Foreword to Special 2015 Issue

The wonderfully versatile world of probiotics

Probiotics have lost none of their dynamism, relevance or potential to inspire future growth in functional foods and dietary supplements, argues Euromonitor International. The global business intelligence provider sheds some light on the ever-growing, ever-changing market for probiotic products, with a focus on two major growth markets – China and the US – and identifies several areas for future development, including chronic disease and free-from products.

Probiotics continue to drive sales

At present, there are two main vehicles for probiotic ingredients: yoghurt and dietary supplements. Our latest data show that, in 2015, probiotic yoghurt (including prebiotic yoghurts) achieved double the value sales growth of non-probiotic yoghurt (6% vs 3%), and the same is true for probiotic supplements (8%) vs non-probiotic supplements (4%).

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Chinese demand propels probiotic yoghurt growth

The most dynamic growth market for probiotic yoghurts by far is China, experiencing value sales growth (constant 2013 terms) of 31% in 2015, which is in line with the equally stellar performance of the previous two years.

Momchilovtsi (by Bright Food Group) is China’s leading probiotic yoghurt brand with value sales exceeding US$1.8 billion in 2015. It is the first ambient yoghurt brand available in China, originally launched in eastern China before distribution was gradually expanded across the entire country. With the completion of its nationwide distribution network, Momchilovtsi has been able to extend its penetration in China’s lower-tier cities, where the country’s middle class consumer base is growing rapidly.

Many Chinese consumers purchase probiotic yoghurts as gifts for their friends or relatives. These products, in addition to being attractively packaged, tend to be marketed as premium imports from Europe, sporting a variety of attractive health benefits, including longevity. Momchilovtsi, for example, is marketed as a traditional yoghurt from the Bulgarian town of Momchilovtsi, where people are said to enjoy a significantly longer lifespan thanks to their regular consumption of probiotic yoghurt.

One of the factors that could act as a potential constraint to probiotic yoghurt growth in China is that Chinese consumers tend to avoid chilled products for breakfast because they believe these to have a negative impact on their digestion when consumed early in the day. This cuts down on an important consumption occasion, which is absolutely key in Europe, Australia and North America, where yoghurt is considered a convenient and healthy breakfast food.

The US is all about supplements

While probiotic yoghurt has been a challenge to sell in the US from the very beginning, probiotic supplements are hugely popular with those consumers who understand the benefits of these sophisticated offerings. Euromonitor International data identify the US as the leading growth market for probiotic dietary supplements in 2015.

US manufacturers have recently taken to expanding their probiotics offering into the paediatric realm. In many cases, producers have leveraged the success of their adult probiotics brands, making adjustments to the delivery format and lowering the colony forming units (CFU) count to create a child-specific product.

Culturelle, the second best-selling probiotic brand in the US, previously extended its probiotics portfolio to include two “kids” products, one being a fruit chew and the other comprising single-dose powder packets. Both have five billion active cultures of Lactobacillis GG, (half the amount of the adult versions). In fact, the majority of mainstream brands are already offered in both adult and child-specific variants. Some examples include Nature’s Way Primadophilus Kids, Vitacost Probiotic Tabs and Renew Life Ultimate Flora Kids packed with three billion CFU, or Nature’s Plus Animal Parade with one billion CFU. The majority of paediatric probiotics currently on the US market centre their positioning around digestive health, claiming to “help reduce occasional digestive upset”.

The EU – a difficult terrain

In the EU, the market environment turned rather inhospitable for probiotic products around 2012, when health claims — and even the mere mention of the term “probiotic” – were banned. Understandably, this caused manufacturers to lose confidence in the European market and a subsequent new product development shift away from probiotics.

Based on analysis of the performance of just probiotic drinking yoghurt, Euromonitor International estimates the potential retail value sales loss as up to US$1.5 billion in six negatively affected EU markets between 2012 and 2020 as a direct result of the restrictive regulatory environment. Probiotic supplement sales, however, despite a dip around 2011/2012, do not seem to be lastingly affected.

The dialogue between the industry body and the regulators is ongoing, with the target to bring the word probiotic back on to European labels. Probiotic research is being revisited, and new efforts are taking a much more careful approach to make sure that studies are soundly designed and involve dosages and formats that can translate into commercialisation without a break in the chain of science.

What’s next for probiotics?

The big question the industry is asking itself right now is this: where are probiotics moving next? In order to continue to thrive – not to mention regaining their foothold in Europe in the medium to long term – probiotic products will have to move beyond their traditional spheres of digestive wellness and immunity boosting to meet the complex needs of modern consumers.

The ageing global population, combined with the rise in unhealthy lifestyles, means that a steadily growing number of people is becoming increasingly fearful of the impact of chronic disease on their lives, including the cost and side- effects of conventional drug treatments. The issue affects developed and emerging markets alike. And this is where one major opportunity for probiotics is starting to emerge, namely in modulating the ecosystem of the bacteria, which resides in the human body – also referred to as the microbiome – in order to counteract/prevent conditions like diabetes and cardiovascular disease.

There is a growing body of scientific evidence that suggests that chronic inflammatory processes, triggered and perpetuated by a compromised microbiome, are, in fact, the underlying cause of most types of chronic disease. Even obesity has been linked to inflammation.

The WHO estimates the global prevalence of diabetes to be 9% among people aged 18+ in 2014. By 2030, the organisation projects that diabetes will be the seventh leading cause of death. Over 80% of diabetes deaths occur in low- and middle-income countries. This clearly indicates the need for low-cost alternatives to insulin injections. It is envisaged that probiotic supplements, in particular, are going to play a key role in this realm in the future.

Another potential growth opportunity for probiotic products arises from the rapid evolution of the free-from products market, which is one of the most dynamic health and wellness trends today. For example, many consumers eschew dairy products because they believe them to be the cause of digestive discomfort. Dairy products, however, are the primary vehicle for probiotics (besides dietary supplements) to date. There is an obvious gap in the market for a more diverse food and beverage product offering targeted at the growing consumer base of free-from products.

Other promising growth areas waiting to be exploited by probiotic product manufacturers are pregnancy and infant nutrition and the fight against antimicrobial resistance (AMR), identified by the WHO as a major concern for public health worldwide in a 2014 report. In terms of growth expectations, the total market for probiotic yoghurt and supplements is estimated to reach US$49 billion (constant terms) by 2020. Euromonitor International predicts probiotic drinking yoghurt to remain the most important probiotic product category that will continue to drive growth globally.

Our forecast data indicate that, in emerging markets, probiotics have a particularly buoyant future ahead. In probiotic yoghurt, China, Brazil, Vietnam, Thailand, Indonesia, Saudi Arabia and Chile are among the top 10 markets expected to propel growth.

Ewa Hudson
Global Head of Health and Wellness Research
Euromonitor International