smart marketing 2006 curative foods is the u.s. immune to the sales opportunity?

Smart Marketing 2006

Landell MillsMANAGEMENT CONSULTANTS

Curative Foods

Is the U.S. Immune to the Sales Opportunity?



Curative Foods

Does Food Cure Illness?


Landell MillsMANAGEMENT CONSULTANTS Some Milk

Micro Components• Lactoperoxidase

– Antimicrobial

• Calcium phosphopeptide (CPP)– Tooth remineralisation

• Conjugated linolieic acid (CLA)– Anti-cancer properties


Landell MillsMANAGEMENT CONSULTANTS What are Nutraceuticals?

• Almost all foods and dietary supplements?

• “Natural” or “Organic” food products?

• “Functional” foods


Landell MillsMANAGEMENT CONSULTANTS The Food/Pharma

Continuum

Food forsustenance

Fortifiedfoods

Functionalfoods Pharmaceuticals


Landell MillsMANAGEMENT CONSULTANTS What are Nutraceuticals?

• The scientific fraternity considers nutraceuticals as: ‘Foods that deliver benefits that extend beyond basic nutrition’

• The marketplace considers nutraceuticals as: ‘Food and beverages that contribute to the general health and wellness of consumers, and can contribute towards the prevention and management of illness and undesirable health conditions’


Landell MillsMANAGEMENT CONSULTANTS The Food/Pharma

Continuum

Food forsustenance

Fortifiedfoods

Functionalfoods Pharmaceuticals


Landell MillsMANAGEMENT CONSULTANTS Market Size Estimates

Market Estimated size (US$ bn)

USA 20.0

Europe (west) 17.5

Japan 12.5

Other Asia 5.5

Australasia 1.5

Others 3.0

TOTAL 60.0


Landell MillsMANAGEMENT CONSULTANTS Japan

• A large, well developed market

• Developed the FOSHU concept

• Probiotics form an important sector

• Prebiotics also important

• Tonic drinks = dietary supplements


Landell MillsMANAGEMENT CONSULTANTS Japanese Tonic Drinks


Landell MillsMANAGEMENT CONSULTANTS Japan

• A large, developed market

• Developed the FOSHU concept

• Probiotics form an important sector

• Prebiotics also important

• Tonic drinks = dietary supplements

• Increasing adoption of western foods


Landell MillsMANAGEMENT CONSULTANTS Western Europe

• A confused market environment

• Some European companies lead global development

• Strong influence from Scandinavia

• Probiotic dairy dominates the market

• A strong trend in prebiotics


Landell MillsMANAGEMENT CONSULTANTS The USA

• Nutraceuticals offer opportunities in an otherwise mature food market

• Why has this not happened earlier in line with the other markets?– Dietary supplements have taken the lead

nutraceutical role• Increasing understanding of the link between

diet and health– Albeit, not to Asian levels (yet)

• Population and health management issues– Prevention is better than cure


Landell MillsMANAGEMENT CONSULTANTS Landell Mills’ Recurring

Themes1. Nutraceuticals are a prospective growth opportunity2. Clear, concise and targeted communication strategies

are paramount to success3. There is no universal magic bullet4. Partnerships offer a natural entry strategy5. Industry associations need to take responsibility for

their role in this prospective market6. Develop and astute and large target approach7. There is no need to wholly re-invent the wheel8. Ensure that the homework is done


Landell MillsMANAGEMENT CONSULTANTS A Prospective Growth

Opportunity

• Globally this sector offers the greatest growth potential– In an otherwise flat food market

• The US is a mature dairy market– Nutraceuticals opportunities may offer growth

opportunities– They may also point towards strategies that

can help to halt or slow sector decline


Landell MillsMANAGEMENT CONSULTANTS A Prospective Growth

Opportunity

• Large brands and categories have been developed in Japan and western Europe– Thus demonstrating the potential in this

emerging sector

• Consumers, the market and the regulatory environment are markedly different in the US– This is no reason to do nothing!!


Landell MillsMANAGEMENT CONSULTANTS Consumers are Different



Consumers are Different

Are we selling bacteria, or better health?


Landell MillsMANAGEMENT CONSULTANTS Communication Strategies

• Clear, concise and targeted communication strategies are paramount to success

• The market is evolving rapidly– But large pockets of confusion still exist

• “Health and Wellness” is a common trend– Few large companies are prepared to risk

“mega-brands” by diverting from conventional position options




• Consumers are increasingly linking diet to health– In the US this often means avoiding the

negatives

• Build a positive proposition into the communication strategy




• The US market has blurred distinctions between healthy/nutritious and nutraceutical food– Consumers will not bother to unravel the

confusion

• Nutraceutical marketers need to articulate their offerings in a meaningful way




• Competition is hotting up– A fear has arisen of the “snake oil” salesman

• Dairy companies need to understand and communicate “the science” to raise credibility




• A veritable smorgasbord of nutraceuticals are being marketed to consumers– Some with “good” science, others without

• Pick a few winners, do and re-do the science and drip feed messages


Landell MillsMANAGEMENT CONSULTANTS The Magic Bullet

• There is no universal magic bullet

• Product sectors and market drivers differ markedly– Global strategies will not work in this market

• The drug/food “hybrid” of supplements has evolved in the US– Dairy companies need to understand the US

supplements market


Landell MillsMANAGEMENT CONSULTANTS The Magic Bullet

• There is no universal magic bullet

• The profile of disease and morbidity in many developed countries is changing– Marketers need to keep abreast of market

dynamics

• Markets need to be differentiated


Landell MillsMANAGEMENT CONSULTANTS Partnerships



• Partnerships offer a natural entry strategy

• Pharmaceutical companies are recognizing the threat– Many are taking a rear guard action through

acquisition

• Dairy companies should develop partnerships with the pharmaceutical sector



• Partnerships offer a natural entry strategy

• Compliance is based on evidence arising from clinical trials– Few companies have the resources to pursue

clinical trials

• Look for synergistic partnering opportunities– To share the resource demand


Landell MillsMANAGEMENT CONSULTANTS Industry Organisations

• Industry organisations need to take responsibility for their role in this market

• Legislative conditions are markedly different between countries– The term “nutraceutical” generally fails to

receive acknowledgement

• Industry organisations need to step up and take responsibility for the good of the industry




• Scepticism abounds among consumers over health claims

• Industry organisations have a key role to play in building credibility




• Efficacy is all about the delivery of benefits via the micro-components of food– A small handful of components are widely

acknowledged as having therapeutic powers

• Industry organisations have a role to test and communicate efficacy to consumers




• Some foods in their own right can be considered nutraceutical


Landell MillsMANAGEMENT CONSULTANTS Eureka Could be Right

Under Your Nose!!• Cheese as a nutraceutical

– High natural calcium content

– Bioactive peptides from the ripening process

– Protein precursors release further bioactive peptides

– High natural CLA content

– Starter cultures that have authentic probiotic qualities

– The sphingolipids in cheese

– Whey proteins




• Some foods in their own right can be considered nutraceutical

• Industry organisations have a role to play to highlight the intrinsic nutraceutical benefits– Review and determine the inherent

nutraceutical benefits of consumer products


Landell MillsMANAGEMENT CONSULTANTS Target Markets

• Develop and astute and large target approach

• There are a number of potential therapy fields to target– Key target fields in the US are obesity,

cardiovascular disease and sports/performance foods

• Reassess the role dairy has to play in key target areas


Landell MillsMANAGEMENT CONSULTANTS Reinvent the Wheel?

• There is no need to wholly reinvent the wheel

• Milk has long been regarded as the most complete food

• Nutraceutical strategies could be developed that build on an emerging or established awareness of milk and dairy foods




• Milk and dairy foods are ready carriers and receptors for formulating with non-dairy components

• The US consumer is suspicious of attempts to redesign the “holy grail”– Develop strategies that do not compromise

known and successful positioning options




• Orthodox food consumption drivers remain– A trade-off is unlikely

• Nutraceutical qualities need to build on established consumer platforms and market drivers


Landell MillsMANAGEMENT CONSULTANTS Do Your Homework

• Ensure that the homework is done• The consumer is seeking healthier food

product options– Marketers and designers see this as a

challenge to reduce fat, sodium and/or carbohydrate content of food

• Undertake consumer research and trialling– Not only for product concepts but also for

communication strategies



• Ensure that the homework is done• Public health concerns about obesity and

cancer are reaching higher levels of awareness– The “old” diseases are largely relegated to

history

• There are knowledge deficits that need to be addressed– Maintain pressure and momentum on R & D



• Ensure that the homework is done

• Lifestyle choices are increasingly determining purchase behaviour– This increasingly applies to food consumption

• Consider fashionable issues like portability, convenience and so on



• Ensure that the homework is done• The large food marketers appear to offer the

best opportunity to develop and market nutraceutical food products– But the big brand marketers will not associate their

products and brands with “risky” nutraceutical products unless they are proven, re-proven and proven again

• Seek out companies with more flexibility and a “speed to market” mentality


Landell MillsMANAGEMENT CONSULTANTS Summary

Consumers are different

The rules are different

The market is different

….but that is no reason to do nothing!!



Thank-you

Ross ChristiesonTel: +44 1373 831 219E-mail: [email protected]



So….What to Do?


Landell MillsMANAGEMENT CONSULTANTS Key Aspects for Success

1. Speak in a language that consumers know and trust

2. Ensure product safety3. Prove efficacy4. Educate consumers about the proposition5. Get the science right, and the regulators on

side6. Get the market position right7. Get the pricing right8. Work on a health claim strategy

smart marketing 2006 curative foods is the u.s. immune to the sales opportunity?

Documents

smart marketing

cure slide

functional foods slide

developed market

foodpharma continuum

prospective market

mature food market

flat food market