Future perfect – identifying market needs31 July 2014
When it comes to leading the field, the truly successful are those that can identify a gap in the market before it becomes an explicit need. Peter Leighton, functional food and nutraceutical trailblazer, and founder of the Abunda integrated consultancy group, explains where he sees the sector’s future.
When asked what it was that set him apart from his competitors, Hall of Fame ice hockey player Wayne Gretzky said: "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."
This sentiment encapsulates the one behaviour that separates exceptional companies from others. Market-makers understand that minor differences and slight improvements aren't real innovation; that real innovation is what drives profits. But the only way to truly innovate is to aim for where the market is going to be and address an as-yet-unarticulated need.
Through the use of analytical tools, such as ethnographic research and cross-impact analysis, I have identified foundational trends that offer opportunities ripe for innovation and growth. These include a growing desire for self-care, fitness, convenience (grab and go), nutritional solutions, the connection between food and health, the growth of cosmeceuticals (beauty from within), healthy snacking, raw foods and ecological activism.
When analysed, these trends illustrate four specific market opportunities that are crying out for innovative products and unique solutions:
- Lifestyle antidotes: If you haven't figured out that consumers are not going to radically change their lifestyle behaviour, you have your head in the sand. We all know we need to exercise more, eat fresh fruit and vegetables, and increase our fibre intake. Yet we don't do it. We're looking for ways to avoid the hard work that's required to change our poor lifestyle practices. Instead, we seek an antidote for our lifestyle.
- Functional foods: As consumers look to justify or rationalise their behaviour, savvy marketers are delivering solutions in the form of functional foods. These are convenient food and beverages that have a positive wellness orientation, delivering more than simple nutrition. Healthy snacks, breakfast 'on the go' and fortified foods allow consumers to continue their lifestyle actions while mitigating their negative impact.
- Simplification: Living a complex and stressful life, many consumers are seeking simplification. This can be delivered in several ways, but the end result is giving users an intuitive, thoughtful nutritional solution that can be easily integrated into their lives. This requires leveraging consumers' beliefs and understanding, while delivering a thoughtful solution.
- Personalisation: The 'me' generation wants personalised nutrition. This is possible, based on advances in research, discovery and delivery. Through simple biological tests, we can identify key health-concern markers and customise a nutritional solution specifically for the individual. This is one area prime for commercialisation.
Beyond these market opportunities, there are ongoing product trends that will continue to show strong growth.
The US market value for products carrying an antioxidant claim is estimated at over $1.2 billion, and they are among the top five health components that consumers want in their food products. In the US, 29% of adults are seeking out high-antioxidant groceries, and 44% of women buy skincare or cosmetic products that promote their antioxidant content. Mintel reported that new antioxidant product launches for food and food supplements increased by about 10% between 2010 and 2011.
Current awareness of antioxidants is high, and, while few understand exactly what they do, most recognise antioxidants as 'good'. The industry is conducting more studies on condition-specific benefits, including cardiovascular health, skin health, cognitive function, blood sugar balance, weight management and inflammation.
We are now seeing the development of a new and powerful class of antioxidants; for example, synthetic triterpenoids have demonstrated the ability to block the development of Parkinson's disease.
In the US, 72% of people are trying to increase their fibre intake. Fibre is crucial to maintaining a healthy digestive system. It helps control cholesterol and blood sugar, and regulates appetite while supporting weight loss. Consumers are recognising these benefits: 84% are aware fibre is beneficial for weight loss, 79% healthy digestion, 43% heart disease, 39% risk of cancer and 36% for healthy blood sugar levels.
There is a gap in the market when it comes to awareness and action, though. It is generally recommended that an individual should consume about 30g of dietary fibre a day, preferentially from food rather than supplements. However, most adults average only 15g a day - only half the recommended amount.
Probiotics is one of the fastest-growing sectors in functional foods. Global volume consumption is over three times that of omega-3, making it the most successful functional ingredient in packaged foods, after vitamins and minerals. Global probiotics demand was $27.9 billion in 2011 and is expected to reach $44.9 billion in 2018, growing at a compound annual growth rate (CAGR) of 6.8% from 2013 to 2018. The lion's share of probiotic sales has been in food and beverages, with annual growth forecast at 7.6% until 2015.
Probiotics were ranked as the most important nutrient by 81% of Americans in 2011, and 57% of shoppers want to learn more about probiotics and immune health, recognised as a secondary benefit after gut health. But the current understanding and acceptance of probiotics - as being strongly linked with gut health and immune function - is just the tip of the iceberg. More than 100 trillion microbes inhabit the human body, vastly outnumbering other cells, and new research into the connection between the microbiome and chronic disease is advancing at a fast pace. MetaHIT, a four-year, €22 million EU-funded study, and the US National Institutes of Health's Human Microbiome Project are just two examples.
The MetaHIT study has shown that the make-up of human gut microflora may have an impact on the development of type 2 diabetes, leading to the creation of probiotic strains that are demonstrating a positive effect on metabolic disorders and obesity.
Scientists have discovered a link between gut microbiota and obesity, noting that microbial populations in the gut are different between obese and lean people, and when the obese lose weight, their microflora changes to that of a lean person. Two hormones responsible for sending hunger signals to the brain were found to not function properly without adequate levels of probiotics in the body. Decreased levels of probiotics result in lower leptin production, leading to an increased urge to overeat, resulting in weight gain.
Canadian researchers found that probiotics not only boosted chronic fatigue syndrome patients' 'good' bacteria in the gut, but also led to a significant decrease in their depression and anxiety symptoms. The researchers believe that probiotics 'crowd out' the more toxic stomach bacteria linked to mood disorders. Furthermore, researchers are finding cardiovascular benefits with certain strains of probiotics; Lactobacillus reuteri NCIMB 30242 helps reduce low-density lipoprotein (LDL) and overall cholesterol levels.
Probiotics have benefits for oral health conditions, as several strains have shown promise against gingivitis. Recently, oral lactic acid bacteria and bifidobacteria have been isolated and characterised for various oral health purposes, including decay, periodontal diseases and halitosis. Streptococcus salivarius K12 and M18 can help fight common oral-care problems by producing a natural protein that stops the growth of the bacteria that causes bad breath. Lactobacillus paracasei was found to be effective against the main bacteria associated with tooth decay.
Phytosterols are plant-derived compounds similar in structure and function to cholesterol, but they inhibit cholesterol's intestinal absorption. While statins reduce cholesterol synthesis by inhibiting the rate-limiting HMG-CoA reductase enzyme, phytosterols reduce cholesterol levels by competing with cholesterol absorption in the gut, a mechanism that complements statins. Demonstrating synergistic benefit in statin users, phytosterols further reduce cholesterol levels by 9-17%. Considering the number of statin users, there is an obvious market opportunity.
The US FDA concluded that, when consumed in the 1-3g range in enriched foods, phytosterols resulted in statistically significant (5-15%) reductions in blood LDL cholesterol levels relative to placebo. The FDA also concluded that a daily dietary intake of 2g a day of phytosterols (expressed as non-esterified phytosterols) is required to make an authorised health claim relating phytosterol consumption to cholesterol lowering and cardiovascular disease risk. The European Foods Safety Authority concluded that blood cholesterol could be reduced by 7.0-10.5% if a person consumes 1.5 to 2.4g of plant sterols and stanols every day. The scientists found that the effect is usually established within the first two to three weeks.
The global market for phytosterols was estimated to be worth over $391.5 million in 2010 and is expected to exceed $887.8 million by 2018, at a CAGR of 9.5% during 2013-18. Europe accounted for 51% of the global market for phytosterols in 2011, followed by North America.
Polyunsaturated fatty acids
In 2011, global sales exceeded $1.86 billion, and PUFAs are predicted to see a 13.6% CAGR for 2012 to 2016. One wild card is the acceleration of pharmaceutical essential fatty acid products hitting the market, which will likely drive stronger growth for functional food and beverages, but may have a negative effect on the supplement market, although time will tell whether that market will also kick into overdrive.
Research shows that PUFAs reduce inflammation and may help lower risk of chronic diseases such as heart disease, cancer and arthritis. There is also mounting data to support cognitive health benefits. Clinical studies suggest that diets rich in omega-3 fatty acids lower blood pressure in people with hypertension. Fish oil has been shown to lower levels of triglycerides and the risk of death, heart attack, stroke and abnormal heart rhythms in people who have already had a heart attack.
Trends to watch
After analysing consumer lifestyle trends and perceptions, demographic data, product sales and ethnographic research, the following six additional trends look to be affecting the consumer nutritional market:
- Better breakfasts: About 10% of the US population does not eat breakfast. Driven by a need for convenience, this trend is all about packing the right blend of nutrition and function into a convenient and delicious serving occasion.
- Cosmeceuticals: Whether it's beauty from within or functional ingredients for topical use, this is a growing trend that will be continuing. Fuelled by an anti-aging and self-directed healthcare mindset, consumers are becoming savvy to new advances in botanical research and are looking for new solutions. In 2011, US sales of skincare cosmeceuticals reached $4.7 billion, and the value of the cosmeceutical haircare category was estimated at $3 billion.
- Healthier snacking: 74% of people surveyed believe that natural means healthier. Guilt reduction is the driving force, as consumers don't want to forego snacking, but they want to feel better about the snacks they consume. Yet, they will not give up the taste factor and convenience that is the cornerstone of snacking. The global snack foods market will reach $334.7 billion by 2015.
- Boosting reality: Experiential products that can deliver a boost to life, such as energy or mood alteration, often see dramatic consumer response. While one may consider alcohol as the poster child for this trend, there are many nutraceuticals that pack an experiential punch. The paradox is that the more experiential the product, the more likely it is to come up against regulatory barriers.
- Trend-monger: Using food as a badge of sophistication or an ethical statement is promoting a movement towards the exploration of more esoteric cultural foods, especially ones that provide a unique ethical story such as Fairtrade, heirloom or varietal.
- Eco-warrior: Taking the trend-monger a step further, there is consumer interest in using food choices as a means of activism. This includes thoughtful sourcing of ingredients, manufacturing and packaging, as this trend is driven by an intense interest in using the product as a means of driving social change. Sustainable ingredients, raw foods, negative carbon footprint and minimal packaging are some of the keys to this trend.