The Move Toward Healthy Products
At the risk of sounding too political it seems as though once the administration gets a hold of an issue, it is probably old news (for example, global warming), but it makes news nonetheless. In early February, President Bush met with representatives from the leading consumer goods (CG) companies and entertainment and advertising industries, to discuss how to encourage exercise and healthy eating choices.
Of course the CG industry is well aware of the move toward healthier eating and has been long working on satisfying ambiguous consumer demand through reformulating what is already on the shelves, new product development and media campaigns. And while something like the low-carb craze is truly a trend, the current direction that health and wellness products are headed looks to be a change in the industry, not a fad. CG companies realize they have only just scratched the surface of possibilities.
A study conducted by Grant Thornton and The Manufacturing Performance Institute ("Appetite for Change: Trends and transitions in the U.S. food and beverage industry") showed that health and wellness products (organics, fortified and better-for-you foods) is the fastest growing segment in the packaged food business. Two-thirds of food and beverage companies cite this as their greatest area of growth in the next year.
The dreaded "trans fats" have been at the forefront of the reformulation arena. Label requirements were ushered in last year, bringing the issue eye-level to consumers. Rather than label products as trans fats culprits, many companies raced to change their ingredients, but finding substitutes is a time-consuming and expensive process. Kraft Foods Inc. made headlines throughout its process. In 2005, the company voluntarily came through with a portfolio of improved products, even developing proprietary blends of oils. More than 100,000 people-hours were invested by Kraft's research and development teams alone. Interestingly, the company wound up seeing benefit immediately with "double-digit" growth on Triscuit sales. Kraft continues to work on nutrition, health and wellness in its products with recent notables such as the South Beach Diet line and 100-Calorie Packs.
Mike Greene, vice president, customer marketing, morning foods, Kellogg Company, speaks to what Kellogg is doing in this area. "Health and wellness is one 'trend' that we believe has significant staying power. Kellogg was founded over 100 years ago on the principles of health and wellness and this remains a key focal area for us today. We believe we are well-positioned to continue to grow with strong brands that deliver on today's needs." These brands include Special K for weight management, Smart Start for heart health and All-Bran for digestive health.
Greene also brings up another aspect of this move that effects CG companies -- working with their customers. To start, he says Kellogg is offering its retail customers products that consumers are actively seeking in the area of wellness such as Special K protein products: New Special K2O Protein Waters, Special K Protein Meal Bars and Special K Protein Snack bars. "Second, we're also working with our retail customers to create exciting cross-category promotions. Consider that the cereal aisle is the recipient of substantially more traffic than the diet-and-nutrition aisle. The size, scale and widespread appeal of the Special K brand is one way we're helping to drive more traffic into our customer's diet-and-nutrition aisles, which is mutually beneficial," he explains.
Jones Soda recently became the first and only soda to rid itself of high-fructose corn syrup (HFCS) and move to cane sugar as a sweetener. Though the health effects of HFCS are debated, one thing is for sure -- it is cheaper and has a longer shelf life, which are primary reasons for its pervasive use. "It's [cane sugar] better for you, it's better-tasting and, overall, it's better for the environment," according to Peter van Stolk, Jones Soda's chief executive officer. The cost to bring the product to the customer did not come cheap, the company's Web site says. Jones Soda has spent more than $1 million retrofitting equipment in order to use pure cane sugar and it costs 5 percent more to use, but Van Stolk says, "At Jones, we thought it was worth every penny."
Organics is such a vast subject that it warrants its own special report (to come this year). Needless to say, however, many CG companies are investing in this area, but because there are so many qualifications for organic consideration, an overwhelming amount of product from mainstream manufacturers is not expected.
Around 18 percent of school-age kids in this country are considered overweight and in addition to the call from the President, many companies are addressing this issue. One of the biggest focuses of late is advertising and marketing. Statistics vary, but it's been said that children watching TV on a Saturday morning see a food/beverage commercial nearly every five minutes. Often the characters they love from these cartoons are used to sell not-so-healthy products. Currently there is a turn toward using them to encourage fitness and good eating. Dora The Explorer, in conjunction with CG companies, like Dole, promoted the "East Smarter, Play Harder" challenge. Recently Masterfoods decided to stop targeting ads in the United Kingdom to children under 12.
Ingredient trends have been identified by players in that industry. In particular Linda Milo Ohr, Nutraceuticals Editor, Food Technology, believes that consumers will be interested in "functional" foods and beverages to "aid in weight management, heart health anti-aging/cosmeceuticals, immunity and digestive health." She says top ingredients will include slow digesting carbohydrates, Omega-3, fatty acids, probiotics, green tea, cinnamon, peptides, whole grains, acai and fiber. CG