The U.S. Market for Nutraceutical Foods and Beverages

Executive Summary

• The Scope of This Report
• Report Methodology
• Nutraceutical Defined
• Seven Main Categories
• Sales Exceeded $17 Billion in 2001
• Table 1-1: U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 1997-2001 (dollars; percent)
• Nutraceuticals Expected to Reach over $22 Billion by 2006
• Table 1-2: Projected U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 2001-2006 (dollars; percent)
• Figure 1-1: U.S Retail Dollar Sales of Nutraceutical Foods and Beverages, 1997-2006 (dollars; percent)
• Tempestuous but Thriving Market
• Infant Nutritionals and Cereals Account for over 42% of Sales
• Table 1-3: Share of Retail Dollar Sales of Nutraceutical Foods, by Product Category, 2001 (percent): 7 categories
• Perhaps 800 Marketers
• You First and "Me First" Modes
• Many Niches with Little Marketer Competition
• Growth to Enable Entry into Market
• Nutraceutical Ad Dollars at $485 Million in 2001
• Variety of Distribution Channels
• Nutraceuticals Spread throughout Store
• In-Store Pharmacies Play Role
• Reasons for Controlling Diet
• Table 1-4: Number of Adult Americans Controlling Diet by Reason, 2001 (number; percent): 14 reasons
• Factors Favoring Control of Diet
• Table 1-5: Demographic Factors Favoring Control of Diet, 2001 (listing): 12 factors

II. The Products

Introduction

• The Scope of This Report
• Nutraceutical Defined
• Glossary of Nutraceutical Terms

The Products


• Seven Categories
  • Cereals
  • Comprehensive Nutritional Drinks (CNDs)
  • Confections
  • Dairy and Dairy Substitutes
  • Infant Nutritional Products
  • Other Beverages
  • Other Food

Regulatory Issues


• The Agencies Involved
  • Food and Drug Administration (FDA)
  • United States Department of Agriculture (USDA)
  • Federal Trade Commission (FTC)
  
  
• Key Legislation
  • Nutrition Labeling and Education Act of 1994 (NLEA)
  • Dietary Supplement Health and Education Act of 1994 (DSHEA)
  • Orphan Drug Act of 1983 (ODA) and Orphan Drug Amendments of 1988
  
  
• The FDA’s Approved Health Claims
• Disclaimers
• Lack of Patent Protection
• Generally Recognized as Safe (GRAS)
• Pending: Nutraceutical Research and Education Act

III. The Market

Market Size and Growth

• Sales Exceeded $17 Billion in 2001
• Table 3-1: U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 1997-2001 (dollars; percent)
• Tempestuous but Thriving Market
• Figure 3-1: U.S Retail Dollar Sales of Nutraceutical Foods and Beverages, 1997-2006 (dollars; percent)
• Wide Range of Market Estimates

Factors in Future Growth


• Educating the Public
• Consumer Health Concerns Increasing
• Personalized Nutrition of the Future
• Scientific Research Becoming More Commonplace
• Internet Acts as a Boost to Market Growth
• Nutraceuticals Institute and Others Help to Promote Growth
• Consumers Desire Health and Convenience
• New Technologies
• Consumers Look to "Alternative Medicines"
• Consumers Look to Self-Help Medicines

Outlooks for Particular Categories


• Cereals
• Comprehensive Nutritional Drinks
• Confections
• Dairy and Dairy Substitutes
• Infant Nutritional Products
• Other Beverages
• Other Foods

Projected Sales


• Nutraceuticals Expected to Reach over $22 Billion by 2006
• Table 3-2: Projected U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 2001-2006 (dollars; percent)
• Figure 3-2: Projected U.S Retail Dollar Sales of Nutraceutical Foods and Beverages, 2001-2006 (dollars; percent)

Market Composition


• Infant Nutritional Products and Cereals Account for over 42% of Sales
• Table 3-3: Share of Retail Dollar Sales of Nutraceutical Foods, by Product, 2001 (percent): 7 categories
• Grocery Channel Controls More than Half of Sales

IV. The Marketers

The Marketers

• Perhaps 800 Marketers
• Types of Marketers
• Marketers Sometimes Focus on Specific Retail Channels
• Table of Marketers and Brands
• Table 4-1: Selected Nutraceutical Food Marketers and Their Brands, 2001 (listing): 48 marketers, 95 brands

Marketer and Brand Shares


• Note on Share Data
• Slim-Fast Holds Strong in Comprehensive Nutritional Drinks
• Table 4-2: Share of U.S. Retail Dollar Sales of Comprehensive Nutritional Drinks, 2000-2001 (percent): 7 marketers; 18 brands
• Mead Johnson Dominates Liquid Concentrated Infant Formula
• Table 4-3: Share of U.S. Retail Dollar Sales of Infant Formula in Concentrated Liquid Form, 2000-2001 (percent): 3 marketers; 9 brands
• Mead Johnson Rules in Powdered Infant Formulas
• Table 4-4: Share of U.S. Retail Dollar Sales of Infant Formula in Powdered Form, 2000-2001 (percent): 3 marketers; 14 brands
• Abbot/Ross Controls RTD Infant Formula
• Table 4-5: Share of U.S. Retail Dollar Sales of Infant Formula in Ready-to-Drink Form, 2000-2001 (percent): 3 marketers; 13 brands
• Pedialyte Synonymous with "Electrolyte Balancers"
• Table 4-6: Share of U.S. Retail Dollar Sales of Infant Electrolyte Balancers, 2000-2001 (percent): 3 marketers; 13 brands
• Unilever and J&J Lead in Nutraceutical Margarines
• Table 4-7: Share of U.S. Retail Dollar Sales of Nutraceutical Margarines, 2000-2001 (percent): 2 marketers; 3 brands
• Share Perspective: Cold Cereals
• Share Perspective: Quaker’s Stake in Cereals
• Share Perspective: Quaker’s Reign in Hot Cereals
• Share Perspective: Westsoy Holds its Own in Soy Milks
• Share Perspective: Lactaid
• Share Perspective: So Be and Arizona Rx Bottled Drinks

The Competitive Situation


• “You First” and “Me First” Modes
• Many Niches with Little Marketer Competition

Competitive Profile: Abbot Laboratories/Ross Products


• Net Sales of $16.3 Billion in 2001
• Corporate Overview
• Focus on R&D
• Ross Products and the Ensure/PediaSure Brands

Competitive Profile: Bristol-Myers Squibb Company/Mead Johnson Nutritionals


• Sales of $19.4 Billion
• Corporate Overview
• Mead Johnson Nutritionals
• Other Products

Competitive Profile: Forbes Medi-Tech, Inc.


• Sales of C$7.9 Million in Fiscal 2001
• Forbes Medi-Tech Covers for Altus Food Company

Competitive Profile: The Hain Celestial Group, Inc.


• Sales of $412 Million in Fiscal 2001
• Corporate Overview
• Westsoy
• Other Hain Celestial Group Products

Competitive Profile: Johnson & Johnson


• Sales Jump Past $33 Billion in 2001
• Corporate Overview
• The Famed Benecol Food Ingredient
• Other Popular J&J Products

Competitive Profile: Kellogg Company


• Sales of almost $9 Billion in 2001
• Corporate Overview
• Kellogg’s Take on Nutraceuticals
• Other Kellogg Products

Competitive Profile: Nutraceutical Clinical Laboratories International, Inc.


• Behind the Scenes in the Nutraceutical Market

Competitive Profile: PepsiCo, Inc./Quaker Foods North America


• Net Sales of $27 Billion in 2001
• Acquisition of The Quaker Oats Company
• Famous PepsiCo Brands

Competitive Profile: Traditional Medicinals


• Corporate Overview

Competitive Profile: Unilever/Slim-Fast Foods Co.


• Sales of $46.7 Billion in Fiscal 2001
• Unilever’s Five Business Segments
• Corporate Overview
• Unilever Steps up to Web Challenge
• Unilever’s Nutraceutical Ventures
• Famous Unilever Brands

Marketing and Product Trends


• Educating the Public
• Ensuring Product Reliability
• Growth to Enable Entry into Market
• Eye Health
• Genetic Profiling
• Other New Technologies to Foster New Products
• Taste Matters
• New Product Types
• Convenience-Oriented Products Sought
• Innovative Packaging
• Table 4-8: Selected Nutraceutical Foods Introductions, 2000-2001 (listing): 37 marketers, 47 brands

Consumer Advertising Expenditures


• Nutraceutical Ad Dollars at $485 Million in 2001
• General Mills Spends $133 Million on Cheerios and Other Cereals
• PepsiCo spends $113 Million to Tout Its Quaker Brand
• Kellogg Spends $65 Million
• Abbot Spends $50 Million
• Philip Morris Spends $49 Million to Help Post and Balance
• Nestle Allocates $40 Million in Support of Infant Formula
• Unilever Spends $18 Million on Advertising for its Slim-Fast Meal On-the-Go Diet Bars
• J&J Spends $14 Million in 20001
• Bristol-Myers & Squibb Slashes Spending to $1.5 Million

Consumer Advertising Positioning


• Ads Aimed at Educating
• Advertising to Specific Group
• Hype versus Subtlety
• Kellogg’s Novel Approach to Weight Loss
• General Mills Banks on Humor
• Doctors’ Offices Friendly to Nutraceuticals

Consumer Promotions


• Coupons
• Free Samples
• In-Store Promotions
• Free Medical Tests

Trade Shows/Conferences


• Trade Shows and Conferences Abundant
• Functional Foods 2002
• EyeforFood USA 2002
• NNFA MarketPlace 2002

V. Distribution And Retail

Distribution

• Variety of Distribution Channels
• Two Main Distribution Paths: Traditional and DSD
  • Traditional Path
  • Direct Store Delivery
  
  
• Sales Forces Target Doctors
• ECR Operations

At the Retail Level


• Retail Margins on Nutraceutical Foods Vary
• Nutraceuticals Spread throughout Store
• Retailers Taking a More Healthful Stance
• In-Store Pharmacies Play Role
• Health Food Stores

VI. The Consumer

The Consumer: America’s Major Illnesses

• Nutraceuticals Driven by Demographics of Illness
• Fatal Illness in the United States
• Table 6-1: Deaths in the United States, by Cause: 2000 (number): 5 causes
• Cardiovascular Disease
• Cancer
• Diabetes
• AIDS
• Other Illnesses (Obesity and Bone Disease)

The Consumer: Lifestyles and Attitudes


• Notes on Sources—The Simmons Consumer Survey
• Consumer Data Are Limited
• Factors Favoring Control of Diet
• Table 6-2: Demographic Factors Favoring Control of Diet, 2001 (listing): 12 factors
• Reasons for Controlling Diet
• Table 6-3: Number of Adult Americans Controlling Diet, by Reason, 2001 (number; percent): 14 reasons
• Table 6-4: Demographic Factors Favoring Control of Diet, by Reason, 2001 (listing): 12 factors; 13 reasons
• Methods for Controlling Diet
• Table 6-5: Demographic Factors Favoring Control of Diet, by Method, 2001 (listing): 12 factors; 8 methods

The Consumer: Brand Use of Nutraceuticals


• Demographic Factors for Choosing Cold Cereal, by Brand, 2001
• Table 6-6: Demographic Factors Favoring Cold Cereal Consumption, by Brand, 2001 (listing): 12 factors; 5 brands
• Demographic Factors for Hot Cereals
• Table 6-7: Demographic Factors Favoring Quaker Hot Cereal Consumption, by Type of Cereal, 2001 (listing): 12 factors; 2 brands
• Comprehensive Nutritional Drinks
• Table 6-8: Demographic Factors Favoring Comprehensive Nutritional Drinks, by Brand, 2001 (listing): 12 factors; 2 brands

Appendix I: Examples Of Consumer Advertising And Promotions

Appendix II: Addresses Of Selected Marketers