TRENDS, OPPORTUNITIES AND

CHALLENGES FOR FUNCTIONAL FOODS

Ranjan Sharma PhD MBA

Nutraceuticals and Functional Foods Symposium

Queensland, Australia,18 June 2010

FUNCTIONAL FOODS – A DEFINITION

No universally accepted definition

Foods and beverages that contain either naturally or via processing or fortification, sufficient amounts of physiologically-functional components and have potential health benefits

FUNCTIONAL FOODS & NUTRACEUTICALS

FUNCTIONAL FOOD EXAMPLES - OMEGA-3

Mini meal -

2006

Chocolate bars – 2006

Milk drink - 2006

Orange Juice -2007

Butter 2007

FUNCTIONAL FOOD EXAMPLES - OMEGA -3 -

AUSTRALIA

FUNCTIONAL FOOD EXAMPLES - PROBIOTICS

FUNCTIONAL FOOD EXAMPLES - PROBIOTICS

- AUSTRALIA

FUNCTIONAL FOOD EXAMPLES - HIGH

FIBRE AND WHOLE/MULTIGRAIN

FUNCTIONAL FOOD EXAMPLES - HIGH FIBRE -

AUSTRALIA

FUNCTIONAL FOOD EXAMPLES -

FUNCTIONAL WATERS

FUNCTIONAL FOOD EXAMPLES - CALORIE

BURNING

Enviga – calorie burning

drink with tea catechins

(Coca Cola)

(US launch Nov 2006)

With EGCG

Celsius - guarana seed, green

tea leaf and ginger root

FUNCTIONAL FOOD EXAMPLES - SUPERFRUITS,

SUPERFOODS, ANTIOXIDANTS

FUNCTIONAL FOOD EXAMPLES -

CHOLESTEROL ABSORPTION

FUNCTIONAL FOOD EXAMPLES - BEAUTY FOODS -

COSMECEUTICALS

FUNCTIONAL FOOD EXAMPLES - ENERGY

DRINKS

CONCENTRATED FUNCTIONAL FOODS

(ENERGY SHOTS)

GLOBAL HEALTH & WELLNESS MARKET, 2008

Global health and wellness market

US$ 570 billion

Global functional foods market

US$ 152 billion

Australian functional foods market

A$ 2.7 billion

Euromonitor, 2009

US FUNCTIONAL FOODS AND DRINKS

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Bone

health

Heart

health

Gut

health

Energy Other

Mil

lio

n $

US Functional foods & drinks

2004

2009

http://www.foodprocessing.com/articles/2006/250.html

FUNCTIONAL FOODS IN JAPAN

Digestive

health

59%

Bone health

2%

Blood

pressure

2%

Cholesterol

4%

Blood

sugar

4%

Weight

management

14%

Teeth health

15%

Functional Foods in Japan, 2007 - $16.4 b

Source: Market NZ

FUNCTIONAL FOODS - AUSTRALIA

0

0.5

1

1.5

2

2.5

3

2003 2004 2005 2006 2007

Sa

les (

$)

Functional Foods Sales - Australia

Euromonitor, 2009

FUNCTIONAL FOODS - AUSTRALIA

Digestive

health

6%

General

health and

wellbeing

57%

Others

37%

Functional Foods - Australia, 2007 – $ 2.7 b

Digestive health

General health

and wellbeing

Others

Euromonitor, 2009

DIGESTIVE HEALTH - AUSTRALIA

Source: Datamonitor, 2009

OPPORTUNITIES AND CHALLENGES

Opportunities

and Drivers Challenges

OPPORTUNITIES AND CHALLENGES

Opportunities

and Drivers Challenges

OPPORTUNITIES AND DRIVERS FOR FUNCTIONAL FOOD

DEVELOPMENT

Population demographics

Rising obesity - the health condition/disease of the millennium

Increased incidences of non-communicable, chronic diseases

Growing proportion of unhealthy kids

Consumer awareness of food-health relationships

POPULATION TRENDS - AUSTRALIA

US Census Bureau

2005

2050

Australia - population by age groups (2005)

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

0-9 years

10-19 years

20-64 years

65+ years

Australia - population by age groups (2050)

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

0-9 years

10-19 years

20-64 years

65+ years

Ageing population

DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT

Population demographics

Rising obesity - the health condition/disease of the millennium

Increased incidences of non-communicable, chronic diseases

Unhealthy kids

Consumer awareness of food-health relationships

ADULT OVERWEIGHT PROJECTION

Country 2005 (%) 2015 (%)

Australia Females 62.7 70

Males 72.1 79

Canada Females 57.1 61.9

Males 65.1 68.6

New Zealand Females 68.2 79.2

Males 68.7 78.5

United

Kingdom Females 61.9 65.7

Males 65.7 69.8

United States Females 72.6 80.2

Males 75.6 84.5

WHO 2007

ADULT OBESE PROJECTION

Country 2005 (%) 2015 (%)

Australia Females 24.9 33.5

Males 23.8 33.3

Canada Females 23.2 28.2

Males 23.7 27.4

New Zealand Females 31.5 48.1

Males 23 35.2

United

Kingdom Females 24.2 28.3

Males 21.6 25.8

United States Females 41.8 54.3

Males 36.5 51.7

WHO 2007

OBESITY A MAJOR FACTOR IN LIFESTYLE DISEASES

Diabetes 80%

Cancer 40% of uterine cancer

25% of kidney cancer

10% of breast

10% of colon cancer

Heart health 21% of heart diseases

Obesity

COST OF OVERWEIGHT AND OBESITY IN AUSTRALIA

Analysis of 5-year follow-up data from the Australian Diabetes, Obesity and Lifestyle study, collected in 2004–2005; 6140 participants ≥ 25 years

Colagiuri et al (2010) MJA ; 192 (5): 260-264

0

2

4

6

8

10

12

14

16

Overwight Obese

Co

st,

$Total cost - 2005 - $21billion

DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT

Population demographics

Rising obesity - the health condition/disease of the millennium

Increased incidences of non-communicable, chronic diseases

Unhealthy kids

Consumer awareness of food-health relationships

DISEASES CAUSING GLOBAL DEATHS

global deaths by cause (millions)

0 2 4 6 8 10 12 14 16 18 20

HIV/AIDS

Tuberculosis

Malaria

Cardio vascular diseases

Cancer

Chronic respiratory diseases

Diabetes

Deaths (millions)WHO 2005

Total deaths – 58 million

DISEASES CAUSING GLOBAL DEATHS

global deaths by cause, 2005 (millions)

0 2 4 6 8 10 12 14 16 18 20

HIV/AIDS

Tuberculosis

Malaria

Cardio vascular diseases

Cancer

Chronic respiratory diseases

Diabetes

Deaths (millions)WHO 2005

Total deaths – 58 million

Chronic

diseases

WHO 2005

Foregone income due to diseases (2005-15)

0

100

200

300

400

500

600

Brazil Canada China India Russia UK

US

$ (b

illi

on

)

Foregone income to deaths

by chronic diseases

US$558 billionThe estimated amount China alone will

forego in national income between 2005-15 as

a result of premature deaths caused by heart

disease, stroke and diabetes

DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT

Population demographics

Rising obesity - the health condition/disease of the millennium

Increased incidences of non-communicable, chronic diseases

Growing population of unhealthy kids

Consumer awareness of food-health relationships

UNHEALTHY KIDS

US data

High blood pressure – 3 fold increase in last 10 years

Cholesterol – 10% of children with 200 mg/dL

Metabolic syndrome – 1 million kids

Overweight – 30% kids

AHA recommendations –

Begin monitoring blood pressure at age 3

Begin monitoring cholesterol at age 8 if there is a family history

Sloan, 2006 (FT April 2006)

DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT

Population demographics

Rising obesity - the health condition/disease of the millennium

Increased incidences of non-communicable, chronic diseases

Unhealthy kids

Consumer awareness of food-health relationships

Disease/health condition %

Obesity 76

High cholesterol 67

Blood sugar imbalance 67

Heart disease 66

Diabetes 64

Lack of energy 58

Osteoporosis 48

Vision problems 38

Arthritis 35

FFN Jan 2006

Consumer research – consumer would use

food to prevent disease/health condition

OPPORTUNITIES AND CHALLENGES

Opportunities

and Drivers Challenges

CHALLENGES – REGULATORY AND LABELLING

Health claims – regulatory/labelling challenges

Confusion about health claims – regulators, manufacturers, consumers are all unsure

Australia – Over 8 years for P293 – still not finalised

What do the consumers understand of health claims? Will they be misled? What if the product did not consistently perform and the claimed health benefits were not achieved ?

Will the misleading claims or claims with inconsistent

benefits lead to litigations?

Can small companies afford such litigations?

DANONE/DANNON CASE – SEP 2009

Jan 2008 - case filed on exaggerated health benefits of certain yoghurt products in their advertising

Sep 2009 - Dannon announced US$35 million (A$40m) settlement of a class action lawsuit for its Activia and DanActive (US name for Actimel)products.

Dannon had to make changes to the labelling and marketing of Activia and DanActive

DANONE/DANNON CASE – SEP 2009

Jan 2008 - case filed on exaggerated health benefits of certain yoghurt products in their advertising

Sep 2009 - Dannon announced US$35 million (A$40m) settlement of a class action lawsuit for its Activia and DanActive products.

Dannon made changes to the labelling and marketing of Activia and DanActive

DANNON DANACTIVE - US

Before After

DANNON DANACTIVE - US

Before After

DANONE ACTIMEL - EUROPE

Before After

GENERAL MILLS WARNED FOR “CHOLESTEROL

LOWERING CLAIMS” – MAY 2009

May 2009 - FDA warns General Mills that cholesterol-lowering, cancer-fighting benefits of its Cheerios brand cereal were “inappropriate,” as claims advertised by General Mills implicitly mislead the public by failing to clarify exactly how the cereal figures into an overall healthy diet designed to lower bad cholesterol levels

KELLOGG TO DROP IMMUNITY HEALTH CLAIMS ON RICE

KRISPIES – JUNE 2010

Packaging which stated that Rice Krispies“now helps support your child’s immunity” to “been improved to include antioxidants and nutrients that your family needs to help them stay healthy.”

Kellogg now barred by FTC from making “claims about any health benefit of any food unless the claims are backed by scientific evidence and not misleading”.

SUCH CLAIMS CAN BE SEEN IN AUSTRALIA

Label claims: “lowers

cholesterol by up to 15%”

rather than saying “helps to

reduce absorption of LDL

cholesterol”

The National Heart

Foundation of Australia

recommends a daily intake

of 2-3 grams of plant sterols

Each serve of HeartActive™

contains 0.8g of plant

sterols

CHALLENGES – FOOD PRODUCT DEVELOPMENT

Phytosterol

Insolubility in water and difficulty in incorporating in low or no-fat beverages

Isoflavones

Bitterness, poor solubility in water

Dietary fibre, prebiotics

Poor suspension and sedimentation

Probiotics

Exposure to heat, oxygen, low pH, moisture and direct light

CHALLENGES – FOOD PRODUCT DEVELOPMENT

Calcium Soluble (chloride)

heat stability, protein instability

Insoluble (milk minerals, phosphate, citrate, carbonate)

sedimentation, grittiness

Iron, zinc, selenium

Flavour, colour, heat stability

Vitamins

Poor solubility and activity loss due to heating

PRODUCT DEVELOPMENT CHALLENGES

Fish oil (EPA & DHA); Microalgae (EPA & DHA); Flaxseed oil (ALA)

Undesirable flavour and taste, rancidity, microencapsulated products still difficult to incorporate in high heat beverages

Market

Success !!1 2 3 4

Regulations &

labellingConsumers awareness

& acceptance

Product performance

flavour and taste

Market

competition

REFERENCE: FUNCTIONAL FOODS WEEKLY

http://www.functionalfoods.com.au

Market intelligence, innovations and

trends in functional foods and

nutraceuticals