyed growth of 6.8%, Activia grew by 32.6%. If those growth figures are replicated this year, Activia will claim the top spot at year-end by some margin.

McDonough points out that Müller is a bigger player than Danone in the overall UK yoghurt market. Müller Light, for example, is the UK’s third largest yoghurt brand, growing 10.7% to £138 million ($216 million/€159 million) last year. However, he also admits that it would be a blow if Activia was to take away Müller Corner’s leadership. The launch of Bio Corner was, he says, about “what’s right for Müller”. But he adds: “It’s important to have the breadth and depth of consumer appeal that drives that number one stature. Corner is still the number one brand and this [the launch of Bio] is a clear statement to keep Corner number one but broaden its footprint.”

MÜLLER COMMITTED TO FUNCTIONAL BRANDS

Despite the distinctly non-functional feel to Bio Corner, Müller remains committed to the functional sector. McDonough, who will leave Müller in May to join brewer Molson Coors UK, says Müller will be putting significant investment behind the company’s overtly functional brand, Vitality,

this spring. The probiotic/prebiotic range, which was

worth a total of £53 million ($83 million/€61 million) in The Grocer’s Top Product Survey, consists of a pot yoghurt, which McDonough says is enjoying year-on-year growth of 15%, and a yoghurt drink, which he says is in decline to the tune of 12% a year, a factor he blames on a refusal to partake in aggressive promotional activity in the active health drinks category in 2009.

“Vitality is a brand that hasn’t been communicated above the line for about three years,” says McDonough. “A big communication campaign will hit the airwaves in March. We’ll have a major celebrity endorsement behind the brand.” Like the launch of Müller Bio, this last point indicates a bid to go head-to-head more effectively with Danone, which uses Martine McCutcheon – one of the UK’s best known actors – to promote Activia and legendary England and Manchester United footballer Bobby Charlton to market its Actimel probiotic yoghurt drink.

Müller has also engaged with the EU’s Nutrition & Health Claims Regulation. McDonough will not give any details but he says the company has submitted Article 13.5 health claims to the European Food Safety Authority. “They relate to a raft of things across our portfolio, because we’re very future-facing in terms of what we are trying to achieve,” he says, adding wryly: “We will see what the portals of power offer in terms of their ruling.”

MARCH 2010 27


L A B E L I N G C A S E S T U D Y

Just as the Nutritional Labeling and Education Act regularized the back of food and beverage packages 20 years ago, the US Food & Drug Administration appears determined to standardise nutritional highlights and claims on the front of product packaging sometime in the next several months.

Since announcing its basic intention last fall, the FDA has signaled that the agency intends to take a strong hand in shaping and simplifying the nutritional information and messages that American consumers see most prominently on packaging. Consumer activists and CPG companies are jockeying to influence the system designed by the agency, which is likely to be revealed by the end of the year.

“The FDA is looking not only at whether consumers will be able to understand and use a system, but also: Will it actually help behaviour change?” said Cathy Kapica, vice president of global health and wellness for Ketchum, a marketing agency that counts several big food and beverage companies among its clients.

For instance, as part of the front-of-package evaluation, the agency is said to be considering altering official serving sizes for many foods because the current ones are too small, resulting in understatement of the number of calories that individuals will consume. The FDA may try to bring them in line with the larger quantities of many foods that Americans actually eat.

The agency is involved in a complex task because, while it has stepped up its regulation of general health claims over the last several years, stipulating and enforcing nutritional labeling per se is a new bailiwick.

“They’re having to deal with the whole new concept of nutritional profiling,” said Kapica. “They may be looking at nutrition labels that make a judgment call. But how do you objectively determine if what’s in

the food is appropriate? Since food is such a complex matrix, what do you do? Do you only look at the good stuff, or the bad stuff, or balance between them?”

In any event, the time seems ripe for the government to move forcefully to the front of the package for a variety of reasons.

Nutritional messages on package fronts have become a confusing cacophony to consumers as CPG manufacturers have rolled out proprietary grading schemes, amplified the frequency and intensity of nutritional and health claims, and even at times defended problematic nutritional positioning. Meantime, many regional supermarket chains have thrown their own store-wide rating systems into the mix, further frustrating shoppers while attempting to enlighten them.

All along, more Americans have become truly interested in making better and more informed nutritional choices – even as the populace as a whole is making little progress in their struggle with obesity and poor nutrition.

And with the US Agriculture Department already well along in its scheduled 2010 overhaul of the federal dietary guidelines, it’s highly likely that government officials will try to exploit obvious synergies between the two processes. Already, Federal Trade Commission officials have indicated that

they are likely to work more closely with the FDA on enforcement of health claims in marketing.

The FDA seems likely to move aggressively in order to take advantage of the opportunity created by these factors and also because a proactive effort would be consistent with the demonstrated regulatory robustness of the Obama administration.

“Companies are finding out that the political winds are changing and trying to figure out the implications for their particular product lines,” said Bruce Silverglade, director of legal affairs for the Center for Science in the Public Interest, an activist group that issued a 158-page report of labeling complaints earlier this year and has the ear of the FDA these days. “The smart time for them to get involved is on the ground floor rather than waiting it out or hoping it goes away.”

Agreed former food-industry lobbyist Gene Grabowski: “This FDA is more sensitive to requests from activists than previous administrations.” The senior vice president of Levick Strategic Communications, in Washington, D.C., said that tighter regulation of package fronts “is also something that career employees at the FDA have been wanting to do for some time. Now, they have support from leadership to do it that they didn’t have before.”

Jockeying for position as US changes pack-front rules

The US government is to tighten front-of-pack labeling guidelines, a move that will remove some food and drink companies’ competitive advantage, but also offer new opportunities as competition comes down to what ingredients are actually in a product. The food industry is taking an active interest in the changes, with companies either reformulating to make sure their products comply with the new rules, or even, like Mars, promoting their own front-of-pack labeling systems. By DALE BUSS.

MARCH 2010 28



LEVEL PLAYING FIELD SPELLS OPPORTUNITY FOR SOME

The shift in the political winds has been dramatic and obvious. When the FDA announced last fall that it would jump in to referee front packaging, it spelled the immediate demise of a nutritional-labeling programme known as Smart Choices. Administered by the Keystone Center, a not-for-profit organization based in Denver, the system had been adopted by dozens of the largest CPG players – but also criticized because Smart Choices didn’t necessarily penalize high-sugar foods. The FDA basically said, “OK, we’ll take things from here.”

But the new era isn’t without benefits or opportunity for the industry. When it’s all said and done, standardization of the front of the package, while removing what had become a source of competitive advantage for some savvy CPG players, will level the playing field for all. “That real estate [on package fronts] no longer will hold competitive advantage except in what the nutritional content of your product actually is,” Kapica said.

Removing questions about content from the arena of competitive manipulation was one major consequence of the Nutritional Labeling and Education Act (NLEA) of 1990. “The industry first fought NLEA and then recognized that change was inevitable, so they modified their position,” Grabowski said. “Then they got on board and helped write the labeling. I think we’re going to see that kind of negotiated conclusion with the front of the package.”

Companies also are jockeying for competitive and even political advantage as the FDA moves ahead. For example, in February, both PepsiCo and Coca-Cola announced support of an industry initiative to move calorie content of beverages to the front packaging. Cleverly, they did so within the context of expressing support for First Lady Michelle Obama’s new initiative to attack childhood obesity in America. Coke already had announced plans anyway to provide front-of-package calorie labeling for nearly all of its products by 2012.

Meanwhile, Kellogg said through a spokeswoman that the company “supports the FDA’s leadership position on the front-of-package labeling issue. We believe consumers will benefit the most if we can work together to improve public health. We look forward to sharing our insights and actively engaging with the FDA in this process.”

And some major manufacturers have been trying to get out in front of the process by lobbying the federal government to adopt a particular type of front-of-package system that they have created, or that favours them. That’s the case, for example, with Mars, which has been rolling out a simple front-package nutritional scoring system on all of its products based on “Guideline Daily Amounts” of calories and key nutrients.

COMPETING APPROACHES

The FDA is said to be considering at least a handful of basic approaches to regulating the front of packages:

• The “GDA” scheme. General Mills, at least on its Big G cereals such as Cheerios, also already uses an approach similar to Mars’, but General Mills also puts other health messaging on the front of its packages.

• A “nutritional-profi ling” system that tackles the issue of judgment calls on products. It could borrow elements from some highly regarded retailer-sponsored programs such as the Guiding Stars scheme that is used by Hannaford, Food Lion and other supermarket chains owned by Delhaize. The American Journal of Clinical Nutrition soon will publish an analysis and recommendation of such an approach, according to Kapica, who is the magazine’s editor.

• A system that focuses on “nutrient density” like one designed by University of Washington researcher Adam Drewnoski. His Nutrient Rich Food Index evaluates foods based on the amount of nine key nutrients they provide relative to the number of calories they contain.

• A representation of a food pyramid that indicates what percentage of a daily recommendation of fi ve food groups is included in the product. ConAgra Foods recently unveiled this kind of approach on the packages of hundreds of SKUs.

• A “traffi c signal” approach using red, yellow and green markers that would guide consumers to the most nutritious choices. But this approach hasn’t worked out very well in the several European Union markets where it’s being tried. This is one scheme favoured by the Center for Science in the Public Interest. But “many people just don’t get the traffi c-signal analogy,” said Brian Wansink, director of the Food & Brand Lab at Cornell University and, for about two years under the Bush administration, head of the federal government’s ongoing overhaul of US dietary guidelines. “They end up thinking that pastel colors are better for them.”

MARS TAKING A LEAD

Mars has been promoting its GDA system as an extension of its efforts that began several years ago to stake out a position as a health-and-nutrition trailblazer in the worldwide confectionary industry. Mars is promoting the system at trade shows and in other meetings with competitors and other CPG players. It also is lobbying the American Dietetic Association for support. If competitors embrace its approach, that could help sway the FDA.

“We’re … constantly there trying to talk about this and invite everyone to come along with us on this journey,” Hank Izzo, vice president of research and development for Mars Chocolate North America, told New Nutrition Business. “The biggest opportunity is

Mars brands such as Skittles use a GDA labeling system.

MARCH 2010 29



to get other consumer-goods companies to go in this direction … We believe that this is the correct option, from results we’ve had from testing with consumers.”

Mars’ confidence in the appeal of its new labeling system in its domestic market is bolstered by the fact that it’s already fully in place and popular throughout the company’s European markets. “The consumer is our boss, and this is something that consumers have asked us for,” Izzo said. “They want clear, transparent information, and we are giving it to them.”

Mars’ scheme is elegantly simple. The front of the package of each Mars product bears an icon, titled “What’s Inside”, that lists the number of calories and the percentage of the US government-recommended daily number of calories that the package represents. On the back is a repeat of the calorie information as well as similar figures for total fat, saturated fat, sugars and sodium.

“Consumers were telling us that they find it very difficult to make [food] choices throughout the day and to manage a balanced, healthy lifestyle, and to get information about what’s inside the foods they ate,” Izzo explained. “The most important thing was calories, and getting help in managing their calorie intake as the day goes on.”

Mars executives want to promote a system that provides uniformity of nutritional information on package fronts, but which

would also – having established a standard that others subsequently adopt, or that the federal government even uses as the basis for an industry-wide system – help solidify its leadership in an attribute that has become increasingly important to the company.

The seriousness of Mars’ aim here was bolstered last year when the company took out print advertisements touting the GDA system in the Washington Post and other publications read by legislators, regulators and others in the nation’s capital.

“If [regulators] are wanting to make a decision on this, which way to go, it’s also important to know that some companies are moving forward on labeling,” said Marlene Machut, director of communications for Mars’ global chocolate business. “It’s important for them in the Beltway to see that companies are doing it.”

FOOD INDUSTRY WORKING TO GET AHEAD OF CHANGES

Even if they aren’t actively lobbying for a particular new labeling scheme as Mars is, few food and beverage companies are sitting still just waiting for the FDA to make its decision. Many are developing new products, and reformulating or tinkering with existing ones, so that they’re easier to pitch as healthful under whatever new regulatory regime emerges in the coming months.

“I’m counseling some companies to make

ingredient changes in order to try to be in the kind of compliance they want to be in when the labeling comes out,” said Ken Harris, a CPG consultant with Cannondale Associates in Evanston, Ill. “Then immediately upon the FDA decision, they can go out and have the labels put on products. That way they won’t lose time.”

SUPERMARKETS UNDER SCRUTINY?

One question the FDA also may address is how supermarket chains’ various nutritional-scoring systems come into play in the new regulations aimed at CPG packaging. Ketchum’s Kapica, for one, believes that the agency will extend its purview to those programmes.

But the $30-billion (€22 billion), privately held Mars, headquartered in McLean, Va., plans to begin working with retailers on point-of-purchase advertising campaigns, consumer-education programmes and other forms of shopper marketing around its GDA system. And Izzo believes that it will dovetail nicely with Guiding Stars and other retailer programmes as they exist.

“We haven’t received anything but positive feedback from our [retailer] partners,” Izzo said. “Some have their own strategies and tactics [for nutritional information] but the key is doing what’s good for consumers and good for the business, and that’s where our strategies come together.”

American consumers are faced with a variety of nutritional information systems. Shown here is the Nutrition IQ system used by Albertsons, one of America‘s largest supermarket chains.

The Hannafords supermarket chain also has its own system for ranking foods’ nutritional value, called Guiding Stars.

MARCH 2010 30


N E W P R O D U C T S

Country Company Brand & Product Description

PART 1: NORTH AMERICA – FOODS & BEVERAGES

All new product information is sourced exclusively from Mintel’s GNPD (Global New Products Database), which can be visited at

www.gnpd.com. Mintel can be contacted at 18-19 Long Lane, London EC1A 9PL, U.K.. Tel. +44-(0)20-7606-4533, Fax +44-(0)20-7600-3327

FUNCTIONAL & HEALTHY-EATING NEW PRODUCT LAUNCHESEach month we summarise new product launches from around the world.• Part 1: North America • Part 2: Rest of the World

BAKERY

Canada Canada Bread Company Dempster’s Body Wise Multigrain Loaf

Made from 100% whole grain and is said to be good for weight maintenance. Provides 50 calories per slice, is a good source of fibre and is low in saturated and trans fat.

USA Bimbo Bakeries Oroweat Dutch Country Extra Fibre Sliced Bread

Contains 10% more of the DV for fibre than white bread, yet has a smooth texture. Said to be a good source of vitamins A, D, and E, and is made with 100% whole wheat. The “heart healthy” product contains no high fructose corn syrup and provides 18g wholegrains per serving.

USA Dave’s Killer Bread Dave’s Killer Bread Rockin’ Rye Bread

USDA organic certified and contains 4g of fibre, 6g of protein and 100% whole grain. Also available are: Killer Blues Bread; Killer Good Seed Bread; Killer Power Seed Bread; Killer 21 Whole Grains Bread; Killer Good Seed Spelt Bread; and Killer Cracked Wheat Bread.

USA Hodgson Mill Hodgson Mill 9 Grain Bread Mix A wholegrain mix that is all natural and low in fat. Can be prepared in the oven or bread machine. It contains milled flax seed and provides 400mg omega-3 oils per serving. Pancake & Waffle Mix contains milled flax seed but no gluten, additives or preservatives.

USA Orgran Natural Foods Orgran Mini Outback Animals Chocolate Cookies

With added psyllium for extra dietary fibre and calcium carbonate as a source of beneficial non-dairy calcium. 100% natural, free from gluten, wheat, dairy, egg, yeast, soy, GMOs and nuts, only 91 calories per pack.

USA Sapere Natural Foods All Natural Goji Berry Shortbread Cookies

Baked with the finest ingredients and free from artificial colours, flavours, preservatives, trans fats or hydrogenated fats. Low in calories, fat and cholesterol and are a good source of fibre.

BEVERAGES

USA Dr Pepper 7Up Antioxidant Naturally Flavoured Diet Cherry Soda

Provides 10% of the RDA of the antioxidant vitamin E. Contains no juice or caffeine, is low in sodium, and features 100% natural flavours.

USA Fuze Beverage Full Throttle Energy Drink with Full Blue Agave Flavour

Now retailed in a 16-fl.oz. recyclable can. Low in sodium.

USA Lastochka Lastochka Natural Mineral Water Contains a balanced natural mineral formula necessary for a healthy metabolism. Said to be suitable for the treatment of many illnesses related to the digestive system and metabolism, and to “help strengthen the immune system by compensating for the loss of micro elements”.

USA Millenium Products GT’s Organic Raw Kombucha Drink Now in Gingerade flavour. Said to support digestion, metabolism, immune system, appetite control, weight control, liver function, body alkalinity, anti-aging, cell integrity, and healthy skin and hair. It contains enzymes, probiotics, polyphenols and detoxifiers.

USA Neuro Headquarters Neuro Sonic Sparkling Vitamin & Herbal Extract Beverage

Lightly carbonated and said to help mental performance at work, school and anywhere else. “Developed using L-theanine and caffeine to put the brain into overdrive”.

USA NOW Foods NOW Shots B-12 10,000mcg Energy Boost

Claimed to provide explosive, long-lasting energy with a full spectrum of B vitamins. Free from artificial colours and flavours. Mixed Berry flavour contains no salt, yeast, wheat, gluten, soy, milk, egg or shellfish, and is retailed in a pack containing 12 0.5-fl. oz. shots. L-Carnitine 2,000mg Energy Shot is enhanced with vitamin B12 and pantothenic acid, provides antioxidant protection, and retails in a pack containing 12 Acai Berry flavoured shots.

USA Trader Joe’s Trader Joe’s Mango Probiotic Smoothie

A blend of five juices with other natural flavours and ingredients. The 100% juice is kosher certified, pasteurised and contains probiotics to help promote a healthy digestive and immune system.

USA Welch’s Welch’s SuperJuice Concord Grape, Açaí and Mangosteen Flavoured Juice Blend

Contains 100% juice from concentrate with added ingredients. Free from added sugar, “packed with polyphenol antioxidants”, and is said to help support a healthy heart, mind and immune system.

BREAKFAST CEREALS

USA Lunds & Byerlys Whole Grain Fibre & Protein Granola

Sweetened with honey and contains 0g trans fat. It provides 10g protein per serving and is an all-natural, good source of fibre. No cholesterol, sodium, or high-fructose syrup.

USA Seitenbacher Seitenbacher Müesli Berries Temptation

A blend of all-natural cereal and European raspberries. Free from wheat and artificial flavours and is said to be a good source of iron, fibre and protein.

USA Trader Joe’s Trader Joe’s Yogurt & Flakes Cereal Crunchy multigrain flakes with probiotic yogurt drops and strawberry slices offering 6g protein per serving.

MEALS & MEAL CENTRES

USA Dannon Dannon Light & Fit Carb & Sugar Control Smoothie

This low-carbohydrate, on the-go smoothie in a Strawberry & Cream variety has 60 calories and has been made with active yogurt cultures. Said to contain 90% less sugar than other dairy-based smoothies and is a good source of calcium and protein.

USA Sara Lee Jimmy Dean D-Lights Turkey Sausage Whole Grain Bagel

Fully cooked and provides a third fewer calories, less than half the fat and 18g of protein per portion.

SIDE DISHES

USA Global Juices & Fruits Earthly Delights Organic Premium 100% Wholegrain Quinoa

Free from wheat and gluten. Said to provide an exceptional source of protein, contains all eight essential amino acids, and is high in iron, calcium, magnesium, B vitamins and fibre.

MARCH 2010 31



Country Company Brand & Product Description

PART 2: REST OF THE WORLD – FOODS & BEVERAGES

BAKERY

France Lu Lu Petit Déjeuner Coeur Fondant Breakfast Cookie with a Smooth Strawberry Yogurt Centre

Designed with nutritionists “to provide a balanced a breakfast for the consumer”. Rich in vitamins and magnesium, a source of calcium and contains no colouring.

Hungary Detki Keksz Detki Inukeksz Cocoa Biscuit Made with a tested prebiotic effect containing inulin, which is claimed to maintain a healthy immune system and functioning of intestinal flora.

Italy Misura Misura Integrale FibrExtra Wholemeal Sliced Bread Loaf

Low in calories, made with olive oil and soluble wheat starch fibre, which “contribute to maintaining a healthy digestive system”.

Mexico Nopal Industrializado Señor Cactus Tortillas with Linseed Said to provide a natural source of fibre and antioxidants, and contain omega 3. Free from colours, flavours and salt. Also available in the range are Tostadas de Nopal (Cactus Toasts), which are low in fat, calories and carbohydrates. It is claimed that regular consumption of cactus improves intestinal function, reduces cholesterol, acts as an auxiliary treatment for diabetes, and helps to control body weight.

Spain Galletas Gullón Gullón Diet-Fibra Soya and Apple Biscuits

Contain high oleic sunflower oil, said to be “among the healthiest edible oils due to its rich profile in unsaturated fatty acids”. Contain 8% dietary fibre from whole wheatflour and pea fibre and are free from cholesterol.

Sweden Nairn’s Rough Oatmeal Oatcakes Made with wholegrain oats and sustainable palm oil. They feature a low GI value and are free from wheat, added sugar, hydrogenated fat, and artificial colour, flavours and preservatives. High in fibre and individually wrapped so they can be consumed on the go. Also available are: Herb and Pumpkin Seed; Mini Oatcakes; Fine Milled; Organic Rough Oatmeal; and Cheese.

BEVERAGES

Australia Energy Delivery Systems Uzi Loaded Energy Shot Described as a high energy shot loaded with a mix of caffeine and vitamins designed to combat fatigue and recharge energy. Available in a 30ml bottle.

France Coca-Cola Burn Energy Shot Now available in a new Energy Shot variety said to contain a high concentration of caffeine, taurine, glucuronolactone, inositol and B-vitamins.

Hungary Innovative Beverages Be! Beautiful Beauty Drink A pomegranate and cranberry soft drink made with natural mineral water, fructose, co-enzyme Q10, l-carnitine and aloe vera. The 0.5L bottle features the slogan “The glamorous you”.

Ireland Skinny Nutritional Skinny Water Wake Up Orange, Cranberry & Tangerine Flavoured Water

Contains 250% of RDI of vitamin C, calcium, potassium and EGCG (an antioxidant found in green tea). Free from sugars and calories, and contains all natural flavours and colours with no preservatives.

Japan DHC Protein Diet (Matcha Green Tea) A limited-edition Matcha Green Tea variety in the Protein Diet weight control drink range. One sachet is said to provide protein and 22 vitamins and minerals required for a meal. It also contains CoQ10, hyaluronic acid, dietary fibre “and other ingredients for good skin and ideal weight”. Features domestic stone-milled Matcha green tea grown at contracted farms.

New Zealand Sanitarium Sanitarium Up & Go Vive Wild Berry Flavoured Beverage

A low Gl nutritional supplement, which contains just 5.4% sugar and is 98.5% fat free. Intended to “supplement a diet which may be low in vitamins and minerals”. High in calcium, vitamins and fibre, contains no preservatives and retails in a pack of 3 x 250ml cartons.

Poland FP Brighty Extracted Korean Ginseng Drink

A non-carbonated drink with ginseng extract. It is claimed that ginseng is used in medicine to support brain development, improve immunity and resistance to stress. Also available in the range is Brighty Pomegranate Juice, rich in antioxidants and claimed to have an effect on cardiovascular functions and give vitality.

Sweden Pukka Herbs Pukka Detox Tea An organic aniseed, fennel and cardamom tea, said to cleanse and revive, and to have “fantastic detoxifying properties”. Contains fennel seed and aniseed, said to be “deliciously sweet”. The naturally caffeine free tea contains cardamom seed for a soothing aromatic flavour and licorice root to calm and nourish. The following varieties are also available: Cleanse; Protect; and Herbal Spiced Chai.

UK Britvic Soft Drinks V Water Glow Vitamin Water V Water is available in a Glow variety, flavoured with pomegranate and blueberry. Formulated with burdock extract and vitamins C, E, zinc and selenium. Naturally flavoured and “has antioxidant properties to fight age-accelerating free radicals”. Selenium is said to be important for cell protection and zinc important for skin renewal and healthy skin. Contains 50 calories per bottle and is made with pure spring water. Free from artificial flavours, colours and sweeteners.

UK Neurobrands Neuro Trim Herbal Extract Beverage Said to be formulated to support weight loss. The non carbonated beverage contains 37 calories per bottle and is free from artificial colours and flavours. Also available are: Gasm; Sonic; Bliss; Sport; and Sleep.

UK The Juice Doctor Juice Doctor Tropical Liquidology Fruity Water

Described as a fruity water bursting with vitamins and minerals, which are designed to balance the body and recharge the batteries. No artificial colouring, flavouring, preservatives or sweeteners and is claimed to provide rapid hydration. Low in sodium.

BREAKFAST CEREALS

Brazil Cytosport Muscle Milk ‘n Oats Breakfast Cocoa Instant Cereal

Said to be a quick, convenient and portable solution for a terrific tasting, satisfying and highly nutritious meal on the go. Formulated with Muscle Milk®, which is said to promote muscle-growth and enhance the retention of minerals needed for muscle contraction. According to the manufacturer, the combination of Muscle Milk® with wholegrain oats “not only enriches the diet with a muscle-building meal low in saturated fats and cholesterol but also provides a significant portion of the recommended daily amount of wholegrain foods and fibre, said to help reduce cholesterol and the risk of heart disease”.

MARCH 2010 32



CONFECTIONERY

France Villars Maitre Chocolatier All Natural Low Sugar Dark Chocolate

Villars has extended its range of all natural chocolates with a new Noir 70% (Dark Chocolate 70%), which contains only 4% sugar. It is sweetened with Rebaudioside-A, a sweetener extracted from the stevia plant, which features a sweetening power 300 times stronger than that of sugar while being low in calories. Free from artificial colourings or flavourings and formulated with gum arabic, a natural fibre.

Germany Stollwerck Stollwerck’s Pharmacy Chocolate Made from 38% cocoa and claimed to be rich in valuable antioxidants. According to the manufacturer, cocoa can help reduce blood pressure, cholesterol, maintain a healthy heart and cardiovascular system and keep the skin healthy.

DAIRY

Brazil Polenghi Polenghi Polenguinho Light + Fibras e Cálcio Processed UHT Cheese with Fiber and Calcium

Enriched with fibre and calcium, and contains 38% less calories and 54% less fat.

Chile Nestlé Nestlé Svelty Digestión Yogurt with Papaya Pieces

Contains fibre, which “helps regulate intestinal transit”, and is high in calcium, “which helps strengthen bones”.

France Danone Danone Taillefine Les Jardins Gourmands

Apple and Pineapple Flavoured Dessert. No added sugar and is said to be a source of vitamin C and fibres.

Germany Nöm Nöm Skimmed Milk with Calcium, Vitamin D and Inulin

A UHT-treated milk with added calcium and vitamin D. Only 1.8% fat content.

Italy Lactalis Nestlé Nestlé Frùttolo Alphabet Strawberry Flavoured Yogurt with Cereals

Made with plenty of milk and wholesome fruit. Free from preservatives, enriched with vitamin D and is aimed at children. Contains live lactic ferments and retails in a 100g pack, including 93g of yogurt and 7g of letter-shaped cereal.

Japan Kyodo Milk Industry Meito Beauty Plus Yogurt Formulated with 50% milk, LKM512 bifido bacteria that reach the intestines alive, as well as collagen, hyaluronic acid and elastin – the substances found in human skin, to “boost beauty from within”.

Japan Yakult Honsha Yakult Eating Yakult SHEs Yogurt Relaunched, having been first introduced only in western Japan in October 2009 targeted at women in their 30-40s with anti-aging concerns. The product is a Peach flavoured variant of lactic acid bacteria drink Yakult SHEs’, solidified with agar and gelatine.

Mexico Pasteurizadora de los Productores de Leche

Levia Honey and Cinnamon Yogurt with Cereals

Formulated with dietary fibre, omega 3, antioxidants, and lactic cultures that “can benefit the wellbeing of the body and a good digestion”.

South Korea Dongwon Dairy Food Angel Milk White Milk for Children Made with fore-milk (colostrum) and enriched with DHA, vitamin D3 and fibre. Said to be beneficial for the growth of children and help treat constipation.

South Korea Namyang Dairy Products Jjaio Peach Yogurt With calcium, Oolong tea extract, vitamin A, vitamin B1, vitamin D3, zinc, l-thiamine and bifidus cultures. Aimed at children, this product is available in a 12-ct. box of easy-to-eat 40g stick-format yogurts. A Strawberry variety is also available.

South Korea Seoul Milk Seoul Milk Strawberry Flavoured Yogurt

Made with the best domestic milk, organic honey and natural fruit juice. This yogurt drink contains lactase to regulate the digestion system.

Spain Schärdinger Schärdinger Vida Sana Probiotic Gouda Cheese Slices

Formulated with bifidus bacteria, said to aid the digestive process. This lactose free product is retailed in a 200g pack. Also available is a Cheese with Yogurt variety, which contains 13% yogurt, is high in calcium, and free from lactose.

Sweden Valio Valio Gefilus Max Raspberry-Wild Strawberry Yogurt Shots

Lactose free and contain four different bacterial cultures. The one-a-day shots are said to be effective against bloating and irritable bowel syndrome. Retails in a pack containing 4 x 100ml shots.

Switzerland Unilever Rama Idea! Margarine Enriched with vitamin B1, alpha linoleic acid and DHA. According to the manufacturer, it contains important nutritive substances that support the brain and nervous and immune systems. Aimed at children.

MEALS & MEAL CENTRES

Japan Myojo Foods Salted Ramen Noodles for Students Designed for students sitting university entrance examinations, the noodles are formulated with GABA, which supposedly enhances brain function. Comes with a variety of toppings including “colourful fish paste cookie-cut into a shape of cherry blossoms as university entrance examinations take place in April when cherry trees blossom”.

SNACKS

Finland Nestlé Nestlé Fitness White Chocolate Wholegrain Cereal Bar

A calcium- and vitamin-enriched product.

France Gayelord Hauser Gayelord Hauser Milk Chocolate Meal Replacement Bars

Contain a caramel filling, and feature Neopuntia, an active innovative ingredient that absorbs fat. Two bars are the equivalent of one meal of 227kcal and contain proteins, 12 vitamins and 11 minerals. Made with 100% vegetable and natural active ingredients. Retails in a pack of eight 30g bars, which is sufficient for replacing four meals.

France Kellogg Kellogg’s Special K Mini Breaks Strawberry Flavoured Cereal Bites

Enriched with vitamins (PP, B6, B2, B1, B9, B12) and iron. Contains only 98 calories per portion.

Germany Aktivkost Champ Muscle High Protein Bar Formulated with 45% protein, vitamins, magnesium and sweeteners. This milk chocolate coated product comes in a caramel-cappuccino flavoured variety, contains only 133 calories and has a reduced fat and sugar content.

Mexico Importadora Primex Yogi Granola Crisps An all natural, fresh cereal snack that combines five nutritious and “ancient” whole grains into bite-size crisps. “Nutritious oats contain soluble fibre, which helps support a healthy heart. Barley provides a natural source of antioxidants and helps reduce free radicals. Spelt, an ancient form of wheat, is more nutritious than modern wheat. Quinoa helps sustain energy and promote vitality.”

UK GlaxoSmithKline Lucozade Sport Recovery Strawberry & Oats Flapjack

Described as a strawberry flavoured protein and carbohydrate oat bar with a white chocolate flavour coating. Said to contain high quality protein for muscle maintenance and recovery after sport and exercise. According to the manufacturer, the product has been tested for banned substances.

MARCH 2010 33


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MARCH 2010 34


Did you know you can now read New Nutrition Business as a powerpoint presentation?If your company has a corporate license, or if you upgrade to a license, you can now also download a 100-slide powerpoint version of each issue of New Nutrition Business as well as the pdf !

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NEW NUTRITION BUSINESS

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July 2009: Published in powerpoint and pdf.

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6



5



Consumer challenges – quick-hit campaigns that offer tangible and rapid results for those

who follow the rules of the programme – have been the key driver of Special K’s success

and have become synonymous with the brand.

Kellogg Special K – the billion dollar weight management brand

4 NEW NUTRITION BUSINESS


In contrast with the sharp focus on “drop a jeanssize” and similar results-oriented messages that arethe distinctive and consistent communications ofSpecial K breakfast cereal (since 2001),

Kellogg seems to have struggled to find the rightpositioning for its water.

At launch the label carried a tape measure in anecho of the Special K drop a jeans size conceptwhile advertising promised that: “Losing up to 6pounds in 2 weeks just got easier!”

In its current incarnation the brand has evolved tosay on the label that it: “Takes the edge offhunger”

MUDDLED MESSAGES?

3



Sales of Kellogg’s Special K20 Protein Water were never high – and now have collapsed,

falling 28% this year. Kellogg’s extension of a breakfast cereal brand to water with a

weight management benefit has proved to be a brand stretch too far. Poor merchandising

didn’t help.

With sales apparently tumbling it’s hard to see how this brand can survive. The recent

launch of Special K Protein Shakes suggests that Protein Water’s days may be numbered

and Kellogg is keen to take a new direction in weight management beverages.

Special K20 Water’s look, shape and

messages have all undergone significant

change in the two years since it was

launched, suggesting that Kellogg was

searching for the right positioning.

BRAND FUTURE IN QUESTION

2

NEW NUTRITION BUSINESS© New Nutrition Business

1



Kellogg makes second attempt

at protein drink market

NEWS ANALYSIS

To fi nd out more e-mail: [email protected]

MARCH 2010 35


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I M P O RTA N T N O T I C E

MARCH 2010 36


20 Key Case Studies in Functional and Health-Enhancing Beverages

Marketing functional and health-enhancing beverages

51 www.new-nutrition.com

near-pharmaceutical functionality. “If we gave

it as low a price point as everything else that is

out there, it would be perceived as having the

same effectiveness as an energy drink,” said Carl

Sperber, creative director and co-founder of Living

Essentials, the Novi, Mich.-based company behind

5-Hour Energy. “But if you spend $3 on [5 Hour

Energy] and it made you feel great for four to six

hours, you feel that you didn’t waste a dime.”LIVING ESSENTIALS THE MARKET LEADERMarket leading brand 5-Hour Energy was only the

second idea hatched by Living Essentials, a group

of entrepreneurial chemists and engineers. First

was Chaser-Plus Freedom from Hangovers tablets.

But when Sperber and other company principals

tasted energy drinks at a trade show in 2004, they

quickly decided they could improve upon the

standard-sized beverages by making them smaller

and more potent.“Back then,” Sperber recalled, “the energy-drink

market wasn’t mature like it is now. So we weren’t

sure about our idea; we didn’t know if it would

have legs.”

One thing was for sure: Living Essentials wasn’t

going to aim its brainstorm at the “14-year-old

skate punks” – as Sperber called them – who

largely populate the energy-drink demographic.

“That market was saturated already,” he said. “So

we wanted to target our product to working adults.

We thought they would respond to our product

because they aren’t energy-drink people per se. And

they don’t respond to energy drink products called

Monster or Freek. They just want energy.”Six months later, the company had perfected a

formula based on caffeine and B-vitamins, designed

packaging, and begun selling the first 5 Hour

Energy shot for $2.99 (€2.13) at the counters of

GNC stores.5-Hour Energy is available in Berry, Lemon

Lime and Orange regular flavours as well as an

Extra-Strength variety that provides a twist on

the Berry flavour and retails usually for 50 cents

more. There’s also a citrus-flavoured decaffeinated

variety.Sperber insisted that the product’s formula and

efficacy was the key to the success of 5-Hour

Energy. “It’s put together pretty carefully,” he said.

“It’s hard to point to any one ingredient and say,

CHART 3: US MARKET – ENERGY DRINKS ARE PREMIUM-PRICED; DAILY DOSE ENERGY SHOTS

ARE SUPER-PREMIUM US energy drink prices compared with one-another and with a “standard” mass-market non-energy

product such as Coca-Cola Classic

Source: NNB Surveys in Wal-Mart, Albertsons, Walgreens

Price per 32 fl.oz. (approximately1 litre)

0CocaColaClassic

1 litre $2.19

$2.19/ 1.55

5

10

15

20

25

30

35

40

MonsterEnergy Drink16 fl.oz. $2.29

$4.58/ 3.25

Red Bull8.3 fl.oz. $2.09

$8.06/ 5.72

Cranergy12 fl.oz. $3.99

$10.64/ 7.56

LivingEssentials 5-Hour Energy12 pack $332 fl.oz. bottles

$41.25/ 29.30

45



it to see if it can still develop greater scale and then [again] justify a bigger presence in the bottlingsystem.”The badly battered Enviga is “an interesting product, and it still could have a future, but it needs to be incubated slowly – the way Coke is doing it now.”

For his part, Crockett said that Coca-Cola had concluded that it was better to build the brandorganically. To assist the effort, Enviga has become available in a new flavour, Tropical Pomegranate, that has replaced the original Peach flavour. Enviga remains available in Green Tea and Berry flavours.Enviga retails for suggested prices ranging

from $1.29 to $1.49 (€0.93-€1.07) for a single serving, packaged in sleek, energy-drink-like, 12-oz/355ml cans. It’s also available in 6- and 12-can multipacks.

ENVIGA AND EGCG

Enviga depends on epigallocatechin gallate (EGCG) for its calorie-burning effects, which is the principal active ingredient in the product. Coke and Nestlé’s research came up with a formula that optimises the interaction between EGCG and caffeine (each can contains 90mg of the alkaloid) and produces the calorie-burning effect through a metabolism-IN HOT WATER OVER WEIGHT LOSS CLAIMSIn early February 2009 Coca-Cola, Nestle and Beverage Partnership Worldwide agreed to re-label

Enviga after a coalition of 26 US states won a settlement with the companies. The dispute arose over

questionable claims that Enviga, a green tea beverage, will burn extra calories resulting in weight loss. As well as paying $650,000 to the states, the companies behind Enviga agreed to add disclosures to

Enviga labeling and to disclaim any weight loss benefits. The product must note that weight loss is only

possible through diet and exercise.“Enviga’s implied weight loss claims were scientifically weightless – unsupported by solid evidence. Enviga

is no magic potion, capable of cutting pounds without pain,” said Attorney General Richard Blumenthal,

who led the coalition.

A press release announcing the settlement stated that: “Enviga’s marketing claims purported that consuming three cans in a day would result in increased calorie burning by up to 60 to 100 calories per day. However, the study cited by the

companies, known as “Rudelle”, ran for only three days and consisted of a small group of healthy 18-35 year olds. The short study could not establish that the any calorie burning associated with Enviga could be sustained over time”. “The limited results of the Rudelle study,” itcontinued, “and the absence of any Enviga-relatedweight loss evidence - prompted Blumenthal to question the implication that consumers would generally experience the same calorie burning as those healthy 18-35 year olds in a controlledsetting.”

The settlement requires that in any marketing of Enviga, or a similarly formulated beverage, that uses the terms “the calorie burner,” “negative calories,” “drink negative,” or makes any claims explicitly or implicitly that consumers will burn calories by drinking Enviga, there must be a clearand conspicuous disclosure that the product doesnot produce weight loss without diet and exercise.



as a comparison. Using packaging, companies

can create new price points and achieve

much higher selling prices for their products.

In particular selling in single-serve packages

makes it very difficult for consumers to easily

compare prices. Putting your new product in

a standard 1-litre gable-top carton, on the

other hand, makes your product look like

every other brand on the shelf and enables

consumers to easily compare prices between

your product and regular products.

• If you use packaging innovation to create

a new category then you are defining the

direction in which many of your competitors

must go and you are defining the packaging

format they must adopt. You are in effect

establishing your credentials as a market

leader and innovator.

In the era of “Individualised Nutrition” single-serve

packages have more appeal to the many niches of

consumers than family packages. Though health

matters, convenience matters more, and delivering

convenience is essential for a health brand that

wants to earn a premium price. The successful

premium brands almost all sell as single-serve

products.

The following examples demonstrate the power

of innovative packaging to conceal premiums,

catch the consumer’s eye, and in some cases – like

the TetraPak aseptic package – facilitate the birth

of a new market:

Compal Essencial: Compal is one of Portugal’s

biggest beverage companies. Its eye-catching

Essencial brand is packaged in 110ml bottles,

each of which looks like a piece of fruit. It clearly

signals what each bottle is

providing – one of your 5-

a-day. The pear flavour, for

example, which is 75% pear

pulp, offers half the fibre of

a fresh pear and also half

the calories. The benefit

is clear, as the Essential

package states:

Get your fruit the Essential

way. Easy to drink, no peeling,

no hassle, no waste and tastes

great too. One Essential Fruit Shot contributes to your 5 a

day (health experts recommend that we eat 5 portions of fruit

and vegetables a day). Eat fruit the easy way, with Essential

Fruit Shot and become a ‘fruitaholic’.

Available in 6 of your favourite fruits.

Just eat more fruit and veg!

Essencial has proven very successful in Portugal,

where the brand has been extended to a package

that offers two of your five a day, and still has only

70 calories or less and is being rolled out in the

UK and Sweden, where the brand was launched

in 2009.

Coconut water (Case Study 10): The advent of

the TetraPak aseptic package – an innovation – is

what has allowed the fast-growing

coconut water market to emerge.

Coconut water oxidises quickly,

but the aseptic TetraPak made

it technologically feasible to

package and distribute fresh

coconut water for the first

time, giving birth to a market

worth over $350 million (€234

million) in Brazil and already

more than $35 million (€23

million) in the US.

Pom Wonderful (Case Study 2): The

confluence of convenience-plus-

health-plus-packaging innovation

also helps the so-called superfruits

– mangosteen, pomegranate and

goji for example – to command

super-premium prices. Pom

Wonderful pomegranate

drinks combine innovative

packaging, clever

merchandising and delicious

taste to deliver a health

benefit. Pom Wonderful’s

distinctive, eye-catching

and elegant packaging

conceals a price premium

of 400% compared to

regular juice.

Published by

Report

20 Key Case Studies

in Functional and

Health-Enhancing

Beverages

by Julian Mellentin

January 2010

PDF – 126 pages, product illustrations, charts and tables of data

Using 20 Case Studies of brands addressing a range of benefits – energy, joint health, sports beverages, protein boosting, digestive health, weight management and heart health – this report looks at what makes some functional and health-enhancing brands succeed and what makes others fail.

Each Case Study gives our usual independent and opinionated analysis, based on interviews with executives at all of the companies concerned, as well as independent beverage industry experts.

Each Case Study addresses packaging – and in particular packaging innovation – choice of ingredients, nutrition profiles, marketing communications strategy, pricing strategies (and why some brands are able to earn premium prices), which consumers buy them and why, all supported with supermarket sales data.

The strategies that successful beverage brands use are summarized in a concise 9-page introduction.

Ordering is easy…see inside back cover or visit www.new-nutrition.com

PRICE FOR PDF: €200 / $295/ £190/ A$345 / NZ$395 / ¥23,000 / C$295

The many strategy issues this report addresses include:

• What ingredients and benefits resonate with consumers in beverages and why

• What the risks and rewards are for innovating in beverage formats and in packaging

• The growing use of beverages as a snack replacements and how this is contributing to a blurring of category boundaries and an increasing hybridization of beverage types, so that the lines between product types and benefits become fuzzy and unclear to consumers.

• The key trend of delivering benefits that are “as natural as possible”, a message now beginning to be used by beverages beyond the superfruit area. One example is coconut water (Case Study 10), a product type that has proved successful in Brazil and the US.

For any company, large or small, aiming to create a successful proposition in functional or health-enhancing beverages and better-manage the risks of new product development and innovation, this report provides practical insights and examples.

MARCH 2010 37


10 Key Trends in Food, Nutrition & Health 2010

December 2009

PPT – 309 slides, product illustrations, charts and tables of data

PDF – 98 pages, product illustrations, charts and tables of data

Ordering is easy…see inside back cover or visit www.new-nutrition.com

PRICE FOR EITHER PDF OR PPT: €200 / $295/ £190/ A$345 / NZ$395 / ¥23,000 / C$295

PRICE FOR PDF & PPT TOGETHER: €320 / $472 / £305/A$552 / NZ$632 / ¥36,000 / C$472

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Digestive health continues to be the biggest trend. Its importance to consumers has been underscored by the impressive growth rates of digestive health brands, with sales of even premium brands increasing by 10%-20% during the recession. And yet digestive health still has huge areas of untapped potential in most countries around the world, especially for fibre fortified products and products in the beverage and cereal categories.

Bones and Movement enters our top-10 trends this year for the first time. It’s a trend that has been gathering momentum thanks to the increasing number of people over the age of 40, who have more reason to be aware of the health of their bones and joints. It’s a niche that is getting bigger fast and it’s a significant area of opportunity in every continent – and one that has not been fully exploited anywhere except in Asia.

Mellentin’s 10 Key Trends for 2010 are:

1. Digestive health – a mega-trend moves beyond the tipping point

2. An intrinsic health benefit that’s also convenient 3. Feel the benefit – the most powerful marketing message 4. Energy – a world of untapped opportunities 5. Fruit and superfruit – the future of food and health 6. Antioxidants – big in America, dead in Europe? 7. Weight management 8. Healthy snacking 9. Packaging and premiumisation 10. Bones and movement

This year the report also includes 7 Micro-Trends. These are:

1. Protein power 2. Kids’ nutrition 3. New life for heart-health and cholesterol-lowering? 4. Probiotics’ new prospects 5. Immunity – a great claim that’s hard to use 6. Fresh start for omega-3? 7. Beauty an ultra-niche opportunity

In addition, this year we address regulatory issues in Europe and what they mean for which trends are likely to succeed – and which ones might disappear – in the European market.

10 Key Trends 2010


any innovative company to play in health. As a

result, the strategy of marketing the intrinsic health

benefit of a food or food ingredient continues to be

the most popular health marketing strategy in the

industry. Natural health benefits are also an idea that’s

easy for the media to understand and easier still

for time-pressed journalists to explain. The media

might be suspicious of GMOs and functional foods,

but it is always hungry for stories about foods with

an intrinsic health benefit: oats, almonds and heart

health; cranberries, blueberries and antioxidants

are all foods whose sales have benefited from

media buzz. The media has played a bigger role in

driving awareness of some foods than industry has:

blueberry growers, for example, can take no credit

for the popularity of their berries – that was a direct

result of media reporting of scientific studies on

blueberries’ intrinsic health benefits.As a result of the confluence of consumer

acceptance and media interest, the idea of

“superfoods” has taken hold and magazines,

websites and books regularly carry lists of “Top-20

Superfoods”.Fruit and products containing fruit have benefited

from these trends more than any other category,

and in Key Trend 5 we focus solely on fruit and

“superfruit”; therefore in this key trend we focus on

how the “naturally healthy” message can be used by

other categories and other food types.

INTRINSIC BENEFITS A WAY ROUND HEALTH

CLAIM RESTRICTIONSBecause a natural health benefit is an idea that’s

popular with both consumers and the media, foods

that can offer such a benefit will be able to maintain

their health appeal even in markets where regulators

forbid them from making any specific claims.

In Europe, for example, new health claim

regulations which set standards of evidence even

more rigorous than for pharmaceuticals will see

the disappearance of many health claims over the

next two years. Even cranberry juice will no longer

be able to discuss its scientifically well-established

benefit of fighting urinary tract infections; foods

whose claims have been approved by the US FDA

might find the same evidence rejected in Europe.

Companies will be forbidden from communicating

health benefits to consumers, but there is nothing to

stop journalists writing about the natural health

benefits of a food or ingredient. All those journalists

need is a continuous stream of information about

relevant scientific research – which savvy companies

will help them to access. Wise companies will also

look to see which ingredients are most written

about and include them in their products – as much

for their health halo as for any specific benefit.

In the European market, in particular, there will

be an increasing focus by product developers on

ingredients that have high consumer recognition

Almond growers have focused on making almonds a valuable ingredient. Today almonds are the nut most-used in chocolate con-

fectionery, worldwide.

Intrinsic benefits

10 Key Trends 2010


Digestive health

However there are significant groups of consumers, particularly in Asia and Africa, who perceive dairy products as having disadvantages in terms of their content of fat or lactose or who just want to have a plant-based diet or who simply aren’t used to the taste of dairy.There’s no reason why dairy should have such a monopoly. For the segment of consumers who want digestive health benefits but want them in a non-dairy form there are in most countries almost no alternatives – and certainly none that could be said to be convenient.

Probiotic Juice

It’s our belief that probiotic fruit juice is one category that can provide consumers with a viable alternative to dairy. Fruit juice is consumed everywhere, appeals to all types of consumers, has little or no negatives associated with it – especially now that product developers are so focused on lowering the calorific value and have an increasing arsenal of ingredients to enable them to do so – and it can be delivered in highly convenient packages

to allow individual, on-the-go consumption. Its convenience and taste appeal are advantages that few other categories can match.Moreover, in consumers’ minds fruit is a natural and credible vehicle for the digestive health message. Fruits such as fig, pear, prune, plum, kiwi, rhubarb – and many others – have a traditional association with digestive health in many countries. It’s for this reason that a digestive health dairy brand such as Danone’s Activia spoonable yoghurt uses such fruits as the flavours for its product, even though it’s the probiotic bacteria in the yoghurt, not the fruit, that deliver the digestive health benefit. The choice of fruit serves to reinforce the association with digestive health.It’s an opportunity that’s so-far under-exploited but, like all good ideas, the idea of juice drinks for digestive health is a very simple one and it’s already been around for a long time:

Calpis’ Fibe-Mini, a fruit juice with added fibre, was launched in Japan in 1988, and it still has annual sales of $45 million (€29.7 million).

ProViva, launched in Sweden in 1994, has shown how successful probiotic fruit juice (using a vegetable-source bacteria, not a dairy bacteria) can be even in a country – Sweden – which has a very high per capita consumption of dairy products andin which lactose intolerance is rare. It has annual retail sales of 25 million litres, worth around €50 million ($75 million), in a country with a population of just 9.1 million. If such a high per capita consumptionwere to be translated into the US market it would be equivalent to a $2.2 billion (€1.5 billion) brand.

GoodBelly, launched in 2008, is the US version of ProViva. It is essentially the same product based on the same active ingredient. Now targeted at early adopters after an abortive attempt to jump straightinto the mass market, it has annual retail sales of around $10 million (€6.6 million.)

Kellogg Pop Tarts are the first product to offer increasedlevels of fibre. Kellogg aims to have 80% of its products labelled as “good” or “excellent” sources of fibre by the end of 2009.

10 Key Trends 2010


Introduction

CHART 1: THE NUTRITIONAL PRODUCT LIFE CYCLE – WHERE THE TRENDS SIT

The chart below was developed to aid understanding of brand positioning and the evolution of markets. Many products start out

on the left, targeting consumers who have a need for a product that has effective technology. They sell in low volumes at premium

prices but over time their appeal increases and they move down the price curve to the right, eventually becoming mass-market

products. Few functional foods have yet made this transition – many companies deliberately target the lifestyle area as a way of

creating a defensible niche and maintaining premium prices. Below we show where some of the Key Trends and the Micro-Trends

– and the brands that are working with these trends – currently sit on the life-cycle. The stages of the life cycle are:

Technology consumers – These are the early adopters, people who have a near-medical need for a product. They need the

technology of the functional food to address their health condition. They see products in a medicalised context and, as with drugs,

they will pay a substantial premium for something that addresses their condition.

Lifestyle consumers – They are interested in maintaining their wellness, not fighting illness. They will adopt new brands and will pay

a premium for a product but only if it supports their lifestyle.

Mass-market consumers – They are motivated when a benefit becomes a standard and is available in products with low or no

premiums, ideally from well-known and trusted brands.

Source: Mellentin & Wennström, The Food & Health Marketing Handbook

Technology Consumers Lifestyle ConsumersMass-market Consumers

Solid line = sales volumes

Broken line = unit selling price

6% - 8% of consumers 20% - 25% of consumers67% - 74% of consumers

Sales

TIME

Omega-3

Protein

Bones &

Movement

Fruit & Superfruit

Weight

management

Energy

Digestive health

Heart &

Cholesterol

Naturally healthy

Published by

Report

10 Key Trends in Food,

Nutrition & Health 2010

by Julian Mellentin

MARCH 2010 38


PUBLICATIONS

REPORTS

Innocent Drinks: seven strategy lessons from the setbacks of Europe’s biggest smoothie makerInnocent Drinks rocketed from start-up to over $200 million in retail sales within eight years, creating a new category in Europe – fruit smoothies. But between 2007 and 2009 its sales plunged by 29% and prices were slashed. This unique 27-page report sets out the seven strategy lessons that can be learnt from the experience of Innocent.

Beauty foods and beverages: 7 strategy lessonsBeauty foods and beverages are big in Japan, but in the West few brands have gone beyond a niche. This unique report sets out the seven strategy lessons that can be learnt from the experience of Danone Essensis, Nestlé Glowelle and Borba Skin Balance Water - three case studies which provide the most clear insights into the risks and opportunities in the “beauty-from-within” business.

10 Key Trends in Food, Nutrition & Health 2010Our annual review, 10 Key Trends in Food, Nutrition & Health, is one of the most sought-after publications in the food industry. The report identifies the 10 mega-trends that will have the most impact on the food and beverage industries over the year ahead. This year we also include seven Micro-Trends, and we address regulatory issues in Europe. It points companies towards some clear and practical strategies for their functional food and beverage developments, production and marketing.

20 Key Case Studies in Functional and Health-Enhancing Beverages 2010Using 20 Case Studies of brands addressing a range of benefits – energy, joint health, sports beverages, protein boosting, digestive health, weight management and heart health – this report looks at what makes some functional and health-enhancing brands succeed and what makes others fail.

Probiotic juice: five key strategy lessons from Europe and the USCase studies in digestive and immune healthProbiotic juice is one of the biggest untapped innovation opportunities in the healthy beverage business, worldwide. The author of this unique report, Julian Mellentin, drawing on case studies from Europe and the US, sets out the five key lessons that are essential reading for anyone who wants succeed in probiotic juice.

Marketing Kids’ Healthy Beverages: Ten key case studiesIn the market for kids’ foods and drinks, it’s in beverages that you will find the most examples of success – and some of the smartest innovations.

Organic and all-natural kids’ snacks and baby foodsSeven key case studiesHealth-conscious parents seem committed to continuing to buy healthy food for their children despite the recession, even as they economise in other areas. This 42-page report looks in detail at these different approaches. Using seven detailed case studies we analyse the performance and strategies of leading organic and “all-natural” kids’ snacks and babyfood brands in the US and UK.

Failures in Functional Foods & Beverages: And what they reveal about successThe functional foods market is a complex one. Success with a new product or ingredient is rare. This unique 98-page report examines failures by functional brands and ingredients. It sets out the lessons that can be applied by anyone trying to develop an effective strategy for a brand or trying to commercialise nutrition science and offers concise strategies for reducing the risk of failure.

Energy shots: birth of a new premium-priced, high-growth categoryStrategies, trends and case studies from the US and UKSuch is the value to consumers of the proposition of a daily dose of energy with no added sugar that in the US alone this new category has soared to over $350 million in retail sales in less than two years - despite recession and despite selling at a massive 400% price premium over “mainstream” energy drinks such as Red Bull!

Trends & Strategies in Weight Management: Ten Key Case StudiesOur concise analysis shows which brand strategies are most effective and why, which ingredient strategies are most effective and why and sets out the key market and consumer trends. Our analysis is illustrated with ten detailed case studies which cover satiety and fat burning and look at how to use weight management to revive old brands or create new ones.

Superfruit: strategy for superfruit successSuperfruits are the product of a strategy, not something you find growing on a tree.Superfruits are revolutionising the way consumers relate to fruit and fruit-based products and they’re growing their market fast – from 40%-100% every year. And yet just a handful of fruits have crossed over from commodity status to superfruit stardom. This guide provides a checklist for superfruit success.

Probiotics: Successful Strategies from the Global MarketplaceThis report is written for anyone trying to develop an effective strategy in the challenging and fast-changing area of probiotics. It sets out the seven steps to creating a successful probiotic brand and describes probiotic strategy both in dairy and emerging new segments such as fruit juice and solid foods.

The Food & Health Marketing HandbookIn a competitive world how do you take your technology to market so that it’s your product that wins at the point of purchase? This handbook tells you how to get the best out of the science and the health benefits of your ingredients or products.

Price per unit SOLE USE ONLY (Multiple user price on request)

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CASE STUDIES

Anlene: What makes the world’s biggest bone-health brand so successful? Positioned as “Expert in Bone Nutrition”, Fonterra’s Anlene dairy brand dominates the high-calcium milk segment in Asia and is the biggest bone health brand in the world. Anlene has achieved that position as the result of both innovation in science and innovations in marketing, marketing communications, packaging and products. It’s a case study that provides a model of best practice for anyone looking to communicate clinically-proven benefits.

Danone Actimel: Innovation Builds a Probiotic Mega-BrandDanone’s Actimel probiotic drinking yoghurt is the world’s biggest immunity brand and one of the world’s biggest and most successful probiotic brands. In this report Actimel’s marketing communications, pricing, packaging, labeling, merchandising, advertising and consumer insights are analysed and explained in detail and illustrated with colour photographs, charts and images from advertisements to provide valuable lessons from which all food and beverage businesses can learn.

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Our case studies and reports give you unique insights into the vital and changing food, beverage and nutrition market.

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