Published in Philippine Daily Inquirer, January 2, 2004
MEGATRENDS IN THE MACRO-ENVIRONMENT LIKE the rising cost of healthcare; a fast and aging baby boomer population; lifestyle changes; and growing acceptance of alternative medicinal and health products have spawned a new type of food and beverage industry known as functional foods, or nutraceuticals.
The first generation of functional foods started in Japan. One of the most successfully marketed first generation functional beverages is Yakult, first sold in Japan in 1921 by its maker Dr. Minoru Shirota who became enamored by his University of Kyoto professor, Russian biologist Elie Metchnikoff’s discovery. Metchnikoff, in his study of a group of Bulgarians, posited that Bulgarians lived longer and had better health because they consumed food that had generous quantities of friendly lactic acid bacteria.
Following this insight, Shirota developed a fermented milk drink now popularly called Yakult, as a flavorful probiotic carrying a bacteria strain called Lactobacillus Shirota, that is able to survive acids and bile in the gall bladder allowing it to reach the stomach intestines to kill deposits of harmful bacteria and foster the growth of good bacteria promoting good digestion and overall health.
Global awareness
However, it was in the 90s that serious work in functional foods and nutraceuticals took frenzied interest among major mainstream food and pharmaceutical global companies like Kelloggs, Campbell Soup Co., Nestle, Kraft, Procter and Gamble, Novartis, Pepsico, Monsanto, Glaxo Smith Kline, etc. with the glaring opportunity presented by the new megatrends.
Dr. Stephen De Felice in 1989 coined the word nutraceuticals, also known as functional foods. He defined it as a food, dietary supplement or medical food that has a medical and health benefit including the prevention and/or treatment of disease beyond basic nutritional functions.
In 1996, Health Canada proposed a refinement in the definition. While nutraceuticals and functional foods share the same physiological benefits including protection from or reduction of risks associated with chronic diseases, nutraceuticals come in medicinal forms and supplements separate from mainstream food. Local examples are ABS bitter herbs Charagen (bitter melon) capsules that help reduce the risks of diabetes and C-Lium Fibre Supplement that helps eliminate constipation. On the other hand, a functional food has similar appearance to conventional food or may come in the form of mainstream food. It is consumed as part of a regular meal. Much like nutraceuticals, functional foods deliver beyond basic nutrition. Fortified foods belong to this category. Some examples are Del Monte Tomato Sauce with Lycopene, Tropicana Smoothies with FruitCal®, Yakult with Lactobacilli Shirota Strain, Kikkoman Soy Sauce with Gravinol® grape seed extract and Nestle’s PowerBar energy bar with simple and complex carbohydrates and 17 natural vitamins and minerals, among others.
Major industry setbacks
In a bid to capture a bulk share of a conservatively estimated $55.6-billion share of the present global market with a minimum 8 percent annual growth through 2010 and a potential value of $250 billion (Nutrition Business Journal Functional Foods Report 2002), major companies are devoting a significant portion of their muscle to this segment, and have post-haste marketed functional products motivated only by the single revenue objective. Not surprisingly, this has resulted in huge, costly and dismal failures.
An analysis of brand failures in the functional food and nutraceutical industry suggests some ineptness in marketing and a blatant disregard for the basic but highly important tenets of marketing. These include:
1. Upholding basic product expectations and integrity. A misguided perception that consumers will buy food products singularly driven by a preventive disease benefit never mind if it does not meet the basic expectations of a food product that include taste and full-flavor quality, smooth texture, aroma,
compatible mouth-feel, no lingering after-taste, faithfulness to label claim, product stability and efficacy of scientific claim, among others. M&M/Mars failed in this aspect with VO2Mas, an energy bar packed with antioxidant aimed at serious athletes. While the product was clinically proven to speed up
a user’s recovery from strenuous activity, it failed on a basic expectation for a food product that is, taste. This is a clear indication of Frederick Herzberg’s two-factor theory in marketing that espouses that marketers must avoid dissatisfiers in their product delivery and ensure the presence of satisfiers to motivate a purchase. While the absence of a dissatisfier does not guarantee a sale, its very presence guarantees a loss. Among functional products and nutraceuticals, the benefit of health and wellness is an intrinsic satisfier that can turn into a sale only if the minimum expectation from a food product is delivered.
2. Clearly stating the consumer benefit. Mesmerized by the magnitude and power of scientific claims of health and wellness benefits, nutraceutical and functional food marketers revolve their story around the bioactive ingredient and not the benefit which consumers can derive from consuming the product. In doing so, marketers fail to articulate the product’s benefit in a way that is meaningful and clearly understood by the consumer. This leaves the consumer recognizing the ingredient name but not exactly comprehending what its overall benefit is to the potential user. This was one of the reasons for the failure of Kellogg’s Ensemble functional food line of nutritionally enhanced cereals, cookies, lasagna, frozen entrees, baked potato crisps made with cholesterol lowering psyllium husk that was axed eight months after its launch in 1999.
In contrast is Yakult’s success story hinged on extensive consumer education achieved through massive introductory advertising and an innovative distribution channel of Yakult ladies who painstakingly taught the market about how an ingredient like Lactobacillus Casei Shirota strain can
promote overall digestion and good health. The big story and benefit remains to be good digestion and health, the ingredient is a mere reason to believe.
3. Use convenient, multiple channels to bring the product to your consumer. Campbell Soup Co.’s foray into the functional food industry was marred by a big flop with its line of Intelligent Quisine, a home delivery meal program offering 40 clinically proven frozen meals and entrees designed to reduce
risks of high blood pressure, cholesterol and diabetes. The meals were marketed via a mail order program priced at $70 a week and arriving at one’s doorstep by parcel specifically, United Parcel Service. Unfortunately, the delivery channel did not sit well with the product’s potential consumers.
Much unlike mainstream food and pharmaceuticals, this new industry offers marketers an opportunity to capitalize on a combination of multiple channels drawing on mainstream grocery retailing and niche channels like health stores and pharmacies including detailing to medical professionals and doctors, dieticians and nutritionists.
4. Capitalize on value pricing. Overwhelmed by the sheer magnitude and power of health claims, marketers are virtually tempted to price their products at premium levels often beyond what the mass market is initially willing and ready to pay. Yakult’s strength combines product, use of appropriate channels, consumer education plus reasonable pricing, today at less than Php40 a pack.
On the other hand, Johnson & Johnson’s failure to successfully market Benecol, a cholesterol-reducing margarine made from phytochemical, stems from wrong pricing at more than $5 which is five times the price of regular margarine.
Nestle’s Power Bar, an energy bar made from oat bran and complex carbohydrates releasing energy over a sustained period recognizes that its premium pricing may only be appreciated by a niche market of competitive and recreational athletes serious about their sports and who characteristically
will not hesitate to pay a premium for the right nutrition.
5. Look for a meaningful story to tell. Because of the industry’s infancy, there is a wide open field among marketers to explore the most promising consumer idea after defining which target market to tap. A huge marketing opportunity awaits functional food brands and nutraceuticals wishing to own any among a roster of health and wellness benefits that include healthy eyesight; stress
relief and energy enhancement; prevention of fatigue, cancer, heart disease, joint pain or arthritis, diabetes, wrinkles; memory enhancement and mental acuity; age retardation; mood enhancement, among others.
6. Focus your story. The overwhelming number of health and wellness benefits that may be associated with one functional ingredient can only attempt the neophyte and less professional marketer to cite a roster of benefits while in the end confusing the target market. Likewise, it leaves the potential user with no clear, single-minded memory about what the product can really do or do best.
Yakult with a probiotic strain like Lactobacilli can prevent stress, infection, aging and indigestion. Clearly, the secret of Yakult’s brand recall lies in its focused story on gut health, making it easy for consumers to understand and retain in memory how Lactobacilli Shirota strain can promote
digestion hence, overall health.
Del Monte Tomato Sauce capitalizes on lycopene, an antioxidant found naturally in tomatoes that help lower the risk of heart disease. The success of ABS Bitter herbs, charagen ampalaya capsules and tea stems from clearly communicating the product’s capability to manage diabetes. The scientific claim created mass market awareness by using credible endorsers known to be diabetics like entertainers Gary Valenciano and Nonoy Zuniga as well as newscaster Mike Enriquez.
7. Truth in advertising. Advertising guru William Bernbach, best known for his Think Small, Volkswagen and When You’re Number 2, You Try Harder, Avis Rent A Car advertising campaigns, once aid, “Advertising doesn’t create a product advantage. It can only convey it. A great ad campaign will make a bad product fail faster. It will get more people to know its bad.†While marketing communications can aid in creating awareness and trial for functional and nutraceutical products, success can only be sealed through delivery of scientific claims. Here lies the challenge for marketers to ensure the brand’s consistency, safety, stability and efficacy of ingredients and overall product.
Future of nutraceuticals
What remains is the marketers ability to strongly communicate and advocate the benefits of functional products and nutraceuticals. Great opportunities exist as the aging baby boomer population is left with little choice but to take better care of their health. In the meantime, the next generation of baby boomlets are becoming conscious of the importance of healthy food intake thus influencing the kind of food that the young netgen s or the Internet generation are taking. As new food preferences and habits begin to take shape, only forwardthinking companies with serious investments in R&D technology and marketing can become part of this young industry.
This means that marketers who aim to ride the bandwagon with inappropriate and unsubstantiated claims is likely to be exposed for their wheeler-dealer marketing strategies. Government legislators and regulatory bodies will likewise need to be more diligent and update their standards and measurement for identifying the integrity and efficacy of scientific claims made by functional food
products and nutraceuticals.