Innovations in US Functional Foods, Beverages and Supplements

Tanya Seaton Inside Beauty Conference September 28th 2005

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Overview

Overview of health and wellness

New US products launches Key factors driving success or failure Conclusions

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Consumer Markets Knowledge Center

Market Knowledge Consumer Knowledge Product Knowledge Company Knowledge

Interactive Consumer Database Market Insight reports and presentations Innovations Reports Foodservice Market Database Market news and comment

ConsumerGraphics Database Market Drivers Database Consumer Insight reports and presentations Case Studies Consumer news and comment

Productscan Online E-Alert updates Innovations Reports Product Insight Presentations Category trend reviews Product share data Case Studies Product news/comment

Detailed company profiles SWOT Analysis Brand share data Product launch data Case Studies Company news and comment

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Health needs Physical health

Total Wellbeing

External Beauty

Mental / emotional health

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New product launches

The number of fortified claims made on-pack on new US product launches
30%
25% % of new product launches 20% 15%

10%
5% 0%

Food
1999
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Beverages
2004
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Source: Datamonitors ProductScan Online new products database

Product examples

Food & Beverages

Dietary Supplements

Inside Health
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External Beauty
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Product examples

Food & Beverages

Dietary Supplements

Inside Health
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External Beauty
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Source: Datamonitors ProductScan Online new products database

Food/Bev & Inside Health

ADDED IRON OR FIBER IN YOGURTS IMMUNE SYSTEM SUPPORT FROM CEREAL PREGNANCY SPECIFIC COMFORT FOOD JOINT LUBRICATION FROM SODA PRE-SPORTS PREPARE & POST-SPORTS REPAIR BARS
Source: Datamonitors ProductScan Online new products database
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Supplements & Inside Health

SOFT CHEWS INDULGENCES FOR WOMEN

GUMMIES FOR KIDS

CRACKLE ROCKS FUN FOR KIDS

STRIPS for MULTIVITAMINS, ENERGY, COUGH, COLD

ORAL SPRAY VITAMINS AND SOLUTIONS
Source: Datamonitors ProductScan Online new products database
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Over the years, I tried to concern patients with their health and decreasing their risk of heart disease or, say, breast cancer. But that doesnt really work because those are negative thoughts, and people dont like to carry negative thoughts around with them

But if we showed them that by eating a particular way they could change their appearance in as short as three days dramatically thats a huge motivator because its positive. And so we do use vanity as a motivator. Get people to do the right thing, and then everything else falls into place.
Dr. Nicholas Perricone, N.V. Perricone M.D., 2005

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External Beauty

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Source: Datamonitors ProductScan Online new products database

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BUT 9 out of 10 new products FAIL

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Key questions
Have you identified your target market?
Age/gender Need/behavior

Will they believe your claims?

Efficacy Credibility

Are consumers ready for your product?

Consumer education Ingredient/product awareness

Are they likely to use your product?

Convenience & lifestyle Meet key mega-trends

What alternatives do they have?

Direct competitors Indirect competitors

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Target audience
Comparing functional product consumption by consumer group to population proportion
60% 50% 40% 30% 20% 10% 0%

18-24yrs

25-49yrs

50+yrs

% of consumption

% of population

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Source: Datamonitor Report New Insights Into Nutraceutical Consumers 2005

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Education & awareness

Calcium
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Antioxidants

Omega-3

Glucosamine

Purchasing Driver

Purchasing Driver

Purchasing Driver

Awareness

Awareness

Awareness

Manufacturer opinion of consumer awareness/purchasing drivers Consumer opinion of their own awareness/purchasing drivers
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Source: Datamonitor Report US Functional Food, Beverages and Supplements, 2004

Purchasing Driver

Awareness

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Efficacy & credibility

How do you rate the following in terms of importance for the success of a new product?
Price Specific ingredients that consumers are looking for Long-term health implications Product claims supported by scientific studies/medical endorsements Immediate effectiveness

Dietary supplements Food and beverages

Taste/flavor appeal
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

% respondents citing very important

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Source: Datamonitor report US Functional Food and Beverages: Innovation Review 2005

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IFT recommendations
Enhance public understanding of foods, food components, and/or dietary supplements and their role in a healthful lifestyle

Clearly convey the differences between emerging and consensus science

Communicate with accuracy and balance

Put new findings into the context needed for an individual to make dietary decisions
Disclose all key details about a particular study Consider peer-review status Assess the objectivity of research
Source: www.ift.org
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Mega-trend framework

Health/Wellness Convenience Sensory

Comfort Connectivity Individualism

Age Complexity Gender Complexity Lifestage Complexity Income Complexity

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Source: Datamonitor Report Evolving Consumer Trends 2005

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Broad competitive landscape

Functional products can satisfy health and wellness needs, but so can:
Over-the-counter medicines Caffeinated coffee Bubble bath, cigarettes & alcohol Botox injections

Complementary & alternative medicines (CAM)

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Science-based innovation
Microencapsulation Nanofoods and nanotechnology Nutrigenomics

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Conclusions

Distribution No credibility gap Clear differentiators

Megatrends

Placement

Consumer

Product awareness & education

Price

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For a copy of this presentation or further information: tseaton@datamonitor.com or cmmarketing@datamonitor.com and visit us at: Inside Beauty - LEVEL III Hall 3A Booth # 2610
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