Marketing Issues for Functional Foods and Nutraceuticals Foods By

Shune Lei Thu Master of Research Science

History

• Functional foods and nutraceuticals food (1990) in US and international.

• In 1999, strong market gains for foods using Nutrition Labeling and Education Act (NLEA) approved health claims and nutrient content claims as part of their marketing message.

• Try to communicate the consumer to get attention

Introduction

• ‘Nutraceuticals’ in 1989 to describe food products that have a medicinal benefit.

• Provided by physical as well as mental and to reduce the risk of disease

• Includes functional foods (such as vitamin-enriched products), nutritional supplements, sport drinks, and medically formulated foods.

• The global functional food and nutraceuticals market is divided into the following categories: • Functional food • Functional beverage • Dietary supplement (one or

any combination of substances like minerals, amino acids, vitamins, and herbs)

• Functional foods help to prevent the disease 1980, Japan, FOSHU (food for specified health use) provide a specific medical or physiological benefit, in addition to the primary nutritional benefits

• Non-alcoholic drink made with non-traditional ingredients• herbs, minerals, vitamins, amino acids, or raw fruits or vegetables • to improving joint mobility, boosting the function of the immune

system or heart, increasing energy and satiety, and creating a sense of well-being

Evolution of Marketing Environment

Good For You

to lower the risk of cancer, heart disease, and other chronic diseases of aging

the food label is a primary nutrition education vehicle for the consumer

Regulatory Background

• Since 1973, FDA regulations labeling

• the food is adequate or effective in the “prevention, cure, mitigation, or treatment of any disease or symptom” is deemed “misbranded.”

A. APPEARANCE OF PERMISSIVE HEALTH CLAIMS ON FOOD PRODUCTS

B. REACTION AND INSTITUTION OF THE NLEA

A. Appearance of Permissive Health Claims on Food Products

mid-1980s the FDA acceleration of explicit health-related and disease-related claims to justify and benefit the public health

1984 promotion of “All Bran” cereal by Kellogg’s Company with labels

benefits of fiber• reduce the risk of

some kinds of cancer

• best sources of fiber

National Cancer Institute (NCI)promotion

Use of diet, and specifically foods rich in certain nutrient properties Consumers

Late 1980s, Oat bran lowered blood serum

cholesterol and the reduced risk of chronic heart disease

Calcium reduce the risk of osteoporosis (diary products and dietary supplements)

vegetable oil products must be cholesterol free to better for heart

B. Reaction and Institution of The NLEA

• To be labeled as healthy, food must meet – “low” for fat and saturated fat (specific nutrient content claims on the label (21 C.F.R. 101.65(d)(2))

• For a health claim to be approved on a food product, the claim must be submitted to the FDA with full scientific documentation.

• All materials enter the public domain. • After lengthy review and public comment, estimated to be in excess of 500 days, the

claim may receive generic approval for use by all products that meet the qualification of the claim.

• A health claim permits a statement linking the nutrient with a disease state. • A dietary supplement claim is limited to a structure–function statement connecting the

nutrient to good health. It can be used on the label and requires a 90-day postmarketing submission to the FDA.

• Substantiation is necessary for the claim, which also is generically available for qualifying products.

• There are substantial and critical marketing differences in the two claim approval formats and the language structure permitted by the two regulatory structures for foods and dietary supplements.

Introduction To Consumer Marketing IssuesFor Nutraceuticals And Functional Foods

• Female, middle-aged, affluent, and more educated than the average consumer who are represent a desirable marketing segment

General Factors

Good Taste Not only should nutraceutical products provide good taste, they must promise good taste in their advertising and reinforce the consumer’s curiosity for good taste.

Brand name connects to functional advantage Health benefits of the productUnique functional value of the food

Consumer education required Levels of consumer education appear to follow public health campaigns, and to the degree that approved health claims receive rapid exposure in the commercial and public health media, consumers quickly appreciate new nutrient benefits.

Avoid information overload omplicated quantitative messages and comparative mathematical relationships can be misunderstanding to consumers so these information is useful for the medical audience and the informed consumer and its presence provides value for these purposes.

Competitive set determined by health issue Cholesterol-lowering foods, whether oatmeal, soy, or stanol ester spreads, are in direct competition with ethical drug products for this purpose and provoke strong competitive response from the pharmaceutical industry. These defensiveresponses are addressed to both the consumer and the medical community.

General FactorsNon-verbal messages important Important method for communicating good taste, quality

assurance and functionality. So satisfied users enjoying the product. Used to suggest target market consumers, product quality, and to provide a “natural” halo for the product with visuals of fields, growing plants, plant botanical graphics, or other reassuring images.

Usage occasion suggests to the consumer the method for incorporating the product into a daily routine, thereby meeting dosage demands. It also suggests product substitution possibilities, which increase likelihood of product adoption.

Avoid negative advertising Functional foods are excellent sources of “better” and “good-for-you” product messages and are easily positioned to emphasize their positive advantage. This good health approach also is less challenging to the regulatory structure.

Niche markets Bioactive ingredients are better understood, they are promoted for specific use by specific populations and represent niche market opportunities.

General Factors

Dosage and standardization The regulatory environment, the educated consumer, and the medical community will be asking for levels of bioactive presence to fulfill efficacious dosage levels. Standardized product will be an important factor for assessing productquality, and perhaps even to meet required product certification in the future.

• The functional food industry is growing steadily worldwide. Innovative products are being launched continuously and competition is fierce.

• Researchers agree that the market is growing at an annual rate of 8-14%, but the exact size of markets for functional foods is difficult to measure.

• Depending on the source of data and definition of this category of products, the global market could range from US$7 to US$167 billion (Market Research, 2004).

• Significant predictors of functional food consumption are related to consumers‘ health motivation, perceived diet effectiveness of products, and knowledge about nutrition (Landström et al., 2007, Petrovici & Ritson, 2006).

• Worldwide consumers believe that functional foods are used to compensate for an unhealthy lifestyle and their opinion is that people should eat and live a healthy life, without relying on single food products (Landström et al., 2009).

• They think good feelings is derived from using the functional food.

Market Growth

• The global functional food and nutraceuticals market is expected to grow at a CAGR of 7.39% during the period 2016-2020.• The Market Size is predicted to rise from $168 Billion in 2013 to $305.4 Billion in

2020.

• The highest growth in the market is being recorded in the energy drinks, healthy snacks and breakfast products sectors.

Type, Benefits, Origin, Ingredients, Consumer and Geography

• Consumers are becoming more interested in following healthier diets to help with digestive disorders by increasing their intake of functional food and nutraceuticals.

• Considered to aid skin health, build immunity, and increase energy levels, enabling general well-being in products

• A major concern for both manufacturers and consumers affects the credibility of vendors in the market.

Key Vendors BASF Coca-Cola Kellogg Nestlé PepsiCo

Nutraceuticals represent an exciting new opportunity for food and pharmaceutical companies to diversify

CHALLENGES RELEVANCE OF NUTRACEUTICALS

PHARMA COMPANIES Declining return on R&D investment ‘Patent cliff Pressures on health

budgets Regulatory oversight

New sector with lower R&D costs New revenue source Most purchases are by

consumers Less onerous regulatory

requirements

FOOD COMPANIES Slow-growing Retailer-owned brands

Retailer power

Internet marketing

Fast growing Source of differentiation & higher marginsInnovative products increase bargaining powerAccepted channel for new products

Global nutraceutical food market by country/regional share

14

22

30

34

%

Europe

Japan

US

Rest of world

The annual global nutraceuticals market is expected to be worth US$250 billion by 2018

Euromonitor, 2010 figures.

GLOBAL NUTRACEUTICAL MARKET - FOODS, BEVERAGES AND SUPPLEMENTS, 2009-2016 ($ MILLIONS)

http://www.bccresearch.com/pressroom/fod/global-nutraceutical-market-worth-$207-billion-2016

Predicted growth rate of nutraceutical usage

The global nutraceutical ingredient market is estimated to experience a growth rate of 7.2% from 2013 to 2018.

Functional Food Market

24

298

25

13

%

Fortified Baked GoodsFortified Malted Health DrinksFunctional DairyFortified Edible OilOthers www.slideshare.com/nuraceuticalproducts.india_2012

Trends of nutraceutical functional beverages in Europe

http://mydrinkbeverages.com/trends-of-nutraceutical-functional-beverages-in-europe

New Nutrition Business Predicts Top Trends for 2015

http://www.nutraceuticalsworld.com/contents/view_breaking-news/2014-12-15/new-nutrition-business-predicts-top-trends-for-2015

Shoppers Tend to Seek Several Claims in Tandem, Revealing Underlying Motivations. (% of consumers seeking a particular attribute) From Food Marketing Institute, U.S. Grocery Shopper Trends, 2014

http://www.ift.org/food-technology/past-issues/2015/april/features/the-top-ten-food-trends.aspx?page=viewall

• Childs* N.M., Marketing Issues for Functional Foods and Nutraceuticals, Chapter 31, Handbook of Nutraceuticals and Functional Foods, Edited by Robert E . C . Wildman, CRC Press 2000Print ISBN: 978-0-8493-8734-0 eBook ISBN: 978-1-4200-3669-5 DOI: 10.1201/9781420036695.ch31

• Nutraceuticals: The future of intelligent food, 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. www.kpmg.com

• http://www.businesswire.com/news/home/20160404006062/en/Global-Functional-Food-Nutraceuticals-Market-2016-2020

• http://www.nutraceuticalsworld.com/contents/view_breaking-news/2014-12-15/new-nutrition-business-predicts-top-trends-for-2015

• http://www.ift.org/food-technology/past-issues/2015/april/features/the-top-ten-food-trends.aspx?page=viewall

• http://mydrinkbeverages.com/trends-of-nutraceutical-functional-beverages-in-europe• www.slideshare.com/nuraceuticalproducts.india_2012• http://www.bccresearch.com/pressroom/fod/global-nutraceutical-market-worth-$207-billion-2016• https://www.google.co.th/search?

q=consumers+demands+for+functional+food+and+nutraceuticals+food&biw=1366&bih=657&source=lnms&sa=X&ved=0ahUKEwjY1a6tl_rLAhUSCo4KHX65BY8Q_AUIBigA&dpr=1

Reference

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