Can Consumer Product Companies Remain Neutral About NutraHealth?
Highlights and Video from the Exclusive NBT Roundtable Event held at Vitafoods Europe 2011
The Nutraceutical Business and Technology (NBT) Awards 2011, held at Vitafoods Europe in Geneva on 11 May 2011, featured an exclusive roundtable event, organised and recorded by Via Connect, a specialist provider of campaigns and events to the bio/pharmaceutical, nutraceutical and personal care industries. The NBT roundtable forum, moderated by Ewa Hudson, Head of Health and Wellness Research at Euromonitor International, focused on the challenges the healthy nutrition industry faces and was attended by over 50 senior executives from prominent consumer product, retail and food research companies.
The top table boasted an ensemble of high-calibre panellists: Werner Klaffke, Director of Unilever’s Global Nutrition and Vitality Platform; Leatherhead Food Research’s CEO, Dr Paul Berryman; Dr Henglong Hu, Director of GSK’s Nutrition Sciences; Tata Global Beverages’ Global Head of Research & Development, Sri Kameswaran; and Dr Michele Kellerhals, Coca-Cola European Union Group’s Research & Innovation Director, Functional Ingredients.
What made this NBT roundtable event such an outstanding success was that panellists and attendees alike shared their experiences with extraordinary openness and did not shy away from addressing some very difficult issues, which are often swept under the carpet at such events.
Weight management: Still hungry for satiety
First up on the agenda was a spirited and extensive discussion of the global obesity issue, and the role and new developments of weight management products. Dr Berryman informed the audience that Leatherhead Foods Research had shown that satiety-enhancing ingredients were indeed capable of inducing a higher degree of fullness and satisfaction after consumption, and Unilever’s Werner Klaffke agreed that the high satiety avenue offered still plenty of opportunities for further R&D and product innovation.
Looking further into the future, Werner Klaffke delivered a very exciting new prospect for weight management new product development by envisaging the launch of products that affect the body’s fat distribution pattern in more targeted ways. So, there might soon be a shift from conventional diet and weight management offerings to ‘body shaping’ products.
Dr Kellerhals added an interesting dimension to the discussion, by pointing out that his company’s biggest weight management product, namely Diet Coke, had moved from being perceived as a dieting aid to being part of women’s daily beauty routines, and that a company could gain new consumers by repositioning its products in this way.
Segmented nutrition: Can the industry afford to ignore low-income groups?
Next up for deliberation was the role of segmented nutrition in the future of nutraceuticals and, in particular, how this might apply to consumers in lower-income groups. Tata Global Beverages’ Global Head of Research & Development, Sri Kameswaran, brought up India as a poignant example of an emerging market, where the bulk of the consumer base was concentrated at the bottom end of the socioeconomic pyramid, with an estimated 300 million people living below the poverty line. He said that while the world’s food and beverage companies were concentrating their efforts on coming up with “cool” functional foods targeted at the tiny, well-off top strata of the socioeconomic pyramid, a large part of the Indian population did not even have adequate access to basic foods.
In response, audience participant Peter Wennström, owner of Swedish-based consultancy company HealthFocus Europe, spoke about the “democratisation of health”, a concept that envisages health-promoting ingredients and foods cascading downwards into the socioeconomically disadvantaged segment of the mass market, helping those consumers who cannot afford to pay extra, but who are, at the same time, most at risk from disease.
Historically, such considerations were largely viewed as falling under governmental public health responsibilities and addressed, for example, through the mandatory fortification of flour and salt with vitamins and minerals. In the future, however, appropriate measures aimed at enhancing the nutritional status of the lowest income groups will increasingly shift into the realm of corporate social responsibility programmes.
Making innovation sustainable
The third roundtable discussion point focused on how to go about selecting innovation directions and achieve commercial sustainability and viability for new product launches. As panellist Dr Kellerhals pointed out, nine out of 10 innovations fail when they enter the market, and they fail quickly.
Unilever’s Werner Klaffke revealed to the audience that his team considered four key areas when creating health and wellness-oriented product innovations with commercial sustainability in mind. The first requirement is an evidence base, ie sufficient scientific backing to support the premise upon which the product is built. Next, it is important to examine consumer trends to see whether a potential product is in alignment with these developments, and then there has to be a careful examination of the different demographics that exist in a location for the purpose of product targeting. Most important, however, is that the innovation fits in with the natural behavioural patterns of the target consumer, because experience and research have shown that lasting behavioural change is so tremendously difficult for consumers to achieve.
Time for a new business model?
One point that surfaced again and again throughout the NBT roundtable event was the call for a new business model, which could deliver health and wellness products to a much larger consumer base in a sustainable way.
Unilever’s Werner Klaffke put it very poignantly when he revealed that, by 2050, there would be nine billion people globally to feed and keep healthy. In order to accomplish this, he said, the food industry needs to affect a shift from the current focus on animal-derived foods back to plant protein, which would entail large-scale, portfolio-wide product reformulations and the remodelling of entire supply chains.
With regards to product innovation, Leatherhead Food Research’s Dr Berryman pointed out that the food and beverage industries were trying very hard to come up with products that were as efficacious as drugs, while, at the same time, they needed to be cheap, and, on top of that, they did not enjoy the same kind of protection which guaranteed novel drugs high profits once they entered the market. No wonder, he remarked, that the current business model was not working in favour of innovation for the food and beverage industries.
Alain Giraud, Business Development Manager at Euromonitor International, raised the issue that the high degree of control exerted by retailers, particularly in the European setting, significantly constrained the success of innovative products carving out a market for themselves. After demanding substantial listing fees, retailers also expected these novel offerings to turn into rampant sales successes within the space of three months, which was unrealistic in many cases. But, because retailers were unwilling to wait for two or three years until a product had established itself and was able to generate appreciable volume sales, many innovative, healthy products stood no chance of carving out a mainstream consumer following.
Robert Orr, Chairman of Ocean Nutrition Canada, brought up the uncomfortable conundrum food and beverage companies were faced with when addressing the economic realities of tackling escalating obesity rates, ie selling less food for more money, a more than problematic business strategy when applied to the mass market. He pointed out that the current business model struggled with a fundamental disconnect between marketing and research and development departments where weight management and other functional products were concerned. No matter how exciting and innovative a product the R&D department could come up with, if it was not going to cost less and sell more, marketing departments would not take an interest. In other words, cheap-to-produce, highly palatable calorie-dense foods, which can easily be shifted in great quantities, are still the most attractive type of product for FMCG companies.
Clearly, the discussion provided plenty of food for thought, calling for an overhaul of long-standing, but perhaps no longer appropriate business practices for companies along the food and beverage supply chain. It is hoped that the roundtable event will be a regular feature at Vitafoods Europe from now on, helping the industry to explore these issues further. The next NBT roundtable event has been scheduled for 23 May 2012.