The functional foods market is a highly complex one. Success with a new product or ingredient in this harsh and demanding market is very rare. In fact, failure is far more common than success and most products sell on a niche basis with very, very select few ever graduating into the mass market.

This one-of-a-kind report draws on the lessons that can be gleaned from functional food failures. It is a unique study which examines brands that have either been withdrawn from market or have not performed as well as parent companies would have expected. As well, it scrutinises ingredients that have fallen foul of the market or have appealed to such a small niche that they have not contributed to any increase in functional food sales.

The demise of brands such as Novartis' Aviva; Unilever's blood pressure-lowering drink; Delamere Dairy's Top Life Prime Time: Danone's Activ; Pfizer's Body Smarts; and Marks & Spencer's & More become the bases for five valuable lessons about branding, marketing, health claims and product differentiation. The stories behind the languishing US sterols market, lactoferrin and lutein provide five lessons about the dos and don'ts of nutrition science commercialisation.

Each of the brands and ingredients covered in this case study are based on interviews with executives at the companies concerned. They speak with considerable frankness as they describe the challenges they have encountered and overcome. We have set their opinions in the context of our own analysis - which means that we do not always agree with some companies' self-analysis - to create a template that is intended to be of use to anyone trying to develop a new product with health benefits or devise a strategy in health.

The categories that we cover in this report are:

• Breakfast cereals and cereal bars
• Dairy drinks
• Confectionery
• Water
• Juice drinks
• Ready meals

This 61-page report is authored by Julian Mellentin - an acknowledged international expert on the business of food, nutrition and health - the insights have been derived from over ten years of dedicated research in the area. Much of the research originates from work on our journal, New Nutrition Business - one of a very few industry publications dedicated to this important area - other examples have been gained from work with clients around the world.

1. Overview

2. Five brand lessons for the commercialisation of nutrition science
Brand Lesson 1: Hard health claims are not essential
Brand Lesson 2: Market a relevant benefit
Brand Lesson 3: The importance of brand relevance
Brand Lesson 4: It’s not possible to have ‘complete ranges’ – brands only stretch so far
Brand Lesson 5: Differentiation through packaging design can achieve price premiums

3. Brand case studies
Case Study 1: Novartis: Cereals, drinks & heart health
Case Study 2: Unilever: Dairy & blood pressure
Case Study 3: Danone: Water & bone health
Case Study 4: Kellogg: Cereals & vitamins
Case Study 5: Pfizer: Confectionery, vitamins & bones
Case Study 6: Marks and Spencer: Soy & heart health
Case Study 7: Delamere Dairy: Milk & joint health

4. Five ingredient lessons for the commercialisation of nutrition science
Ingredient Lesson 1: Have the science to substantiate the benefit
Ingredient Lesson 2: Dominate a niche first & expand from there
Ingredient Lesson 3: Plan for commoditisation & falling prices
Ingredient Lesson 4: Don’t be a me-too producer
Ingredient Lesson 5: Avoid me-too benefits

5. Ingredient case studies
Case Study 8: The US sterols market: Dairy, juice & cholesterol lowering
Case Study 9: Lactoferrin: A failure to make immunity relevant
Case Study 10: Lutein: Eye-health benefit not relevant in food

6. Exploding the myth of pharma companies as players in functional foods

Photographs, Charts & Boxes

Photographs
1. Novartis’ Aviva Range
2. Flora pro.activ blood pressure control drink
3. Advert for Flora pro.activ blood pressure control drink
4. Valio Dairy’s Evolus
5. Calpis’ AmealPeptide
6. Danone Activ
7. Kellogg’s K-sentials
8. Kellogg’s Frosted Flakes
9. Marks and Spencer’s &More range
10. Delamere Dairy’s Top Life Prime Time
11. Minute Maid Heart Wise orange juice
12. Yakult’s Bifiene
13. Kemin’s FloraGlo

Charts
1. Novartis’ Aviva – a Four Factors analysis
2. Pricing comparison of UK breakfast cereals in 2000
3. The decline of Benecol spread 2001-2006
4. The decline of Unilever’s Take Control spread 2001-2006
5. Market share of Minute Maid Heart Wise 2003-2006
6. US sterols market 2001-2006

Boxes
1. Even in the home of functional food blood pressure is a niche concern
2. A science-and-disease focus fails to deliver results
3. Not even big in Japan
4. How is lactoferrin faring in a buyers’ market?