© datamonitor 2 insights into tomorrow’s nutraceutical consumers john band march 2006

© Datamonitor2

Insights Into Tomorrow’s Nutraceutical Consumers

John Band

March 2006

© Datamonitor3

Agenda

• Market context

• Consumer insights

– Lifestyle health problems are on the rise

– Healthy eating is increasingly part of consumers’ lives

– People do not believe manufacturers’ health claims

– Consumers have an attitude-behavior gap over healthy eating

• Conclusions

© Datamonitor4

The nutraceuticals market is much larger in the US than in Europe

-

5

10

15

20

25

30

1999 2004 2009

Nu

trac

euti

cals

mar

ket

valu

e (U

S$b

n)

Europe

US

Market context

Nutraceutical consumption is growing fast

• The US nutraceutical market was worth US$18.9bn in 2004, with annual growth averaging 7.2% between 1999-2004

• The European nutraceuticals market is less developed than that in the US with sales of US$5.0bn in 2004, but is growing slightly faster at 7.4% a year

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What are the consumer trends driving growth?

• Rising consumer awareness of, and active interest in health

• Growing trend towards self-medication

• An aging population concerned with health and beauty

Market context

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What are the key developments within the industry?

• Technological advancements in ingredients:

– New functionality

– Efficacy

– Taste & usability

Market context

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• Effective remedy for female health issues such as estrogren imbalance and menopause

• New studies are encouraging for efficacy in treatment of hormonal shifts

• Arthritis and joint disease are increasingly concerns for Baby Boomers

• New formulations are not shellfish-derived and can be used widely

• Beverage and candy forms are growing in popularity

• Fishy taste, texture and instability have kept growth relatively low

• New powder form of omega-3 is heat-stable and tasteless and can be used in foods and drinks

Formulation developments have affected a number of ingredients

• Recent data has linked calcium consumption to increased weight loss

• Studies showed that subjects ingesting lowest levels of calcium were six times more likely to be overweight

CALCIUM

• Plays large role in energy production

• Recent findings show that CoQ10 supports oral and gum health

• CoQ10 depletes with age

CoQ10

• Associated with prostate health, eye health and cancer prevention

• New application in skin health and anti-aging have been developed

LYCOPENE

OMEGA-3 GLUCOSAMINEBLACK COHOSH

Market context

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Strong growth in the usage of nutraceutical claims

5.5%

11.5% 10.5%

23.7%

9.9%

15.1%16.1%

25.3%

0%

5%

10%

15%

20%

25%

30%

Food Beverages Food Beverages

Europe US

2001 2005

% of new product

launches

The number of nutraceutical claims made on-pack on new launches

Market context

Source: ProductScan analysis of 30,000 launches tracked per year across Europe + US

© Datamonitor10

Agenda

• Market context

• Consumer insights– Lifestyle health problems are on the rise



– There is an attitude-behavior gap over healthy eating

• Conclusions

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Lifestyle health problems drive nutraceutical consumption

0%

10%

20%

30%

40%

50%

60%

70%O

ral h

eal

th

Ene

rgy

Gut

hea

lth

Ski

n, h

air,

nails

Moo

d

Hea

rt h

ealth

Eye

hea

lth

Ant

i-ag

ing

Bon

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ealth

Alz

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er's

Insight: lifestyle health problems are rising

Which of the following are you concerned about on a regular basis?

HIGHER LOWERDaily Relevance

Source: Datamonitor / Nutraceuticals World survey 1,002 US consumers, 2005

% of US adults, 2005

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Gut health concerns motivate mainstream consumers


(millions of people)

Nutraceutical consumers

Those with illness

At-risk population

Heart health 4.0 107.4 191.4

Bone health 2.2 73.0 117.3

Gut health 3.7 0.5 6.5

• The number of people who regularly consume specific heart- and bone-healthy nutraceuticals in Europe is far lower than the number of people suffering from associated conditions.

• The reverse is true for gut health, because gut concerns are important to all consumers.

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Gut health concerns motivate mainstream consumers

Gut friendliness, microbes

Improved digestion

Healthiness, superiority

Wellbeing

Control over life and health

Lightness, energy, contentment

Promotes health effects

Taste and sensory quality

Reasons to choose functional yogurts

Physical wellbeing Mental wellbeing

Pleasure and enjoyment

Freedom of choice, variety

Fruit and berries, sugar

Gut friendliness, microbes

Improved digestion

Healthiness, superiority

Control over life and health

Lightness, energy, contentment

Promotes health effects

Pleasure and enjoyment

Freedom of choice, variety

Fruit and berries, sugar

Consumers enjoy “indulging” in health – they want to feel good now


© Datamonitor14

There is a market for targeting long term health

• Of course, there are potentially large addressable markets for targeting medical / long term health concerns


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Heart health is a growing unmet need


The number of people suffering from heart disease is rising as the population ages

Number of heart disease sufferers, 2000-2010:

Source: Datamonitor

0

5

10

15

20

25

30

2000 2002 2004 2006 2008 2010

France

Germany

Italy

Spain

UK

Sweden

Netherlands

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6466687072

74767880

2000 2005 2010

Bone health concerns are also driven by an ageing population

Source: Datamonitor Healthcare Business Unit


NB: Osteoporosis = brittle bones; osteopenia = weak but not brittle bones

The number of people suffering from bone health conditions is rising

European osteoporosis and

osteopenia sufferers (millions)

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• In all countries, around 30% of consumers consider it ‘very important’ to improve physical health through diet

• This suggests a hard core of healthy living and healthy diet advocates

• The extent to which mainstream consumers follow their lead depends strongly on local and cultural factors

People increasingly understand the importance of a healthy diet

European and US Consumer Survey

0% 20% 40% 60% 80% 100%

France

Germany

Italy

Netherlands

Spain

Sweden

UK

US

% respondents

Not important Important Very important

Insight: healthy eating is part of everyday life

Healthy eating is increasingly part of consumers’ lives

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Successful products focus on desires for a healthy lifestyle

“Keep your Inner-self healthy and happy”

“Thick and creamy yoghurt”


“Friendly bacteria”

Ads about not caring what others think – feeling superior to the average Joe

Danone:

Yakult:

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Consumers want quality of life not just longer life

• Life expectancy is rising, we expect to live longer

• But it’s not enough to just prolong an average / unfulfilled life

• World Values Survey data shows that consumers values are shifting from materialism to post-materialism – from security to quality of life

• We want to be happier, be in control, live the celebrity lifestyle, have satisfying careers not just secure ones… = Quality of life

Why consumers want the ‘feelgood’ factor:


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• Consumers across the US and Europe are skeptical of the product claims made by food and drinks manufacturers

• They view them as less trustworthy than banks, insurance companies, utilities or car dealers.

0%

10%

20%

30%

40%

50%

60%

70%

Trustworthy Untrustworthy

Nutritional claims made by food and drinkplayers

% r

es

po

nd

en

ts

Europe

US


Insight: people do not believe health claims

People do not believe manufacturers’ health claims

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• People are especially skeptical of health-boosting claims (rather than general nutritional claims), which is a serious barrier to wider nutraceutical adoption.

• Snake-oil salesmen, psuedo-science and promises of ‘miracle cures’ have eroded public confidence

0%

10%

20%

30%

40%

50%

60%

Trustworthy Untrustworthy

Health-boosting claims made by food and drink players

% re

spon

dent

s

Europe

US



People do not believe manufacturers’ health claims

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Consumers do not value specific ingredients as highly as manufacturers think

60%56%

74%

36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Awareness Purchasing Driver

Manufacturers

Consumers

Source: Datamonitor / Nutraceuticals World survey 1,002 US consumers; local trade interviews, 2005

Manufacturers need to focus on educating consumers about the benefits of functional ingredients

Manufacturers’ perceptions of consumers’ awareness of and purchasing driver for Omega 3, and actual consumer survey data


© Datamonitor24

88%79%

96%

69%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Manufacturers Consumers

Calcium

75% 74%

88%

60%


Antioxidants

52%

38%

67%

22%


Glucosamine

Consumers do not value specific ingredients as highly as manufacturers think

Source: Datamonitor / Nutraceuticals World survey 1,002 US consumers; local trade interviews, 2004


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• Focus tightly on specific health benefits

– Functional food and drinks cannot adopt a general wellness position: although consumers believe that certain ingredients can benefit specific areas of wellness, they tend to reject claims that a product can produce change for the better across a range of health conditions.

• Seek endorsements from reputable organizations

– 40% of consumers say that specialist advice would make them more likely to buy a cosmeceutical product. This is also the case for nutraceuticals, which tend to have similar functional benefits.

Manufacturers must communicate effectively with consumers to gain their trust


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• Younger consumers show the biggest gap concerning general health

– In both Europe and the US, consumers are highly likely to say they believe that improving physical health is important, but are less likely to take active steps to improve their physical health – the spirit is willing, but the flesh is weak.

– Young Adults are almost 20% less likely to have taken steps over the last year to improve physical health than they are to believe that physical health is important, whereas this gap is as low as 4% among Late Senior consumers.

Insight: the attitude-behavior gap

Consumers have an attitude-behavior gap concerning healthy eating

© Datamonitor27

• Men show the biggest gap when it comes to healthy eating

– There are deep-seated differences in attitudes: while attempting to follow a healthy diet is expected for women, many men view this as un-masculine and as a waste of time.

– This difference is particularly pronounced in the US, but it also exists in Europe.


Consumers have an attitude-behavior gap concerning healthy eating

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Consumers want good taste and ‘fit’ with their lifestyles


• Taste is still more important than health

• Convenience dominates lives – the demand for quick fix solutions

– Few people like making significant lifestyle changes (e.g. only 1% of dieters achieve permanent weight loss) - people want quick fixes

– So make products simple and easy to use

– Does the product meet the occasion? – portable, ready-to-use, single serve etc.

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• Use natural ingredients for taste and authenticity

– Targeted functional products can be made from natural ingredients, but many natural products currently just make general health claims.

• Tap into demand for ‘accessible premium’ products

– Some nutraceutical categories can be marketed as strongly aspirational even at a relatively low price point.

Products that address the attitude-behavior gap


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Agenda

• Market context

• Consumer insights

– Lifestyle health problems are on the rise



– There is an attitude-behavior gap over healthy eating

• Conclusions

© Datamonitor31

Conclusions

• The largest addressable market is in ‘high daily relevance’ areas such as performance boosts and presentation rather than long term disease prevention / treatment.

• Long term health needs can be exploited, but you need to show immediate benefits (mental well-being) to reach the broadest market among those that are interested.

• In either case, offer consumers immediate benefits – mental well-being / feelgood factor and communicate these in a positive, non-threat based way.

• Consumers are skeptical of product claims, so build your products’ functionality on credibility – offer specific health benefits, don’t be general.

• To overcome the attitude/behavior gap, the product needs to taste good and ‘fit’ with their lifestyle.

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Don’t forget: is your offering better than alternative solutions?

• Does your offering really provide a better consumer solution than existing options?

• Often you will be up against some powerful competitors:

– Medical functional food/drink vs.Over-the-counter medicines

– Energy boost food/drink vs. Coffee

– Anti-stress functional food/drink vs. Cigarette; Alcohol

• Often it won’t be. So don’t invest in haste

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Checklist for success

• High daily relevance

• Specific, clearly communicated benefits

• Offers immediate mental well-being

• Positively marketed, lifestyle positioning

• Taste

• Convenient fit with lifestyles

• Best vehicle / format for delivery

• “Something I care about”

• “I understand it, I believe it”

• “Makes me feel-good now”

• “It’s yum” - (I’ll buy it again)

• “I can get it, it’s easy to use”

• “It’s my best bet for getting this”

Your offering has: Why it’s important to consumers:

© Datamonitor34

Contact us for your research requests…

• Giles WattsSales [email protected]+44 20 7675 7255

• Gordon Cousland, Client Services [email protected]+44 20 7675 7035

• John BandManaging [email protected] +44 20 7675 7183

• Jill-Marit Lerum Cornes, Lead [email protected]+44 20 7675 7102

mailto:[email protected]




© datamonitor 2 insights into tomorrow’s nutraceutical consumers john band march 2006

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