A key factor driving growth in dairy product sales in developed markets is the increasing demand for products with functional properties, such as probiotic yoghurts. Euromonitor looks at the different types of functional dairy products available and the main players in this competitive market.
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In 2003, global sales of dairy products reached €211.5bn (US$259.4bn) according to the latest research by global market analyst Euromonitor International. Total value growth of 13.4% from 1998 to 2003 was underpinned by good growth in the dominant Western European region. Added-value growth in mature markets such as France and Italy, and rapid growth in less well developed markets such as Greece and Turkey was witnessed over Euromonitor’s survey period (1998-2003). Another factor affecting the market was the appreciation of the euro against major world currencies, especially the US dollar.
Health trends shape innovation
A key factor driving value sales growth in developed markets was the increasing demand from consumers for dairy products with ‘functional’ properties. This led to the promotion of added-value products such as probiotic and other functional yoghurts, reduced-fat and enriched milk products and fermented dairy drinks and organic cheese.
Another important trend was the increasing demand for consumer convenience. Manufacturers such as Nestlé, Kraft and Danone responded with the introduction of single-serve cheese portions, smaller milk servings in resealable bottles, and the highly successful development of probiotic drinking yoghurts that do not require a spoon. However, Euromonitor found that this trend tended to be limited to the more developed markets of Western Europe, North America and Australasia, whilst demand for the long shelf life of UHT milk was more in evidence in the emerging markets of Asia-Pacific and Africa and the Middle East.
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Probiotic drinking yoghurt leads
Reflecting prevailing health trends, Euromonitor’s research shows that probiotic drinking yoghurt was the fastest growing dairy product sector between 1998 and 2003, followed by soy milk, (spoonable) probiotic yoghurt, flavoured milk drinks with juice and fermented dairy drinks.
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To be classified as probiotic, a product should contain living organisms that, when consumed in adequate numbers, survive in the large intestine long enough to offer health benefits beyond basic nutrition. Health benefits include inhibiting the growth of harmful bacteria, promoting good digestion, boosting the immune system and increasing resistance to infection. Examples of probiotics include yoghurts and fermented dairy drinks containing bacteria beneficial for the intestine microflora such as Lactobacillus acidophilus and Bifidobacterium bifidum.
Euromonitor believes that a key factor in the success of probiotic drinking yoghurt is based on its portable format, which offers an easy and convenient way to aid digestion. It has also benefited from its competitive positioning against soft drinks, as well as bolder graphics in packaging and heavy investment in advertising by major manufacturers such as Danone, Müller and Nestlé. As drinking yoghurt is consumed without a spoon, it is a particularly car-friendly food. Moreover, single-serve sizes are conducive to on-the-go consumption.
Arla enters health battle
Sweden is a country where it is particularly clear that the industry is exploiting the current probiotic trend, with a number of companies launching organic and bio yoghurts in 2003 and 2004, such as Proviva and Primaliv (by Skånemejerier), Verum (by Norrmejerier).
Cultura is a new range of probiotic products from Arla Foods, introduced in May 2004. The product range comprises a drinking yoghurt, a natural yoghurt and sour milk, with all the product range containing the bacteria Lacobaciullus casei F19. The new line is meant to compete directly with Skånemejerier’s Proviva and also with other health drinks and yoghurts in the market.
The war against cholesterol
Probiotic yoghurt, designed for intestinal health, is not the only “functional” yoghurt now available. Over the last year, Euromonitor has seen the introduction into the market of new yoghurt products formulated to reduce cholesterol. Examples include the introduction of a drinking yoghurt, launched in early 2004 under the St Hubert Ilô brand by Vedial, offering anti-cholesterol properties in France. This was immediately followed by Danone’s introduction in April 2004 of a new range of anti-cholesterol yoghurt, sold under the Danacol brand. The new line includes plain/natural yoghurt and two fruit yoghurt variants, and was supported by a strong TV and press advertising campaign in the French media. Danacol is said to be able to help reduce the level of ‘bad cholesterol’ in the human body. The product label shows the product to be ‘scientifically tested’ and the new line has also received the approval of the French health authorities (L’Agence française de sécurité sanitaire des produits de santé).
Unilever extends Flora Pro-activ range in UK
In the United Kingdom, the battle against cholesterol is also an issue of paramount importance. Half the UK population has high cholesterol levels, and cholesterol remains the single biggest modifiable risk factor for coronary heart disease. In response to the strong customer demand for more cholesterol-control food solutions, Unilever launched an extension line of its low-cholesterol brand Flora Pro-activ in early 2004.
The brand, already present in spreadable oils and fats, was extended through the introduction of a new range of semi-skimmed milk drinks and yoghurts. Flora Pro-activ includes in its formulation plant sterols – an active ingredient proven to reduce the level of cholesterol. There is widespread optimism among local manufacturers about the chances of success of these products, with some analysts forecasting a spectacular growth for Flora Pro-activ in the next few years. The brand, however, along with other similar products such as Benecol, has come under some criticism from the UK Advertising Standards Authority, which ruled recently that the advertising campaigns showed the potential benefits of the product in an exaggerated and potentially misleading fashion.
More NATURLínea, less fat
Euromonitor reports that the introduction of low-calorie versions of existing products is another one of the key trends taking place in the global marketplace. An important example can be found in the Spanish market, with the launch of NATURLínea in February 2004, by Corporación Alimentaria Peñasanta. It comprises an organic range of dairy products, including yoghurts and semi-skimmed milk.
It is claimed that that long-term consumption of this product helps to reduce the volume of fat tissue. This is achieved through the action of TonalínR CLA, an active ingredient that avoids further accumulation and helps to reduce the volume of fat tissue. The reduction would vary between 5% and 20% of the total existing fat tissue. The manufacturer warns, however, that consumption of the product should be combined with regular exercise to obtain the best results. Interestingly, however, the advertising campaign markets the new line as ideal to improve health ‘without having to make major sacrifices’.
Emergence of prebiotic products
Prebiotics are a relatively new concept in the dairy products market. According to Nestlé’s nutrition website, it has been defined as a ‘non digestible food ingredient that beneficially affects the host by selectively stimulating the growth and/or activity of one or a limited number of bacteria in the colon, and thus improves host health’.
A new prebiotic product is Masvital, introduced in the Spanish market by Leche Pascual in autumn 2003. Masvital is a prebiotic fermented dairy drink, available in two flavours (plain or orange) and is fortified with prebiotic substances such as fibres from chicory, onion, artichoke and asparagus. The new line is being marketed as products that ensure the speedy assimilation of calcium as well as stimulating the regeneration of the intestinal cells.
Taste is still key
A new brand could have scientific backing, marketing support and even distribution reach but could still fail because consumers do not like the taste. An example of a successful new product launch is Actimel, by Danone. In Actimel’s case, pleasant taste has been successfully combined with all of these factors. Industry experts also advise that companies should avoid an overly medical image to be able to drive home the concept of daily consumption. As such, Euromonitor’s research suggests that product claims should focus on the product’s ability to help consumers stay healthy, with advertising featuring people who are well, as opposed to advertising for medicines which typically feature the symptoms which the product is designed to relieve.
Yakult under pressure
Yakult is by far the largest player in both the fermented dairy drinks and probiotic drinking yoghurt sectors. According to Euromonitor’s latest research, Yakult Honsha Co Ltd’s consolidated share in 2002 was estimated to be 38%. Its key brand is Yakult, which is the reference product for all fermented dairy drinks, having been available in Japan for more than 50 years.
However, this global market share represents a drop of almost three percentage points from 2001 for Yakult, in contrast to the steadily increasing share of Danone.
It appears that Yakult has lost its unique health positioning over the review period and is now unable to distinguish itself from the roar of functional and pseudo-functional claims coming from all sides in the dairy industry, particularly probiotic yoghurt, soy milk and even sour milk drinks. This is indicative of the highly competitive marketplace that players must now face as they enter the health arena.
For information on Euromonitor’s research reports, click here.
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