Foreword to Autumn 2014 Issue

Nutraceuticals: which are the top-selling health benefits?

Food and beverages marketed as exerting specific physiological effects are selling as well as ever. Not even a worldwide recession has managed to stifle the popularity of these (usually) premium-priced products. Global business intelligence provider Euromonitor International gives an overview of the global nutraceuticals market, and examines which positioning platforms are the most popular for fortified/functional food and beverages.

Health is important to consumers

Euromonitor International health and wellness data shows not only that the global nutraceuticals market is enormous in size, but that its growth is continuing at a steady pace, largely unfettered by recessionary pressures. In 2013, retail value sales of vitamins and dietary supplement reached US$84.5 billion worldwide, up from US$62.5 billion in 2008 (based on fixed 2013 US$ exchange rates), while fortified/functional packaged food and beverages amassed a staggering US$263.6 billion, representing a 41% increase on 2008 sales.

Considering the impact of the 2008 financial crisis, which brought economic growth to a grinding halt in many of the world’s foremost consumer markets, such growth rates are no small feat and attest to the fact that consumers are more than willing to dedicate some of their disposable income to their personal health and wellness goals.

Key positioning platformsNN_pages_pdf__page_4_of_19_

So, what are consumers’ main health and wellness concerns? Euromonitor International has identified 14 prime positioning platforms on which health and wellness packaged food and beverages are marketed, as shown in the figure to the right.

Of course, it is not just products with added functional ingredients that are leveraged on these positioning platforms, but also naturally healthy products, such as oat-based breakfast cereals promoted as heart healthy.

Predictably, after general wellbeing, weight management is the most popular positioning platform, accounting for one fifth of health and wellness food and beverage value sales in 2013. In terms of growth, though, the category’s performance has been a tad on the sluggish side, achieving a CAGR of just 4% over the 2008-2013 review period.

This is certainly not because consumers are no longer keen on keeping their weight in check, but they are
slowly losing their enthusiasm for conventional slimming products, such as calorie-counted ready meals and meal replacement slimming products, including shakes, and bars. Instead, slimmers are staying away from carbs, and are veering towards high protein products, which are not overtly marketed as weight management products, but are widely believed to afford longer-lasting satiety.

To a not insignificant extent, the boom in food intolerance products, which clocked up more than double the value growth rate of weight management products over 2008-2013, also has some relevance here, as many consumers blame their excess pounds on food sensitivities, even if the presence of an allergy or an intolerance cannot be diagnosed via conventional medical routes.

Energy boosting enjoys fastest growth

Human nature loves nothing more than a quick fix, which is why the most dynamic positioning platform over the review period was energy boosting, seizing an 11% CAGR over 2008-2013, equating to a 71% value sales increase overall. Needless to say, the bulk (almost 90%) of these sales came from energy drinks.

There is now a move towards ‘natural’ or ‘clean’ energy, which fits in with the global trend towards products labelled ‘natural’, although a legal definition for this designation has not yet been established. Examples of such products include EQ8 Natural Energy and Runa Clean Energy.

The former, by EQ8 Limited, is sweetened with steviol glycosides and promises to provide one of the five recommended daily fruit and vegetable portions a day. It is available from virtually all mainstream retailers in the UK. Runa LLC, a New-York-based company founded by two young entrepreneurs in 2009, boasts a short ingredients list – an attribute much favoured by consumers keen to avoid “overprocessed” products. For its energy-boosting properties, the product employs the guayusa leaf, sourced from Ecuador. Up until now, maté and guarana, which also originate from South America, are the most common natural alternatives to the (synthetic) caffeine found in the majority of energy drinks, and we expect to see plenty of new product development activity on the ‘natural energy’ front in future.

Beauty from within: A tricky concept to sell

Beauty from within remains a comparatively small positioning platform for health and wellness food and beverages. It accrued global value sales of US$358 million in 2013, which is modest when compared to the US$31 billion achieved by energy boosting, and the even more staggering US$156 billion amassed by weight management products. Even the urinary tract health category mustered more than double the sales realised by beauty from within in the same year.

The primary problem for the category is 2-fold: these products do not give immediate results, but, unlike cardiovascular health-positioned products, which also tend to rely on cumulative long-term effects, beauty from within products tend to lack a solid scientific evidence base affirming their efficacy. This partly explains why sales in North America have thus far remained fairly negligible. In Asia Pacific, on the other hand, these products enjoy a much stronger cultural acceptance (particularly in Japan, South Korea, Thailand and Malaysia), and 41% of category value sales were generated in this region in 2013.

However, because of its still rather modest sales base, and also due to the Asia Pacific region being a huge market in terms of population numbers, Euromonitor International predicts that, over the 2013-2018 forecast period, beauty from within will garner the second highest value growth rate of 30% at constant 2013 prices, behind energy boosting’s 40% rise. Food intolerance products are envisaged to see almost the same percentage growth gain as beauty from within, followed very closely by digestive health.

What is abundantly clear is that nutraceuticals, which were once dismissed as a “fad”, are becoming ever more relevant to consumers, both in terms of helping them manage serious health concerns, such as cardiovascular
disease and obesity, as well as in the “feel good” realm, as evidenced by the proliferation of energy boosting, digestive health and beauty from with in products. Also, the fact that functional foods and beverages have emerged as virtually recession proof should encourage manufacturers to continue investing in NPD.

Simone Baroke
Contributing Analyst at Euromonitor International