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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 MAY 2008 ISSN 1464-3308VOLUME 13 NUMBER 7

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 15-16

Continued on page 4

Pages 21-24Page 3

GABA: From big in Japan to bigger in

the West?

The French say ‘Oui!’ to cranberry’s health

benefits

Unilever turns ice cream into a healthy

probiotic snack

Nestlé has decided to become the latest me-too entrant to the UK’s fast-growing but crowded smoothie market – a move that has been awaited by industry since October last year.

The world’s biggest food company has, in collaboration with Boost Juice Bars, launched a range of “unique fruit smoothies containing 100% natural health ‘boost’ ingredients”.

The range currently consists of four products:

• Mango Mania Energy Boost with guarana and ginseng

• Berry Blitz Immunity Boost with a “dairy-free probiotic” and vitamin C “to help strengthen the body’s defences”

• Smashin’ Strawberry Mind Boost with a ginseng and guarana mix “which can aid memory and concentration”

• Tropical Twist Metabolism Boost with Teavigo a green tea extract, produced by DSM Nutritionals, which can have a positive effect on fat oxidation.

Each product carries the claimed benefit prominently on the front of the label.

The products are packed in 250ml and 750ml

Nestlé chases after the smoothie market

bottles priced at £1.79 ($3.54/€2.23) and £2.49 ($3.11/€4.92) – in line with other smoothie brands already on the market. They went on sale in the UK at the end of April in multiple grocers including Wal-Mart Asda and Sainsbury’s.

Boost Juice Bars is a recent entrant into the UK market and a relatively small player. It is a better-known brand in Australia, where it is the dominant juice bar chain. Janine Allis, Boost Juice Bars founder and CEO, said in a press statement that:

“Nestlé has a fantastic reputation for quality and brings the marketing experience you’d expect from a big company; but most importantly the team we worked with really understands the Boost Juice Bars brand. We also loved having access to the fruit experts at the Nestlé Product Technical Centre in

Lisieux, France who helped to develop the products.”

Despite the massive growth of the UK smoothie market over the last 10 years, penetration is very low – Innocent Drinks, the market leader, has said that only 20% of the population of the UK has ever tasted a smoothie. Nestlé’s objective appears to be to substantially increase that penetration.

According to Jon Walsh, managing director of new business at Nestlé UK:

“Consumer tests show our Boost Smoothies will bring new consumers into the category. Many consumers rightly love the regular smoothies that are currently available

but with category penetration so low at 30% there is much room for incremental growth which tests show our Boost Smoothies will deliver.”

Boost Smoothies are the first range of products developed by the Nestlé

UK new business division formed in 2007 to help drive the company’s development

into the UK’s leading nutrition, health and wellness company. The launch is being supported

with a £5 million ($10 million/€6 million) integrated marketing and communications campaign.

MAY 20082

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 TA C T S

LEAD STORY

1,4 Nestlé chases after the smoothie market

NEWS ANALYSIS

3 Unilever turns ice cream into a healthy

probiotic snack

5 Works With Water delivers Beauty in a

bottle

EDITORIAL

6 Nestlé boldly goes where others have gone before

7-8 Red Bull Simply Cola: How not to

extend a brand?

9 Cracking the beauty code

CASE STUDIES

10-11 BEVERAGES: Coconut water: ‘A

powerhouse of nutrition’

12-14 SUPERFRUIT: Cranberry’s reinvention

continues apace

15-16 HEALTH CLAIM: The French say ‘Oui!’

to cranberry’s health benefits

17-18 BEAUTY: Inside Out Beauty creates

‘exclusivity for everyone’

19-20 MARKETING: A Glimpse of the future

from XanGo

21-24 INGREDIENT: GABA: From big in

Japan to bigger in the West?

25 LABELLING: The pluses & minuses of

food-ranking systems

NEW PRODUCTS

26-28 Functional & healthy-eating new

product launches

IMPORTANT NOTICE

29 A polite reminder to our subscribers

NEW NUTRITION ON THE NET

30 Get the most from your subscription

NEW CASE STUDIES

31 Probiotics: Successful Strategies from

the Global Marketplace

32 7 Outstanding Companies in

Functional & Health-Enhancing Foods

33 10 Factors for Success in Energy Drinks

– Europe and the U.S.

34 New Nutrition Business Publications

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EditorJulian [email protected]

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All Market LLC .....................10,11Apple & Eve ......................12,13,14Boost Juice Bars.......................1,4,6Booths ...........................................5Bourbon ......................................22Calpis ..........................................22Campina........................................5Coca-Cola ....................13,22,23,24Cott Beverages ..............................5Danone .......................................6,9Daylesford Organic .....................17Decas .................................12,13,14DKSH ...........................................5DMV International .......................5Dole .............................................14

DSM Nutritionals .........................1Dunkin Donuts..............................4Eat ..........................................17,18Ezaki Glico ..................................22Fancl ............................................24Fresh and Wild ............................17Fuken Chagyo .............................24Gika .............................................15Harvey Nichols .......................17,18Innocent Drinks .........................4,6Inside Out Beauty ....................9,17International Paper .....................11Jamba Juice ................................4,6Japan Tabacco.............................23Jones Soda ...................................23

Lotte ............................................22Monoprix ....................................17Morrisons ......................................5Nestlé .......................................1,4,6Nippon Meat Packers .................24Ocean Spray ................12,13,14,15O.N.E. World Enterprises ......10,11PepsiCo .........................................6Pharma Foods International ........... ...........................................22,23,24Pharmatoka .................................16Planet Organic ............................17Pom Wonderful ...........................14Red Bull GmbH ............................6Sainsbury’s ....................................5

Selfridges .....................................17Starbucks .......................................4Sunkist .........................................14Superquinn ..................................17Tesco ..........................................5,9Unilever .........................................4Waitrose..................................17,18Wal-Mart Asda ..............................1Whistlestop ..................................17Whole Foods Market ...................17Works With Water ......................5,9XanGo ................................. 19, 20Yakult Honsha .....................6,21,22ZICO .....................................10,11

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MAY 2008 3


N E W S A N A L Y S I S

Unilever is testing whether the probiotic concept can be made to work in the kids’ ice cream market with a new UK launch under its Milk Time brand, part of an ongoing effort to turn ice cream from an indulgence into a healthy snack.

Milk Time Milk & Strawberry Probiotic Lolly is a hand-held, bottle-shaped milk ice made with skimmed milk and low-fat yoghurt. It contains the probiotic bacteria Bifidobacterium lactis BB12, which is described in product literature as helping “support the body’s natural immunity”. The brand is being billed by Unilever as the first-ever probiotic ice in the UK market.

To reinforce the probiotic benefit and make a link to a category and product type that many parents will already be familiar with and associate with health, the label carries a prominent graphic of a daily dose-type probiotic yoghurt bottle and the words: Made with probiotic yogurt.

The product is also prominently flagged: Without artificial colours & flavours. It further states:

We believe that people need small moments of pleasure in their lives. Our passion is inspired by our love for simple ingredients like milk, fruit and chocolate, which makes our products the best pleasure food there is.

Love Milk. Love Fruit. Love Chocolate.

The probiotic ice has been introduced to allow parents to “reward their children” with a healthy treat, Unilever says.

The new line is an extension of the Milk Time range, which was launched in early 2007.

The range targets the after-school snacking occasion and aims to help parents feel good about offering a snack that their children will eat and which also tastes good.

Unilever is targeting mothers with the message that a Milk Time ice cream is a wholesome treat with as much calcium as a 100ml glass of milk, as well as containing no artificial colours or flavours.

Unilever turns ice cream into a healthy probiotic snack

by Julian Mellentin

The introduction of the Milk Time range is part of a re-positioning by Unilever of its Wall’s umbrella brand – the UK’s biggest ice cream brand – from a sweet treat to a “healthier” food, with the goal of increasing frequency of purchase.

Milk Time offers a variety of ice creams whose milk content ranges from 38% to 70%. They have all been fortified with calcium to contain at least 15% of the RDI.

Milk Time probiotic lolly is available in a 6-pack multipack, priced at £1.99 ($3.93/€2.48) as well as a single-serve impulse pack at £0.30 ($0.59/€0.37) each. This is mass-market pricing that compares with other “regular” products.

COMMENT

Two key industry trends can be seen at work in Unilever’s newest launch. The first is that more and more companies are looking at the success of dairy-based probiotic products for digestive and immune health and asking why they too can’t get a slice of the huge growth in this area.

In the mind of the consumer it’s dairy that is overwhelmingly associated with probiotic health benefits. So well-established is dairy that no other category can hope to challenge its dominance and only one other category – juice – will be able to carve out a good-sized niche for itself. It must seem logical to Unilever to make probiotic benefits available in a dairy-based product. Whether consumers

will accept such a benefit in an indulgence product is another question.

That brings us to the second trend, which is the efforts of makers of indulgent foods to re-position them as healthy. Unilever’s Milk Time brand has this explicit goal. It’s

a strategy that has legs when the product is talking about an intrinsic benefit, such

as the antioxidants in dark chocolate, which is a message that enables

health-conscious adults to give themselves permission to eat more

of something they already want to eat.

But in probiotic ice cream, we believe, Unilever will

most likely find that they have created a niche brand with Milk Time. If

it can be profitable at that level then that will be a success. No one should expect this launch to herald a change in ice cream markets, where the consumer interest is overwhelmingly in indulgence.

MILK TIME PROBIOTIC LOLLY INGREDIENTS & NUTRITION FACTS

Ingredients:Fresh Semi Skimmed Milk (19%), Low Fat Yoghurt (16%) (contains Bifidobacterium Lactis Bb12), Sugar, Reconstituted Skimmed Milk, Dried Glucose Syrup, Strawberries (6%), Cream, Glucose Syrup, Lemon Juice from Concentrate, Calcium Carbonate, Beetroot Juice from Concentrate, Skimmed Milk Powder, Whole Milk Yoghurt, Stabilisers (Locust Bean Gum, Guar Gum), Emulsifier (Mono and Diglycerides of Fatty Acids), Natural Flavourings. Nutrition Facts: Per 100g Per stick

Energy 670 kJ 270 kJ

160 kcal 65 kcal

Protein 2.5g 1g

Carbohydrate 28g 11g

Fat 4g 1.5g

MAY 20084



A HEALTH BRAND – BUT AN UNKNOWN BRAND

The attraction for Nestlé of co-branding with a smoothie bar chain is obvious – the Nestlé brand does not stand for the “natural and healthy” and “fruit” values that are essential for brands in the smoothie category to be credible. But in partnering with Boost Nestlé isn’t leveraging off an established and well-known smoothie brand. Although the Boost franchise has more than 200 outlets in Australia, Singapore, Indonesia and Chile, it only entered the UK in 2007 and has just six stores in three cities.

So it’s not surprising that Janine Wallis should say in a press statement that “customers weren’t familiar with Boost Juice Bars”. There are plans to build Boost into a national chain over 10 years and the UK franchisees of Boost – who paid the Australian Boost £750,000 ($1.5 million/€935,000) for the concept – have a track-record of success in building retail

formats, having previously built up the Millie’s Cookies retail chain before selling it for a reported £25 million ($50 million/€31 million).

In effect, many consumers, perhaps most, aren’t going to make the connection between the new products and the healthy, fun smoothie bar. In fact, with the Nestlé brand name also prominent on the front of the label, many will just assume that it’s a Nestlé brand. For many consumers of smoothies that will be a turn-off – it’s no accident that in Nestlé’s recent tie-up with the Jamba Juice chain in the US to launch a similar range of ready-to-drink smoothies there is no mention of Nestlé anywhere on the label.

So if the point of difference isn’t the brand – which is the central plank of smoothie market leader Innocent’s success – then that leaves taste and added health ingredients as the selling point. With respect to the added ingredients, consumers who are motivated by these can already find them in many beverages on the UK market. The only exception is the branded green

tea extract Teavigo, an ingredient which has been around since 1999 and has had a chequered history. The presence of ginseng and guarana has never proven to be a particularly compelling “reason to buy” for UK consumers, and whether consumers will now believe that they are going to get an effective dose from what is in effect a lifestyle product is a big question.

JAMBA TIE-UP FOR NESTLÉ USA

April also saw Nestlé’s entry into the American smoothie market, selling a range of ready-to-drink, dairy-plus-fruit smoothies and juices under the brand of Jamba Juice, America’s largest chain of smoothie bars. Significantly, there are no references to Nestlé on the products or in promotional materials.

The single-serve drinks all contain added vitamins, minerals and other “boosts”, just as Jamba Juice’s fresh smoothies do in the companies’ quick-serve outlets. The products have been designed to replicate as closely as possible the taste and texture of the smoothies made-to-order in the Jamba stores.

One retailer told New Nutrition Business that the products will be merchandised in branded, stand-alone refrigerator units like those used by US smoothie market leader Odwalla, but of an unusual design said to be similar to the shape of the juice blender machines which Jamba uses in its stores. These chillers will be placed in the fresh produce aisle – where the health-conscious people shop – which, it is hoped, will better differentiate the products from regular yoghurt drinks which are priced at around $2 (€1.25) each compared to $3.60 (€2.27) each for the new Jamba drinks.

The Jamba Juice partnership, which had been gestating for two years, is an opportunity for Nestlé to enter the $2-billion (€1.25-billion) smoothie market and also get a toehold in fresh dairy.

Jamba Juice, founded in San Francisco in 1991, has 600 stores in the US and is the biggest smoothie bar chain. Its vision is to grow to 3,000 stores. Starbucks, by comparison, has 12,000 coffee shops. Jamba is facing increasing competition for a share of the healthy consumer’s dollar – and not only with other smoothie bars. People can go to Starbucks for coffee – and now for smoothies too. And chains like Dunkin Donuts have also entered the market, offering smoothies in its stores, which number in the thousands.

For more comment see the Editorial on page 6.

SCIENTIFIC SUBSTANTIATION CITED BY NESTLÉ FOR CLAIMS MADE BY THE NEW BOOST RANGE

Mango Mania Energy BoostKennedy et al. (2004) Pharmacol. Biochem. Behav. 79: 401-411, Reay et al. (2005) J Psychopharm 19: 357-365 ,Haskell et al. (2007) J Psychopharm 21: 65-70.Health claim based on well-established diet-health relationship between ginseng and alertness and guarana and mental performance (claim ID) in compliance with Regulation (EC) 1924/2006 Article 13.

Berry Blitz Immunity BoostSaker et al. (2005) Pediatrics 116:e221-e228, Bunout et al. (2004) J Parenter Enteral Nutr 28 : 348-354.Health claim based on well-established diet-health relationship between Lactobacillus paracasei (ST11) and gut health (Claim ID 232) in compliance with Regulation (EC) 1924/2006 Article 13.

Smashin’ Strawberry Mind BoostKennedy et al. (2004) Pharmacol. Biochem. Behav. 79: 401-411, Reay et al. (2005) J Psychopharm 19: 357-365 ,Haskell et al. (2007) J Psychopharm 21: 65-70; Kennedy et al. (2007) J Ginseng Res 31: 34-43.Health claim based on well-established diet-health relationship between ginseng and alertness and guarana and mental performance in compliance with Regulation (EC) 1924/2006 Article 13.

Tropical Twist Metabolism BoostDulloo et al. (1999) Am J Clin Nutr 70: 1040-5, Ota et al. (2005) J Health Sci 51: 233-236,, Kajimoto et al. (2006) J Health Sci 1: 161-171, Boschman & Thielecke (2007) J Am Coll Nutr 26: 389S-395S, Nagao et al. (2007) Obesity 15: 1473-83.Health claim based on well-established diet-health relationship between green tea extract rich in epigallocatechin gallate (EGCG) and weight management (Claim ID 395) in compliance with Regulation (EC) 1924/2006 Article 13.

Continued from front page

MAY 2008 5



Works With Water, the only UK company delivering clinically proven health benefits in bottled spring water, has launched Beauty, a first-of-its-kind functional water developed to help consumers achieve a smoother, more radiant complexion.

Beauty is formulated with 100mg Praventin, a natural ingredient derived from milk and created by a proprietary process owned by DMV International, the ingredients division of Dutch dairy giant Campina. Praventin is a bioactive protein rich in the milk fraction lactoferrin and the Works With Water launch represents the first time it has been used in a food or beverage in Europe.

“Acne is no longer just a teenage problem as increasingly women in their thirties are suffering, with a third reporting that they still get spots,” said Jules Birch, Works With Water’s founder, in a statement accompanying the launch.

“Praventin has been shown to be highly effective in improving the complexion from the inside out and works in two ways. Firstly, it inhibits the development of the Propionibacterium acnes which is present on most people’s skin and responsible for many skin impurities and acnes, thereby lessening the number of new spots forming.

“Secondly, its anti-inflammatory properties mean that the size of spots is reduced and blemishes heal quicker resulting in a smoother complexion. By adding it to a spring water formulation we have created a product that helps hydrate and heal skin from the inside.”

Beauty, which also contains high-grade aloe vera extracts and natural raspberry and rose fl avours, joins Works With Water’s range of new generation functional waters which now includes: 120/80, a blood pressure-lowering water (see below); Delicate Balance and Little Squirts (for children), which contain a prebiotic for a healthy gut; Eau So Cool, designed to help boost calcium absorption; and Water of Life, which contains fi bre.

All the waters are preservative-free, sugar-free and naturally flavoured. They are suitable for vegetarians, diabetics, coeliacs and pregnant women. Works With Water has obtained listings for Beauty in Tesco and Morrisons supermarkets, where it retails at £1.29 ($2.55/€1.60) per 500ml bottle – the

Works With Water delivers Beauty in a bottle

by Paul Vincent

same super-premium price point as 120/80.As with all Works With Water spring

waters, Beauty was developed in partnership with ingredients specialist DKSH Great Britain.

“Bioactive peptides are a new area of research within both the food and cosmetics industries and the functionality of Praventin combines these two areas perfectly,” DKSH’s Kavan Ranasinghe said at launch. “We strongly believe that this will be the year that cosmaceutical products finally come of age.”

BLOOD PRESSURE-LOWERING WATER MAKES A SPLASH

Last spring 2007 Works With Water launched 120/80, the UK’s first spring water specifically developed to help lower blood pressure (see the June 2007 New Nutrition Business for full coverage). Named after the optimum blood pressure level, it was the first spring water in Europe to contain dairy peptides, which are derived from milk protein and clinically proven to be effective in the reduction of blood pressure.

“The launch of 120/80 demonstrated our continued commitment to deliver

spring waters with clear and evident health benefits,” Birch told New Nutrition Business.

“Due to strong media coverage and the ensuing consumer demand, the ROS at launch exceeded all our expectations, resulting in unanticipated stock shortages as we struggled to meet that demand.”

“Nearly a year down the line we are moving 120/80 into multipacks, in direct response to the growing number of people consuming it on a daily basis as they see the positive effects. This summer will also see the launch of 120/80 Citrus,” says Birch.

120/80 is currently listed in Tesco, Morrisons and Booths, and Birch is in discussions with other major retailers to increase distribution channels. “Effective from 1 April this year global soft drinks specialist Cott Beverages assumed responsibility for the distribution of our products in the UK,” Birch told NNB.

“Cott is currently co-packer of the Works With Water range at its aseptic plant in Nelson, Lancashire and this new partnership is the next stage in our strategy for growth within the UK,” she concluded.

For a very different approach to marketing water as a beauty-enhancing beverage in the UK see the related story on Inside Outside Beauty on page 17.

DMV INTERNATIONAL & PRAVENTIN

Praventin’s positive effects on acne in teenagers have been suggested by two consumer studies conducted by DMV International. The studies showed a median decrease of complexion blemishes by 71% after one month and 95% after two months.

The 44 teenagers were asked questions about how they believed Praventin had supported skin health and 83% stated they would like to continue taking Praventin.

The subjects reported no adverse side effects. In the studies subjects took 200mg of Praventin in the form of a dietary supplement each day. Beauty contains 100mg, half the recommended daily amount.

For more information visit www.praventin.typepad.com

MAY 20086


E D I T O R I A L

PepsiCo clearly intended to make a big splash in the UK’s fast-growing smoothie market when it acquired the PJs brand back in early 2005. PJs had retail sales of £10.9 million ($21.4 million/€13.5 million) and it was the second-biggest brand in the UK smoothie market after Innocent, which had sales of £30 million ($37 million/€59 million).

At the time, dislodging Innocent Drinks from the top slot seemed an achievable goal and PepsiCo set to work with new flavours, new packaging and a £5 million ($10 million/€6.2 million) ad spend – at the time the biggest the smoothie category had ever seen. PJs was, and is, a good brand and a good-tasting product and by the end of 2006 Pepsi’s efforts had paid off, with PJs sales growing 100% to £22.6 million ($44.3 million/€28.1 million). In the same period, however, the Innocent brand grew 168%, to £80 million ($157 million/€99 million).

In 2007 Innocent romped ahead another 60% to £131 million ($257 million/€163 million) in retail sales – while PJs, by contrast, grew a mere 6.8%, to just £24.2 million ($47.5 million/€30.1 million). This wasn’t just modest growth by PJs – it was a sign of failure since the total smoothie market grew by 31% in the same period.

At the end of 2007 PJs’ market share was just 11% while Innocent, far from being dislodged, holds a 65% share of a market now valued at £214 million ($420 million/€266 million).

PJs did nothing wrong. The products taste good, have good packaging design and have been well marketed. The brand performed well on all parameters – but Innocent performed better. The difference is that Innocent holds the dominant share of the mind of the consumer and as a result holds the dominant share of the market.

In partnering with Boost in the UK Nestlé has decided to follow PepsiCo – not in its footsteps exactly, but several paces behind it. Clearly Nestlé thinks it can do better – though there are few who would believe that its marketing know-how and execution skills match those of PepsiCo. Nestlé’s plans, in fact, have three main flaws: Innocent Drinks, the undisputed UK smoothie

champion, won’t be losing any sleep over Nestlé’s title challenge.

Nestlé boldly goes where others have gone before

1. Launching a me-too that’s free from innovationInnocent Drinks created a new category when it launched its smoothies back in 1999; Red Bull GmbH created a new category with energy drinks; Yakult Honsha and Danone created a new category of daily dose probiotic dairy drinks. In the nutrition business successful brands are innovative brands – they are the ones that create new categories. Nestlé’s Boost juice is a straight me-too, it brings no new benefit to the category – the “boost” ingredients have all been tried before and can be found in other types of beverages – and their consumer appeal is highly questionable.

2. Launching with an unknown brandThe attraction for Nestlé partnering with a smoothie bar chain is obvious, but in partnering with Boost, Nestlé isn’t leveraging off an established and well-known smoothie brand. Boost only entered the UK in 2007 and has just six stores. Even Boost’s founder admitted in a Nestlé press statement that “customers weren’t familiar with Boost Juice Bars”. Most consumers won’t be making the jump from the product to a healthy, fun smoothie bar.

3. Including ‘Nestlé’ on the labelWith the Nestlé brand name prominent on the front of the new Boost smoothies many will just assume that it has come from the Nestlé stable. In the US, Nestlé’s new smoothies will be marketed solely under the Jamba Juice brand – a well-known national smoothie chain. No mention of Nestlé will appear anywhere on the label – because the Nestlé brand stands for confectionery, ice cream and pasta sauce. It’s not a credible platform for an “all natural” health concept. The same applies in the UK – and hence the presence of the well-known Nestlé brand on the Boost label, with its very strong associations in consumers’ minds, will count for more than the unknown Boost brand. That will be a turn-off for many “all natural” consumers.

Despite the massive growth of the UK

smoothie market over the last 10 years, penetration is still very low – Innocent Drinks, the market leader, has said that only 20% of the population of the UK has ever tasted a smoothie. Smoothies are a premium-priced item, not a mass-market item. They sell in very low volumes at very high values per litre. The concept may in time evolve into the mass market, but any brand that thinks it can jump straight into the mass market will be in for a tough time.

It’s a basic rule of marketing that anyone who tries to be a me-too in an established market with dominant players will have their work cut out – and most such me-too strategies fail. Boost is being well supported promotionally and perhaps it will perform as well as PJs, but we do not believe that it could do any better.

Writing about the German assault on the French fortress of Verdun in 1915, Winston Churchill wrote that: “The tactical execution was without fault. The vast strategic misconception on which it rested was fatal.”

If Boost stalls as a PJs-sized brand, then Nestlé’s strategic misconception of the smoothie market will be the cause.

MAY 2008 7


E D I T O R I A L

Red Bull GmbH is the original new category creator, bringing the “energy” concept to the supermarket for the first time. Now it has decided to be a me-too in a mature and well-defended category – which should make us all pause for thought. Would “Harley Davidson Perfume” be a logical extension of the world’s best-known motor-bike brand? Or how about Bic, the company best known for producing disposable pens, lighters and razors, extending into disposable women’s underwear?

Neither of these extensions made any sense at all to the consumer. As a result both have gone down in the annals of marketing failures – and it seems that the mighty and seemingly infallible Red Bull has decided to follow them. A year or two from now the company is likely only to have underscored what market experience and business school studies have long highlighted – that strong brands with strong and specific associations can’t successfully be extended into new segments.

“The cola from Red Bull. Strong and natural,” reads literature for Red Bull’s first new product launch and first brand extension since its debut back in 1987. It has been common knowledge within the industry that Red Bull has been looking around for some time for a new product opportunity. The result of that search is Red Bull Simply Cola, a “natural cola” said to be made with cola nut, coca leaf and natural caffeine, derived from coffee beans.

Set to be launched in Las Vegas in June, Red Bull Simply Cola will be sold in 250ml slimline cans, said to deliver 32mg of caffeine per serve – compared to 80mg in the 250ml can of Red Bull energy drink. A 355ml can will also be available.

The cola will also launch in the UK, Austria, Switzerland, Italy, Ireland and Russia.

The brand is said to be debuting in parts of the US as well as the UK, Ireland and the Netherlands and will be premium-priced, sources say.

At one level it’s understandable why Red Bull would want to extend its business into new product areas. The company pioneered the creation of a new category when its

Red Bull Simply Cola: How not to extend a brand?

energy drink debuted in 1987. The brand – which brought to the market a new benefit in a new package – has grown to be worth over $10 billion (€6.9 billion) in retail sales in the US and Europe alone and it still holds an impressive 60% share of the energy drink category. But growth in the energy category is slowing and in some markets it has challengers.

Red Bull has only made one significant launch in the past 20 years, when it debuted a sugar-free variant, which in some countries has grown to be 50% or more of sales. The sugar-free variant was a logical move, bringing as it did the consumer benefit of “none of the bad stuff ” (sugar) while still delivering the taste and energy benefit.

But now Red Bull seems set on a launch which flies in the face of the strategy which has made it so successful. As a general principle, good marketers and business school gurus alike know that extending strong brands with a strong and clear benefit platform into new areas and new benefits yields modest results at best and mostly breeds failure.

Marketing writer Al Ries, co-author of The 22 Immutable Laws of Marketing, is just one of those who have observed that:

“If you have a powerful perception for one class of product, it becomes almost

impossible to extend that perception to a different class. Names have power, but only in the camp in which they have credentials and when they get out of their camp, when they lose focus, they also lose their power.”

Hence Harley Davidson can be a successful motor-bike brand, but it will have little potency in the world of perfume.

Many marketers remain in love with the concept of brand extension – the strategy in which a strong brand is used in a different product category. Launching a new product is not only time-consuming but also needs a big budget to create awareness and to promote a product’s benefi ts. Managers believe they can reduce costs and risks by using an established brand to accelerate consumer recognition and trust for the new product. But that only works when the new product is very close to the original brand’s values. Move too far away and you get into trouble.

A brand’s “extendibility” depends on how strong consumers’ associations are with the brand’s values – and Red Bull stands for energy drinks. Nothing more, nothing less. It is synonymous with “energy drink”. It is not synonymous with “cola”. In consumers’ minds that word belongs to Coke and Pepsi.

What’s more, Red Bull is trying to associate its name with the term “natural”

Red Bull GmbH is set on a launch which flies in the face of the strategy which has made it so successful.

MAY 20088


E D I T O R I A L

– but the brand values of Red Bull are the opposite of “natural” and the brand image has no appeal to the types of consumers who favour natural products.

In fact, the closer you look at Red Bull Simply Cola, the more apparent it becomes that the best thing that Dietrich Mateschitz – the visionary founder of Red Bull, who still owns half the company – can do to protect his bank balance is to fi re the team who came up with this ill thought-out concept.

Earlier this year, after conducting tens of interviews, we published our report 10 Key Factors for Success in Energy Drinks – Europe and the US. The past 20 years of energy drinks and the past 15 years of functional foods have shown us that the rules of success have a lot in common, whichever category you are in. The 10 lessons from the energy drinks category are:

1. New category creation2. A benefi t that the consumer can feel 3. Focus on one benefi t4. Focus on one brand5. Lifestyle marketing6. Packaging innovation7. Innovation in distribution8. Premium pricing9. Internationalisation10. Asian ideas

Red Bull Simply Cola breaks a surprising number of these rules. The launch of the original Red Bull and the growth of the energy drink category is one of the very best

examples of new category creation. Ironically, Red Bull has been praised in the past precisely because it did not enter the mature cola category.

In an article published in the Harvard Business Review, entitled “Strategies to Crack Well-Guarded Markets”, authors Bryce and Dyer say successful new market entrants “don’t engage in frontal attacks, because market leaders … will stop them in their tracks with price wars, ad blitzes ... and other retaliatory tactics”. One of the examples they give is a comparison of the performance of Red Bull with Virgin Cola. The latter staged

a head-on assault on the US cola market – a stronghold held by Coke and Pepsi – with advertising blitzes and comparable pricing but never got more than 1% of that market.

Red Bull, on the other hand, entered the US with a niche product, in innovative and entirely new packaging, priced at twice the price of any regular soft drink and distributed (at fi rst) only through bars and convenience stores. The company did not use ad blitzes, instead relying on sampling. The reward for this unconventional approach was that Red Bull was able to create a new category and a loyal following from which to move into the mainstream and build a brand with over $700 million (€520 million) in US retail sales – a 65% market share of the energy drink category – just 8 years after its launch. Clearly, the marketing team at Red Bull

don’t have time to read the Harvard Business

Review. If they had, why would they attempt a strategy that even Virgin – one of the very few companies in the world which has succeeded in stretching a brand – couldn’t make work?

Marketing is not a battle of products, it’s a battle of perceptions. This means that once a brand has captured and reinforced its position in consumers’ minds, then it’s very diffi cult to change those minds.

Red Bull has chosen to walk away from the strategic thinking that has made it successful, entering a mature, well-defended category with a me-too brand with a point of difference that does not match the brand’s values. Risk-taking can lead to success, but success can lead to aversion to risk, as has so clearly happened in this case. And aversion to risk leads to failure. To quote Ries and Trout:

“When a brand is successful, the company assumes the name is the primary reason for the brand’s success. So they promptly look for other products to plaster the name on … Actually it’s the opposite, the brand got famous because you made the right marketing moves … but the more you identify with your brand the more likely you are to fall into the extension trap. Pride goeth before destruction and a haughty spirit before a fall. Proverbs 16:18.”

For more information on our latest report, 10 Key Factors for Success in Energy

Drinks – Europe and the US, go towww.new-nutrition.com/ENERGYDRINKS.asp

One of these is a new category-creating innovation and the other is a me-too with a questionable future – yet both came from the same company.

February saw the debut of Pepsi Raw, an all-natural cola described as “the most signifi cant innovation from Pepsi UK in the last 15 years”.

Initially, Pepsi Raw will only be available in selected bars and clubs in seven UK cities – London, Manchester, Glasgow, Brighton, Birmingham, Leeds and Liverpool, with a wider roll-out planned for later in the year.

The new cola is made from natural ingredients and contains no artifi cial preservatives, colours, fl avourings or sweeteners. By replacing corn syrup with cane sugar, the company has managed to reduce the calorie content of a 300ml bottle from around 120 calories to around 90 calories.

Pepsi Raw is paler in colour than original Pepsi and contains sparkling water, apple extract, plain caramel colouring, coffee leaf, tantaric acid from grapes, gum arabic from acacia trees and cane sugar. All this naturalness comes at a premium price, however: Pepsi Raw costs around £2 ($3.90/€2.50) per 300ml bottle.

PEPSI BEATS RED BULL TO THE PUNCH

MAY 2008 9


else fails I’m going to do this today and feel good about me’.”

Inside Out Beauty’s lifestyle marketing appears to be more developed and more aggressive than that of Works With Water. But the difference is that Sip’s active ingredients are vitamin C and botanical extracts – ingredients which, in terms of science for skin health, have much less to offer. The “feel the benefit” element of Sip will be less than for Works With Water, and though Sip’s lifestyle marketing may cause it to power ahead at first, in the end the ability of consumers to “feel the benefit” is going to be the most effective at creating a following of loyal consumers with high rates of repeat purchase.

For now, most companies are remaining on the sidelines of the beauty foods business. But if Beauty works for Works With Water, its owners will find no shortage of large companies keen to acquire its brand and take it to a wider audience.

E D I T O R I A L

In 10 or 15 years from now we may see a beauty food market that is as large and well-developed in the West as it is in Japan – but getting from here to there is going to be a long and difficult journey.

One or two pioneers are signposting the potential. Danone’s Essensis beauty yoghurt is already the biggest European brand with sales of over €40 million ($63 million) in four countries, according to Nielsen data, just one year after launch.

But beauty is proving a challenging area for other food companies who are thinking about targeting it – and if you’re not Danone, how do you compete?

The main challenge is persuading women to include “beauty foods” and “beauty beverages” in their daily routine. Asking them to substitute a food or beverage for a cosmetic is going to be almost impossible. Skincare products are mostly strong brands and well marketed – and consumers’ willingness to believe in such products is very high. That Danone has had initial success with Essensis is attributable to the fact that Danone has the scale and skill to market its beauty yoghurt in the same way as a regular beauty product and still have credibility with consumers.

But if you’re not Danone then a blend of effective science with lifestyle marketing and convenience looks like being the best way forward.

Highly innovative – and niche – UK water company Works With Water (see page 5) is taking exactly this approach with its new flavoured water, simply branded Beauty. The active ingredient is Praventin, a lactoferrin ingredient that is already widely used in cosmetics and is marketed in the US as a dietary supplement. Praventin has clinical evidence in support of its skin benefits, which result from its effectiveness in fighting bad bacteria, reducing redness from inflammation and helping repair damaged cells caused by blemishes.

Praventin also has the benefit that its effects become apparent very quickly – as a look at the enthusiastic

Cracking the beauty codecomments on American consumer websites will confirm. The consumers, in other words, can experience the benefit quickly – and being able to feel the benefit is the most persuasive selling point in a functional food. The easy-to-feel benefits of probiotic products, for example, have been the main drivers of their success.

The clinically effective dose of Praventin is 200mg a day and half that amount is found in one 500ml bottle of Beauty. If Works with Water can get sufficient distribution – it already has a national listing with Tesco – and if consumers can feel (and more importantly for beauty foods, see) the benefit then it will have a successful product on its hands. Cleverly, the company is supporting its “clinically proven” beauty water with lifestyle marketing, as the eye-catching bottle illustrates.

Rival beauty water brand Sip (see page 17) is taking a different approach. Sip’s owners understand the lifestyle needs of its target consumers perfectly: “Think of the scenario of the woman coming out of the gym, saying to herself, ‘My body is my shrine and I drink a bottle of Sip because that’s going to finish off my beauty regime’. You’ve also got the mum, hungover, who’s forgot to take the make-up off last night, driving the kids to school and she’s got a bottle of Sip in the car and she says, ‘You know what, if all

Pioneering brands exploring the potential of beauty foods: Danone’s Essensis beauty yoghurt, Works With Water’s Beauty and Inside Out Beauty’s Sip.

MAY 200810


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

Four years ago coconut water was virtually unknown in the US. Today, thanks mainly to the efforts of three small startup companies, an ever-increasing number of Americans are recognising it as one of the most nutritious natural beverages on the planet. It is, in the words of Dr Bruce Fife, a world authority on all things coconut, “a powerhouse of nutrition containing a complex blend of vitamins, minerals, amino acids, carbohydrates, antioxidants, enzymes, health-enhancing growth hormones, and other phytonutrients”.

Extracted from young, green coconuts, coconut water has a natural balance of sodium, potassium, calcium and magnesium, making it a natural electrolyte drink and three times more hydrating than water.

It was coconut water’s hydration properties that led to it acquiring a reputation as the ultimate hangover elixir in Brazil. In the US, however, the primary positioning of coconut water is as “Nature’s sports drink”. This is because 330ml/11oz of coconut water has more potassium than two bananas and 15 times the amount found in the equivalent volume of most sports and energy drinks. Coconut water is therefore ideal for replenishing the electrolytes lost during exercise and has none of the artifi cial fl avourings and colourings found in so many traditional isotonic beverages.

Without recent advances in packaging technology, coconut water would still be confined to the tropics. When coconut water is exposed to air it rapidly loses most of its nutritional

Coconut water: ‘A powerhouse of nutrition’

Coconut water has been enjoyed for thousands of years in the tropics but has only been available as a consumer product since 1999, when it appeared on the Brazilian market. By 2002 it was the second most highly consumed beverage after orange juice in Brazil. Coconut water has been available in the US since 2004, where the market is now thought to be worth more than $10 million (€6.4 million) and growing 100% year on year. PAUL VINCENT recently talked to the three startups driving the burgeoning American coconut water industry: All Market LLC, ZICO and O.N.E. World Enterprises.

characteristics and begins to ferment. With the advent of the aseptic Tetra Pak, coconut water’s natural components, its aroma and, most importantly, its flavour, could be preserved for the first time.

Currently all aseptic packaged coconut waters are produced in Brazil. The three biggest importers and marketers of packaged coconut water in the US are All Market LLC, ZICO, and O.N.E. World Enterprises.

VITA COCO LEADS THE WAY

The fi rst company to market in the US was New York-based All Market LLC. Co-founders Michael Kirban and Ira Liran fi rst learned about coconut water from some Brazilians they met in a NYC bar in February 2002. Within two months Liran was in Brazil researching the prospect of branding coconut

water for the American market. Negotiations with plantation owners and producers ensued and the seed for Vita Coco, the brand name hit upon by Kirban and Liran, was sown.

Two and a half years later Vita Coco was launched in NYC; within six months it had expanded into California, the Mid West and South East of the country. Currently Vita Coco is available in more than 5,000 retail stores nationally.

“Vita Coco is the market leader in the natural coconut water segment,” Liran told New Nutrition Business.

“According to recent SPINS data, the packaged coconut water industry did just over $3 million [€1.9 million] over the past 52 weeks, of which Vita Coco owns a 46% share. This data is for natural specialty retailers only, and accounts for only a fraction of our total sales, most of which are focused on the conventional and mass grocery stores and chains, and smaller convenience stores throughout the US, Canada, UK and Australia.”

Vita Coco has managed to double its sales every year since launch – last year it raked in $4 million (€2.5 million) and the company is confi dent that it will reach $8 million (€5.1 million) in 2008.

Vita Coco contains just one ingredient – coconut water – with no preservatives, added sugars, juices, water or colouring. In addition to Natural Coconut Water, the company currently offers Coconut Water with Passion Fruit, Coconut Water with Pineapple, Coconut Water with Peach & Mango and Coconut Water with Tangerine.

Vita Coco is available in a 330ml/11oz Tetra Pak with a suggested retail price of $1.49-$1.69 (€0.95-€1.08); the Natural Coconut Water also retails in a 1-litre Tetra Pak for around $5.50 (€3.50). The Tetra Pak preserves the beverage’s freshness, without refrigeration, for up to eight months.

“Our best selling SKU is our plain coconut water, followed by the pineapple flavour, which consists of coconut water, coconut purée and pineapple purée (a natural pina colada),” says Liran. “Not far behind is our tangerine flavour, which we just launched a few months ago.”

When asked what made Vita Coco stand out from its rivals, Liran responded: “The difference between our brand and our competitors’ is that we use a younger green coconut, which positively affects the tastes and nutritional benefits of potassium.”

MAY 2008 11


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

All Market is also promoting Vita Coco as an excellent base for mixed drinks – Kirban was quoted in Brandweek earlier this year as saying Vita Coco and rum was “the offi cial drink of the offi ce after 6 p.m.”.

ZICO DELIVERS ‘NATURE’S SPORTS DRINK’

Hot on the heels of All Market and Vita Coco were Mark and Maura Rampolla who founded their company ZICO in 2004, and soon after launched a brand of coconut water with the same name.

“I fi rst tried and fell in love with coconut water as a Peace Corps volunteer in Central America in the early 1990s,” Mark told NNB. “I then spent much of the next 14 years in and out of Latin America, including running International Paper’s beverage packaging business in the region. I decided to start my own business, loved the beverage space, saw all the activity in the sports drink and enhanced water categories and realised that nothing could better meet the consumer need than coconut water.”

With the foundation for ZICO Coconut Water thus laid, the Rampollas developed their brand positioning as “Nature’s Sports Drink” and began targeting active, health-conscious consumers who were looking for a natural alternative to typical high-sugar, artifi cial sports drinks.

“According to our consumers,” says Mark, “the main difference between ZICO and our competitors’ products is the taste. In fact, they say they prefer ZICO to anything else on the

market because its tastes almost fresh from the tree and the taste is consistent from production to production.”

Currently ZICO is doing only grassroots/guerilla marketing, which consists of securing a presence at events such as triathlons, runs, bike rides and sporting events where people can experience the effects of ZICO.

ZICO was the fi rst in the world to introduce fl avoured coconut water, launching both Mango and Passion Fruit & Orange Peel variants with its Natural coconut water in 2004. “Both fl avours have a great taste and no additional calories, carbs or acidity,” says Rampolla.

Interestingly, sales of flavoured coconut water currently account for less than 20% of the total coconut water sales in the US.

While ZICO appeals to multiple customer bases, the company is especially targeting infl uential, up-scale consumers through yoga studios, gyms and hotels. Accordingly, Zico is priced at a slight premium to its rivals, at around $2 (€1.25) per 330ml pack.

“For instance,” Rampolla explains, “ZICO is carried in Robert De Niro’s new $750/night Greenwich Hotel in Tribeca.”

While ZICO is not currently releasing sales fi gures, Rampolla is confi dent that the coconut water category will grow to be worth $1 billion in the future, and that “ZICO will be the defi nitive leading brand”.

He estimates that the market will be worth between $10 million (€6.4 million) and $15 million (€9.6 million) this year in the US and agrees with All Market’s Liran that it’s diffi cult to measure ZICO’s total retail sales as SPINS, IRI and other market researchers do not include sales in gyms, yoga studios, day spas, hotels and colleges.

“We currently have between 30% and 40% market share even though our distribution footprint is very limited,” says Rampolla. “The market is growing probably 100% per year and we’ve been growing about 250% year over year and expect to retain this rate throughout 2008 as well.”

ZICO has a number of line expansions under development and expects to roll these out later this year or early next year.

O.N.E. MAKES UP THE BIG 3 IN THE U.S.

The third major player in the US is O.N.E. World Enterprises, established in 2005 with the goal of providing a line of packaged, better-for-you beverages that serve as a healthier and natural alternative to sports drinks, energy drinks, sodas, enhanced waters

and bottled waters. Its portfolio of products currently includes 100% Coconut Water (launched in 2006), Amazon Açaí (launched last year), Coffee Berry Juice and Cashew Juice (both of which were launched at Natural Products Expo West in March).

“O.N.E. stands for One Natural Experience,” the company told NNB. “O.N.E. beverages are geared toward consumers who strive to live a healthy, active, lifestyle by incorporating natural, better-for-you products into their day to day lives. For example, this includes athletes, yogis, ‘weekend warriors’, moms, children, travellers and students.”

O.N.E. Coconut Water is available in 11oz and 1-litre Tetra Paks at Whole Foods Markets across the US and online at www.OneNaturalExperience.com. The 11oz size retails for between $1.79 (€1.14) and $1.99 (€1.27), and the 1-litre pack for between $5.59 (€3.56) and $5.79 (€3.69).

“As a brand we are focused on educating consumers about the tremendous health benefits of coconut water and our other beverages,” O.N.E. said. “We will continue to use marketing vehicles such as our online presence and event partnerships to help get the word out to consumers.”

O.N.E is committed to environmental sustainability and donates a percentage of sales – which the company expects to top $7 million (€4.5 million) in 2008 – to organisations such as Brazil Foundation and Healthy Child, Healthy World.

Positioned as “Nature’s Sports Drink”, Zico is the second biggest-selling coconut water in the US.

O.N.E. 100% Coconut Water is targeted at athletes, yogis, “weekend warriors”, moms, children, travellers and students.

MAY 200812


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

The new cranberry products appearing in the US range from extensions of Ocean Spray’s diet-juice line to Decas’ nutritionally fortified dried fruit to Northland’s blends of cranberry and other dark juices. Not coincidentally, pomegranate juice plays a prominent role as a complement to cranberry in many of the industry’s new formulations.

“Cranberry and pomegranate are falling into the same realm, to a large degree, as being very powerful antioxidant fruits,” Jeff Damiano, director of marketing for Apple & Eve, which owns the Northland brand, told New Nutrition Business.

“Dark red juices are getting a tremendous amount of play with consumers, including grape juice. And what we can do with cranberries plays into the trend with boomers, who aren’t high on taking pills and supplements. They’d rather get their nutrition and benefits from their foods. If they know that their intake of an 8oz serving of 100% juice is giving them added value, then they don’t have to supplement with pills, that’s where they want to go. They don’t want to have to carry around that little [pill] case that says: ‘We’re getting old.’”

Cranberries, of course, are rich in antioxidants, as are most superfruits, and have the additional – and perhaps unique – benefit of a proven record of mitigating or preventing urinary-tract infections in women. Cranberries have a significant amount of compounds called proanthocyanidins that offer an anti-adhesion mechanism that prevents harmful E. coli bacteria from adhering to the urinary-tract wall.

Ocean Spray only recently began to embrace the health-marketing possibilities of cranberries, and Apple & Eve and Decas have quickly followed suit over the last year or two. Here’s how each of these three major players in the American cranberry business are embracing the fruit’s better-for-you potential:

Ocean Spray: The grower-owned co-

Cranberry’s reinvention continues apace

Like a giant rubbing the sleep out of his eyes, the US cranberry industry is finally beginning to tap the full potential of its healthful little berries in the better-for-you marketplace. It’s not just leader Ocean Spray that is creating a robust stream of new products and relevant positioning in the segment – other players including Apple & Eve and Decas Cranberries are bidding for bigger pieces of the cranberry pie. DALE BUSS reports.

operative based in Massachusetts is, of course, the dominant force in the cranberry business worldwide, with a brand worth more than $1 billion (€630 million). Ocean Spray’s own research was instrumental in helping prove scientifically the folkoric connection between cranberry juice and urinary-tract infections.

Yet it was only a little more than a year ago that the brand’s stewards declared a new intention to attempt to exploit cranberries’ better-for-you heritage in aggressive new ways.

“Cranberries were good for you, but

the marketing leadership had a tough time talking about health,” Ken Romanzi, Ocean Spray’s domestic chief operating officer since 2005, told NNB in February, 2007. “So the first thing I did when I got here is say, ‘We have to talk about health.’”

Besides unapologetically trumpeting the health benefits of cranberry juice, Ocean Spray has added two other important elements to its positioning. The first is an unprecedented emphasis on the good taste of its products – a strategy that Romanzi insisted is fully backed up by consumer research.

“We have studied our brand against other iconic beverage brands,” he said. “And we have studied how it stacks up against the others in a whole bunch of attributes. We’re the only brand that equally stands for great taste and great health – the only brand in consumers’ minds that can say both of those things.”

In fact, Romanzi went so far as to stack Ocean Spray’s brand appreciation up against some of the very monsters of the beverage industry. “Coca-Cola tastes great, but consumers don’t say that it’s good for you,” he said. “And in consumers’ minds, Tropicana scores high on health. But it’s not a taste brand. Is [taste] why people drink it every morning?”

Romanzi said that Ocean Spray has been “honing in on” its unique positioning in part as a way to create some openings for the brand in the other major new element of its positioning: against various “need states.”

He explained: “Our premise is to take our positioning in the juice aisle – not outside the juice aisle – and apply it to different beverage need states.”

That is why, for example, in 2006 Ocean Spray debuted Diet Ocean Spray, sweetened with Splenda, and comprised of “a lot of Vitamin C and water,” as Romanzi put it – but only 7% cranberry juice. “People might

MAY 2008 13



drink cranberry juice in the morning but not during the rest of the day because diet drinkers want only five to 10 calories per serving,” he said. “And people certainly want the good-for-you aspects that we bring to them.”

So far, Romanzi said, Diet Ocean Spray has proven “to be highly incremental to our business, as we intended it to be. It’s doing well”.

Ocean Spray also recently has added all-natural blends that are 100% juices – cranberry mixed with other, sweeter juices. And in another bold gambit aimed at a particular “need state”, the company has just introduced Cranergy, a product that it is calling the first mass-market juice-based energy drink. (See the March 2008 New Nutrition Business for full coverage).

On the other hand, it’s not much of a surprise that Ocean Spray already has guessed wrong with some of its proliferating new products. For example, Ocean Spray last year decided to take on Naked Juice and Odwalla with its own line of “superpremium” juices under the brand Grower’s Reserve, that would be merchandised in supermarket produce sections like the other two brands – which now are units of PepsiCo and Coca-Cola, respectively.

Ocean Spray executives believed they

had some permission to play in the produce section in part because “we were in that section long before those brands, with fresh grapefruit,” Romanzi explained. “Business was booming [in superpremium juices], so we wanted to test there.”

But results for Grower’s Reserve have been middling after their first year in test markets, Romanzi admitted, and he indicated that Ocean Spray already may be abandoning the initiative.

“It’s doing so-so,” he told NNB. “We saw that in that category, some of the products are straight juices, and some are smoothies and thick purées and protein juice. To be successful there, we may have to re-jig things. Straight juice just isn’t a big enough proposition to carry us there. But we don’t have entrees in protein drinks, fruit smoothies or ‘green’ drinks.”

Romanzi declined to say exactly what Ocean Spray might do differently in the superpremium segment. He did note, however, that growth in the until-recently fast-growing smoothie market is slowing and that combatting the strength of Coca-Cola’s Odwalla and PepsiCo’s Naked in the produce-department smoothie segment was a Herculean task. “I don’t like to fight with giants,” he said.

Apple & Eve: Since the privately held juice company based in Port Washington, New York acquired the Northland juice

brands about three years ago, it has been trying to refashion the line as an adult product, specifically aimed at women.

Because Northland’s product line already was fairly well developed, especially because the brand had been the industry leader in fielding 100%-juice blends, Apple & Eve initially focused on overhauling Northland’s marketing and its aim at women. That is why, for example, Northland became a major sponsor of the Breast Cancer Research Foundation and has heavily advertised that fact.

“This is an important mission, and women respond to that,” Jeff Damiano told NNB. Naturally, there’s also an obvious – if largely unspoken – tie-in to women’s health because of the attributes of cranberry juice in preventing urinary-tract infections in women. Northland’s anti-breast-cancer efforts “do resonate with women,” he said, even though dozens of other US brands also have hitched their wagon to the cause of breast-cancer mitigation in various ways.

At the same time, Northland also has begun expanding into new products. “We’ve stayed true to cranberry-juice positioning, but we thought that the brand had bigger opportunities, so we decided to diversify and break through the boundaries of ‘just cranberry’,” Damiano explained.

Heading into pomegranate juice territory was a natural move, he explained. “It

CHART 1: OCEAN SPRAY SHELF-STABLE JUICE DRINK/BLEND SALES HISTORY 2002-2007

Retail sales US$ (millions)

Total US sales in supermarkets, drugstores and mass-merchandise outlets (excluding Wal-Mart).

Ocean Spray effected a dramatic turnaround in sales of its juice drinks and juice blends in 2006, a result of investing in more aggressive, health-focused marketing and adding new, lower-calorie products to their portfolio.

Soucre: Mintel GNPD

400Year ending 5 Jan, 2003

$490.2m

425

450

475

500

525

550

Year ending 4 Jan, 2004

$470.4m


$452.5m

Year ending 31 Dec, 2006

$479.3m


$534.8m

Northland owners Apple & Eve have thought outside the square and fielded a line of pomegranate-based juice blends.

MAY 200814



isn’t a mystery anymore thanks to what Pom Wonderful has accomplished with that fruit,” Damiano acknowledged, introducing an era in which pomegranate has become a mainstream juice and food and beverage flavour.

So Northland strayed from its cranberry moorings a bit by fielding a line of fortified, pomegranate-based juice blends including

those with blueberry juice and cherry juice. “We feel that Northland has a license

to do this, whereas other brands – such as Ocean Spray – shouldn’t or couldn’t do it because they’re purely synonymous with cranberry juice,” Damiano said. “Same thing with Welch’s and grape juice. But Northland has the ability to go beyond cranberry juice.”

Decas: Pomegranate juice also is playing a significant role in beyond-cranberries expansion by Decas Botanical Synergies, a five-year-old subsidiary of commodity supplier Decas Cranberries that is specifically focused on health-and-wellness product applications.

Decas has just introduced its first major consumer product under the Fruitaceuticals sub-brand: OmegaCrans and PomaCrans dried cranberries. Unlike Ocean Spray’s Craisins dried cranberries, however, the Fruitaceuticals products enjoy nutritional enhancement to boost their levels of omega-3s or antioxidants.

“We aren’t competing against Sunkist or Dole dried fruit either,” said Doug Klaiber, chief operating officer of the Massachusetts-based concern. “These are supercharged superfruit. We’re defining a unique new category. We’re a tweener between standard dried fruit and some kind of dietary supplement. This is good functional food.”

CHART 2: OCEAN SPRAY CRAISINS SALES HISTORY 2002-2007

Total US sales in supermarkets, drugstores and mass-merchandise outlets (excluding Wal-Mart).

When, in late 2006, Ocean Spray finally began advertising Craisins, sales, unsurprisingly, benefited hugely. A TV ad featuring the characters Henry and Justin, out in a cranberry bog persuading a little girl that Craisins are the sweetest way to consume cranberries worked wonders, and helped boost sales by more than 40% last year.

Soucre: IRI

Retail sales US$ (millions)

0Year ending 5 Jan, 2003

$28.6m


$30.6m


$34.4m


$41.6m


$59.8m

10

20

30

40

50

60

Klaiber noted that as popular as pomegranates and açaí berries and other superfruit have become, it’s been difficult for consumers to avail themselves of the nutritional benefits of these products in a variety of forms. About 75% of pomegranate and açaí applications, he said, are in beverages. One primary reason is that the raw fruits themselves are problematic for dried-fruit products. Pomegranate is a large and strangely structured fruit, and açaí berries are mostly stone. “We’ve got a unique delivery vehicle in Fruitaceuticals,” he said.

PomaCrans incorporate pomegranate juice for extra antioxidants beyond those provided by the dried cranberries per se. Thus the consumer is receiving “the equivalent antioxidants of two fresh pomegranates and a glass of cranberry juice cocktail in a 1oz serving of PomaCrans”, according to Klaiber. OmegaCrans rely on extra cranberry seed oil as a source of additional omega-3s, omega-6s and omega-9s.

Both products come in a 4oz pouch, each of which holds four servings, at 100 calories per serving of PomaCrans and 91 calories in each serving of OmegaCrans. They retail for a suggested $4.99 (€3.17) per pouch in the fast-growing network of natural foods outlets. “Everyone who’s tasted or seen this product,” Klaiber said, “recognises its value”.

Decas has just introduced its first major consumer

product under the Fruitaceuticals sub-brand:

OmegaCrans and PomaCrans dried cranberries.

The Fruitaceuticals products enjoy nutritional

enhancement to boost their levels of omega-3s or

antioxidants.

INTRODUCING

POMACRANSTM FRUITACEUTICALS

®—ANTIOXIDANT-RICH CRANBERRIES

plus PURE POMEGRANATE!

PomaCransTM are infused with premium whole pomegranate concentrate—with the antioxidant

power of punicalagins—for a great-tasting SuperFruit snack bursting with extra antioxidants.

INTRODUCING

OMEGACRANS® FRUITACEUTICALS

®—ANTIOXIDANT-RICH CRANBERRIES

plus HEALTHY OMEGAS!

OmegaCrans® are infused with cranberry seed oil—a harmoniously balanced source of Omega 3-6-9—

for a delicious SuperFruit snack bursting with both antioxidants and healthy Omegas!

MAY 2008 15


H E A LT H C L A I M C A S E S T U D Y

For a long time France has had a well-earned reputation for being among the most diffi cult place in Europe to get a health claim. So it was a signifi cant and unexpected event when, in early 2004, the country became the fi rst in the world to grant one for American cranberries, making them the fi rst fruit in the world able to make a specifi c health claim.

That approval was largely down to the efforts of Gunther Haesarts, CEO of Gika, a specialised distributor of fruit juice concentrates, fruit purées, fruit pectins and fruit fi bres. In his former life as the French distributor of cranberry products for Ocean Spray, the world’s biggest cranberry company, Haesarts faced a challenge – French people didn’t know what cranberries were and, unlike Americans, weren’t at all aware of their benefi ts in fi ghting urinary tract infections (UTIs). Yet the potential of the market was, and still is, huge, says Haesarts.

“Two million women in France have recurrent cystitis,” Haesarts told New Nutrition Business. “This means that they go to the doctor three to four times a year. Women are swallowing antibiotics which mostly don’t work properly anymore. For these women these recurrences are a real social disaster, a limitation on their quality of life and they need an effective solution.”

French regulators have always been “notorious for always saying ‘non’”, according to Haesart – and “non” was what the AFFSA, the French food safety authority that is responsible for scrutinising health claims, had already said to some 53 health claim petitions on products of all kinds. Haesarts learned that in fact, the AFFSA had done so with good reason: “They said that they wanted studies, serious scientifi c studies and they simply weren’t getting enough studies to support the claims that were being requested.”

With the help of Ocean Spray and a French supplement industry association, Haesarts created a dossier of all the available science on vaccinium macrocarpon, the specifi c variety of American cranberry which Ocean Spray supplies. This was all then translated

The French say ‘Oui!’ to cranberry’s health benefits

Four years ago France became the first country in the world to grant an approved – and very specific – health claim for a fruit. Gunther Haesarts, who masterminded the petition for that claim, explains what happened next to JULIAN MELLENTIN.

into French and the scientifi c dossier that was eventually submitted to the AFFSA, says Haesarts, “was 20cm thick”.

In April 2004, the health claim for cranberry (see Box) was approved for use on food, beverage and dietary supplement products containing Ocean Spray’s cranberry juice concentrate and 90MX cranberry juice powder.

“France being a country in which everything is forbidden except what is allowed, if the government approves a health claim that is really something big,” beams Haesarts. “The effect of the health claim triggered the development of a market that was dead before that.”

Sales of cranberry ingredients in France rocketed from just €0.5 million ($800 million) in 2003 to €12 million ($19 million) in 2007 and, barring the constraints of supply of cranberries, that growth trend should continue.

On the back of the claim approval, Ocean Spray launched its fl agship product, cranberry juice cocktail on the French market in January 2005. Haesarts was unable to comment on

its sales, but industry sources speculate that sales of Ocean Spray cranberry juice cocktail were around €10 million ($16 million) at retail prices in 2007. That’s an impressive milestone to reach in just two years, especially for a fruit and a health benefi t that was new and previously unknown to French consumers and a product that has a taste that many French people dislike. For a sign of where the Ocean Spray brand might go, comparable sales in the UK market, with the same population as France, were €60 million ($95 million) in 2007.

Gika hasn’t been resting on its laurels and in June 2007, as a result of a further petition, it secured the AFFSA’s agreement to extend the claim to all forms of cranberry ingredients that contain the effective dosage. Only sweetened, dried cranberries are excluded, because of their sugar content.

The health claim for cranberry is likely to be accepted at the EU level. The cranberry claim approved in France forms part of the dossier of potential health claims submitted by the French government to the European Food Safety Authority (EFSA) under the European

FOODS & BEVERAGES FEATURING CRANBERRY LAUNCHED IN FRANCE 2003-2007

The impact of the French food safety authority (AFFSA) approving a health claim for cranberry early in 2004 is shown clearly by the above bar chart. During the same period seven dietary supplements based on cranberry appeared on the French market, the first of which were launched by Pharmatoka, the company headed by the man who ensured the health claim became a reality: Gunther Haesarts.

02004

12

2005

20

2006

63

2007

77

20

40

60

80

No. of products

MAY 200816


H E A LT H C L A I M C A S E S T U D Y

Union’s new health claim regulatory process. If the claim is validated – as will most likely happen – it will become a Europe-wide claim, a development that would potentially have a massive effect on sales of cranberry ingredients.

Haesarts defi nes the French market for cranberry ingredients by reference only to sales of products which can meet the threshold for the health claim – only those containing 36mg of proanthocyanins (PACs) per dose or per serve. This is the necessary quantity of PACs to ensure that microbes cannot adhere to the wall of the urinary tract or the bladder.

“There is of course a wider market for products that don’t contain that level,” Haesarts explains, “and some products containing these lower dosage ingredients still try to use the health claim. So to protect the integrity of the market we police it.

“We screen every product and test it – which is an expensive process – and if they use the claim and have less than 36mg per dose we report them to the department for the repression of frauds. One guy started to blend grape PACs, which cost one-fi ftieth the price of cranberry ones, in a product that

was claiming to give the benefi t of cranberry PACs. By taking the lead and uncovering these kinds of things we protect the integrity of the market for the consumer.”

Haesarts is helping to drive the creation of a new market for effective products through his supplement company Pharmatoka, whose Urell brand of supplements is based on cranberry extract.

“People who want the 36mg benefi t can get it from a 300ml glass of cranberry juice, but those who don’t like its taste, and in France that is many people, for them we make the benefi t available in one small capsule.”

The active ingredient in the Urell capsule is the result of a patented extraction technology, owned by Pharmatoka, which is able to extract suffi cient PACs from cranberry concentrate to meet the high PAC content required by the French health claim.

“A capsule is very convenient for women. It is portable, they can keep it in their purse and take it to work and drink it with a glass of water.”

Urell is sold in France exclusively through pharmacies, with a network of 35 people putting it on the shelves.

“Getting it into the pharmacy is one thing, getting it out is quite another,” observes Haesarts. “To create awareness and sales we have a team of 25 people who call on 15,000 doctors to promote the product and convince them of the science. The presence of the approved health claim is very helpful in this. The doctors recommend it to women with recurrent cystitis. If a woman is satisfi ed she tells her girlfriends, they try it, they tell friends and family and so slowly awareness grows in the market.”

Launched in 2004, Urell is already distributed in fi ve countries outside France, and will be in 15 markets by the end of 2008.

“We have a branch offi ce in Japan, where we think there is huge potential for really effi cient cranberry products,” Haesarts told NNB.

THE CRANBERRY HEALTH CLAIM IN FRANCE

The claim approved by the AFFSA is very specifi c. The agency ruled that the data submitted supported the health claim only for consumption of the cranberry vaccinium macrocarpon – the American variety grown by Ocean Spray – and all other varieties of cranberry, such as the European species vaccinium oxycoccus and vaccinium vitis-idaea, are explicitly excluded from using the claim.

The agency was also very specifi c that the effective cranberry “dose” is one delivering 36mg of measured proanthocyanidins (PACs). One reason for the specifi city is that the PACs found in the vaccinium macrocarpon cranberry are said to be specifi c and unique to that berry and are not found in other regularly consumed fruits. These PACs are polyphenols with a specifi c action mechanism – only discovered in 1998 – which blocks E.coli bacteria’s ability to adhere. The AFFSA-approved wording for the claim reads:

Helps to reduce the adhesion of certain E.coli bacteria on the urinary tract walls.

“There are many cranberry products on the US market but typically a product contains just 2mg-6mg of PACs. It’s a market of worthless placebos. Here, too, we believe there is huge potential for effective products. We are launching there this year under the Allura brand.”

Pharmatoka’s commitment to the science of cranberry is underscored by the fact that the company is itself funding two further clinical studies this year to add to the dossier of evidence for cranberry’s ability to fi ght UTIs.

Haesarts believes that the current focus on “high in antioxidants” that characterises the superfruit market will have to change. “Many fruits can quote their ORAC value and claim that they are high in antioxidants,” he observes, “but it’s not at all clear that antioxidants are of themselves effective in the way that some people claim.

“Too much of what is claimed for antioxidants relates only to in vitro studies. Where are the clinicals? To be credible superfruits will have to do as cranberry has done and establish that they have a specifi c benefi t and that there is signifi cant clinical science to support the benefi t.”

Haesarts is crystal clear about his company’s mission:

“Our intention is to build a huge worldwide market for effective cranberry products. We can help the millions of women with UTIs. We sell the anti-adhesion power of the cranberry. People are overfed with antibiotics and if people can have something that helps prevent the recurrence of infections, in a natural way, that is reducing the need for antibiotics and making a better quality of life.”

All Haesarts’ trailblazing work familiarising the French with cranberry is really starting to pay dividends. “It’s now six years of non-stop work – including the weekends – but it’s fun and interesting,” he says. “I now know the world of cranberry by heart. Whatever good things we can squeeze out of that amazing little berry, we will.”

Based on a patented extraction technology which delivers the level of proanthocyanins (PACs) which science says is effective in fighting urinary tract infections, Urell is marketed in 15 countries, including France and Japan.

MAY 2008 17


B E AU T Y C A S E S T U D Y

Inside Out Beauty was founded with a £50,000 ($99,000/€62,000) investment by Kate Cazenove and Kate Shapland and began trading in May 2007. Cazenove, whose background is in business magazine publishing, and Shapland, who is the beauty editor at UK newspaper The Daily Telegraph, are relative novices in the food industry. They were friends through their husbands, who worked together, and eventually settled on going into business with one another. Shapland’s expert eye had spotted that “holistic beauty” – or beauty from the inside – was enjoying an upswing in popularity and believed it was time to tap into this.

“Beauty was getting more holistic, but holistic in a glamorous way,” Shapland told New Nutrition Business. “It was a much more sexy approach to beauty. Women understand buzz words like antioxidants and anti-ageing and all that stuff, and we felt that rather than offer them something completely unsexy like a supplement we could give them a drink that’s delicious and has the beauty benefits within it. The idea was to develop a product that was a joy, a good experience for women, from the beginning to the end.”

Adds Cazenove: “We wanted it to be fun. We had a look around and there were lots of other functional products out there. But we felt most of these products were designed by men. They were very cold, very functional. We wanted to glam it up. Ours is not a clinical trial drink.”

Inside Out Beauty currently has listings in outlets owned by UK supermarket Waitrose and sandwich chain Eat. Sip is also on sale in Spain and Portugal and is about to get a roll-out in France (in Monoprix supermarkets) and Ireland (in Superquinn), and is attracting interest in the US, the Far East and South Africa.

Inside Out Beauty creates ‘exclusivity for everyone’

There are numerous flavoured waters on the UK market, including a handful that claim to be good for your skin (see related story on page 5). None however, has been marketed with the searing insight displayed by Inside Out Beauty, a new startup that has tapped into both what modern women are thinking and worrying about – in short, how they look – and where they go to get their information and influences. Inside Out Beauty have managed to process all of this into a successful niche product that women want to buy. RICHARD CLARKE reports.

Roll-out was gradual at first, but quickly gathered pace. Sip went on sale first in the food halls of upmarket London stores Selfridges and Harvey Nichols, and in the Kensington branch of US retailer Whole Foods Market. Then it moved into Daylesford Organic, Fresh and Wild and Planet Organic. Next it was launched into Whistlestop (a chain of convenience stores based in rail stations), Waitrose and Eat.

The company won’t divulge retail sales yet – and given its current significant exposure to the grab-and-go foodservice market, meaningful independent data would be hard to come by for this young brand. However, the company says retail sales are “doing very nicely” and will go into seven figures this year.

“Once we knew we were liked, we felt we could move into the mainstream,” Cazenove told NNB. “Eat was the pivotal moment in our life because of the faith we got from them. They trialled us and it worked so well that they put us in all 84 of their cafés. For our young age that’s really amazing. It was then we realised Sip wasn’t a ‘ladies who lunch’ kind of drink; it really did appeal to an awful lot of people. It showed we had got the taste and look right. We had created a product that provided ‘exclusivity for everyone’.”

Cazenove, 41, paints a vivid picture of Sip’s target consumers: “Think of the scenario of the woman coming out of the gym, saying to herself, ‘My body is my shrine and I drink a bottle of Sip because that’s going to finish off my beauty regime’. You’ve also got the mum, hungover, forgot to take the make-up off last night, driving the kids to school and she’s got a bottle of Sip in the car and she says, ‘You know what, if all else fails I’m going to do this today and feel good about me’.”

Shapland adds, simply: “Kate and I are our own target market, really.”

“We all know we should be drinking more water and yet we still go off and grab the Diet Coke or the coffee, because we find water boring,” explains Cazenove. “We wanted to offer people something that was as pure as water but had a bit of a taste, too, so was more interesting. That’s where Sip has really filled a gap.”

MAY 200818


B E AU T Y C A S E S T U D Y

THE INSIDE WORD ON SIP

Sip currently comes in four flavours: Lemongrass & Ginger, Mango, Elderflower and Ruby Orange. A 500ml bottle retails for £1.29 ($2.55/€1.61) in Waitrose (or 26p/100ml), compared with £2.49 ($4.93/€3.10) for a 4 x 500ml multipack of Volvic flavoured water bottle of Evian (or 12p/100ml), meaning it commands a chunky premium.

In terms of ingredients, Sip flavoured waters contain vitamin C, botanical extracts, white tea tincture and selenium. The botanical extracts vary according to flavour variant, but include lime flower, heather, marigold, sweet violet, rose petal, red clover, nettle and linden blossom. Shapland says she and Cazenove took expert advice from a leading herbalist before deciding which ingredients to include.

Notwithstanding what’s in the bottle, Inside Out Beauty says the way the product looks and is marketed is the most important

factor. It’s the antithesis of, say, Yakult – which is still sold in the mundane, functional little bottle that has barely changed in more than 70 years.

“Our bottle is beautiful,” purrs Cazenove. “Out of all our start-up money we spent more on design than on anything else. It’s because the image is everything. Even if it tasted great, we wanted to make sure those bottles looked absolutely stunning.”

SPREADING THE WORD ABOUT SIP

Marketing for Sip has been innovative, drawing on Shapland’s excellent connections in the world of fashion and beauty. She talks about “seeding Sip into the right environments”, and making sure celebrities are seen in the same place as the product. “We managed to get backstage into fashion shows and beauty events, music events too. It was about getting into the opinion-forming environment, where the people who influence were. We didn’t shove it in front of celebrities but we did get it in situations where they were going to be.”

“Kate managed to get us in every single newspaper and women’s magazine,” says Cazenove. “And when a magazine like Grazia [a big seller in the UK] says, here’s a bloody fantastic new drink out, you’ve got 500,000 people reading that – and what Grazia says goes.”

The world of fashion and beauty very much influenced the way Inside Out Beauty designed its website too. “A lot of our inspiration has come from editorial and the way women’s pages are presented in magazines and newspapers,” Cazenove told NNB. Our website is very fast-paced – just like the pages of a fashion magazine.”

Inside Out Beauty also uses more traditional means of marketing, primarily sampling, which Shapland and Cazenove

do themselves. They have no plans to spend money on advertising. “There’s no point in advertising unless you’ve got millions,” says Shapland. “You can be much more clever, and we feel that with our contacts, our background and our product we can get into all the areas the big advertisers want to get into but pay for.”

“Look at the millions of circulation that we’ve achieved from PR,” adds Cazenove. “You’d be hard-pushed to get that kind of coverage from adverts.”

WATER THE ‘SIP’ OF THE ICEBERG

In terms of NPD, Inside Out Beauty has just launched LicketySip, an ice lolly also containing “skin-friendly” botanical extracts. It is currently being sold in Harvey Nichols and Eat. Like Sip water LicketySip iced lollies are 100% natural – they have no preservatives, artificial flavours, sweeteners or colours in them. LicketySips “evoke traditional lollies” and come in three flavours: Mango, Lemon and Blackcurrant.

The company has plans has for more NPD on the drawing board but is keeping this under wraps for now. It does intend, however, to add another twist to Sip water with brand crossovers – most likely the production of a limited edition variant in conjunction with a top women’s magazine, perhaps Grazia.

Cazenove and Shapland have just sold a stake in their company to a private equity investor to allow them to take the business up to the next level and meet the ever-increasing demand for its products. But they are determined not to ease off on the hands-on approach they take to every aspect of the business, which they believe is underpinning their success. “We’re not a corporate; it’s just Kate and I,” says Cazenove. “It comes from us, and people really like that.”

SIP LABEL MESSAGES

On the front of the bottle, sip is written in large letters which is followed by (depending on flavour):

• Lemongrass & Ginger – your way to better, beautiful skin

• Mango – your way to gorgeous, glowing skin

• Elderflower – your way to younger, radiant skin

• Ruby Orange – your way to fresher, brighter skin

Text on the back of the bottle reads:

We all know water works wonders on your skin. But with Sip it works a little harder. Sip is the only still water with a natural beautifying complex specially blended from vitamin C – renowned for its skin-preserving benefits, antioxidants – which combat skin-ageing free radicals – and skin-friendly botanicals all to nurture your complexion from within.

In keeping with the Sip brand’s holistic beauty ethos, LicketySip iced lollies also contain skin-friendly ingredients, soothing rose petal extract and the antioxidants vitamin C and selenium.

MAY 2008 19


M A R K E T I N G C A S E S T U D Y

In the global business of food and health, XanGo is undoubtedly one of the brightest stars. As we outlined in the October 2007 New Nutrition Business, the company’s strategy exemplifies Mellentin’s 10 Habits of Highly Effective Nutrition Companies. Now XanGo is readying itself for the next big step on its journey to becoming a $1-billion (€640 million) company.

Later this year, XanGo will introduce a new skin care system featuring xanthones (the powerful antioxidants of which mangosteen has the highest concentration in nature). Called Glimpse Intuitive Skin Care, the new cosmetics range “responds to your specific skin care needs with an intelligent xanthone formulation that puts the green power of the earth at your service”, according to the XanGo Launch website (www.XangoLaunch2008.com).

“The official brand launch will be at our annual convention, to be held in Salt Lake City on November 5-8,” Bob Freeze, XanGo’s vice president of public relations, told NNB.

“When it launches, Glimpse will be a simple but effective collection of a few unisex

A Glimpse of the future from XanGo

In less than six years Utah-based XanGo, the direct marketing company that created the premium mangosteen juice category, has enlisted nearly one million distributors in more than 20 countries. In order to meet its stated goal of becoming the fastest nutritional products network marketing company in history to reach annual sales of $1 billion (€640 million), XanGo is extending both its product portfolio and its marketing tools at a rate of knots. PAUL VINCENT reports.

products. What makes this brand so exciting is the amount of detail that has gone into making it a premium and unique personal care line. Featuring [XanGo’s] proprietary BioActive X3 Complex, these products present specific scientific formulations based on xanthones from the mangosteen pericarp, by teams led by top clinicians from Japan.”

The BioActive X3 Complex is the result of a “cutting-edge scientific exploration” that is

“advancing skin care nutrition technology”, explains Freeze.

The extension into the cosmetic realm is a logical fi t for a company that has a lifestyle-oriented and “community” approach to nutrition. Glimpse and XanGo juice are key factors, the company says, in a “natural nutritional regimen to be launched by XanGo”, presumably simultaneously with the skin care range.

“XanGo is excited to be expanding the mangosteen category we created with this premium brand,” says Freeze. “The launch of Glimpse marks a natural evolution for the

XanGo continues to expand all areas of its business at speed: XanGo.TV, which broadcasts real-life stories from XanGo distributors and consumers worldwide was introduced last October; the new 1oz/30ml, sample-sized XanGo Single was launched in January; and the Glimpse Intuitive Skin Care range will be launched in November this year.

“The launch of Glimpse

marks a natural evolution

for the category.”

MAY 200820


in pilot markets in Germany, Belgium and Austria.

XanGo describes Xalo as being supportive of “digestive health and cleansing, revitalization and regeneration of healthy skin; improvement in proper absorption of vital nutrients; and a boost of natural energy levels”. Xalo sells in Europe at about the same price point as the original XanGo juice ($37.50/€ 23.90 per 750ml).

“Our whole introduction in Europe is an

introduction of our brand there, and we want to be strategic,” Digles told NNB at launch. “[It] really is about expanding our category leadership worldwide and giving an expanded audience access to mangosteen.”

One year on the company has “experienced significant growth in the EU”, according to Freeze, and Xalo, he says, has played a key role in that expansion.

“The EU market has an affinity for aloe vera, and this product taps into that existing customer sentiment … Its taste is exquisite, and this helps set apart Xalo from several other beverages in the market.”

SUMMARY

Significantly, the speed of XanGo’s international expansion continues to be matched by its rate of expansion in its home market.

“XanGo continues to see strong growth in the US, as well as in international markets,” Freeze told NNB. “In 2007, we saw strong upward trends in Germany and Malaysia. The success of these two regional hubs spawned expansion into several additional EU and Asian markets. Our latest is Taiwan, in which we just opened an office on March 29, 2008. XanGo now operates in 23 countries, with plans to expand into other new markets in the EU and Asia within the next 12-15 months.”

By continuing to drive innovation in all aspects of its business, XanGo isn’t just steadily pursuing its goal of achieving a $1-billion annual turnover – it’s positively chasing it down.

M A R K E T I N G C A S E S T U D Y

category, as the rind of the mangosteen has a deep and storied history of use in traditional Southeast Asian cultures to assist with all types of skin ailments. We are truly building upon the glimpse into the future that Joe Morton [XanGo’s president of international development and distributor relations] had when he first tasted the mangosteen and envisioned the impact this small fruit could have on the world.”

Between now and the November launch XanGo we will be initiating a VIP programme for their top distributors that will allow them to handle and sample the product in advance of our convention. “This programme will begin at our regional meeting in Orlando, May 30 and 31,” adds Freeze.

BROADCASTING THE XANGO LIFESTYLE TO THE WORLD

Education of, and dialogue with, consumers have been central to XanGo’s rapid global expansion. Late last year XanGo’s already formidable marketing arsenal was expanded to include a brand-centric video sharing website, www.XanGo.TV, which broadcasts real-life stories, insights and experiences from XanGo distributors and consumers worldwide.

“XanGo.TV is designed to achieve an elite level of brand intimacy. XanGo is a lifestyle brand. Our business is built on distributors and consumers sharing their personal experiences with XanGo and our nutritional products. XanGo.TV offers a visually captivating platform for those narratives and gives viewers a behind-the-scenes look into the company,” said XanGo’s chief marketing pfficer John Digles at launch.

By March XanGo.TV had already logged a million hits, with distributors and consumers from around the world producing and sharing XanGo.TV videos about their experiences with XanGo juice. The site is also host to a library of videos and podcasts from the first five years of XanGo’s history.

“XanGo.TV provides an unprecedented view into XanGo’s direct selling business opportunity. Viewers can see the personalities and personal service dynamics at work as distributors show how they build their own XanGo businesses,” added Digles.

In February the company hosted the inaugural XanGo.TV

Awards Show, recognising the best video entries from distributors around the world. More than 200 distributors from the 20-plus countries in which XanGo is distributed filmed their XanGo stories and inspiration. The 10 best were honoured during a 20-minute online broadcast event hosted by Digles.

CONTINUAL PACKAGING INNOVATION

One of the 10 habits of highly effective nutrition companies is innovation in packaging. XanGo identified, crucially, that it had to make its package look unlike any other. The juice is packaged in a long and curvaceous bottle more like a wine bottle in appearance than a conventional gable-top juice carton.

In January, XanGo took its packaging innovation further by introducing the XanGo Single, a 1oz/30ml miniature version of the original XanGo bottle.

“The XanGo Single was developed in response to distributor demand for a small sample-size version of XanGo juice that is ideal for travelling and networking,” Freeze told NNB.

“Because the great flavour of XanGo Juice is our distributors’ greatest sales tool, we are

providing them with sample packs that they can provide to their potential customers.

Also, these packs meet the Federal Aviation Administration’s requirements that liquids, gels

and aerosols must be in 3oz or smaller containers for airplane travel.”

The XanGo Single comes in a small, plastic packet that is in the shape of the XanGo bottle. “It is sold by the case, each case containing three boxes of 30 one-ounce samples,” explains Freeze, adding that distributors pay $100 (€63.70) per case.

THE XALO EFFECT

In the May 2007 New Nutrition Business we reported the launch of Xalo, a new

mangsoteen-based juice that includes aloe, grape seed and green tea which was introduced last summer

The EU-exclusive Xalo has played a key role in XanGo’s expansion in that region.

“Its taste is exquisite, and

this helps set apart Xalo.”

MAY 2008 21


with elevated blood pressure who consumed a 100ml dairy beverage containing the same GABA content of Pretio daily for four weeks.

The company’s Pretio marketing campaign succeeded in boosting consumer awareness to the extent that the ingredient market doubled in size between 2004 and 2005 to be worth JPY1.25 billion ($12.2 million/€7.8 million), according to New Nutrition Business partners Global Nutrition Group (GNG).

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

GABA: From big in Japan to bigger in the West?

Discovered in 1950, gamma-aminobutyric acid (GABA) is a neurotransmitter that regulates brain and nerve cell activity and has been called the “brain’s natural calming agent”. The GABA market emerged in Japan after the amino acid – originally sourced from rice germ – was commercialised in 1990. In 2001 it was listed as a food ingredient in Japan and since then more than 30 GABA-fortifi ed products spanning seven categories have been launched in Asia. Now the way is clear for the fi rst such product to be launched in the US, suggesting the beginning of a new chapter in the history of functional foods. PAUL VINCENT reports.

Despite being approved as a food ingredient in Japan since 2001, consumer recognition of GABA was very low until 2004, when Yakult Honsha launched a blood pressure-lowering dairy drink containing the amino acid called Pretio. In 2007 there was a shift away from GABA featuring a key additive in foods and beverages and toward its promotion as a naturally present functional ingredient in rice-based products.

Source: GNG

CHART 1: JAPAN’S GABA FOODS & BEVERAGES MARKET

0

$14.7m/€9.4m

2004 2005 2006 2007

Retail sales (JPY billions)

2

4

6

8

10

12

14

$98.2m/€62.4m

$127.6m/€81.1m

$113.9m/€72.3m

GABA was discovered in the same decade as Yakult Honsha was established and 50 years later that company’s flagship product – Yakult, the original little bottle – earns worldwide sales of more than $1.5 billion (€960 million).

In the 1990s Yakult was the catalyst for Danone’s probiotic dairy revolution which redefined the industry in Europe and is now doing the same in the US. As a functional ingredient, GABA – which is only now about to cross from Japan into the West – may seem unlikely to follow a similar trajectory to probiotic bacteria but it pays to bear in mind that nobody could have predicted the extent to which probiotic dairy products would come to influence the strategies of the world’s biggest food companies.

GABA IN JAPAN

Despite being approved as a food ingredient in Japan since 2001, consumer recognition of GABA was very low until 2004. In that year Yakult Honsha launched a blood pressure-lowering dairy drink containing the amino acid called Pretio and supported it with a heavy marketing spend.

Joint research by the company with a team led by Professor Katsuo Kamata of Hoshi University confi rmed that GABA lowered blood pressure by inhibiting noradrenalin secretion and the constriction of intestinal arterioles. The resulting patented process involves L. casei Shirota – the bacteria strain used in Yakult – breaking up milk protein to produce glutamic acid, an amino-acid, which is then converted into GABA by another bacteria strain, Lactococcus lactis. Each 100ml carton of Pretio contains 10mg of GABA and 10 billion L. casei Shirota.

Three clinical studies have since established its blood pressure-lowering effect in people

Blood pressure-lowering and stress relief are potentially promising health benefi t areas in Japan, where the idea of the country being a “Stress Society” has been gaining ground in recent years. Stress affl icts 50% of the population, according to statistics from Japan’s Health, Labor and Welfare Ministry. Similarly, the National Nutrition Survey in 2004 reported around 50% of people over 40 have high blood pressure or mild hypertension. It’s estimated that there are 7.8 million Japanese with high blood pressure and more than 30 million with potential hypertensive problems.

In this sort of climate, and with a

MAY 200822


recognised its popularity and included it in its list of the 30 hit products of 2005, and the product was awarded the fi rst prize in the Health and Life category of the “Trend Contest” conducted by Dime magazine.

Ezaki Glico then launched GABA Cocoa – containing 42mg of GABA per cup – in September 2006. One pack makes 5 cups of cocoa and comes in a resealable pouch.

In order to maintain the brand’s freshness in the mind of the notoriously fi ckle Japanese consumer, Ezaki Glico has continued to extend it at a rapid rate. The range now includes a 200ml ready-to-drink iced coffee that contains 28mg of GABA; a Super Bitter variant on the original Mental Balance Chocolate GABA which is 72% cacao; and, most recently, a convenient chocolate fi nger-type format of Mental Balance Chocolate GABA.

Similar products from Ezaki Glico’s main rivals Lotte and Bourbon appeared hard on Mental Balance Chocolate GABA’s heels.

Due largely to the innovations of just two companies, Yakult Honsha and Ezaki Glico, the size of Japan’s market for GABA-fortified foods and beverages reached JPY11.6 billion ($113.9 million/€72.3 million) in 2007 (see Chart 1). Unsurprisingly the two dominant brands are Yakult’s Pretio, with 35.9% of sales, and Ezaki Glico’s Mental Health Chocolate GABA, with 28.4%, according to

GNG. In 2006 Coca-Cola

Nippon joined the GABA party, launching its own a GABA-fortified iced coffee under its well-known Georgia brand.


In order to maintain its GABA brand’s freshness in the mind of the notoriously fi ckle Japanese consumer, Ezaki Glico has extended it at a rapid rate since 2005. The range now includes cocoa, iced coffee and dark chocolate variants.

signifi cant marketing investment behind it, Pretio performed well in its fi rst year, hitting JPY4.9 billion ($47.8 million/€30.4 million) in sales in 2005. In 2007 sales surged ahead of Calpis’ non-GABA-based blood pressure-lowering drink, Ameal S, which had created the category in 1997. Pretio is today possibly the biggest brand of its kind in the world.

EZAKI GLICO OPENS UP THE GABA FRONTIER

A year after Yakult Honsha launched Pretio, the Japanese confectionery giant Ezaki Glico successfully stimulated the demand for both cocoa and products containing GABA in Japan with its line of GABA-fortifi ed chocolate products which are positioned on a stress-relieving platform.

Launched in May 2005, Mental Balance Chocolate GABA was in nationwide distribution by October of the same year, sporting the slogan “For you who fi ght in the stressful society”.

Whereas normal chocolate contains 9mg of GABA per 100g, Mental Balance Chocolate GABA contains 280mg per 100g, or 25 times as much. The product contains the proprietary high-purity GABA ingredient manufactured by Pharma Foods International, the leading GABA supplier in

Japan.Mental Balance Chocolate GABA’s effi cacy

in the area of relaxation has been confi rmed by the research co-conducted with University of Shizuoka, the results of which were announced at the meeting of the Japanese Society for Food Science and Technology in 2006.

In its fi rst year on the market Mental Balance Chocolate GABA reached JPY4 billion ($39 million/€24.8 million) in retail sales, according to GNG, double initial estimates. The leading magazine Nikkei Trendy

*Such products have only been launched in Japan, Taiwan and South Korea. While worldwide launches dipped slightly in 2007, now that GABA has obtained GRAS status in the US, expect a spate of launches in the West over the next two or three years.

Source: Mintel GNPD

CHART 2: GABA-FORTIFIED FOOD & BEVERAGE LAUNCHES 2004-2007*

0

1

2004

2

2005

14

2006

12

2007

No. of products

2

4

6

8

10

12

14

MAY 2008 23


Later in the same month Jones Soda, the marketing-leading premium soda company, announced that it had entered into an agreement with PFI that granted it exclusive rights to use Pharma GABA in beverage

applications in the US.“We started communicating in March last

year, when Jones Soda showed big interest in the concept of Pharma GABA,” Jang told NNB.

While Jones Soda GABA, which was supposed to have been on the market late last year, is still in limbo, PFI sees a bright

In the same year Japan Tobacco (JT) launched a soft drink called Gaba Cool Water, which was developed in co-operation with Osaka City University, in its home market. Containing 50mg of GABA, the product is promoted with the slogan “Cools you from the brain downwards”.

Coca-Cola Nippon again introduced its own equivalent product a year later, under the entirely new brand Aquarius. Each 500ml bottle of Sharp Charge contains 50mg of GABA and 60 calories. The product is targeted at business people in their 30s and 40s who “want to maintain a sharp and agile body and mind”.

JAPAN’S GABA INGREDIENT GIANT

Pharma Foods International (PFI) is one of the leading companies in Japan focused on the research and development of functional food ingredients. The company’s Pharma GABA ingredient is produced from glutamic acid fermented by a lactic acid bacterium. Pharma GABA is a 20% pure, water soluble powder that is said to assist healing, alleviate stress and enhance sleep when taken before going to bed. Significantly, functional foods and drinks today account for 90% of the demand for GABA in Japan.

“Currently we have about a 50% share of the GABA ingredient market in Japan,” Y. J. Jang, a Pharma Foods sales offi cer told NNB.

PFI has played a key role in increasing consumer awareness of GABA in its home market – it co-developed the hugely successful Mental Balance Chocolate GABA with Ezaki Glico.

“In Japan, about 80% of people know about GABA. Stress is everywhere in our society and those feeling stressed range from children to adults,” says Jang. “We consider that the GABA market, which can ease this social stress, has huge potential.”

In June last year Pharma GABA obtained GRAS (generally recognised as safe) status from the US Food & Drug Administration (FDA), paving the way for the ingredient to be used in foods and beverages in America. Pharma GABA is already approved in China and Taiwan, and PFI is looking to expand into other Asian countries.


Between July 2001 and April 2008 the Mintel Global New Products Database (GNPD) records 51 launches of products featuring GABA in their list of ingredients. Thirty-three were in Japan, 10 in the US, three in Taiwan, two in South Korea and one in each of France, the Czech Republic and South Africa. The amino acid has so far appeared in products across nine GNPD categories, with Healthcare (which includes dietary supplements) and Confectionery having seen the most launches.

Source: Mintel GNPD

CHART 3: GABA-CONTAINING PRODUCTS LAUNCHED BETWEEN 2001 & 2008 BY CATEGORY

0

Confec

tione

ry

No. of products

2

4

6

8

10

12

14

Healthc

are

Non-alc

oholic

bevera

ges Skinca

re

Bakery

Breakfa

st

cerea

ls Dairy

Sauc

es &

season

ings Sou

p

“Chocolate is accepted in

the current GRAS status and we

are currently working with

a chocolate company.”

future for GABA in the US, across a range of categories.

“We’re acutely aware that the product forms and selling methods should be matched to each country and culture. In the US we fi rst need to fulfi ll the regulation status, and we think it will take about two or three years to launch new products.”

The company also plans to target its Pharma GABA ingredient at US cereal manufacturers,” according to Jang.

PFI clearly sees GABA-enriched chocolate proving as popular in the US as it has done in Japan: “Chocolate is accepted in the current GRAS status and we are currently working with a chocolate company.” Jang declined to be more specifi c at this stage.

A SHIFT TOWARDS FOODS NATURALLY RICH IN GABA?

GABA fi rst appeared as a named (front of pack) ingredient as long ago as 1998, when Fuken Chagyo introduced Gabaron Powdered Tea, a powdered green tea rich in GABA, claimed to reduce blood pressure due

MAY 200824


The effect of orally administered GABA on relaxation and immunity during stress has been investigated in humans. Two studies were conducted in 2006 by the R&D department of Pharma Foods International. The fi rst evaluated the effect of GABA intake on the brain waves of 13 subjects. Electroencephalograms (EEGs) were obtained from each after they (1) drank pure water; (2) drank water fortifi ed with GABA; and (3) drank water fortifi ed with L-theanine (an amino acid found naturally only in green, black and oolong teas that promotes a relaxed, yet alert, mental state – see the August 2007 New Nutrition Business for full coverage).

An hour after intake, the GABA-fortifi ed water was associated with signifi cantly increased alpha waves and decreased beta waves compared to the other test liquids. The authors concluded from their results that GABA not only induces relaxation but also reduces anxiety.

The second study investigated the relaxant and anxiolytic effects of GABA intake in stressed subjects. Eight acrophobic (height-fearing) subjects were divided into two groups: one, the placebo group, was given 50ml of water and the other was given 50ml of water fortifi ed with 500mg of Pharma GABA.

All subjects were then asked to cross a suspension bridge in the Nara prefecture of Japan (see picture below). Immunoglobulin A (IgA) levels in their saliva were monitored during the bridge crossing. Several studies in humans have established a correlation between stress and below-normal levels of secretory IgA in saliva.

The placebo group showed a marked decrease in their IgA levels, while the GABA group showed signifi cant increases. Researchers concluded that GABA could work effectively as a natural relaxant and its effects could be seen within one hour of its administration to induce relaxation and diminish anxiety.

“Relaxation and immunity enhancement effects of gamma-aminobutyric acid (GABA) administration in humans”, published in Biofactors 2006; 26(3):201-8.


GABA IN SKINCARE PRODUCTS

It has long been recognised that nerve and muscle movements play a role in the formation of wrinkles. Greater understanding of GABA’s relaxation-inducing effect on the brain has seen the amino acid appear in skincare products in recent years, where it is usually described as a natural muscle relaxant and is claimed to smooth or reduce fi ne lines. GABA has thus become one of a relatively small number of functional ingredients that appears in both food and non-food products.

According to Mintel GNPD Cosmetic Research, one of the fi rst skincare products to capitalise on GABA was Dr Brandt Crease Release Rapid Wrinkle Reducer, which appeared on the US market in 2004. It is formulated with a GABA complex that “works synergistically with the complexion to immediately smooth fi ne lines, wrinkles, crow’s feet, and signs of stress with remarkable effects especially around the eyes and mouth, and between the brows”. The product is not cheap, however: it retails at $150 (€95) on Amazon.com.

Since then, GABA has appeared in other skincare products in both mass-market and selective distribution. In many cases products claim to offer quick “wrinkle-free” results. Others position themselves as substitutes for cosmetic injections.

The Mintel GNPD records that eight skincare or cosmetic products featuring GABA were launched worldwide in 2005 and more than twice as many (18) in 2006. Nineteen such products were introduced in 2007.

CLINICAL STUDIES ON GABA

to its synergism with other ingredients of tea.Early last year Fancl, a leading Japanese

cosmetic and healthfood company launched Slim Smile freeze-dried soup, aimed at young, health- and weight-conscious women. The soups are formulated with over a third of the RDA of vitamins, minerals and dietary fi bre, and use germinated, unpolished rice that is naturally rich in GABA.

Nippon Meat Packers simultaneously introduced a microwave lunchbox meal targeting health-conscious consumers, featuring tofu, vegetables, and fi bre-fortifi ed rice that also boasts a high natural GABA content.

“It appears that the emphasis on GABA as a key additive may be waning, and that it is now as likely to be promoted as a ‘natural’ functional ingredient to support physical and emotional wellbeing,” observed Mintel’s GNPD of these launches. This may well be true of the maturing Japanese market, but it seems certain that GABA will soon become the buzz added functional ingredient in the West.

Eight acrophobic (height-fearing) subjects had the effect of GABA consumption on their stress levels monitored as they crossed this suspension bridge in Nara, Japan.

MAY 2008 25


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

Topco’s new food ranking system, called the Overall Nutritional Quality Index (ONQI), uses a numeric score to rate any food item or recipe, “enabling consumers to make choices based on an unbiased assessment of a food’s nutritional value”, according to the company. The ONQI was developed over a two-year period by 12 health and nutrition scientists from throughout North America, under the leadership of Dr David Katz, director of the Yale-Griffin Hospital Research Center.

“Dramatic improvements in health are possible with changes in diet, and the way to a better diet is through one informed choice at a time,” stated Dr Katz in a statement accompany the launch. “The ONQI provides a powerful tool – perhaps the most powerful tool – designed for that very job. The science behind the ONQI is very sophisticated, yet the tool is simple to use.”

A food or recipe’s ONQI is computed using a “complex algorithm” that incorporates some 30 nutrient factors, and is given a score from 1 to 100. The ONQI will also be available to consumers through food manufacturers, restaurants and online.

According to Topco, whose members represent more than $110 billion (€70 billion) in consumer sales and operate thousands of stores across the country – feedback from consumer testing of the system confirmed that the simplicity of a single score helped to eliminate the confusion often associated with product nutrition labels and marketing claims. By comparing foods within or across food categories, the ONQI is claimed to answer the question: “Which, on average is better for me?”

There are few Americans who can decode Nutrition Facts panels and Ingredients lists as efficiently as Kimberly Lord Stewart. This time last year New Nutrition Business reviewed her seminal book Eating Between the Lines: The Supermarket Shopper’s Guide to the Truth Behind Food Labels, calling it “an

The pluses & minuses of food-ranking systems

At the end of last year Topco Associates – a $7.3 billion (€4.6 billion), privately held company that provides services for its member-owners which include supermarket retailers, wholesalers, and foodservice companies across the US – unveiled a new at-a-glance system for rating nutritional quality. The new food-ranking system will begin appearing in thousands of American retail grocery stores in the second half of 2008. But will the new system, “born of pure science” really help consumers solve the label labyrinth? PAUL VINCENT reports.

indispensable reference guide for anyone wishing to know more about what exactly they are putting into their grocery carts and ultimately into their bodies”. Eating Between the Lines provides American shoppers with a torch to guide them through the murky maze of “food label speak” – the confusion which the implementation of the ONQI is meant to clear up. But Stewart is not convinced the new system is the panacea it is being billed as by Topco.

“I’m not sure how I feel about the ONQI grading system,” she told NNB. “There is value in helping the consumer understand the nuances of health properties for various packaged food products but the ONQI system ranks an orange above an apple, and barley above whole oats.

“Within the whole foods categories, this level of scrutiny via complicated algorithms may simply add to consumer confusion. Most consumers can barely make sense of metric values, much less a system that pits an apple against an orange.”

Stewart is a strong proponent of food-ranking systems – she’s just not sure the ONQI is the best candidate for the job.

Considering how much adding, subtracting and multiplying is currently required from the average consumer to determine if a product that is marketed as “healthy” actually is, it’s not surprising that different food-ranking systems have evolved in recent years.

Two years ago Hannaford Brothers, a New England supermarket chain of 150 stores, developed a system called Guiding Stars that uses shelf tags to rate the nutritional value of nearly all the food and drinks in its stores from zero to three stars. According to the company, one star indicates a “good” nutritional value, two stars is “better” and three stars is “best”.

(Interestingly of the 27,000 products that Hannaford’s formula was applied to, 77% received no stars, including many, if

not most, of the processed foods that are marketed as being good for the consumer.)

“Personally, I think the three-star programme is very doable for most consumers,” Stewart told NNB.

Her suspicions of the ONQI’s ability to help the average consumer to learn what she calls the “language of food” are based on her monitoring of recent dietary trends in the US.

“It wasn’t that long ago, during the low-carb craze, when the absurdity of such data led consumers to believe that carrots and bananas were contributing to weight gain because of concentrated sugars.”

Just how successful Topco will be in translating its “complex algorithm” that is “born of pure science” into the language of the average American consumer will become apparent in the coming months. “The old saying,” concluded Stewart, “that it’s like comparing apples and oranges, may well apply here.”

For a comprehensive unravelling of the tangled web woven by American

food labellers, see Eating Between the Lines: The Supermarket Shopper’s Guide to the Truth Behind Food Labels by Kimberly Lord Stewart, St. Martin’s Press, Griffi n Paperback Original, $14.95.

www.EatingBetweentheLines.com

MAY 200826


N E W P R O D U C T S

Country Company Brand & Product Description

PART 1: NORTH AMERICA – FOODS & BEVERAGES

All new product information is sourced exclusively from Mintel’s GNPD (Global New Products Database), which can be visited at

www.gnpd.com. Mintel can be contacted at 18-19 Long Lane, London EC1A 9PL, U.K.. Tel. +44-(0)20-7606-4533, Fax +44-(0)20-7600-3327

FUNCTIONAL & HEALTHY-EATING NEW PRODUCT LAUNCHESEach month we summarise new product launches from around the world.• Part 1: North America • Part 2: Rest of the World

BABY FOOD

USA Wegmans Gentle Infant Formula with Iron A formula for babies 0-12 months old. The product contains a blend of lipids DHA and ARA, milk-based nutrition and partially broken down whey protein and is said to be easy to digest. It is certified kosher and is available in a 24-oz. tin.

BEVERAGES

Canada Earthly Delights Earthly Delights All Natural Pomegranate Blueberry Juice

A 100% juice said to promote a healthy heart. This juice was boosted with grape seed extract, containing powerful antioxidants which help strengthen blood vessels. This kosher certified product is available in a 355ml bottle and is all natural. Also available are: Pomegranate with Mango & Mangosteen; and Pure Pomegranate.

USA Ok! Organics OK! Organics Cool Calm Said to be an alternative to hyper-caffeinated energy drinks, the product is said to provide a soothing, calming feeling of being in control instead of a wound up one with nervous energy. The certified USDA organic beverage is an excellent source of calcium and magnesium, is free from preservatives, artificial colours, flavours, sweeteners, added sugar, caffeine, sodium or gluten and retails in a 16floz bottle.

USA Odwalla Odwalla Serious Focus A concentration and mental sharpness enhancing nectar with 56% of apple, raspberry, cherry and mango juices featuring 14% organic ingredients. It contains natural caffeine derived from green tea. The Kosher certified drink has been flash pasteurized. The product does not contain GMO’s and it retails in a 450ml bottle.

USA One World Enterprises, LLC O.N.E. Coffee Berry Juice Described as a super-high antioxidant, naturally caffeinated fresh juice, said to have similar levels of caffeine as a cup of green tea. This juice contains antioxidants called phenolic acids, which may help to fight the build-up of free radicals, promote healthy lipid levels and protect against oxidative stress. This all-natural product is also available in a Cashew variety, which is fat free.

USA Next Foods GoodBelly Probiotic Juice Contains vitamins and probiotic. The product is organic and carbon neutral. It is aimed at aging baby boomers.

USA Simply-Originals Simply-Originals Purple Corn Drink A naturally functional beverage, which contains the antioxidant C3G. Purple corn can be found mostly in Peru. The Kosher certified product is free from preservatives, and is retailed in a 16floz bottle. Also available in this range is a Flax Seed variant, which is high in Omega-3 fatty acids.

USA Sayan Chaga Sayan Health Chaga Beverage Offers the world’s first all-natural, wild-harvested Chaga range beverages. The drinks combine antioxidants and are said to offer health benefits documented for centuries. It is free from sugar and contains only five calories. It is said to promote overall health and well-being, support the immune system, fight aging, and boost energy. Available in Raspberry, Peach, and Original flavours.

USA Odwalla Odwalla Serious Energy A 45% pineapple, mango, guava, and passionfruit juices nectar enriched with green tea extract, ginseng and vitamins. The Kosher certified beverage is said to increase alertness and elevate vitality. Available in a 450ml bottle.

CONFECTIONERY

Canada Jelly Belly Candy Jelly Belly Sports Beans Energizing Jelly Beans

Available in a Fruit Punch variety, these jelly beans contain carbohydrates, electrolytes and vitamin B and C and are available in a 1oz pack.

DAIRY

Canada Danone Danone Activia Fibre Probiotic Yogurt Contains B.L. Regularis to maintain a healthy digestive system, and is said to be a good source of fibre. The product is available in a pack containing 8 x 100g yoghurts in two flavours: Red Fruits and Cereals; and Peach and Cereals.

DESSERTS & ICE CREAM

USA Mudslinger’s Dairy Free Mudslinger’s Dairy-Free Frozen Dessert

Available in a Lemon and Poppyseed variety, which is made with coconut milk and is free from trans fat, cholesterol and lactose, this product retails in a pint sized tub.

HEALTHCARE

USA Bullwater Health & Fitness, LLC Pomology Anti Aging Whole Food Antioxidant Dietary Supplement Drink Mix

Helps fight the daily damage caused by free radicals. The combination of antioxidant rich fruit and vegetables includes pomegranates, blueberries, black cherries, plums, rapes, açaí and beets, plus an anti-aging blend with Resverapure designed to support healthy aging and longevity. The mix is 100% naturally Pomegranate/Blueberry/Açaí flavoured. The 10.58oz jar contains 30 servings.

SNACKS

Canada David Roberts Foods David Roberts Omega 3 Nuts The nuts are made with a special coating of flax, which is an excellent source of omega-3 polyunsaturated fatty acids. Omega-3 is said to be possibly the single most important nutrient that is almost entirely missing from a modern diet. The certified kosher product contains no trans fats or cholesterol and is high in dietary fibre, and is available in a 350g pack. Two varieties are available, Kettle Cooked Black Pepper with Sea Salt Peanuts and Kettle Cooked Smokey BBQ Peanuts.

USA Bouquet Of Fruits On Track Snack Fruit Energy Bar Said to be made with real fruit, the bar contains omega-3 and -6, low fat, antioxidants, no added sugar, a low glycemic index, and is suitable for vegans. Retailed in a 1.4oz pack available in: Chocolate Cherry Fudge; Mixed Berries; Peaches & Cream; and Strawberry Banana varieties.

MAY 2008 27



Country Company Brand & Product Description

PART 2: REST OF THE WORLD – FOODS & BEVERAGES

BABY FOOD

Greece Jotis Jotis Biscuit Purée A paste rich in vitamins, probiotic fibres and iron, suitable for children over five months of age. Available in a 300g tub.

Portugal Vitagermine Babybio Calm Night Herbal Tea Contains tilia flower, orange tree leaves, apple pulp and lemon balm leaves. This Organic product contains no gluten and is suitable for babies aged four months and over. Retails in a 30g box containing 20 tea bags. Also available is Sweet Digestion Herbal Tea that aids the digestive system.

Japan DHC DHC No Oishii Shokuhin (egg balls) Calcium-fortified Egg Balls made with domestic potato starch ( from Hokkaido prefecture) and domestic eggs for extra safety. The balls also contain vitamin D to aid calcium absorption and DHA and EPA, found in breastmilk, and isomaltooligosaccharide to aid digestion. Flavourings, colourings, alkalies are not added.

BAKERY

India ITC Sunfeast BenneVita Flaxseed Biscuits Containing a vegetable source of omega 3 fatty acids, the biscuits are rich in fibre and protein and are said to help reduce cholesterol, maintain a healthy heart, and good gut health. Available in a 92g pack.

Mexico Biocentury Bicentury Devoroagras Gallettas Sabor Yogur-Chocolate (Chocolate and Yogurt Cookies)

These cookies have a high fibre content and are enriched with 12 vitamins. Retails in a pack of 16 and features a bifidogenic formula for healthy digestion. Also available are Almond and Apple; Orange and Chocolate; Yogurt and Lemon; and Wholewheat with Fructose varieties.

South Korea Lotte Confectionery Lotte Good Morning Soft Cake A substitute food for breakfast, the product contains 10 vitamins, collagen, iron and calcium. It is available in a 168g pack, containing four sachets, 42g of each. The product is also available in Soybean; and Cheese flavour.

BEVERAGES

Japan Fancl White Advance Drink Ex (Refreshing Citrus)

A beverage form of the beauty supplement White Advance. It contains hydroxytyrosol and L-cysteine that helps growth of skin-coloured melanin, artichoke extract that is known to stop the formation of dark melanin at an early stage, as well as vitamin C, hyaluronic acid and niacin.

Japan Ito En Jujitsu Yasai A blend of 20 vegetables and four fruit juices and yoghurt. Its sucrose hails entirely from fruit and vegetables. The proportion of each ingredient is 50% vegetable, 45% fruit and 5% fermented milk. There is no added salt or sugar.

Japan Kracie Foods Mix Fruit Jelly Drink for Men A zero-calorie jelly drink to combat metabolic syndrome. It contains fat-burning L-carnitine and five vitamins to support metabolism, as well as energising maca. It contains konjac for a chewy texture.

Japan Ito En Young Vegetable Green Juice Cold soft drink (green juice) blending five kinds of green leaves (kale, spinach, Jew’s mallow (mulukhiyya), brussel sprouts, and young barley leaves) and three kinds of health ingredients (zinc, honey, and dietary fibre). No sugar or sodium added.

Mexico Cocos Nucifera y Productos Aquoco Agua de Coco (Coconut Water)

Low in sodium and retailed in a 500ml plastic bottle.

Japan DHC Kenko Drink A blend of concentrated young sasa veitchii leaf ( from Hokkaido prefecture) juice and cranberry juice for daily health maintenance. Bamboo acts as a barrier, cranberry juice is rich in kinic acid, licorice extract for stress and fructooligosaccharide is to boost good bacteria. Free of flavourings, colourings and preservatives.

Japan House Wellness Foods Uruoi Shukan (Grapefruit) A grapefruit flavoured soft drink with nigerooligosaccharide, hyaluronic acid and ceramide to support the skin’s radiance, moisture, beauty and health.

Taiwan Shang-Peng International Vitamax Black Bean Drink Low in sugar, high in fibre, and high in calcium, this product is said to supply daily calcium, provide vitality and stimulate the metabolism. It is suitable for vegetarians, and available in a pack of 20 x 30g sachets.

Japan Mizkan Blueberry & Cassis Black Vinegar Diet A blend of black vinegar, made entirely from domestic unpolished rice, and blueberry & cassis juices. It contains 2% fruit juice and is targeted at those concerned about calorie intake, or for the entire family.

Japan Ito En Asian Water A cold functional soft drink with an Asian theme blending three kinds of Asian health ingredients (dietary fibre, marine-derived minerals, soy isoflavone) which help create beauty from the inside out. Lychee flavour and low in calories.

Taiwan AGV AGV Agar Agar Green Tea A rich in fibre product which claims to promote bowel movement. This tea is free from preservatives and artificial flavourings, and retails in a 600ml bottle.

Vietnam Bac Kinh Do Bac Kinh Do Lord Tea Reduces internal heat, stimulates digestion and reduces the level of sugar and cholesterol in blood. The product is retailed in a 30g pack with individually wrapped sachets.

France LA Fuel LA Fuel Energy Drink Featuring a Wildberry taste and containing 32mg/100ml of caffeine, this product is specially developed to energise and refuel the body and stimulate brain power and concentration. It is unsuitable for children, diabetics, pregnant women and people sensitive to caffeine. The product is available in a 250ml can.

India GlaxoSmithKline Horlicks Lite Strength & Stamina Malt Drink

Said to help fight tiredness, this product is free of added sugar or cholesterol and contains iron, antioxidants, B vitamins and protein. Retailed in a Regular Malt variety.

MAY 200828



DAIRY

UK Alpro Dairy-Free Yogurt Alpro Soya Light Dairy-Free Yoghurt Made with a blend of soya beans and real fruit, calcium, fibre and vitamins, this product is naturally low in saturated fat and calories. It is available in a pack containing four 125g containers with two Raspberry & Blackberry and two Pineapple & Passion Fruit flavours.

Venezuela Alpina Productos Alimenticios Alpina Avena Light (Oatmeal Drink Light)

A skimmed oat meal drink, with 0% fat, low in calorie, and free from cholesterol and preservatives. It is ultra pasteurised and naturally rich in fibre. This product is sweetened with Splenda and is available in a 1L pack.

China New Hope Dairy Qin Pai Yogurt Drink Formulated with bifidobacteria, which helps increase immunity and aids in digestion. The product is QS certified and retails in a 1000g carton. A Strawberry flavour is also available.

France Danone Danone Activia Fruits Secs (Dried Fruits Flavoured Yoghurt)

Contains active bifidus regularis. This product features dried apricots and raisins and is a good source of fibre. It is said to help regulate intestinal transit within 15 days if consumed regularly. This product is retailed in a 500g pack containing four 125g tubs. Also available in this range is a Raspberry variety.

Ireland Danone Danone Actimel Cherry Drinking Yogurt

A probiotic drinking yogurt with L. casei imunitass cultures and cherry. The product is scientifically proven to help support the body’s defences. It is suitable for vegetarians, and from age three upwards. The pack contains eight x 100g bottles.

Russia ALEV Normula Functional Yoghurt A functional yoghurt with micro-capsules, the products are targeted at female consumers. The Yoghurt Normula Active comes in an Orange flavour and contains citrus fibres, inulin and ginseng root extract. The product is claimed to aid recuperative functions of the digestive tract and normalise metabolism. Normula Harmony with an Apple and Banana taste contains turmeric, peavine root and rockweed algae. Normula Beauty offers a Grape flavour and contains calcium, vitamin D3, green tea extract, co-enzyme Q10, blackberry concentrate and dietary fibres.

Australia National Foods Yoplait ElivaeRhubarb & Apple Yoghurt

A blend of cultures which contain digestivus culturus to help maintain inner digestive health as well as calcium to help maintain bone strength. The yoghurts have low glycemic index for longer satisfaction, are 98% fat free and free from artificial flavours, colours, gluten and gelatine. This prebiotic product retails in a pack of 4 x 150g tubs.

Australia Nestlé Nestlé Munch Bunch Vanilla and Strawberry Flavoured Yoghurts

Contain omega-3 for brain development, calcium for strong bones and teeth, probiotics for stomachs, no artificial colours or flavours, less than 5g added sugar per serve and real fruits. The product is claimed to be “great for growing kids” and is approved by the National Heart Foundation. This product retails in a 720g containing eight tubs, including four Vanilla flavoured yoghurts and four Strawberry yoghurts.

China Want Want Group Want Want Huo Jun Duo Live Lactobacillus Drink

Free from fat, cholesterol and preservatives, this QS certified product is retailed in a pack of four 100ml bottles.

Chile Danone Calan Yoghurt Sabor Chirimoya (Cherimoya Yogurt)

Available in a 120g pot. This product is high in calcium.

Australia Parmalat Vaalia Berry Splash Low Fat Yogurt Made with antioxidants, which boost the body’s defences and protect the body’s cells from damage caused by free radicals. It contains low fat, low glycemic, vitamin A, C and E, goji berry, açaí, grape seed and green tea extracts. The product is claimed to be free from gluten, artificial sweeteners, colours, flavours and preservatives. It is also contains a “unique” blend of three active cultures for digestive health and retails in a 900g tub.

Singapore Lifeway Foods Lifeway Organic Probugs Cultured Milk Smoothie

Has a no spill spout to make it a no mess snack and an easy-to-grip shape for little hands. This milk smoothie is a source of calcium and vitamin D, and contains probiotic and ten live & active kefir cultures. This kosher certified product is available in an Orange Creamy Crawler and retails in a pack containing four 147.5ml pouches. A Sublime Slime Lime flavour is also available.

New Zealand Goodman Fielder Activate Body Boost Probiotic Drink Available in an Apricot and Peach flavour, this product supports the immune system and aids in digestion. It contains zinc, antioxidants, and B group, A, C and E vitamins. The drink is 99% fat free and is retailed in a pack containing four 100ml bottles.

Hungary Royal Brinkers Holland Premium Light Margarin (Light Margarine)

Fortified with omega-3, omega-6, and vitamins B6, B12, A, D, and E. This product retails in a 500g tub. Also available are Margarine with Extra Virgin Olive Oil; and Margarine with Iodized Salt.”

South Africa Woolworths Woolworths Ayrshire Bourbon Vanilla Flavoured Yoghurt

A double cream yoghurt with no added preservatives or colourants. This certified kosher product is suitable for vegetarians and is free from rBST hormones. The yoghurt contains HOWARU probiotic cultures, which are said to help the digestive system, to assist in lactose digestion, to stimulate the immune system and to improve general health. The yogurt retails in a 150g pack.

Italy Stuffer Stuffer Vivita Yogurt with Aloe Vera A low fat yoghurt which contains probiotic ferments BB-12 that help regulate intestinal functions. This product is retailed in a two-count pack. Also available are the following varieties: Ananas (Pineapple); Bianco (Plain); Fragola (Strawberry); and Mirtilli (Blueberry).

China Yi Li Dairy Products Y-Yo Peri Low Fat Yogurt Formulated with NOC collagen and live lactobacillus, which is said to have beauty benefits. It contains 50% less fat than normal yoghurt. This halal certified product is retailed in a 630g bottle. Available in Blueberry; Almond; and Aloe Vera flavours.

SNACKS

Singapore Slim Secrets Slim Secrets Night Time Binge-Buster! A high protein snack bar, made with real snap frozen berries, with white chocolate. The bars are low in GI carbohydrates, wheat-free, high in fibre and contain only 3.9g of fat. Said to help reduce hunger and the bags under the eyes while sleeping.

MAY 2008 29


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

Price: $295/€200/£145/A$345/NZ$395/C$295/¥33,000

A concise 35-page description first sets out:

• which marketing techniques are most effective and why• how probiotic products are priced and how some can achieve super-premium prices• how packaging innovation can be used to differentiate a product and achieve a

premium price• why you should create a new brand rather than extend an existing brand• why successful brands are the ones that create new categories or new segments.

This practical analysis is supported over the following 70 pages by 13 detailed case studies, all illustrated with supermarket sales data.

Probiotics: Successful Strategies from the Global MarketplaceThis report is written for anyone trying to develop an effective strategy in the challenging and fast-changing area of probiotics. It sets out the seven steps to creating a successful probiotic brand.

100 pages, over 60 illustrations and charts, supported with brand sales data

Probiotics: Successful Strategies

60 www.new-nutrition.com

“For a product like Actimel,” said Danone’s Wilson, “visibility is what counts- and visibility leads to a snowball effect on sales.”

Such has been the success of the fridge concept that Danone now uses branded stand-alone fridge units for other brands where it wants to get high visibility quickly, notably the recent launch of its Essensis beauty yoghurt (see photo).

MARKETING TO HEALTH PROFESSIONALS

Medical marketing can play a useful role in supporting brands like Actimel and while Danone invests heavily in making information about Actimel available for health professionals, medical marketing is not a driver of the brand – rather it is there as an insurance policy. In 2002, Ian Wilson informed NNB that “Doctors are finding themselves faced more and more with questions about life rather than diseases, problems such as ‘I’m tired’ or ‘I’m stressed’ especially from women. They’re also faced with minor illnesses, such as diarrhoea in children. Doctors don’t want to be constantly prescribing

antibiotics and are increasingly looking for other solutions.

“Added to that, consumers are asking them a lot of questions about food, and doctors in every country have low nutrition training. But doctors are now becoming more involved in the food side and the total management of illness than in the past.

“As a result, with all the information about food and health that’s around – on TV, in magazines the consumer can be more knowledgeable than the doctor, who often doesn’t watch TV and doesn’t read the women’s magazines. “So people come in and ask ‘What do you think about this Actimel?’ and doctors are not very happy if they don’t know about it – they don’t like to feel less expert than their patients and like to feel in control.

“As you might expect, Actimel representatives can find it difficult getting time to talk with medical professionals – sometimes they have to make appointments a year in advance – but, increasingly, Danone finds that doctors are open to listening:

“Our objective is to inform them, we don’t preach to them,” Wilson affirms. “We don’t start

Actimel products have good visibility in mass retailers. This picture, taken in a branch of the Real hypermarket chain in Munich, Germany, illustrates the amount of shelf-space commanded by the brand.



There isn’t much point in putting in a major effort to create a probiotic brand with all the development and ingredient costs that entails unless you’re going to be able to earn superior retail prices and therefore higher profit margins. Luckily the ability to premium-price probiotics is supported by consumer preferences. Even in Germany, a market where supermarket sales of yoghurt are highly price-competitive, Activia retails at a 100% premium to own-label probiotic yoghurts. In the US, too, Activia sells at a 30% premium to competing “regular” brands and a 100% premium to own-label yoghurts (see Chart 4).

In neither market has premium-pricing proven any barrier to Activia becoming the number one probiotic brand and attaining mass-market status.

Packaging innovation is also a good way to command – and conceal – high price premiums. A very good example is daily dose probiotic dairy drinks, which need to be of a certain size to deliver

an effective “dose” of bacteria, but at the same time enable such brands to sell at high prices. Brands such as Actimel and Yakult are among the world’s most expensive products, measured on a price per litre basis.

To use the example of Actimel in the Netherlands again:

• 1-litre of milk retails at around €0.75/$1.15• A 4-pack of Actimel 100ml drinks retails for

€2.15/$3.50• If Actimel was sold by the litre in 1-litre cartons

its retail price would be €5.38/$8.38 a litre!

Packaging innovation makes it very difficult for consumers to easily compare prices. You can be sure that at such a price Actimel – which is basically drinking yoghurt plus probiotic bacteria – will be a very high margin product.

5. An opportunity for premium pricing and packaging innovation

Danone Activia has been phenomenally successful despite selling at a significant price premium over regular, non-probiotic yoghurt brands such as Yoplait Trix in US supermarkets. As the chart shows, Activia sells at a 100% premium to supermarket own-label regular yoghurts.

Source: Albertsons.com

CHART 4: PRICE COMPARISON OF SPOONABLE YOGHURTS IN THE U.S.

0

0.5

0.10

0.15

0.20

0.25

$0.10

Albertsonsown-label

$0.154

YoplaitTrix

$0.20

YoplaitYo-Plus

$0.218

DanoneActivia

Priceper

ounce ($)



CHART 2: THE LIFESTYLE CONSUMER

Source: Mellentin, J. & Wennstrom, P. The Food & Health Marketing Handbook, 2002.

CHART 1: THE TECHNOLOGY CONSUMER

Source: Mellentin, J. & Wennstrom, P. The Food & Health Marketing Handbook, 2002.

These are the early adopters. Representing, according to research by Health Focus International, between 2%-8% of the market, these are the people who have a medicalised or near-medical need for a product. They need the technology of the functional food to address their health condition. They put functional before food and see products in a medicalised context and, as with drugs, they will pay a substantial premium for something that addresses their condition.

These are the people who like to be first with new benefits. They are interested in maintaining their wellness, not fighting illness. They will adopt new brands and will pay a premium for a product but only if it supports their lifestyle.

THE NUTRITIONAL PRODUCTS LIFECYCLE

The lifecycle was developed to aid understanding of brand positioning 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 and selling in low volumes at premium prices, and over time increase volumes and move down the price curve to the right, until they are mass-market products.

Volume

Unit Selling Price

Unit Selling Price

Published by

Case Study

Probiotics: Successful Strategies from the Global Marketplace

by Julian Mellentin

Available in PDF only

MAY 200832


7 Outstanding Companies in Functional & Health-Enhancing Foods


Price: $295/€200/£145/A$345/NZ$395/C$295/¥33,000

Our latest report, 7 Outstanding

Companies in Functional &

Health-Enhancing Foods,

provides insights into the

strategies of the most

outstanding companies in

the field of food and health –

insights that anyone can apply

to their own business.

The criteria for inclusion in this report were very simple:

• companies whose strategies in food, nutrition and health are the most advanced and most successful• companies whose strategies best illustrate the direction of the “functional foods revolution”• companies from whom the most can be learnt about how to be successful in the business of food and health.

Our selection includes some large companies with diverse portfolios (Danone, Unilever, PepsiCo) as well as very focused companies (Yakult Honsha and Pom Wonderful) and an entrepreneurial startup (Innocent Drinks). Common to all these companies, despite their very different starting points, is a demonstration of how to be successful in food and health.

The seven companies are: 1. Danone (global)1. Danone (global) 2. Unilever (global) 3. PepsiCo (global) 4. Emmi (Switzerland) 5. Yakult Honsha (global) 6. Pom Wonderful (US) 7. Innocent Drinks (Europe)

7 Outstanding Companies


Look Better Achieve More Feel Good Daily

Be Healthy for LongerBe Free From Health

problemsGive Children a Good Start

“If I look better, I feel better. So

I’m searching for things that will

help me manage my weight, keep

me fit and active – and if they

make me look a bit younger, even

better!”

“I want to do more, and there’s

more pressure on me to do

everything – at work and at home.

I need to boost my physical

and mental energy levels, and

recharge my batteries.”

“I know I can affect my mood by

making good choices, including

what I eat. I want things that will

relax my mind, help me sleep

well and generally make me feel

good.”

“So many people have food-

related problems – allergies,

intolerances, diabetes, irritable

bowel syndrome, the list goes on.

I don’t want that – I want solutions

today to lead a happy, healthy

life.”

“I want my children to have the

best possible lives. And a big part

of that is making sure they eat

good food, helping their bodies

and minds develop strongly.”

UNILEVER’S VITALITY STRATEGY: LIFE GOAL MODELS



Essensis is sold in 4-packs of 110g pots of spoonable yoghurt and in 6-packs of 100ml bottles of drinking yoghurt, which retail for around €2.99 ($4) per pack – around the middle market price for daily dose products. It is available in four flavours: Natural, Litchi & White Grape, Raspberry & Pomegranate and Peach & Apricot.

What’s most striking about Essensis is the amount of money with which Danone backed the launch. The cosmetics business, driven by giants like L’Oréal, is all about massive expenditures on full-page print advertising and at point-of-sale. It’s an approach that Danone already applies to its other brands and, as the examples of print adverts from Spain, Belgium and France show Essensis is getting the same treatment. The ads powerfully convey an image for the product and explain its benefit and function in some detail – a necessary strategy for the still embryonic concept of foods for beauty.

Also shown is our artist’s impression of the point-of-sale display for Essensis we found in the chiller cabinet of a supermarket in Belgium (the supermarket wouldn’t let us take a picture), as well as the eye-catching stand-alone refrigerated merchandising unit for Essensis – a tool that has boosted sales of other Danone dairy brands.

INNER BEAUTY CONCEPT GATHERS STEAM

It’s not surprising that Essensis is selling best in France. With Spain and Italy it’s one of the countries where women take the greatest care of their appearance. The French cosmetics and skincare market – the type you apply to your skin, not the type you eat – is worth €2.2 billion ($3 billion), making it the biggest in the world.

Franck Riboud, chairman and CEO of Groupe Danone, speaking in a media conference call shortly after the launch of Essensis in France, said that with sales of 85 tonnes in its first two weeks – equivalent to a retail value of over €500,000 ($670,000) – Essensis had got off to a better start than Danacol, his company’s cholesterol-lowering brand.

“We decided [therefore] to accelerate the launch in Italy, Spain and Belgium,” said Riboud, adding that weighted distribution was already at 90% in France.

The Spanish market holds huge potential for Essensis too. Already Spanish women are big buyers of products that help them control, or even reduce their weight, such as NaturLinea – a dairy product with added conjugated linoleic acid (CLA) and a claim that it helps reduce body fat. It has sales

Danone is investing heavily in maximising the point-of-sale impact of Essensis. This is our artist’s impression of a point of sale display we found in a branch of the Carrefour supermarket chain in Belgium (it’s our impression because the supermarket wouldn’t let us take a picture). In addition to occupying all of the shelves in one section of the chiller cabinet, there are flags on either side of the display, so that attention is drawn to it even when you’re at the furthest end of the fixture, and on the floor in front of the display is an Essensis-branded mat.

MAXIMISING POS IMPACT



success in America is so astonishing for so many in the industry.

Activia’s performance “has made us much more comfortable that people here in the United States are ready for foods with a functional benefit,” Ostermayr says. “Clearly the US consumer, in great numbers, hears and understands that foods can taste great and have a specific benefit.”

So how did Dannon manage to achieve the seemingly impossible and turn Americans on to the benefits of gut health foods? In part it is simply the passage of time and the fact that, through the news media and other messaging, millions of Americans now understand the concept of digestive health, which has been ingrained in the diets of Europeans and others for decades.

That said, however, digestive health had previously never been a primary component of the intrinsic-health message that Dannon, Yoplait and other US yoghurt makers had promoted over the decades of yoghurt’s rise in popularity in America. This is one reason that, at a conservative estimate, Europe’s market for probiotic products is worth about $5 billion (€3.9 billion) a year and Japan’s

about $4 billion (€3.1 billion), while the US market is worth just $500 million (€335 million) annually.

Yet Dannon’s eagerness to overcome the gut-health obstacle in the US clearly was a driving force.

“Here you’ve got a global company that is just doing phenomenally with its probiotic products in Europe, and so they look at the US as kind of a lagging market,” says Gus Valen, president of the Valen Group, an Atlanta-based better-for-you consulting firm. “They wanted to push that. And that’s what they did.”

And Dannon deserves credit specifically for their handling of Activia’s launch. One tactic was to snatch the product from the perception of being medicinal by offering it in six different flavours and in a variety of packages.

Even more important, Dannon named the proprietary, probiotic-bacteria culture in Activia Bifidis Regularis, making the primary benefit of eating the product – reduced constipation – comparatively clear to everyone. The culture’s name is also used in advertising and on the label.

“It was truly smart to brand the bacteria to

TABLE 2: TOP 20 YOGHURT BRANDS: U.K. 2007

Danone Activia has accelerated from nowhere to become the No.2 brand in the space of seven years, even overtaking mass market brands such as Müller.

Source: The Grocer (UK)

Published by

Case Study

7 Outstanding Companies in Functional and Health-Enhancing Foods

by Julian Mellentin


7 Outstanding Companies in Functional & Health-Enhancing Foods explains how these companies have connected to many of Mellentin’s 10 Key Trends in Food, Nutrition & Health (eight or nine of the trends, in the cases of Danone, Unilever and PepsiCo).

MAY 2008 33


10 Factors for Success in Energy Drinks – Europe and the U.S.


Price: $295/€200/£145/A$345/NZ$395/C$295/¥33,000

This new report:

• sets out the 10 Factors for Success in Energy Drinks

• shows how the factors for success can be applied in other beverage categories

• examines the new niches forming in the energy drinks category

• offers strategies for marketing energy beverages in the future.


10 Factors for Success in Energy Drinks looks broadly at strategy and success in the energy drinks category in the US and Europe. It examines key players, new entrants and new niches within the market as well as providing market data.

10 Key Factors for Success in Energy Drinks


Ocean Spray – which has been embracing its better-for-you heritage lately with innovations ranging from diet juices to Craisins (dried cranberries) – saw a market opportunity it couldn’t ignore. Executives rightly figured that sleep-starved twentysomethings and teenagers weren’t the only Americans who could benefit from an energy boost. Mothers and other active young-adult females weren’t being addressed by the energy drink mainstream.

“There was no natural source of energy in a beverage for moms who are trying to get many things done in a day,” Wyman told New Nutrition Business. “There was no beverage for their needs and for active boomers in general, that didn’t have artificial energisers. It would be rare to see them drinking Monster or Red Bull, which really are designed for the high-test young male.”

Cranergy is aimed at young and middle-aged women and, in particular, at their need-state in mid-day. “They may be coming off mid-afternoon kids’ activities or making dinner, and they are looking for ways to get through that mid-afternoon lull without having to drink their tenth or fifteenth diet soft drink,” Wyman explained. “They’ve been looking for solutions.”

Ocean Spray is supporting the current launch of Cranergy with what Romanzi called “full-scale” TV advertising beginning in May 2008, coupons, in-store sampling, in-store TV and an unusual campaign offering the 10oz containers as a trial size.

“I’ve been pushing [the coop] to use this concept for an introduction for three-and-a-half years,” confided Romanzi. “People will be able to buy a single container at a very low price just to try it.”

The beverage giant is trying an innovative launch package with retailers it calls a Fast Start Pallet. This involves shipping to retailers a pallet that includes each package type of each flavour along with a shipment of the 10oz trial package. Ocean Spray plans to ship about 7,000 of the pallets in the first two weeks of March 2008.

Retailer excitement is palpable, according to the coop. At a summit of Sam’s Club vendors recently, Ocean Spray distributed 500 sample packages of Cranergy. “We didn’t have one negative comment,” Wyman enthused.

“We had people coming back the second day who had consumed it the first day, and based on its efficacy, they wanted another one.”

2. Women

Products targeted at women are proliferating. One of the best examples is Coca-Cola’s Tab Energy. Marketed as a low calorie energy drink (it is sweetened with sucralose), it is a reinvention of an old Coca-Cola low-calorie cola brand, which enjoyed popularity in the 1980s.

The drink is currently being targeted and advertised towards a female market as illustrated by the distinctive pink colour of the package and the slogan Fuel to be Fabulous. The revived brand

was launched in February 2006 during New York Fashion Week, supported by TV advertising that featured well-dressed, attractive women, who could very well be Hollywood stars, going shopping for extravagant clothing, driving expensive cars, and eating at exclusive restaurants.

However, food and beverage products that are too overtly women-specific have had a very high rate of failure. Many such breakfast cereal brands, including Quaker’s Nutrition for Women, have gone by the wayside. The US bar-market is one



There is clearly scope for fruit drinks to gain a toehold in the energy category, which had been an untouched area for the juice industry before the March 2008 launch of Cranergy by Ocean Spray (see Box). Sales of fruit drinks with health benefits – and particularly superfruit drinks – have increased

in recent years on the back of fruit’s all-natural, intrinsically healthy image. Most of these new fruit drink propositions – notably in the smoothie category – also retail at very high price premiums compared to the established juice brands.

OCEAN SPRAY WADES INTO US ENERGY DRINKS MARKET

Cranergy comes in either 46oz multi-serve bottles, 4-packs of 12oz single-serve bottles and, for the warehouse club channel, 24-packs of 10oz single-serve bottles.

In March 2008 Ocean Spray will launch a juice-based energy drink it calls Cranergy, perhaps the most ambitious product it has ever developed. The world’s biggest cranberry cooperative is attempting to create a new segment in the booming US energy drinks sector which continues to be dominated by the likes of Red Bull and Monster.

Consumer research has persuaded the Massachusetts-based coop that mothers and other consumers are ready for a new, healthier alternative to the sugar-and-caffeine-laced beverages which are increasingly supplanting carbonated soft drinks.

“Cranergy tested as one of the strongest concepts we’ve ever had,” Peter Wyman, vice president of domestic sales, told New Nutrition Business. “It’s also by far the strongest platform we’ve had accepted across many retailers. Not one retail or grocery account across the country has turned this item down.”

The new product, explained Ken Romanzi, Ocean Spray’s chief operating officer, is “really designed for people who need a boost – but not a big jolt of energy. We’re not looking to go head-to-head with Monster and Red Bull; not to try and topple the energy drinks. We’re just trying to satisfy a need-state. And we’ll do that in the juice aisle”.

Cranergy will be non-carbonated and initially available in two flavours: Cranberry Lift and Raspberry-Cranberry Lift. It will have from 20% to 23% juice depending on the flavour, with 35 calories per serving.

Its “naturally energising” ingredients, as Romanzi describes them, include green-tea extract and B vitamins, which support “healthy energy production”. It is sweetened with Splenda, which Wyman calls “a widely accepted sweetener”.

Cranergy will break the energy drinks mould by being packaged in a 46oz multi-serve bottle like most drinks in the juice aisle of supermarkets. Ocean Spray will also offer a 4-pack of 12oz, single-serve bottles. Both products will be priced at around $3.99 (€2.75) apiece.

“That’s a heck of a lot cheaper than most energy drinks,” commented Romanzi. And because Ocean Spray’s “consumers like to drink over time,” the bottles will be re-sealable.

The coop has created a separate package for the growing warehouse club channel: a 24-pack of 10oz, single-serve bottles.

While energy drinks clearly have proliferated in the US market, with hundreds of new products now introduced yearly, no major juice brand has stepped into the market with a bet as large as Cranergy. Recent better-for-you energy drink launches have tended not to be juice-based, with the notable exception of Del Monte’s 50%-juice Bloom Energy (which is carbonated) that was introduced in the summer of 2007.



remarkably similar and they will be expressed no differently in America.

And it’s not only Japan from which the West has taken its lead. Energy drinks originated in Thailand, where Red Bull was launched back in the 1970s. To this day Red Bull GmbH is still 50% Thai-owned. The world’s second-biggest energy drink brand, Shark, is also Thai-owned.

The original Red Bull drink was developed in Thailand by the company TC Pharmaceutical, where it was sold under the Thai name Krating Daeng. Sales soared across Asia in the 1970s and 1980s.

The Thai product was transformed into the global brand we know today as Red Bull by Austrian entrepereneur Dietrich Mateschitz, who visited Thailand on a business trip in 1982 and discovered that Krating Daeng helped to cure his jet lag. Mateschitz worked with TC Pharmaceutical to adapt Krating Daeng for European tastes and with the Thai owner, Chaleo Yoovidhya, founded Red Bull GmbH. Red Bull GmbH launched the first Red Bull in Austria in 1987, moving out of Austria for the first time in 1992 (when it was launched in Hungary).

In 2006, Forbes Magazine listed Chaleo Yoovidhya as the 292nd richest person in the world with an estimated net worth of over $2.5 billion (€1.7 billion).

If you are looking for a new product concept or a way to create a new category, you could do worse than to look in Asia.

BEYOND THE BULLRING – A FUTURE OF NICHES FOR ENERGY DRINKS

The energy drinks market – like most markets – is now in the process of fragmenting into a series of niches. There is zero chance that any brand can now challenge the dominance of the category creator – Red Bull – and indeed all such attempts in the past 20 years have failed. It is a rule of modern consumer marketing that there is space for two leading brands and (maybe) a third trailing brand. Beyond that the remainder of the market is contested by all the other brands, each of which must establish a distinct identity and capture and dominate a niche if they are to survive, for they have no hope of ever competing with the biggest brands.

CHART 1: ENERGY DRINK SALES – U.S. – SUPERMARKET SALES ONLY (EXCLUDES OTHER CHANNELS)*

Just three brands account for 71% of supermarket sales. 17 brands fight over the remaining 29%

Source: IRI. *Data includes total food, drug & mass merchandise store sales, excluding Wal-Mart, for the 52 weeks ending 30 Dec 2007

Red Bull42.13%

All other brands29.34%

Rockstar11.82%

Monster16.71%

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Case Study

10 Key Factors for Success in Energy Drinks – Europe and the U.S.

by Julian Mellentin

MAY 200834


PUBLICATIONS

CASE STUDIESProbiotics: Successful Strategies from the Global MarketplaceThis report is written for anyone trying to develop an effective strategy in the challenging and fast-changing area of probiotics. It sets out the seven steps to creating a successful probiotic brand and describes probiotic strategy both in dairy and emerging new segments such as fruit juice and solid foods.

7 Outstanding Companies in Functional & Health-Enhancing FoodsOur latest report provides insights into the strategies of the most outstanding companies in the field of food and health. Companies featured in the report have the most advanced and successful strategies in nutrition and health; have strategies which illustrate the future direction of functional foods; and deliver valuable lessons about how to be successful in the business of food and health. Our selection includes: Danone, Unilever, PepsiCo, Emmi, Yakult Honsha, Pom Wonderful and Innocent Drinks.

10 Key Trends in Food, Nutrition & Health 2008Our annual review, 10 Key Trends in Food, Nutrition & Health, is one of the most sought-after publications in the food industry. The report identifies the 10 mega-trends that will have the most impact on the food and beverage industries over the year ahead. It points companies towards some clear and practical strategies for their functional food and beverage developments, production and marketing.

5 Key Trends in Kids’ Nutrition 2008In a world in which health is becoming a standard for the entire food and beverage industry, one of the current challenges (and a fecund opportunity) lies in the kids’ nutrition market. The report identifies the five mega-trends that will have the most impact on the market for kids’ healthy food and beverages and provides detailed scrutiny of the links between kids’ food, nutrition, health and business.

10 Factors for Success in Energy Drinks – Europe and the U.S.10 Factors for Success in Energy Drinks looks broadly at strategy and success in the energy drinks category in the US and Europe. It examines key players, new entrants and new niches within the market as well as providing market data.

Kids’ Nutritional Dairy: 10 Key Case StudiesDairy is the most dynamic category in the business of kids’ nutrition worldwide. The three ingredients currently getting most attention from companies are calcium, probiotics, and omega-3. Underpinning these is the strong trend towards “natural”, “free from” and “organic” positionings. Using 10 case studies from Europe, the US and the Asia Pacific region, as well as one global brand, this report sets out the ingredient, marketing and branding strategies which are driving growth in kids’ nutritional dairy.

Functional and Health-Enhancing Juices: 7 Key TrendsUsing 15 detailed case studies this report analyses the functional and health-enhancing juice business. It explains that digestive health, behind superfruits, is the single most-promising trend for the juice industry – and demonstrates how two companies have quietly built digestive brands worth over $50 million in annual sales. It explores juices with added ingredients and it points out that the areas of beauty, energy and weight management all have the potential for profitable growth.

Danone: The World’s Biggest Functional Dairy CompanyDanone is, with PepsiCo, one of the two biggest and most successful functional food companies. This report sets out the lessons that can be found in the stories of Danone’s successes in digestive health, immunity, heart health and kids’

health, as well as beauty (Essensis yoghurt) and energy (Mizone functional water). Each section examines in detail the company’s branding, advertising, pricing and merchandising strategies, as well as the corporate strategy of Danone, which puts health at the heart of business.

Failures in Functional Foods: 10 Key Case Studies & 10 Key LessonsThe functional foods market is a highly complex one. Success with a new product or ingredient in this harsh and demanding market is very rare. In fact, failure is far more common than success and most products sell on a niche basis with very, very select few ever graduating into the mass market. The report analyses some of the more spectacular failures and offers strategies for reducing risk in the functional foods world.

Success and Failure in Functional Water: Eleven Case Studies from Europe, the US and AsiaWhat makes consumers choose functional waters? What are the critical success factors in marketing waters with added health benefits? Why is the category mass-market in Japan, but still only niche elsewhere in the world? Why have so few brands been successful? And why have most product launches failed? The report examines the marketing strategies of 11 different functional water brands and identifies the critical factors for bringing functional waters to market.

The Food & Health Marketing HandbookIn a competitive world how do you take your technology to market so that it’s your product that wins at the point of purchase? This handbook tells you how to get the best out of the science and the health benefits of your ingredients or products.

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Danone Actimel: Innovation Builds a Probiotic Mega-BrandDanone’s Actimel probiotic drinking yoghurt is the world’s biggest immunity brand and one of the world’s biggest and most successful probiotic brands. In this report Actimel’s marketing communications, pricing, packaging, labeling, merchandising, advertising and consumer insights are analysed and explained in detail and illustrated with colour photographs, charts and images from advertisements to provide valuable lessons from which all food and beverage businesses can learn.

Innocent Drinks: What makes Europe’s fastest-growing smoothie brand so successful?For any company, large or small, looking to create a successful health proposition the story of the meteoric rise of smoothie makers Innocent Drinks shows what can be achieved in a tough, highly competitive category. Innocent’s strategies are not elusive, nor unachievable – they are instead steps that any company can easily take to propel its brands to new levels.

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