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N e w N u t r i t i o n

B U S I N E S Swww.new–nutrition.com January 2015 iSSn 1464-3308Volume 20 number 4

T H E J O U R N A L F O R H E A L T H Y E A T I N G , F U N C T I O N A L F O O D S & N U T R A C E U T I C A L S

Pages 24-25Pages 11-14 Pages 15-18

Continued on page 3

Super-premium free-from brand shakes

up bar marketThe Kind brand has achieved the impossible, growing its sales by more than 1000% over a five-year period, becoming one of the most successful snack brands of the last five years with sales of almost $300 million. Even more remarkably, this has been achieved despite selling at a 200% price premium in a category in which differentiation is notoriously difficult to achieve.

Kind’s success – which is the result of 10 years of effort – is a testament to the power of:

1. Securing universal distribution, with presence in every possible type of retail outlet

2. A massive sampling effort

3. A comprehensive marketing campaign

4. Brand messages which firmly link the product to some of the most important trends

Snack brand sparks market

for sprouted grain

Mass market will put snap

back into sales?

Oat-and-dairy drink targets US breakfast table

January 20152

N E W N U T R I T I O N B U S I N E S Sw w w. n e w - n u t r i t i o n . c o m


C O N T E N T S & C O N T A C T S

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ISSN 1464-3308 All rights reserved, photocopying of any part strictly prohibited.

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LEAD STORY

1,3--7 Super-premium free-from brand shakes up bar market

CASE STUDIES

8-10 DIGESTIVE WELLNESS: Probiotic refreshes feel-the-benefit advantage

11-14 INNOVATION: Snack brand sparks market for sprouted grain

15-18 SNACKING: Popchips hopes mass market will put snap back into sales

19-20 SNACKING: Sahale mission remains ‘out of the ordinary’ despite Smucker acquisition

21-23 PROTEIN: Sports branding for breakfast protein boost

24-25 DAIRY: Oat-and-dairy drink targets US breakfast table

26-28 WEIGHT WELLNESS: Acquisition propels The Fresh Diet in national expansion

29-30 SUGAR: Making sense of sugar?

IMPORTANT NOTICE

31 A polite reminder to our subscribers

REPORTS

32 10 Key Trends 2015

33 Powerpoint presentations

34 Key trends in the business of dairy nutrition

HOW TO SUBSCRIBE

35 Case Study Order Form

36 Subscription Order Form

7-Eleven ..........................................4Activia .....................................8,9,10Amazon .........................................23Asda...............................................23Au Bon Pain ....................................4BioEssential Botanicals..................12Costco ...................................4,11,19Dannon ...................................8,9,10Enray .............................................20First Milk CNP ....................21,22,23Flat Earth ......................................11Frito-Lay ..............................11,15,17Glaceau Vitaminwater ..................16HEB ..............................................11IRI .................................................17Jamba Juice......................................4

JM Smucker .............................19,20Kashi .............................................11Kellogg ..........................................11Kellogg Popcorn Chips .................16Kind .................................1,3,4,5,6,7Live Better Brands.........................12Mondelez Wheat Thins Popped ...16Natural Marketing Institute .....12,14Nielsen .............................................5Nisa ...............................................23Nutrition Capital Network ............20Olestra ...........................................11Palladium Equity Partners ............20PepsiCo .........................................11Popchips .........................15,16,17,18Quaker Popped .............................16

Sahale Snacks ...........................19,20Starbucks .......................................19Target .........................................4,11Team Sky ............................21,22,23Tesco .............................................23Trader Joe’s .....................................4Upbeat...........................................23US Whole Grains Council ............12VMG Partners ................................5Walmart............................4,11,17,19Way Better Snacks ..........11,12,13,14Weetabix On the Go .....................23Wegman’s ......................................11Whole Foods Market .............4,11,19Wonderful Pistachios .....................15

January 2015 3


E D I T O R I A L

Continued from front page

First launched back in 2003 by Daniel Lubetzsky, who is still CEO, the brand’s proposition was to be “kind to your body, your taste buds and the world.” Judging by both sales figures and consumer comments in online forums, the brand has succeeded in delivering tastes that appeal to people and win their loyalty.

INGREDIENTS “YOU CAN SEE AND

PRONOUNCE”

Kind products usually feature ingredients that are more expensive than its lower priced, mass-market competition – and use a higher proportion of the better-tasting ingredients. It’s arguable that if Kind had gone for mass-market pricing instead of its super-premium position (see Chart 2) – thus necessitating lower-cost ingredients – it would have struggled to achieve the same taste and texture performance.

In 2015 the brand’s tagline is “ingredients you can see and pronounce” and the bars have a distinctive appearance with very visible whole nuts, fruit pieces and grains, backed by an ingredient list that is natural-looking and uses simple, easy-to-understand terms.

The Fruit and Nut line, for example, is made with whole nuts and fruit pieces. In terms of nutrition, each 40g bar delivers 200 calories, 13g of total fat, 9g of sugars and 6g of protein (naturally present in the nuts).

Kind offers six product lines, each of between 5 and 8 flavours.

MESSAGES THAT CONNECT TO THE BIGGEST TRENDS

Traditionally the brand went after women, but began to increase its male focus from 2011 with the launch of Strong & Kind, which offers “10g of natural protein, no soy or whey!” per 45g bar. The product uses pea protein.

The brand focuses on being overall healthy. Messages used on all product labels include:

• All natural• Gluten/wheat free (and many

products are also dairy-free)• Low glycemic index• Non-GMO• No trans fats

As part of its naturally healthy identity, Kind products also focus on a “naturally functional” aura, using ingredients that have an intrinsically health image, such as almonds, walnuts, oats, blueberry, chia and quinoa, and describe them in terms such as:

CHART 1: THE PHENOMENAL RISE OF KIND BARS

Growth has been powered by aggressively expanding distribution, supported by heavy sampling and an engaging marketing campaign - turning a super-premium bar into a sales success. Total US sales in supermarkets,drugstores, mass market retailers, Gas/C-stores, military commissaries and select Club & Dollar retail chains.

0

50

100

150

200

250

300

2009 2010 2011 2012 2013 52 weeks ending Oct

2014

$10.23$15.15 $26.92

$71.58

$157.64

$288.91

$ millions

Source: Infoscan Reviews, IRI

NEW NUTRITION BUSINESS

Healthy grains

5 “super grains” (Oats, Millet, Quinoa,

Amaranth, Buckwheat

Low GI

KIND HEALTHY GRAINS These clusters, launched in 2013, are the company’s first move beyond bars. The product is designed to be consumed with milk as a breakfast cereal or used a s a topping on fruit or yoghurt.

100% Wholegrain

These clusters, launched in 2013, are the company’s first move beyond bars. The product is designed to be consumed with milk as a breakfast cereal or used a s a topping on fruit or yoghurt.

KIND HEALTHY GRAINS

January 20154



E D I T O R I A L E D I T O R I A L

“superfoods like blueberry and chia”“100% wholegrains like amaranth and quinoa”

As the box on page 7 shows, the brand connects to 6 of the New Nutrition Business 10 Key Trends.

In 2013 the brand went beyond the bar to launch “Healthy Grains,” which is marketed as a “better kind of granola”. It is claimed to be lower in fat and sugar than other brands. It is Kind’s first foray into a product which can be used like a breakfast cereal or as a topping on fruit or yoghurt. In interviews Kind’s owners have referenced the company’s ambition to become a food company and not just a bars business.

A major driver of Kind’s sales numbers is the effort that has gone in to rapidly maximising distribution. A snack that seven years ago was available in just 10,000 stores like Whole Foods, Kind is now sold in

over 80,000 outlets across the US, in more than 50 chains including Trader Joe’s, Walmart, Target, Costco, 7-Eleven and many others.

Kind also looks for impulse sales by getting itself in a wealth of locations where it may be the only bar on sale – from café-cars on trains, corporate

canteens, sports stadia, juice bars like Jamba Juice and upscale cafes such as Au Bon Pain.

The number of units sold in each outlet will be small – and that is one reason why most mainstream marketers ignore such distribution opportunities, leaving the field open

CHART 2: KIND IS A SUCCESS DESPITE SUPER-PREMIUM PRICING

0

5

10

15

20

25

30

35

40

Kind BarsFruit & Nut

$1.49/40g bar

KindOats & Honey$1.09/35g bar

Nature Valley (General Mills)Oats & Honey$0.25/21G bar

Fiber One(General Mills)

Oats & Chocolate$0.50/40G bar

Kashi (Kellogg)Fruit & Grain

$0.50/32g bar

WalmartFruit & Nut

$0.33/35g bar

Quaker90 calorie, low-fat

Oatmeal Raisin bars$0.25/24g bar

$37.25

$31.14

$11.90$12.50

$15.63

$9.43$10.42

$ per kilo

equivalent

Source: NNB survey of Walmart


Samples of the Healthy Grains range were sent out to bloggers across the US to generate word of mouth

Samples of the Healthy Grains range were sent out to bloggers across the US to generate word of mouth.

January 2015 5



to the competition – but collectively those sales add up to something worth having. At the same time, omni-presence in distribution is as effective as advertising at creating consumer awareness of the brand.

WINNING THE SHELFSPACE WAR

It’s worth observing that the competition for shelf-space – especially in a commoditised category like bars – is intense and this has caused many people in industry to wonder exactly how such a small company is getting so much, so quickly.

Undoubtedly part of the answer in the last year has been the rising

consumer interest. According to Nielsen data, of the more than 2,000 products in the bar category, six of the top-10 best-sellers are Kind products. However, although the company and retailers decline to comment, it is clear that fees for space must play some role – as they do for so many brands – at least initially, something that would not be possible for companies without significant financial backing.

Kind clearly has significant financial resources, dating back to 2008, when private equity firm VMG Partners invested an undisclosed amount in the company.

Kind does traditional advertising, consisting mostly of outdoor poster

campaigns, and has an active presence in social media. But – as is so often the case with new products and little-known brands – sampling has been key to driving growth. According to Forbes magazine, Kind’s sampling budget was just $800 in 2008. The following year, with the investment of private equity backers, that jumped to $800,000. Today, Kind is said to spend more than $10 million on efforts to get people to try Kind bars. The company has a full-time field marketing team in 25 US cities that organizes sampling in stores, sponsoring sporting events, taking free samples into corporate offices and putting them in gift bags at company events.


[BOX – ALSO ON NEXT PAGE] SAMPLING IS A KEY STRATEGY FOR KIND

§  Samples are given out at fairs, food markets, in the street etc and also sent to bloggers which generates word of mouth

§  According to the founder, Mr. Lubetzky, KIND has a 98% conversion rate when people they the products and his strategy is to get as many people to try it as possible.

Free samples to bloggers creates awareness though

reviews and post

3

SAMPLING IS A KEY STRATEGY FOR KIND

• Samples are given out at fairs, food markets, in the street etc and also sent to bloggers which generates word of mouth• According to the founder, Daniel Lubetzky, KIND has a 98% conversion rate when people try the products and his strategy is

to get as many people to try it as possible.


BOX cont.


reviews and posts.

January 20156




THE VALUE OF KINDNESS?

From the outset, Daniel Lubetzky made giving to worthwhile social causes an aim of his company. Prior to Kind he had a background in cause-related marketing and is also the founder of an organization called PeaceWorks that works to create business relationships in conflict regions.

The company, which calls itself “not-only-for profit,” has pledged thousands annually to support customer-generated projects that give back to the community.

While there are many would-be entrepreneurs who believe that “doing good” can differentiate a business and win loyal customers, Kind appears not to agree. In a media interview Lubetzky was reported as saying that: “In most cases for real sustainable brands, that’s not what drives sales or long-term success. The product has to stand on its own merits and it has to be the best product in its category.” He added that cause marketing has driven less than 5% of the brand’s growth.

KINDNESS CHALLENGE

Kind’s mission, however, helps it to stand out. It is summed up on the back of the wrapper: to inspire “not so random acts of kindness.” Consumers can join the “Kind Movement” by signing up online. The brand sends monthly newsletters that include “kinding missions,” calling for small act of kindness. If enough people accept the challenge, the brand makes a “big kind act.”

Kind has endlessly refined its “acts of kindness” programme, partly in response to disappointments – where particular causes attracted no support. As the box shows, although many causes are represented on the Kind website, usually only 2-3 attract a significant amount of support, while most attract very little. That


[BOX – THIS SLIDE AND NEXT 1] THE KIND MOVEMENT

§  Over 345 000 acts of kindness has been recorded and 1 million people have been affected by small and big kind acts since the program started in its current form about three years ago according to KIND.

§  The movement has its own webpage; http://dtkt.kindsnacks.com/dtkt/ where supporters can log in and post their stories etc

6 • Over 345 000 acts of kindness have been recorded and 1 million people have been affected by small and big kind acts since the program started in its current form about three years ago according to KIND.

• The movement has its own webpage; http://dtkt.kindsnacks.com/dtkt/ where supporters can log in and post their stories etc.


[BOX CONT.] It is worth noting that of the many causes that are presented each month usually only 2-3 attract much support (see upper image). The majority attract relatively little support (see lower image).

7 It is worth noting that of the many causes that are presented each month usually only 2-3 attract much support (see upper image). The majority attract relatively little support (see lower image).

THE KIND MOVEMENT

January 2015 7


E D I T O R I A L

aside, Kind is said to have supported “acts of kindness” that have affected over 1 million people.

PREMIUM PRICING SUCCESS

What makes the Kind story even more remarkable is that – as so often is the case with new brands – it has proved that you can earn a significant price premium (in this case around 200%, as Chart 2 shows) in a category that is mass and short in differentiation.

Kind has shown – as so many brands have before it in other categories – that if you deliver excellent taste and texture, provide benefits that are seen as natural, connect to the biggest trends, support your brand with intensive sampling and clever marketing and focus on building up distribution you can grow your business and earn premium prices. Kind is yet another Case Study in “how to do it right”.

KEY EXAMPLES OF KIND COMMUNICATION


Press

Kind gift box from online

shop

Sampling around the US and flowers given to people to pass on as a act of kindness

Loyalty program for online shop


reviews and posts

Facebook campaign; get a letter kit and leave a letter with kind words at a public place or

give to somebody who needs it

Do the Kind thing movement

KIND: A BRAND CONNECTED TO 6 OF THE 10 KEY TRENDS


[BOX] KIND: A BRAND CONNECTED TO 6 OF THE 10 KEY TRENDS

Ingredients with a naturally healthy halo such as almonds, oats, quinoa, chia, blueberries, flax and many others A brand focused solely on healthy snacking With only 200 calories per 40g bar Kind is a credible choice The male-oriented “Strong & Kind” line delivers 10g of protein per 45g bar. Many other products have 6g of protein naturally present in nuts. A focus on “good grains” and “super grains” such as oats, quinoa, chia All products are gluten/wheat-free and many are also dairy-free

Ingredients with a naturally healthy halo such as almonds, oats, quinoa, chia, blueberries, flax and many others

A brand focused solely on healthy snacking

With only 200 calories per 40g bar Kind is a credible choice

The male-oriented “Strong & Kind” line delivers 10g of protein per 45g bar. Many other products have 6g of protein naturally present in nuts.

A focus on “good grains” and “super grains” such as oats, quinoa, chia

All products are gluten/wheat-free and many are also dairy-free

January 20158



D I G E S T I V E W E L L N E S S C A S E S T U D Y

Measured at a global level, Activia, which was first launched in Europe in the early 1990s, is the world’s biggest probiotic brand. When Activia debuted in the US in 2006 it immediately transformed the US yogurt market, where the probiotic digestive health proposition had not previously existed. Activia remains by far the biggest probiotic brand, but like every other yoghurt brand it has been overshadowed by the rapid and powerful rise of the Greek-style segment that now dominates the US yogurt market, with a 50% share.

BREATHING NEW LIFE INTO BRAND

Activia’s latest gambit is to revive the “Activia Challenge” for the first time in four years. The renewal of the promotion followed other initiatives such as diversifying into the Greek-style variants of Activia, dropping an ill-fitting line extension called Activia Dessert, adopting a more specific new health claim and modernizing its advertising with a lineup of current and vital celebrities as brand ambassadors while axing ageing boomer Jamie Lee Curtis.

All of these moves are designed to breathe new life into a brand that, while it still has an impressive $700 million (€568 million) in retail sales, has not been able to make much headway over the last four years under the Greek assault. Activia’s market share in the US peaked at 11% in 2010 but as its growth rate was slower than that of the market – which was

Probiotic refreshes feel-the-benefit advantage

In a bid to breathe fresh life into its Activia probiotic digestive health brand – lately somewhat overshadowed by the Greek yogurt phenomenon – Dannon USA, the North American arm of French dairy giant Danone, has set out to re-focus the attention of American consumers with the reintroduction of its feel-the-benefit challenge. By Dale Buss.

Activia’s revival of its “Activia Challenge” pairs the “twice a day for four weeks” challenge with current and vital celebrities such as boxer Laila Ali.

January 2015 9



powered by Greek – this is now down to 7%.

At launch back in 2006, Activia helped propel growth by introducing Americans to the Activia Challenge, a marketing tool which had already been proven in the European market for six or seven years. The idea behind the challenge is simple: Enjoy Activia twice a day for two weeks and experience improvement in minor digestive maladies – or get a refund.

CHALLENGE LETS CONSUMERS FEEL THE BENEFIT

“Right after we launched the brand, we had two tasks: We had to explain how probiotics works and we also had to overcome skepticism that it actually did work,” Jeffrey Rothman, vice president of marketing for proactive health brands for Dannon, including Activia, told New Nutrition Business.

The Activia Challenge worked, because it highlighted that an

effective probiotic product was one that enabled customers to “feel the benefit” – the most effective marketing tool any brand can have. The Challenge helped boost US household penetration for the brand “dramatically in a very short period of time, adding a million households during the promotion period and becoming one of the most effective promotions we’ve ever done at Dannon,” Rothman recalled. “More important, consumers bought the product and stayed with Activia. The traditional promotion in our category is just a price discount: You see a big spike in volume and consumption, and typically sales will return to pre-promotion levels.”

Dannon ran the Activia Challenge five more times through 2010, and the pattern “created a stepladder effect, where each time we’d see about three quarters of households new to the brand would stay with it,” Rothman

said. But by the sixth time, he said, “we started to get marginal returns. Each time we did it, it worked slightly less, as with any promotion. So the business team decided to do other things.”

FTC CHARGE “PLAYED NO ROLE”

There may have been another reason Dannon decided to stop running the Activia Challenge after 2010: the intervention of federal regulators. The US Federal Trade Commission (FTC) had charged that the company did not have sufficient evidence to support some claims in Activia advertisements, including one that stated that one daily serving relieved irregularity by boosting “slow intestinal transit time”. The company settled those charges in 2010 by agreeing to be more careful in its advertising claims and by paying $21 million (€17 million) to 39 states whose attorneys general worked with the FTC in its investigation.

1

4

2

5

3

6

ACTIVIA TV ADVERTISEMENT WITH LAILA ALI

Narrator: The Activia challenge

Laila Ali: There’s nothing like leaving home feeling attractive. But too many times I feel bloated, gassy, uncomfortable with gurgling. Nothing seems to feel right and yet another pile of clothes goes on my bed.

So I’m taking the Activia challenge.

Narrator: Eating Activia twice a day for 4 weeks may help reduce frequencies of minor digestive issues like bloating, gas, discomfort and rumbling.

Laila Ali: When your tummy smiles things just feel right. Join me and take the Activia challenge.

Narrator: It works or it’s free.


January 201510




But Michael Neuwirth, senior director of public relations for Dannon USA, insisted that the dustup with the FTC played no role in the four years that have elapsed between the sixth Activia Challenge and the current seventh version. “Our statement of benefits of Activia would have been the same regardless of the promotional vehicle,” he said.

DRAWING ATTENTION TO REVISED HEALTH CLAIM

However, Dannon has renewed the Activia Challenge in large part to publicize its revised health claim for the brand. Until this year, the claim on the Activia package was that the product:

“Helps naturally regulate your digestive system.”

But based on new Dannon studies of subjects who consumed Activia over a four-week period, twice a day, the brand came up with what it believes is an improved health claim:

“Activia may help reduce frequency of minor digestive issues like bloating, gas, rumbling and discomfort when eaten twice a day for a four-week period.”

FRESH FACES

The new language was introduced as part of Activia’s new advertising campaigns in early 2014, but Rothman believes reviving the Activia Challenge will underscore the new claim and that consumers will be responsive to its new specificity. “With new science and a new claim, we felt there was an opportunity to reintroduce an old tool and modernize it where it could be fresh again,” Rothman explained.

REFRESH FOR ACTIVIA

The Challenge revival also follows up the freshening of Activia

advertising that began early this year. The brand dropped Curtis – an actress of boomer vintage who hasn’t been active in films or on TV lately and who brought to consumers’ mind a series of effective parodies of Activia ads on Saturday Night Live from several years ago – in favour of fresh faces Shakira, the Colombian-born singing superstar; American country-music star Reba McIntire; Laila Ali, a retired boxer and daughter of Muhammad Ali; and TV doctor Travis Stork.

“They have brought some diversity and attention to the brand in a marketplace that has become extraordinarily crowded, including at the shelf,” Rothman said. It’s also possible that Activia will play a role in the major deal Dannon just struck to become the official yogurt sponsor of the National Football League, details of which will be announced in January.

GREEK-STYLE IN, DESSERT OUT

Perhaps an even more important move by Dannon to stabilize Activia came in 2012 when it introduced a Greek-style version to the brand portfolio; in 2013 an “Authentic

Strained” version was added; and in 2014 Dannon unveiled a “Light” version of Activia Greek. “That’s the key thing we did” to the product line in the last two years, Rothman said. “It complements the traditional part of our business.”

Yet, Dannon also dropped a product line that complemented traditional Activia. It took the Dessert line off the market at the end of 2013 after only a brief run after deciding that Activia “is not great at creating new segments in the category,” Rothman said. “We are fantastic at bringing a health benefit and additional value to our existing category.” Also, yogurt consumers couldn’t get used to ripping open a package as an indulgent treat in the afternoon or evening.

But by contrast, Rothman said, Dannon’s recently launched Creamery brand of desserts “is purposefully designed to create a new segment in the yogurt category”.

Neither is Dannon troubled by the ongoing increase in other probiotics products. In 17 million US households now, Rothman said, Activia “dwarfs” all other probiotics products in penetration. “And we all benefit from increased knowledge and awareness of probiotics.”

As part of its bid to breathe new life into Activia, Dannon introduced a Greek-style version in 2012.

January 2015 11


I N N O VA T I O N C A S E S T U D Y

Way Better Snacks has become a fast-growing brand with $25 million (€20 million) in sales in just three years because:

• it hit the burgeoning market for better-for-you salty snacks at exactly the right time

• its focus on sprouted and alternative grains demonstrated a new way to approach the category

• “sprouting” is a next big thing • founder and CEO Jim Breen

knows what he’s doing

After gaining space at more than 20,000 stores – from Whole Foods to Walmart, Wegmans to HEB, Target to Costco – for Way Better chips made of the seeds of flax, quinoa, kale, chia and black beans, Breen is rolling out the brand’s first big diversification: a line of crackers, made from barley, spelt and emmer. “Retailer accounts are excited that we’re expanding into other related better-for-you categories,” Breen told New Nutrition Business. The crackers will be “widely accepted and available across the country in many outlets”.

Breen is counting on accomplishing with Way Better crackers what the brand’s salty snacks did: to greatly upset the category. Way Better tortilla chips earned sales of about $7 million (€5.7 million) in 2012, their first year on the market. That number doubled in 2013 and in 2014 – having added pita chips to the range – sales were around $25 million (€20 million). The aim is to roughly double sales again for another year or two.

Breen based the success of Way Better on three crucial premises:

1. There remains plenty of room in the category for a savvy new better-for-you brand. PepsiCo-owned Frito-Lay, the category giant, is widely seen as having mostly botched its attempts to create new healthier products, beginning in the late 1990s with the disastrous foray into fat-blocking with Olestra, then evolving into a short-lived run with Flat Earth snacks made out of fruits and vegetables. The PepsiCo unit’s failure has left most of its products still being made from potatoes and corn

while a proliferation of small and startup brands have tried to leverage alternative ingredients and products to capture the better-for-you salty snacker.

2. Breen noticed that more mainstream consumers are growing wary of refined carbs in traditional snacks made from wheat and corn. “Consumers want grains, seeds and beans that are unadulterated more and more,” he said. “Some of that is being driven by the non-GMO movement, but there also is growing evidence that white winter wheat isn’t a terrific choice for consumers. It’s becoming increasingly known in the general population that a lot of the issues we’re seeing with children’s behavioral disorders, with diabetic situations and with gluten intolerance and sensitivity, synchs up pretty amazingly to the adulterated wheats of the Seventies. As this story becomes better known, it’ll drive a movement to grains that predate this alteration.”

Snack brand sparks market for sprouted grainWay Better has put the innovative reinvention of an old type of food at the core of its business, delivering “good grains” that are sprouted and naturally gluten-free for people who want to avoid bad carbs and snack more healthily. A business that combines technical and marketing know-how, consumers have rewarded it with enviable sales growth, and its success is likely to spark me-toos – already, Kellogg has picked up the sprouted grain idea with its Kashi brand. By Dale Buss.

NEW NUTRITION BUSINESS 1


January 201512




3. Health-active American shoppers have moved past mostly meaningless “natural” or “all-natural” positioning and instead are looking for truly significant criteria as they make decisions on better-for-you snacks. That is where Way Better’s emphasis on nutrient density comes in. “Most of the conversation we hear from consumers and see at food expos is around nutrient-dense grains, seeds and beans, which are ‘better carbs’,” Breen explained. “They’re really interested in better-for-you snacking, and what are the products that truly deliver it, than in whether something is ‘natural’. Our products also are non-GMO and gluten-free, but again, that’s not what’s driving consumer interest.”

DEVOTION TO SPROUTING CREATING

NEW SEGMENT

What is creating a point of difference in a market in which it’s hard to create differences – and as a result driving consumer interest – is that Way Better Snacks’ Simply Sprouted Tortilla Chips and Simply Sprouted Pita-ahh Chips are made from alternative grains that are sprouted and, Breen believes, that his brand is demonstrating a devotion to sprouting that is defining an entire new segment of better-for-you snacks. In 2014, a survey conducted by Way Better

with the Natural Marketing Institute found that 17% of US consumers in the general population were already aware of products with sprouted grains and seeds.

“That was higher than we expected, because we’re still relatively early in what is clearly a trend that is ramping up,” Breen said. “And when we added focus-group research, we found that people ‘get’ sprouted grains. They don’t necessarily know what it is, but they know it’s better for them.”

Sprouted grains may be new to Americans – and many other western cultures – but they in fact have a long history of use in bakery in markets as diverse as Germany and the Middle East.

The idea of using sprouted grains is that a seed is basically a storage container for grain, keeping everything inert until the conditions are just right for the germ to digest the endosperm and begin growing. The bran layers on the outside of the seed are to protect the plant until it’s ready to sprout. And at that point, studies show, it’s easier for the nutrients held by the plant to become bioavailable in the human body.

“If you sprout something, enzymes are activated that greatly reduce or eliminate the barriers to absorption in the grain, such as a substance called phytic acid, so that you can uptake all the nutrients that are there,” Breen

said. “There’s also evidence that you’ll have significant increases in some vitamins and antioxidants, though we’re not claiming that yet.”

Sprouted Grains have a solid basis in science. According to US industry body the Whole Grains Council:

• the amount of soluble fibre in sprouted grains is higher than in regular grains, providing a net gain in fibre even while the amount of insoluble fibre decreases

• there are higher levels of certain minerals and vitamins, including vitamin A and folate, in sprouted grains

• the nutrients in sprouted grains stand up to heat processing, as well as other adverse factors, better than those in regular grains

VERTICAL INTEGRATION ALLOWS

INNOVATION

The seeds in Way Better Snacks are sprouted by adding moisture when the germination process begins then halting it just after the sprout begins to grow by drying the seeds again. So important is the precise execution of this process, Breen said, that his holding company, Minneapolis-based Live Better Brands, actually acquired its sprout supplier, BioEssential Botanicals, based in Ontario, Canada, in May 2014.


January 2015 13



THE FOREFRONT OF SPROUTING SCIENCE

“Having a sprouter and working with one that takes great care to do it right is super-important,” Breen explained. Way Better targets a 98% germination rate for its seeds “so that we can get the most nutritional bang out of them as possible,” he said. The system includes a pristine water-filtration system and precise seed-soaking and drying system.

“It’s too simple to think that you can sprout just by throwing stuff in a bin, having it germinate a bit, drying it back out and calling it a day,” he said. “We don’t do any of that. After we’re done low-temperature air-drying them, we return them basically to the seeds and grains that came to us. They can be milled into a flour – or still could be grown whole. They could grow into a plant years later. You can only achieve that if you’ve worked out a process that cares for the seeds and nutrients as much as possible.”

Breen said that acquiring BioEssentials also will help Living

Brands develop “next-generation seeds that continue to improve the process so that we can get the absolute maximum possible out of the seeds.” Among other things the company is working on “some exciting proprietary combinations” of seeds and grains in which nutritional profiles complement one another.

He fully intends to keep Way Better Snacks at the absolute forefront of the science of sprouting, and the use of alternative grains, as more startup and existing mainstream brands attempt to tap into the consumer appeal of both. Part of Breen’s approach, for instance, involves balancing the use of hip grains such as quinoa and chia, and even vegetables such as kale, with a focus on sprouting and with more traditional but highly capable alternative species such as flaxseed.

“We’re big believers in flax,” Breen said. “It’s as strong nutritionally, or almost as strong, as these others, but it’s not as talked about. But everyone gravitates to the new and interesting. I’m not seeing anything that’s super-exciting from an ingredient standpoint

that we’re not already participating in.”

Another example of Breen’s contrarian viewpoint as competitors flock to use alternative ingredients is kale, which has become the “ingredient du jour” in snacks and beverages found in natural product stores.

“Some of the newer brands are strictly focused on using kale, and they’re making that a leverageable differentiation,” he said. “But we’re taking kale and making its nutrients more bioavailable with what we’re doing with them. We have germinated kale seeds in some of our products, which is far more nutritious than kale itself. They’re packed with nutrients right when they start to germinate, and the longer they’re left to grow into a plant, the less nutrient-dense they are because they fuel their own growth with their nutrients.”

Understanding that consumer appreciation of Way Better’s approach to sprouting is crucial to its continued dominance, and acknowledging that all of this


[BOX] TV ad: “Sprouting made way better”, 2012

Male voiceover: “Seeds, grains and beans are all outstanding nutritional food sources, but they are difficult to digest and their nutrients are poorly absorbed because each has a natural protective barrier specifically designed to protect it till it is ready to sprout allowing them to endure the rigours of nature and still grow into viable healthy plants. The way to get past these barriers and unlock all the good stuff that lives within is to make them sprout or germinate them. All of a sudden the proteins, essential fatty acids and minerals that were once locked away are now available for the body to use. The result is better access to some of the most powerful human rocket fuel on earth and that’s just ONE of the things that makes us Way better! So go ahead – snack – it’s way better for you!”

https://www.youtube.com/watch?v=PrS5Wj3owKY 3

TV AD: “SPROUTING MADE WAY BETTER”, 2012

Male voiceover: “Seeds, grains and beans are all outstanding nutritional food sources, but they are difficult to digest and their nutrients are poorly absorbed because each has a natural protective barrier specifically designed to protect it till it is ready to sprout allowing them to endure the rigours of nature and still grow into viable healthy plants. The way to get past these barriers and unlock all the good stuff that lives within is to make them sprout or germinate them. All of a sudden the proteins, essential fatty acids and minerals that were once locked away are now available for the body to use. The result is better access to some of the most powerful human rocket fuel on earth and that’s just ONE of the things that makes us Way better! So go ahead – snack – it’s way better for you!”

https://www.youtube.com/watch?v=PrS5Wj3owKY


January 201514



S N AC K I N G C A S E S T U DYI N N O VA T I O N C A S E S T U D Y

information is a lot for shoppers to confront, care about and absorb, Breen is very deliberate about communicating the brand and its benefits down to the smallest detail, and about keeping his approach dynamic as the business grows.

TIGHTER MESSAGE NOT TOO TECHNICAL

For example, he said, the brand is “tightening up messaging on our packaging. We came out with a package that was fairly advanced from an overall look and feel” in terms of how much information shoppers could absorb while reading labels in a store. Another part of its research with the National Marketing Institute was to understand which Way Better package messages and information were resonating with consumers – and which weren’t.

“Even some simple terms, consumers were responsive to – and others, they weren’t,” Breen said. “We’ve used that information to improve the commentary on our packages. We’re simplifying our messaging and not scaring [shoppers] by being too technical with a lot of food-science-y stuff. We’re a snack product and not positioning ourselves to be a meal replacement, so we want to be careful to tell them the real cool stuff but not get into it in such a deep way that it’s uncomfortable for them.”

Similarly, Way Better is spreading the gospel of sprouting with what Breen called a “pretty aggressive communications campaign” through various marketing channels but doing so in a way that balances the need for consumer education with other important elements such as product sampling and reaching target audiences effectively.

Efforts include discussion of sprouting in social media and a new educational web site called SimplySprouted.com as well as appearances at more than 200 community events in 2014 that

ranged from gluten-free and allergy-free gatherings to natural-foods festivals to food-and-wine affairs.

“Our approach is a little less about sampling and a little more about education,” Breen said. So, for instance, Way Better displays include visuals of the seeds themselves, and brand representatives carefully hand consumers individual chips so that they can point out specific advantages of the product over regular snacks and better-for-you competitors. They discuss sprouting and probe for how much the passer-by understands – and wants to know – about it.

And all of this action is staffed either by Way Better employees or by “carefully selected ambassadors,” Breen explained. “We don’t go hire college kids for $10 an hour. We don’t ever stand on a corner and hand out bags of chips outside of a football game. We go to events where we’re confident there’s a high percentage of people who seek products like ours, and try to engage them as much as possible while they’re there. We can’t go super-deep with all of them, but we don’t just pass the stuff out and hope they read the bag.”

TABLE 1: WAY BETTER SNACKS NAKED BLUES NUTRITION SNAPSHOT

January 2015 15


S N AC K I N G C A S E S T U DY

Popchips is attempting to jump-start flagging growth and move to the next stage of brand awareness in the US market with a TV-advertising campaign, a significant addition to its healthy snacking product line and the guidance of a new CEO and a new chief marketing officer who know a thing or two about elevating snack brands.

The Los Angeles-based maker of “popped” (instead of fried or baked) snack chips launched an expensive, $15 million (€12 million) campaign of television commercials in September 2014 aimed at boosting awareness among American consumers, especially in the mid-west, where the brand hasn’t really caught on. The effort is being guided by the new Chief Marketing Officer (CMO), Marc Seguin, who joined the company from Wonderful Pistachios, where he led an explosion in brand awareness and sales that took the brand from start-up to being one of America’s 10-biggest snack brands.

Sales have struggled lately for Popchips, but Seguin welcomed the

chance to take the brand to the next level along with new CEO Paul Davis, a former Frito-Lay executive. Founder and former CEO Keith Belling remains on Popchips’ board.

“This brand has a lot of legs,” Seguin told New Nutrition Business. “For me, this was an opportunity to do for another brand what we did at Wonderful Pistachios: introduce the entire country to a product that we know they’re going to love to taste

– and that they can come back to again and again without having to eat something that’s deep-fried.”

Popchips’ leaders are trying to create the next big leap for a brand that enjoyed an enthusiastic early reception in the US savoury snack market. Launched by serial entrepreneur Belling in 2007 as an alternative to calorie-laden snack chips produced by Frito-Lay, and taste-challenged baked chips, Popchips was borne of a popping process that produced a different kind of potato chip.

Popchips have less than half the fat of fried chips and even baked chips. Per serving, for instance, Popchips provides 4g of fat compared with 10g per serving of Lay’s Potato Chips, 7g in Terra Sea Salt potato chips, and even 6g of fat per serving of Frito-Lay’s baked Sunchips Original flavour. Similarly, Popchips carries just 120 calories per serving versus 150 calories for Lay’s, and 140 calories each per serving for Terra Sea Salt and Sunchips Original.

An important benefit of Popchips’

Popchips hopes mass market will put snap back into sales

The Popchips brand got its start from a technology that enables grains to be “popped”, rather than baked or fried, delivering less fat and calories while preserving taste. The brand has gone from strength to strength – but now it faces its moment of truth. It is investing in moving from lifestyle to mass, from digital marketing to mass TV advertising, and it is doing so just as its point of difference erodes and sales have begun to falter. Popchips must succeed in the transformation or settle for niche status. By Dale Buss.

January 201516




preparation method is that they are light compared to their main competitors: 20 or more chips in a 1oz (28g) serving of Popchips compared with 15 in a traditional bag of potato chips. That is largely because of the difference in oil content. Popchips have a chewy-crispy consistency of a hybrid of a rice cake and a potato chip.

CELEBS, SOCIAL MEDIA DRIVE SALES

Belling modeled the Popchips strategy on that pursued by Glaceau, which launched and nurtured its Vitaminwater brand and product line, got outside investors to fund its growth and eventually enjoyed a $4.1 billion (€3.3 billion) sale to Coca-Cola. “We want to do in the snack aisle what Vitaminwater did in the beverage aisle,” Belling told New Nutrition Business back in 2010. “I’d be thrilled with $1 billion in revenues.”

Like Vitaminwater, Belling courted the attention and investments of celebrities, including actor Ashton Kutcher, and relied heavily on social-media-fueled word of mouth. Popchips also invested heavily in print advertising featuring minority owners such as the singer Katy Perry, and sampled continuously at consumer events on the east and west coasts.

As a result, Belling notched Popchips sales of $6.5 million (€5.3 million) in 2008, which rose to sales of $40.9 million (€33 million) in 2010, to $73 million (€59 million) in 2011 and to sales of $93.7 million (€76 million) in 2012. The addition of a major new diversified line, tortilla chips, in 2012, also added to Popchips’ momentum.

COPYCATS ERODE POINT OF DIFFERENCE

But by 2013, some significant impingements for Popchips began to pop up. Competitors had noticed Popchips’ growth and began fielding their own popped snack products. They have included Quaker’s Popped, by Quaker Oats; Kellogg’s Popcorn Chips; and Mondelez International’s

Wheat Thins Popped. The copycat products from bigger rivals have undercut the novelty of Popchips’ product format.

Seguin acknowledged that “in the short run, competition always creates pressure on the business. But in the long run,” he added, “it’s a good thing. It forces you to maintain your competitive edge in the marketplace.” In response, he said, Popchips has been emphasizing maintaining “the best-tasting product on the market”. And Seguin said that competition “does create scale” and further encourages a snacking habit in American consumers, especially Millennials. “It’s the biggest food-consumption shift of the last 50 years,” he said.

The second obstacle to Popchips’ recent growth was effectively of its own making: Last year, the brand felt forced to add 15% more product to each package without boosting

its suggested retail prices. The move stemmed from digital buzz from some Popchips customers who were complaining that Popchips was sparing with the number of actual chips in a bag. “They told us a little more product in the bag would be good, especially if they’re sharing it with family members,” Seguin said. “And our fans built the business. So we fulfilled that request, improved the value proposition and made sure that people are getting all the Popchips they want.”

But it wasn’t so easy. “It’s a huge commitment for a company of our size,” Seguin said. “Not only upsizing without price increase but the transition of delivering the new product to the store, fronting out the old product and so on. It cost us several months of sales to execute it.”

While Popchips made sure to promote its new generosity in a digital marketing campaign, and at point of


CHART 1: AFTER A STRONG START, SALES OF POPCHIPS HAVE STALLED

Between 2012 and 2014 Popchips’ sales fell by 17%. At the same time the total salty snacks market in the US grew by 7%, to reach $20.6 billion.

Total US sales in supermarkets, drugstores, mass market retailers, gas/C-stores and Select Club & Dollar retail chains).

0

5

10

15

20

25

30

35

40

45

50

55

60

65

2009 2010 2011 2012 2013 52 Weeks Ending Sep 2014

$10.315

$26.048

$51.190

$64.542 $63.827

$53.615

Source: Infoscan Reviews, IRI

January 2015 17



sale in stores, the whole exercise took its toll. Between that move and extra competition, in sales tracked by IRI, Popchips growth began stalling in 2013. Sales actually declined by 1% in 2013 in US supermarkets, drug stores and mass merchandisers (except Walmarts) where results are tracked by IRI, while overall sales in the salty-snack category advanced by 4%. And for the 52 weeks ended September 7 of 2014, Popchips sales dropped by 20% compared with the previous 52 weeks.

TIME FOR A “NATIONAL VOICE”

It was time, Seguin and Belling decided, to elevate Popchips to national brand status with a TV campaign.

“What was missing in the marketplace was a voice for many better-for-you brands,” Seguin said. “We’ve been fighting it out in the store and doing lots of local marketing, but very few brands have been competing with Frito-Lay with a true national voice in the media.”

In other words, Popchips needed to go more mass. Over the first six years of its existence, Belling had built cachet and awareness for Popchips largely by hitching the brand to celebrities such as Perry and Kutcher, who bought minority stakes and mined their massive social-media following to advance Popchips. The brand also heavily relied on in-store sampling in core metro markets on the coasts, including Boston, New York, San Francisco and Los Angeles.

“That had quickly built our brand advocacy in those areas, and we had reasonably strong penetration in key urban markets on the coasts, but now we are looking for a way to pick up a national reputation – and that was going to require a broader campaign,” Seguin said. “Where people have interacted with the brand, it’s been a fantastic success – that’s on the coasts, but not in the centre of the country … In Los Angeles, if I tell someone I’m

the CMO of Popchips, they think it’s a fortune 50 company, but in middle America they might think I’m a telemarketer. That speaks to the great opportunity we have.”

Moreover, he explained, for Popchips it wasn’t just a question of expanding its geographic awareness to the middle of America and beyond the coasts. Seguin also determined that the brand essentially had reached

the limits of digital effectiveness if Popchips were to become truly a mass-market product challenging the giant Frito-Lay. After all, Belling has said all along that his goal was to make Popchips a $1-billion brand and the salty-snack equivalent of Vitaminwater. Popchips’ household penetration has reached only about 5% nationally versus the 60%-or-so penetration by some Frito-Lay brands.

Popchips ads repeatedly weave a description of the product’s popping process and its “all the taste, half the fat” positioning into humorous dialogues between “Ed and Jane,” a young-adult couple played by actors who have an improvisational-comedy background.

TABLE 1: POPCHIPS SEASALT & VINEGAR NUTRITION SNAPSHOT


January 201518




“Digital is a great way to have focused interaction with consumers, if you have a finely tuned target market or a geography to go to, and you can build relationships that way,” Seguin said. “People are used to an ongoing conversation about the brand. But when you want to reach a whole bunch of people at once, with scale, there’s nothing as effective as TV … We know our fans will love the TV ads, because they know our personality. But the ads are mainly an awareness-driving activity for all the people who don’t know us.”

HUMOROUS POSITIONING

The ads repeatedly weave a description of the product’s popping process and its “all the taste, half

the fat” positioning into humorous dialogues between “Ed and Jane,” a young-adult couple played by actors who have an improvisational-comedy background. “They’re every-day, super-approachable [characters] who bring a lot of life to the brand and communicate lots of personality and what makes us special,” Seguin said.

Seguin has been immediately pleased by the results. “We ran our first 30-second spot on Sunday Night Football [on NBC] and we got 27 million viewers all at once; that’s an average audience. There’s no digital analog for that today. You’d have to do lots of different digital programs to get to 27 million people. If I can make Americans aware [of Popchips] with a loud megaphone, and then get them into a store or to go online, then I can

engage them digitally.”Seguin cautioned that Popchips’

national-advertising ambitions are still in their early phases. Although it was recently disclosed that global singing sensation Perry, who remains a Popchips shareholder, will headline the high-profile halftime act at the Super Bowl, Super Bowl advertising for Popchips “is a few years down the road for us. It took us four years of advertising for Wonderful Pistachios, and building sales and our retail presence, before we decided to break through to the next level. So I would like to think that a few years from now, we’d be having the same conversation about Popchips.”

CHART 2: SNACK CHIP PRICING COMPARED

To sell at a super-premium price and also grow – which is what Popchips is aiming to do – a brand needs to have some clear and strong point of difference.

Popchips no longer has any point of difference in the snack category – and at the same time has failed to connect to important trends such as gluten-free and “good grains”.

0

5

10

15

20

25

30

$ per kiloequivalent

Pop Chips$0.67/23g bag

Way BetterSprouted grain

chips$3.15/155g bag

BeanitosWhite Bean Chips$2.94/170g bag

Nabisco(Mondelez)

Wheat Thins Popped$2.88/127g bag

Kettle Bakedpotato chips$3/113g bag

Lays Bakedpotato chips

$2.98/6.25oz bag

Lays Classicpotato chips

$3.98/13.75oz bag

$29.13

$20.32

$17.24

$22.68

$26.55

$16.82

$10.21

Source: NNB survey of Walmart

January 2015 19



If ever there was a company ripe for acquisition, Sahale Snacks certainly fits the bill. The privately held company has grown from a quirky entrepreneurial start up in 2003 to a successful gourmet snack brand with projected 2014 net sales at $50 million (€39.6 million), and distribution in national chains like CostCo, Starbucks, Walmart and Whole Foods Markets. Not surprisingly, the company was purchased in late 2014 by the J.M. Smucker Co, a diversified food group with $5.6 billion (€4.5 billion) in sales.

APPEALING OPPORTUNITY WITH STRONG

GROWTH PROSPECTS

There is little doubt Sahale was an appealing opportunity in this era when big mainstream brands are looking for acquisitions that provide good return on investment, with strong growth opportunities and the chance to enhance their portfolio with

brands that have a more healthful and transparent image. Although the jury is still out as to whether such acquisitions are ultimately ideal for the smaller brand, Smucker’s has a solid track record of acquiring specialty and organic brands that retain their independence.

That may be a key factor for Sahale. Founded in 2003 by entrepreneurs Josh Schroeter and Edmond Sanctis, the brand specializes in taking well-understood snack products and offering them in new and unexpected ways.

They gained a following by boldly cutting through the snack category’s clutter with interesting culinary combinations, such as the Sing Buri Cashew mix, including lemongrass, soy-glazed cashews, with pineapple, peanuts and sesame seeds, lightly dusted with mild Chinese chile and the Valdosta Pecan mix, with black peppered pecans, sweet cranberries and a pinch of orange zest.

In addition to its signature glazed-nut blends, Sahale now also offers:

• Nut and fruit mixes (Raspberry Crumble Cashew and Berry Macaroon Almond)

• Premium blends (Maple Pecans and Pomegranate Pistachios)

• Sahale Crunchers (Almond Parmesan Cheese and Herbs, and Almonds with Cherries, Apple and Maple)

• Seven varieties of Grab and Go snacks (including Raspberry Cashew Crumble and Mango Tango Almond mix).

The premium priced mixes have suggested retail prices ranging from $1.00-$2.00 (€0.79 to €1.59) for the 1.5 oz (50g) Grab and Go snacks to $8.75 (€6.94) for an 8oz (227g) package of the nut and fruit mixes.

The synergies of the deal seem strong for both sides. Sahale brings snacks to Smucker’s existing portfolio,

Sahale mission remains ‘out of the ordinary’ despite

Smucker acquisitionThe recent purchase of Sahale Snacks by J.M. Smucker is the latest industry deal as big brands seek companies that offer growth and a healthful footprint, but can the small innovative brands being bought up retain their authenticity? Karen raterman reports.


January 201520



P R O T E I N C A S E S T U D YS N AC K I N G C A S E S T U DY

which includes products like fruit spreads, peanut butter, packaged coffees, shortenings and oils. As consumer demand for innovative and more healthful snack products grows, the appeal for Smucker, which has broadened its health offerings with other acquisitions, is undeniable. The company most recently acquired Enray Inc., a manufacturer of organic, gluten-free ancient grain products, in August of 2013. Sahale will give it a strong brand in the high growth area of snacks with innovative flavour profiles and whole food ingredients with no preservatives, trans fats or artificial additives. Sahale also provides inroads to consumers looking for gluten-free and non-GMO choices in the snacks category.

ACQUISITION TAKES SMUCKERS’ OFFERINGS “BEYOND ORDINARY”

Paul Smucker Wagstaff, president of the Orrville, Ohio-based company’s US Retail Consumer Foods group, called the acquisition exciting and an excellent strategic fit. “The addition of the Sahale Snacks premium lifestyle brand, and its portfolio of innovative and on-trend products, provides an established platform for growth in the snacking space,” he said in a statement. While the deal is not expected to have a material effect for Smucker in 2015, the company did say in its most recent earnings report that it expects to see a net sales increase of about 5%, which includes the $25 million (€19.8 million) of expanded net sales contribution from the merger.

The company feels the Sahale line is also complementary to its existing products. “We were very pleased to add Sahale Snacks to our product portfolio because the products are great tasting and beyond ordinary,” said Maribeth Burns, Smucker’s VP of corporate communications. “We believe the Sahale and Smucker teams will be able to leverage expertise with innovation from each other as we

expand our product offerings in the snacking category.”

The company is also planning to leverage its existing infrastructure, scale and reach to prompt new growth for the innovative brand. “We look forward to continuing to grow the Sahale Snacks brand,” Burns continued. “The unique ingredient combinations and adventurous flavour profiles offered by Sahale create opportunities to reach new consumers in the on-trend snacking category.”

For Sahale it will be business as usual, according to current CEO Eric Eddings, who, along with founders Schroeter and Sanctis, is expected to have continued input by joining the Smucker team. The acquisition also includes the company’s 150 employees and its leased Seattle facility. Eddings noted that they are proud to join the Smucker family and “we look forward to the continued growth of the Sahale Snacks brand as we maintain our focus of bringing ‘Beyond Ordinary’ snacking to consumers daily lives.”

It is a reasonable expectation, according to Grant Ferrier, CEO and principal of Nutrition Capital Network. Smucker has done other deals and has been good at retaining

the integrity of the brands they purchase, he said. “There is no reason to think that they won’t do that again.”

“LITTLE FALLOUT”

Ferrier also believes that Sahale will have little fallout from core health consumers who sometimes express displeasure with brands that “sell out” to big food interests, such as the recent Annie’s acquisition by General Mills. “Annie’s was actually sold sometime before to Solara Capital, so if they were just selling out, it had actually already happened,” Ferrier explained. Similarly, Sahale has been part of a private equity firm, Palladium Equity Partners, since 2007.

There will be less and less of this type of concern as consolidation continues, Ferrier added. “In general, the enlightened and sophisticated consumers that our industry targets are increasingly tolerant of big businesses who want to bring healthy products to more people,” he said. “The mission is to make more people healthy and changing how big food operates is a part of that mission too.”

TABLE 1: SAHALE SNACKS NUTRITION SNAPSHOT

January 2015 21


P R O T E I N C A S E S T U D Y

The commercial agreement which allows UK dairy First Milk’s CNP business to use the Team Sky cycling brand on an expanding range of protein-based breakfast products could just be a stroke of genius. This is a hugely successful team which has near ‘national’ status (though not officially) in Britain, is associated with household sporting names and role models, and appeals as much to families as to cycling enthusiasts.

CYCLING ENJOYS HEALTHY, CLEAN

IMAGE

In the last few years, the image of cycling itself has seen a transformation in the UK, probably far more than in most other European countries. Its reputation as a healthy and eco-friendly pursuit has been bolstered by the sporting success of cyclists such as Sir Chris Hoy, Sir Bradley Wiggins and Chris Froome in the London Olympics and Tour de France. Wiggins and Froome are both Team Sky members.

“This is a unique sporting brand which transcends tribal behaviour,” says marketing director at First Milk and CNP,

David Young. “The strong affinity with the brand comes from a broad spectrum in the population.”

Importantly, cycling is also still widely regarded (rightly or wrongly) in the UK as being ‘clean’, so any association with cycle-friendly nutrition is a positive one.

Team Sky itself was established in 2009, while sports nutrition specialist CNP’s story goes back to 1998. First Milk acquired CNP in 2012. Two years earlier, CNP had moved into a new research, development and testing facility in Manchester. As well as cycling, the brand supplies customised nutrition to a range of

professional sports including boxing, athletics and Premiership and Championship football clubs, says Young.

As he explains, his company already has a range of sports products such as bars and gels aimed at the more active consumer, up to now sold more through cycling and other sports outlets, as well as online. This range will also now be given more of a push through supermarkets, Young reports.

BREAKFAST THE KEY OPPORTUNITY

But the Team Sky Breakfast launch marks CNP’s first move into lifestyle

Sports branding for breakfast protein boost

It may enjoy the branding of one of the UK’s best-loved sports teams, but dairy company First Milk is taking care to target not just sportspeople but lifestyle consumers with its growing breakfast range based on dairy protein – an ingredient that, the company says, appeals to a wide audience. By Paul GanDer.


January 201522




as opposed to sports nutrition. Breakfast is the key opportunity, the company believes. It quotes figures which suggest that British consumers – rather incredibly – spend an average of 3 minutes 15 seconds on breakfast, with nearly a quarter of consumers regularly missing breakfast “due to a lack of healthy choices”.

According to Mintel research from April 2014, one third of UK adults now eat breakfast out of home daily.

“It is a shocking fact that for many consumers simply putting cereal into a bowl with milk and eating it is seen as being ‘inconvenient’,” says Young. CNP’s answer is to combine convenience with inclusive branding, active and healthy associations and a protein boost.

PROTEIN THE COMMON FACTOR FOR

ATHLETES AND LIFESTYLE CONSUMERS

Comparing elite and amateur sports applications with the lifestyle opportunity, Young comments: “The use of protein is the natural link. But nutritional and calorific intake will be very different for each audience. The role of protein – particularly dairy protein – across all our lines is becoming more important to us. But that role is positioned in different ways for different consumers.”

The summer launch range of two smoothies (330ml, less than 180 kcal each) and two flavours of dry porridge (5x35g sachets) has since been added to by a third smoothie flavour, ready-to-microwave porridge pots and ready-to-eat breakfast pots (incorporating First Milk’s quark rather than whey) – all products high-protein.

Smoothie flavours are: • Blueberry & Raspberry• Pineapple & Coconut • Orange & Mango

Porridge pot flavours are:• Superfruits• Apricot • Original

TABLE 3: NUTRITIONAL FACTS PANEL FOR FIG & HONEY HIGH PROTEIN PORRIDGE

TABLE 2: NUTRITIONAL FACTS PANEL FOR APRICOT HIGH PROTEIN PORRIDGE POT

TABLE 1: NUTRITIONAL FACTS PANEL FOR PINEAPPLE & COCONUT FLAVOUR HIGH PROTEIN SMOOTHIE

January 2015 23



For the porridge sachets:• Superfruits• Fig & Honey

For the breakfast pots:• Mixed Cherry• Summer Fruits Each smoothie contains 26g of

protein. For the two porridge formats that figure is 12.5g per serving, and for the breakfast pots 10.8g per 125g pot. “The science is a little unclear when it comes to how much protein the body can assimilate in one go, but it seems to be in the region of 30g,” Young explains.

It is unlikely that the Team Sky Breakfast range will stop there. And having successfully steered CNP into lifestyle nutrition with one brand, Young clearly senses a larger opportunity. “We’re working on a second range positioned in another way,” he says, giving little away. “We think it’s a very innovative approach. It will probably be launched in the New Year.”

PREMIUM PRICE

CNP has been Team Sky’s nutrition and hydration provider since the team was set up; its own head of brand is quoted as saying it sees the range as an opportunity to grow public awareness of the team, and Young likes to talk about a “partnership”. Nonetheless, the launch clearly involves some sort of commercial licensing.

The flipside of this commercial arrangement is a retail price premium of between 15% and 20% for the porridge pots, which retail for £1.00 ($1.56/€1.27) compared with “standard offerings”, says Young.

The quark-based breakfast pots have a recommended sales price of £1.25 ($1.96/€1.59), while for the box of five porridge sachets the figure is £3.00 ($4.69/€3.80). The smoothies retail at £2.50 ($3.91/€3.17). This compares with £1.75 ($2.74/€2.22)

for a smaller 250ml bottle of all-day protein drink Upbeat (see NNB May 2013).

Each 500g For Goodness Shakes! high-protein milk drink retails at £2.50 ($3.91/€3.17). Arla Wing-Co, the largest high-protein milk drink in the UK market, retails at £1.28 ($2.00/€1.63) per 500ml bottle.

The range is currently stocked by 700 Tesco and 350 Asda stores around the UK. “But we’re also trying alternative routes to market; not just the classic grocery multiples,” says Young, explaining that CNP is working with the Nisa network of convenience stores. “The range has also become our first to be sold through Amazon.”

Which consumers is CNP/First Milk trying to reach? “We’ve identified three core target users,” he says. “Firstly, passionate cyclists, and we see this group as comprising slightly more males than females. Secondly, the young urban professional, again with a slight male bias. In both cases, we’re talking about a 25-to-35 age profile. The third group is ‘foodie’ consumers who engage with healthier propositions.” In all, CNP reckons these groups could account for 20% or 22% of the total population.

AIMING FOR SLICE OF BREAKFAST DRINKS MARKET

Young sees the breakfast drinks market as being especially interesting, now that big cereal brands such as Weetabix have launched their own heavily-promoted offerings. “We think we could have around 10% of the UK breakfast drinks market by the end of the year,” he says bullishly.

What makes him so sure? “You can see how the fixture is developing in Tesco, for example,” he says. “Some are sports-facing, others with a wider positioning. If they’re too sports-based, typically they have less of an opportunity to engage with a wider audience.”

Young emphasises that the Team Sky Breakfast smoothie and Weetabix On The Go breakfast drink work differently in terms of branding and nutrition. But he says: “It will be interesting to see how sales evolve. We could be in the same area as Weetabix by the end of the year.”

Regarding the category as a whole, he concludes: “There’s likely to be a bit of contraction as those brands which engage less well with consumers drop away.”


January 201524



D A I R Y C A S E S T U D YD A I R Y C A S E S T U D Y

Colombia-based Alpina has added flavors and overhauled the packaging of its Avena line of oat-based dairy beverages to take advantage of opportunities in the US market, including demand for portable breakfast foods, and the expansion of the Latin American immigrant population. Alpina’s competitors are also trying to leverage the increasing adoption of drinkable oats by American consumers – but without Alpina’s advantage of a brand with a Latin heritage and customer base in the United States.

“The formula has been proven among our customers,” Pamela Zager, marketing director for the Miami-based arm of the Colombian company, told New Nutrition Business. “We did add new flavours to encourage more trial among our American consumers in the US, but also to give our existing customers something new to try in a product they already love.”

Alpina has added strawberry, chocolate and dulce de leche flavours to accompany its traditional lineup of original, light and cinnamon flavours. Consisting of water, powdered milk, precooked oat flour and sugar, Avena comes in 8.33oz (250ml) shelf-stable cartons that retail in the US (on Amazon) for around $2.00 (€1.62) per pack, a 100% premium to almond milk and a 60% over products such as Kellogg Special K protein drink. Avena contains 170 to 180 calories along with 4g of fat, 5g of protein and 1g of fibre. Avena also provides 15% of an adult’s daily recommended consumption of calcium. The original flavour also comes in a 32oz (1 litre) package.

Avena’s new packaging, in shelf-stable Tetra packs, incorporates bold colours that stand out on store shelves and highlights the flavours. The package also features English on one side and Spanish on the other. “We’re confident the new packaging will

communicate the product better and stand out on crowded store shelves,” Zager said.

The traditional creamy beverage, served chilled, has been a staple in many Latin American homes for centuries, with parents and children alike drinking it. Alpina’s recipe follows the generations-old tradition of the El Espinal region of Colombia, where cold drinkable oats were sold in local markets. Alpina began manufacturing Avena in Colombia in 1996 as the first mass-produced oatmeal drink. It quickly became popular in Venezuela, Ecuador and Peru and widely accepted across Central America.

Establishing Avena in the United States over the last few years has been an exercise in market fusion. To a great degree, Alpina has simply been following the influx of South Americans and other Hispanics to the US; the Hispanic population of the US has increased sixfold since 1970.

Oat-and-dairy drink targets US breakfast table

Cold drinkable oats have long been a staple food in Latin America, and now, with a packaging and flavour upgrade, Colombian dairy company Alpina has its sights on increasing demand among American consumers for convenient breakfast foods. By Dale Buss.

January 2015 25


D A I R Y C A S E S T U D Y

At the same time, Latins in America are reproducing at higher rates than other Americans. “Plus Hispanics have immense buying power, and they exhibit cultural sustainability, with their customs and culture not disappearing into the American melting pot,” Zager noted. Thus, Avena mostly still appeals to “the many consumers from South America who value the product” and remain “our biggest advocates and largest consumers”. Thus the company decided not to change the formula of Avena. “We want to keep the authenticity of Avena and have it be the same product whether it’s in South America or the US,” Zager said.

Under Alpina’s merchandising strategy Avena is still shelved in the centre aisles of stores and generally in the Hispanic-foods sections of retailers, Zager said. But Alpina is attempting to break Avena free from that traditional real estate in the store, and “we are finding additional success with display activity by the milk coolers and cereal aisle,” she said.

Alpina executives believe they’ll continue to garner an increasing share of their sales from non-Hispanic Americans thanks to consumers’ continuing search for healthy beverages and also because the typical American’s tastes are growing more adventurous. “Latin foods have become increasingly popular in the Americas as consumers look for new and exciting flavours,” Zager said, including mango, salsa and fajitas. “US consumers have embraced Latin flavours as their own.”

Thus, Alpina’s flavour strategy also represents a bridging action. Chocolate and strawberry, of course, are the two most popular varieties of flavoured milk in the US market, so they made sense as the company added flavours to the Avena line to further infiltrate American supermarkets. But the third new flavour, dulce de leche, is a traditional one in Hispanic cuisine – and also has

become increasingly popular in the United States.

DRINKABLE OATS MEET BREAKFAST

CONVENIENCE NEEDS

Overall, drinkable oats hit a sweet spot for US “consumers needing to eat on the go”, especially at breakfast, Zager said. “These ‘transumers,’ which is what we call them, look to find products that not only meet their health standards but are convenient while running the kids to school or practice, on the subway, or between meetings.”

Indeed, an increasing number of competitors in the US have latched onto drinkable oats with the same understanding, including big companies as well as startups. Campbell Soup’s Bolthouse Farms offers two flavours of parfait breakfast smoothies blending fruit juice and yogurt with oat flour, while PepsiCo’s Naked Juice has tested fruit-juice-and-

oats smoothies in limited markets. PepsiCo’s Quaker Oats unit also sells Leche Con Avena in Latin America, and CEO Indra Nooyi famously has emphasized the importance of “drinkifying” as much of the company’s global food portfolio as possible.

Meanwhile, US upstarts in the category include Oatworks, which uses a nutritionally enhanced oat powder from Swedish company Biovelop, and Sneaky Pete’s Naturally Outstanding Beverages.

But Zager insisted that Alpina can stand apart even amid proliferating competition because it’s the only offering in the US market with an explicit dairy positioning and the company doesn’t consider the other players to be direct rivals. “Given that we are an oat-based dairy product,” she said, “we consider our competition as oatmeal and milk products.”

TABLE 1: ALPINA AVENA CINNAMON NUTRITION SNAPSHOT

January 201526



W E I G H T W E L L N E S S C A S E S T U D Y

Imagine a business model that requires a perishable product, customizable services and 16,000 delivery miles nightly, across 12 states, 44 metro areas and 573 cities, regardless of weather. It sounds more like the postal service than a healthy food company, but this challenging model may be the reason The Fresh Diet is the only fresh, healthful meal delivery service that has achieved a national footprint. One of the reasons they are so successful is that they have a mission is to help customers meet their healthy diet goals individually.

The Miami-based company is touted as America’s #1 gourmet meal delivery service. Forbes Magazine has called it one of the most promising US businesses and the company has been on the Inc. Magazine list of 5000 fastest growing companies every year since 2010. And the concept only seems to be gaining in popularity. The Fresh Diet has shown a three-year growth

rate of 69%, with revenues up from $16 million (€12.6 million) in 2010 to $26.9 million (€21.1 million) for 2013.

All this success undoubtedly helped attract the attention of its new parent company, Innovative Food Holdings Inc. (IFH). The Bonita Springs, Fla., based provider of specialty, healthcare, gluten-free and artisanal foods for the food service market acquired The Fresh Diet last summer in a deal for 10 million shares of its common stock, plus the assumption of debt. The acquisition was not surprising, given that the founders brought on a new, experienced management team in 2013 to help shift the company from an entrepreneurial track toward a higher efficiency operation focused on growth, profit and standardization.

The acquisition is likely to provide good synergy for both firms, according to Grant Ferrier, CEO and principal of Nutrition Capital Network. “We haven’t seen a lot of meal delivery

services find success. Though many have tried, no one else has really brokered through to the national scene.” The acquisition should do well, he added, because larger corporations interested in these healthy and natural companies are now getting better at retaining authenticity of brands they buy. And they now better understand the competitive framework of the industry in health and wellness.”

Featuring five service kitchens nationally, in Miami, Los Angeles, New York, Chicago and Dallas, The Fresh Diet delivers one day’s worth of food (three meals and two snacks that are not frozen or vacuum-packed) to customers for a weekly or daily subscription fee that ranges from $24 to $49 (€18.85 to €38.49) per day. An online meal planner helps customers choose from four specific plans, including the Classic, Premium, Vegetarian and Gluten-Free. Each has options based on dietary needs and

Acquisition propels The Fresh Diet in national expansion

Backend customization and strong customer service have been the building blocks for The Fresh Diet’s success, but a new parent company with a shared vision and additional resources leave the fresh delivery service poised for additional growth. Karen raterman reports.

January 2015 27



caloric goals and can be customized with personal preferences. A typical day’s worth of food consists of 1200-1400 calories for women and 1600-1800 for men.

ALL ABOUT CUSTOMIZATION

The new parent will help source ingredients that The Fresh Diet already uses and, more importantly, leverage resources to enhance the concept and grow its offerings, according to Raj Rawal, CEO at The Fresh Diet. “For the last year, we have been very excited about the growing demand for convenient, fresh, healthy food. But really in the last six weeks, it is even more exciting because we now have a parent company that shares the full confidence and belief in the model, and has the ability to support this vision with enough resources to capitalize on the demand.” In the weeks since the acquisition, The Fresh Diet has already introduced a new meal plan for vegetarians and gluten-free customers.

Customization has been a key distinguishing factor for The Fresh Diet service from its beginnings. The company was founded in 2005 by entrepreneur Zalmi Duchman and his former roommate, Yosef Schwartz,

a Le Cordon Bleu trained chef, with $500 of financing on a credit card. They saw the need for fresh, healthy meal delivery for busy people, with some customization, and have always been committed to providing the highest levels of quality and customer service, according to Rawal. “These guys scraped and scratched and mortgaged their condos and did whatever it took to drive the business and push growth,” he noted.

The founders created menus based on the Zone Diet and also developed the formula and technology to deliver fresh foods daily to customers with those all-important customized options. “This was the building block of the current company. We have the technology to show the customer what is being offered next Tuesday, so they can make their selections, and we can procure on that and deliver to their satisfaction,” Rawal explained. The system also allows customers to identify foods they dislike and ensure that they are left out of the delivery.

Although the company is certainly addressing the needs of busy, health-conscious consumers, the desire to control weight is also a key driver for Fresh Diet customers. Because most people do start with the service for weight management reasons, the

company offers four different calorie ranges in the meal plans. Customers also have the option to spread out deliveries based on their personal usage rather than being forced to receive deliveries on consecutive days, like most other diet delivery plans, which often force users to take more food, faster than they want it, causing burnout.

For example, Rawal explained, if a customer purchases a 31-day plan, typical usage of those delivery days is over a 45-day period. Fresh Diet offers the flexibility to stop and start deliveries at the customer’s convenience, say if they are going out of town. “We find that three-fourths of our customers come back and buy again because they like this versatility. That continues to validate what we are doing,” Rawal said.

FRESH MEALS IN RAIN, SLEET OR SNOW

This flexibility also generates challenges in an already difficult business model. “We have to be sure that the customer meal we provide in Boston is the same as the one in San Diego,” Rawal explained. “So we need to procure ingredients that offer the same meal, taste, impact and nutritional composition in both


January 201528



TECHNOLOGY CASE STUDY


cities.” Considering the geographic differences they have, he added, the company is constantly evaluating its sourcing for consistency and freshness and working to ensure standardization of preparation in all of the five service kitchens.

Meals are then sent out for delivery between 7pm and 5am, in tamper-proof, insulated cooler bags to arrive on customer doorsteps. Another customization allows customers to say where they want their bag delivered. Some choose the front doorstep, but in more urban or rural areas they might choose a side door or even give Fresh Diet drivers their key fob to leave the bag in a parked car. Coordination of deliveries can be difficult especially given that they are often late at night and in the dark, Rawal said. And the weather, especially snow, is another huge factor, he continued. “We are just keeping our fingers crossed that this January and February will not be as bad as last year,” he said. “Last winter was so bad, we lost a couple of vehicles, but thankfully no people.”

ENGAGING CUSTOMERS

Rawal also noted that the team works hard to ensure Fresh Diet customers are meeting their goals and know

exactly what they are getting for their money. “We are not just selling widgets and customers want to be knowledgeable about what they are putting inside their bodies,” he said. Beyond the flexibility, The Fresh Diet employs a full-time, certified nutritionist, Trishna Joshi, who is on call to do one-on-one consultations with subscribers.

Joshi confirmed that most customers are interested in achieving weight loss goals from the meal delivery service, but she also notes customer questions about preventing diabetes and thyroid issues, gaining muscle mass for health, and transitioning to a gluten-free or vegetarian diet. Most of the clients, she added, are women between the ages of 30 and 60.

A typical day’s meal in the classic plan includes a fruit salad with cantaloupe (melon), red grapes, honey dew melon, pineapple, banana and ricotta cheese for breakfast; white albacore tuna in a spinach tortilla wrap for lunch; spicy shrimp with papaya salsa as a midday snack; Thai curried noodles with broccoli and tofu for dinner; and key lime pie for dessert. Most of the meals are based on the Zone plan of 40% carbohydrate, 30% fat and 30% protein.

A lot of people also want to do regular, weekly calls with Joshi. “Some people want me to follow up on a weekly basis because they don’t want to be set up for failure if they aren’t making their goals.” Her job, she added, goes beyond helping them with the Fresh Diet meals. “I help guide them to not only use the meal plans to achieve their goals, but to also educate them in making knowledgeable food choices and even making the right choices when they are on vacation.”

EXPANSION POTENTIAL

As far as additional vision for the future, Rawal is bullish on the potential for new offerings and expansion. IFH, he added, can help the company prioritize opportunities for growth and create efficiencies as they scale up. While there are several ideas in the pipeline, Rawal was reluctant to be too specific. But he did say that the company has potential to expand into other areas of delivery, such as dairy and specialty items, as well as the food service segment. He noted they are also looking at the potential of fresh flexible family meals and high quality catered items for special occasions.

January 2015 29


S U G A R C A S E S T U D Y

TECHNOLOGY CASE STUDY

AB Sugar, one of the world’s leading sugar businesses, has launched a new consumer-facing website and communications campaign in order to address what it sees as often misleading information about the role of sugar in obesity in particular. While the international sugar supplier does not present it as such, this could be seen as a response to a growing tide of criticism from health and nutrition professionals and academics, much of it in the wake of new recommendations from the World Health Organisation (WHO) and the UK’s Scientific Advisory Committee on Nutrition (SACN) earlier this year. But are consumers really so concerned about their sugar intake? And how is AB Sugar fighting back? What are the lessons for reformulation?

GROWING PRESSURE ON SUGAR

SUPPLIERS

The company says it began work on the makingsenseofsugar.com website last year, well before much of the more recent debate on the role of ‘free sugar’ took off. But in the meantime, pressure on sugar suppliers generally has been growing from at least two directions. First, views appear to have hardened among the ‘commentariat’ and opinion-makers. And second, some major brand-owners are moving away from sugar as a base ingredient for larger proportions of their ranges, shifting in particular towards stevia.

During October 2014, for example, Coca-Cola in the UK launched a major media campaign for its Coca-Cola Life sub-brand. Advertising

boasted a calorie reduction of a third in the stevia-sweetened variant, compared with standard colas, thanks to a 37% reduction in sugar. Other messaging focused on the full range of Coca-Cola products and the fact that “40% of the Coca-Cola we sell

in Great Britain is without sugar or calories”.

In the wake of the draft SACN report on carbohydrates and health in June, chair of the relevant working group Professor Ian MacDonald was quoted as saying: “The evidence we

Making sense of sugar?Sugar has replaced fat as the new “dietary demon” in some markets, and companies are wrestling with how to meet expectations of lower sugar and boost their business. Unsurprisingly, a major sugar producer is tackling the issue head-on, initiating a major consumer communications campaign to tell the other side of the story. Can they succeed in convincing consumers that sugar is not all bad? By Paul GanDer.


January 201530



S U G A R C A S E S T U D Y

have analysed shows quite clearly that high free-sugar intake in adults is associated with increased energy intake and obesity.” He highlighted the links between sugar-sweetened drinks and the incidence of type II diabetes in adults and obesity in children.

A reduction to 5% of energy intake from all sugars would reduce these risks, he said. This is in line with a suggestion by the WHO earlier this year that its own guidance should be revised downwards. The current WHO advice remains 10%, but for many UK teenagers the real figure is estimated to be closer to 15%.

Like others in the sugar supply chain, AB Sugar has a few concerns about the way its ingredient is being portrayed – and singled out for attention. “Sugar is often being shown as a proxy for calories,” says head of food science at the company Dr Julian Cooper. But that is an oversimplification, he explains. “We are not against reformulation, but it should in fact reduce calories.”

Making much the same point as Coca-Cola with its 40% figure, communications manager at AB Sugar Sharon Fisher says: “One of the things that gets forgotten is all of the good work that’s been done to date. There’s such a wide choice these days. If you want low-calorie or mid-calorie products, you’ve got that choice.”

Meanwhile, Cooper argues: “The SACN report recommendations are very challenging, and it would be quite difficult for most people to achieve them.”

Across its current communications, the company makes

much of the statistic that total per capita consumption of all sugars has fallen by nearly 12% in the UK over the past decade, according to the UK’s Department for Environment, Food and Rural Affairs (DEFRA). Consumption of non-milk extrinsic sugars (NMES), the more technically-precise term for ‘free sugars’, has decreased even more sharply – by 16% – over the same period, says Cooper.

Addressing the question of free sugars or NMES, he adds: “‘Free sugars’ aren’t quoted on the label. What you’re given is ‘total sugars’.” And to the suggestion that free sugars should in fact be listed, he asks: “How are you going to measure them?” He cites the example of a fruit yogurt, where sugars are present in the milk and in the fruit, as well as being added.

Anecdotally, there have been suggestions that consumers identify sugar as an unhealthy ingredient, but do not actually alter their purchasing patterns accordingly. AB Sugar says it has no evidence that this is the case. “From our own consumer polling, it seems that over one third

of adults don’t take into account how many calories they consume,” Fisher reports. “Often, people don’t factor in the calories found in liquids.”

There is a belief that sugars are ‘hidden’ in foods, even though they appear on the label. And that reflects another issue, that consumers do not always read food labels. Overall, says the company, people are often confused by different health messages, and lack a lot of basic knowledge about the food they consume.

As another strand in its communication campaign, AB Sugar commissioned a report from social enterprise 2020health. Published in October under the title ‘Careless Eating Costs Lives’, it recommends a broadening out of the obesity debate.

“For example,” says Fisher, “it’s not just the calories you consume which matter. It’s how you burn them off.”

Some in the medical profession have called for either bans on advertising for high-sugar drinks or higher taxation. Though neither of these seems a likely outcome, the sugar industry clearly feels it has a fight on its hands.

Source: makingsenseofsugar.com

January 2015 31


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January 201532



10 Key Trends in Food, Nutrition & Health 2015

Ordering is easy…see inside back cover or visit www.new-nutrition.com

Published December 2014

Published every year since 1996, our 10 Key Trends is the only trends analysis that enables you to differentiate enduring trends from short-term fads and understand how to use them successfully in your strategy.

That’s because our methodology, shown in the report in our unique Trend Diamond, ensures that we take into account every single factor that drive a trend’s evolution – from ingredients and science through to consumer needs and sales figures.

All year long we monitor a mass of data. We analyse this to work out what’s truly important, and what’s not. That’s why companies around the world use our annual Key Trends to formulate their strategy and innovation plans.

PPT PDF

8www.new-nutrition.com

© New Nutrition Business 20147 www.new-nutrition.com

© New Nutrition Business 2014

10 Key Trends 2015

CHART 2: THE NUTRITIONAL PRODUCT LIFE CYCLE The chart below was developed to aid understanding of brand positioning, ingredient lifecycles and the evolution of markets.

Many products start out on the left, targeting consumers who have a need for a product that has effective technology. They sell in

low volumes at premium prices but over time their appeal increases and they move down the price curve to the right, eventually

becoming mass-market products. Many companies deliberately target the lifestyle area as a way of creating a defensible niche and

maintaining premium prices. Below we show where some of the Key Trends currently sit on the life-cycle. The stages of the life

cycle are:

Technology consumers – These are the early adopters, people who have a near-medical need for a product. They need the technology of the food to address their health condition. They see products in a medicalised context and they will pay a substantial

premium for something that addresses their condition.Lifestyle consumers – They are interested in maintaining their wellness, not fighting illness. They will adopt new brands and will pay

a premium for a product.Mass-market consumers – They are motivated when a benefit becomes a standard and is available in products with low or no

premiums, ideally from well-known and trusted brands.TECHNOLOGY CONSUMERS

LIFESTYLECONSUMERS MASS-MARKET

CONSUMERS

Solid line = sales volumes

Broken line = unit selling price6% - 8% of consumers 20% - 25% of consumers 67% - 74% of consumers

SALES

TIME

Naturally functional

Snackifi cation

Weight Wellness

Protein

Good Carbs Bad Carbs

Dairy 2.0

Gluten-Free

Sugar

Fat

Digestive Wellness



10 Key Trends 2015

10 Key Trends 2015

1NATURALLY

FUNCTIONAL

The strongest foundation for success 3

Market shift means opportunity for entrepreneurs

WEIGHT WELLNESS

2 Paradise for start-ups – innovation

without limits

SNACKIFICATION

4PROTEIN

Powered by “naturally functional” 5

GOOD CARBS VS BAD CARBS

The rise of good grains 6

Dairy’s rebirth as a natural whole food

DAIRY 2.0

7The normalisation of

avoidance

FREE-FROMFAT

9 A long, slow death for low-fat?8

The new dietary demon

SUGAR

DIGESTIVE WELLNESS

10The secret driver

of other trends

10 Key Trends in

Food, Nutrition &

Health 2015

by Julian Mellentin

Published by

NOVEMBER/DECEMBER 2014 ISSN 1464-3308

VOLUME 20 NUMBER 2/3


© New Nutrition Business

37

2. Coconut Water The success of coconut water – which surged from zero in 2006 to an almost $3 billion (€2.4 billion) business in North America and Europe by 2014 – is just the first step in a massive emerging trend: healthy, natural, naturally sweet and sustainable waters taken directly from plants. Like coconut water, maple and birch waters offer naturally functional benefits that make them perfect options for health-conscious consumers. These plant waters are adopting a similar strategy and are likely to find their own niches.

1. Some nutritional properties, some science. Coconut water has not secured any

approved health claims, because it doesn’t need to. It is naturally low-calorie and naturally

sweet – little or no sugar need be added. Coconut water’s image has been bolstered by

statements such as that by the UN Food & Agriculture Organisation that it’s “a natural

isotonic beverage with the same level of electrolyte balance as we have in our blood. It’s

the fluid of life.”

NEW NUTRITION BUSINESS © New Nutrition Business 18

Chart 2: The nutritional product life cycle cont.

NEW NUTRITION BUSINESS © New Nutrition Business

4

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10 Key Trends in

Food, Nutrition &

Health 2015 by Julian Mellentin

January 2015 33


10 Key Trends in Food, Nutrition & Health 2015


Published December 2014

Published every year since 1996, our 10 Key Trends is the only trends analysis that enables you to differentiate enduring trends from short-term fads and understand how to use them successfully in your strategy.

That’s because our methodology, shown in the report in our unique Trend Diamond, ensures that we take into account every single factor that drive a trend’s evolution – from ingredients and science through to consumer needs and sales figures.

All year long we monitor a mass of data. We analyse this to work out what’s truly important, and what’s not. That’s why companies around the world use our annual Key Trends to formulate their strategy and innovation plans.

PPT PDF


© New Nutrition Business 20147 www.new-nutrition.com


10 Key Trends 2015

CHART 2: THE NUTRITIONAL PRODUCT LIFE CYCLE The chart below was developed to aid understanding of brand positioning, ingredient lifecycles and the evolution of markets.

Many products start out on the left, targeting consumers who have a need for a product that has effective technology. They sell in

low volumes at premium prices but over time their appeal increases and they move down the price curve to the right, eventually

becoming mass-market products. Many companies deliberately target the lifestyle area as a way of creating a defensible niche and

maintaining premium prices. Below we show where some of the Key Trends currently sit on the life-cycle. The stages of the life

cycle are:

Technology consumers – These are the early adopters, people who have a near-medical need for a product. They need the technology of the food to address their health condition. They see products in a medicalised context and they will pay a substantial

premium for something that addresses their condition.Lifestyle consumers – They are interested in maintaining their wellness, not fighting illness. They will adopt new brands and will pay

a premium for a product.Mass-market consumers – They are motivated when a benefit becomes a standard and is available in products with low or no

premiums, ideally from well-known and trusted brands.TECHNOLOGY CONSUMERS

LIFESTYLECONSUMERS MASS-MARKET

CONSUMERS

Solid line = sales volumes

Broken line = unit selling price6% - 8% of consumers 20% - 25% of consumers 67% - 74% of consumers

SALES

TIME

Naturally functional

Snackifi cation

Weight Wellness

Protein

Good Carbs Bad Carbs

Dairy 2.0

Gluten-Free

Sugar

Fat

Digestive Wellness



10 Key Trends 2015

10 Key Trends 2015

1NATURALLY

FUNCTIONAL

The strongest foundation for success 3

Market shift means opportunity for entrepreneurs

WEIGHT WELLNESS

2 Paradise for start-ups – innovation

without limits

SNACKIFICATION

4PROTEIN

Powered by “naturally functional” 5

GOOD CARBS VS BAD CARBS

The rise of good grains 6

Dairy’s rebirth as a natural whole food

DAIRY 2.0

7The normalisation of

avoidance

FREE-FROMFAT

9 A long, slow death for low-fat?8

The new dietary demon

SUGAR

DIGESTIVE WELLNESS

10The secret driver

of other trends

10 Key Trends in

Food, Nutrition &

Health 2015

by Julian Mellentin

Published by

NOVEMBER/DECEMBER 2014 ISSN 1464-3308

VOLUME 20 NUMBER 2/3


© New Nutrition Business

37

2. Coconut Water The success of coconut water – which surged from zero in 2006 to an almost $3 billion (€2.4 billion) business in North America and Europe by 2014 – is just the first step in a massive emerging trend: healthy, natural, naturally sweet and sustainable waters taken directly from plants. Like coconut water, maple and birch waters offer naturally functional benefits that make them perfect options for health-conscious consumers. These plant waters are adopting a similar strategy and are likely to find their own niches.

1. Some nutritional properties, some science. Coconut water has not secured any

approved health claims, because it doesn’t need to. It is naturally low-calorie and naturally

sweet – little or no sugar need be added. Coconut water’s image has been bolstered by

statements such as that by the UN Food & Agriculture Organisation that it’s “a natural

isotonic beverage with the same level of electrolyte balance as we have in our blood. It’s

the fluid of life.”

NEW NUTRITION BUSINESS © New Nutrition Business 18

Chart 2: The nutritional product life cycle cont.


4

Did you know you can now read New Nutrition Business as a powerpoint presentation?If your company has a corporate license, or if you upgrade to a license, you can now also download a 100-slide powerpoint version of each issue of New Nutrition Business as well as the pdf !

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IN THIS ISSUE


Available in powerpoint and pdf.

10 Key Trends in

Food, Nutrition &

Health 2015 by Julian Mellentin

January 201534



Key trends in the business of dairy nutrition


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The dairy industry has always been at the cutting edge of innovation in nutrition and health. Dairy, more than any other category, is perfectly positioned to profit from the most important consumer trends. In this report we identify the 14 key trends that offer the greatest opportunities for dairy.

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