While food processors, food ingredient and biotechnology companies invest millions of dollars in researching new health-promoting products, it is in fact everyday foodstuffs like whole-grains, soy, tomatoes and fruit juices which are leading and re-defining food and health marketing and business strategies. Michael Heasman and Julian Mellentin of the Centre for Food & Health Studies have written a book describing the business strategy, marketing and policy issues that are driving international markets for functional foods. Here they offer just-food.com readers an exclusive insight.
Following the lead in Japan where the functional foods revolution started, Western food companies have introduced dozens of new products claiming specific health benefits. Often targeted at a distinct medical condition, such as lowering ‘harmful’ cholesterol, these ‘hi-tech’ products are being overtaken by companies using new insights from nutrition science, to re-launch and market everyday foods from breakfast cereals, to nuts, to fruit juices emphasizing the health benefits of their intrinsic bioactive food components.
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This ‘low-tech’ model of functional foods is the one now driving the bigger market for foods with health benefits – a business strategy Heasman and Mellentin call ‘leveraging hidden nutrition assets’.
For all the excitement and talk about new science, cutting edge ingredients and new technologies, the functional foods revolution is, at one level, turning out to be very basic. This is one of the many contradictions shaping the new market for food and health and one that is de-railing much business strategy in functional foods.
“Recent years have seen the acceleration of what we see as one of the defining characteristics and dynamics of the functional foods revolution. This is the way in which traditional foodstuffs are ‘re-inventing’ themselves as functional foods with health benefits supported by science. This is where companies ‘leverage hidden nutrition assets.’ Key to the success of this strategy is using new insights from nutrition science – not to create new ingredients and products – but to enable consumers to better understand the intrinsic health benefits of the existing components of our food supply. In this way ‘functional food science’ is giving new life to what are often decades old food brands.”
United States leads the world in ‘leveraging hidden nutrition assets’
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By GlobalDataOats, ‘whole grains’, soy, tomatoes, orange juice, and cranberries are all examples of the power of this leveraging effect (not to mention everyday fruit and vegetables). The uncovering of their health benefits by science has enabled the first three to win Food and Drug Administration-approved heart health claims in the US, while tomato-based products have seen sales increase on the back of growing awareness of the cancer-fighting potential of lycopene (which makes tomatoes red), and cranberry juice sales have boomed because of its natural efficacy in fighting urinary tract infections.
Key to the emergence of this strategy of ‘leveraging hidden nutritional assets’ have been US corporations – such as General Mills in the case of whole grains, Quaker with oats, DuPont and ADM with soy, Heinz with tomatoes, Tropicana with orange juice, and Ocean Spray with cranberries.
The marketing communication of the ‘generic’ health effects of traditional foodstuffs is giving powerful force to the idea that one day: all foods will be functional. The continued leveraging of hidden nutrition assets – especially if accompanied by the brilliant marketing skills of companies like General Mills, for example – threatens to turn the functional food revolution on its head and make it even harder for premium-priced single product propositions with a specific health benefit or novel ingredient to develop as anything other than niche (or tightly targeted) products.
The ‘leveraging of hidden nutrition assets’ also makes most of the early definitions of functional food redundant – none of these traditional foodstuffs have an ‘added’ ingredient for health effects, these are intrinsic to the product as consumed. But much strategic business thinking in functional foods and forecasts of massive market growth proposed by some market research companies and management consultants, is still based on these early definitions. Many of these projections must now be considered as deeply flawed.
The way forward: developing ‘concepts’ not ‘products’
The consequence of these developments is that one of the key strategies of many companies – to achieve strong differentiation of their products by communicating disease-related health claims through specific ingredients – is being rapidly eroded in value.
And the widely held belief that technology alone is going to provide differentiation is coming apart under the twin pressures of generic health claims (that is, all food can be ‘functional food’) and the rapid diffusion of the technology to a large number of companies – such as the recent expansion and availability of plant sterol-based cholesterol-lowering ingredients and products.
Product-specific differentiation on the basis of ‘technical fixes’ of single medical ‘risk factors’, such as by how many percentage points a product may or may not lower cholesterol, is looking like a strategy doomed to struggle in the long-term.
The Functional Foods Revolution documents why functional foods have become so important to the future of the food industry, the global marketing and business strategies being adopted and the major players involved. They also look at the broader business environment that is emerging, particularly the policy and regulatory context, from health claims to consumer communications.
Companies who want to succeed in the long-term in the functional foods revolution will need to adopt a radical new food-and-health-driven business model, through a concept called The Healthful CompanyTM. These companies can be at the forefront of the internationalization of food and health and a pioneer of a new kind of food supply. Companies that don’t become a Healthful CompanyTM risk failing in the marketplace and are in danger of misleading consumers about the long-term health benefits of foods.”
The strategy to re-position everyday foodstuffs on the basis of their health promoting properties as ‘leveraging hidden nutrition assets’, is one of seven business strategies, some that work and others that don’t, which we identify as defining market and business developments.
By Dr Michael Heasman and Julian Mellentin of the Centre for Food and Health Studies.
The Functional Foods Revolution: Healthy People, Healthy Profits? by Dr Michael Heasman and Julian Mellentin, Directors of the Centre for Food & Health Studies, tells the story of how the world’s major food companies are looking to use their nutritional and scientific expertise in pursuit of the health benefits of food, and unleash products and marketing campaigns to tell consumers how to beat disease and keep well through food. The book covers developments in Europe, Japan and the United States.
The book is available through just-food.com in both paperback and hardback. For further details visit:
The Functional Foods Revolution: Healthy People, Healthy Profits? (Hardback)
The Functional Foods Revolution: Healthy People, Healthy Profits? (Paperback)
The Centre also publishes New Nutrition Business, the long-established international journal on food and health, which is read in 40 countries.
Contact Michael Heasman or Julian Mellentin on tel: +44 020 8758 9414, e-mail: Michael.heasman@new-nutrition.com and julian.mellentin@new-nutrition.com
