Developing New Functional Food and Nutraceutical Products

Debasis Bagchi, Sreejayan Nair, Debasis Bagchi, Sreejayan Nair

• Publisher: Academic Press
• Year: 2016
• ISBN:
  9780128027790
• Topic: Technologie et ingénierie
• Subtopic: Sciences de l'alimentation

Developing New Functional Food and Nutraceutical Products provides critical information from conceptualization of new products to marketing, aiming to present a solid understanding of the entire process through detailed coverage of key concepts, namely innovation, regulation, manufacturing, quality control, and marketing.

Chapters provide insights into market and competitive analysis, product design and development, intellectual property, ingredient sourcing, cost control, and sales and marketing strategies.

• Examines key considerations in product development
• Provides a streamlined approach for product development
• Addresses manufacturing and quality control challenges
• Includes key lessons for a successful product launch and effective marketing

Chapter 1

Growth patterns and emerging opportunities in nutraceutical and functional food categories: market overview

Jeff Hilton BrandHive, Salt Lake City, UT, United States

Abstract

The dietary supplement, functional food, and beverage marketplace is a $150 billion category growing at 10+% per year. Eight key market trends appear to be driving activity and growth in this sector. Those 8 trends include: (1) marketplace convergence of categories, channels, and technology; (2) accelerated growth of functional foods and beverages; (3) cobranding partnerships between ingredient suppliers and manufacturers; (4) increased focus on science and claims validation; (5) growing demand for sustainable and eco-friendly products; (6) explosion in active nutrition products as consumers become more health conscious; (7) emergence and popularity of innovative dosage and delivery forms; (8) rise of the millennials and a new paradigm on health and wellness.

Keywords

convergence

functional foods

functional beverages

millennials

baby boomers

cobranding

clinical science

sustainability

eco-friendly

transparency

sports nutrition

active nutrition

dosage

delivery forms

nutraceuticals

1.1. Introduction

This chapter is perhaps unique in that it is written by a 25-year veteran of the natural products industry. My background includes positions with Nature’s Way, Nutraceutical Corporation, and consulting work with many of the top United States supplement and food companies including Solgar, NBTY, Natrol, Schiff, Dupont, and LESAFFRE. So I do come at this from somewhat of an insider’s perspective. It’s what I do every day. In that way, I hope my perspective is insightful for you. You will probably also note a slightly instructional tone as I tend to write as if I am speaking to a client.

Where do I begin to dissect trends in this $150+ billion sector? It’s growing overall at over 10% per year with functional food and beverages leading the way, followed by nutraceuticals and supplements at a somewhat lower growth rate. It is an industry going through almost constant change and evolution, partly due to the changing regulatory environment, and partly due to the ever-changing attitudes of everyday consumers regarding health and wellness.

As an overview to the content for this chapter, I have identified eight major market trends that I think are changing the face of the functional food, beverage, and dietary supplement business from a macro perspective. Those eight trends are:

1. Marketplace convergence of categories, channels, technology and consumers,

2. Accelerated growth of functional foods and beverages,

3. Cobranding partnerships between ingredient suppliers and manufacturers,

4. Increased focus on science and claims validation,

5. Growing demand for sustainable and eco-friendly products,

6. Explosion in active nutrition as consumers become more health conscious,

7. Emergence and popularity of innovative dosage and delivery forms, and

8. Rise of the millennials and a new paradigm on health and wellness.

1.2. Trend one: the power of convergence to change a marketplace

There’s something in the air these days. It’s the sound of change and evolution in the healthy lifestyles sector. It’s a movement with momentum and it is driving the marketplace. I like to call it convergence. And it manifests itself in a number of ways that provide insight into where we are headed as an industry. Any savvy industry observer can feel the winds of change uprooting “business as usual” and turning the paradigms we have all operated under for decades on their heads, frankly. I have identified four specific types of convergence that I think are changing the way consumers think and buy healthy or better-for-you products and services.

1.2.1. Category convergence

The lines are blurring between supplements, foods, beverages, and pharmaceuticals. As consumers become aware of validated nutrients that they want to incorporate into their diets, they want to consume them in the most convenient and nonintrusive manner possible. So they are increasingly relying on enhanced and fortified foods and beverages to supply the dietary supplementation traditionally and historically delivered through tablets and capsules. Smart dietary supplement manufacturers and suppliers should already be developing plans to make sure they have a primary or cobranded presence in the burgeoning functional food and beverage categories. In addition, convenience and portability are driving consumers toward alternative dosage forms that are more easily consumed and transported including liquids, gels, shots, gummies, and stick packs. Smart dietary supplement manufacturers are already testing alternative delivery forms or partnerships for their nutrients. Actual and virtual retail shelves are changing, and for good reason. Pill fatigue is not just a seniors concern…. it’s a people concern.

1.2.2. Channel convergence

The paradigm of control in the marketplace has been turned upside down, with the consumer now in control and wielding all the power. They can quickly and easily price shop and compare retail offerings with direct-to-consumer websites. They can dissect and research claimed features and benefits and access product reviews in seconds. Today’s consumer is all about transparency and authenticity, so there is no place to hide. Plus increasingly more integrative health providers are recommending and even dispensing dietary supplements to their patients. So as these various distribution channels continue to overlap and merge, the competition for consumer mind share is intensifying. Smart marketers are establishing revenue streams in each of these growing channels to tap into consumer trends in self-care that show no signs of diminishing. The name of the game in today’s environment is to be wherever the customer is, and that’s not easy.

1.2.3. Technology convergence

If the 23 & Me, Fit Bits, Apple watches, and other innovations in wearable technology have taught us anything, it is that consumers don’t need (or want) a doctor to tell them what’s up with their day-to-day health status. For catastrophic illness, MDs are still the first resort. However, for more general maladies and aging/prevention strategies, consumers are self-diagnosing in droves and using technology to monitor their cholesterol, blood pressure, sleep patterns, and even genetic propensities. Who knew? And that’s just the beginning. According to thought leaders and professionals, the “quantified self” is only just off in the distance as consumers take charge and proactively work to monitor their own health and wellness needs. Smart marketers are working on plans now to integrate their products with these emerging self-assessment technologies or get left behind.

1.2.4. Consumer convergence

So in my opinion, where all of this is leading is to a significant marketplace opportunity that rivals any we have seen in the past few decades. Consumers I think are empowered but they are also confused. They are armed with tactics, but don’t have an overall integrated plan of action for improved or sustained health as they age. They have their enhanced beverages, nutritional gummies, nutricosmetics, and their digital devices, but they don’t understand how to bring it all together in a cohesive and efficient and effective way. Where this is heading is toward a more customized, personalized healthcare delivery that takes into consideration the whole patient or consumer. What is lacking is an approach that integrates these elements into an actionable, credible, and easy-to-follow plan or regimen that can be tracked, customized, and replicated across a broad population.

Smart industry players are working to capitalize on this explosive megatrend resulting from the convergence of multiple categories, channels, technologies, and consumer demographics. Smart marketers recognize that this multifaceted convergence is one of the single biggest market opportunities we’ve seen in this nation of aging baby boomers and entitled millennials.

1.3. Trend two: functional foods and beverages

I remember back in the 1990s sitting in meetings talking about the potential of the functional food and beverage sector, which at that point was in its infancy. Now, over a decade later, we are in the ramp-up to significant expansion of the category with new products entering the market on an almost daily basis. A simple walk down the beverage aisle of Whole Foods provides an excellent example of the proliferation that has occurred. The sheer volume of functional beverage entries is both staggering and intimidating. Even more sobering, probably 50% of those brands won’t be on the shelf one year from now. The beverage aisle is a brutal retail battleground where brands either thrive or die. Functional food brands have not yet proliferated to the extent that functional beverages have, but based upon a review of marketplace activity and trends, many more functional food product introductions are on the horizon. And the key driver here is the consumer, believe it or not. In survey after survey, consumers have stated that they prefer their health and wellness to result primarily from what they eat and drink on an ongoing daily basis, so it is not a huge leap to expect expanded growth for these once vertically niched market segments.

The following seeks to identify, review, and discuss some significant and relevant ingredient and formulation trends in these growing categories.

1.3.1. What is a functional food?

As defined by the Institute of Medicine in Washington, functional foods are “those foods that encompass potentially healthful products, including any modified food or ingredient that may provide a health benefit beyond the traditional nutrients it contains.” Functional foods can i...