I. Executive Summary

Scope and Methodology
• Products Covered

The Products
• Foods and Beverages Fortified to Enhance Nutritive Value
• Products Not Included
• Four Major Fortified Food Categories
• History of Food Fortification
• Vitamins, Minerals, Dietary Fiber, Probiotics, and Herbs are the Most Common Fortifiers

The Market
• Sales Exceed $5.5 Billion in 1999
• Table 1-1: U.S. Retail Sales of Fortified Foods by Product Category, 1995-2004 (dollars): Staples, Beverages, Baby Foods, Snacks/Desserts
• Staples, More than Doubling, Are Now the Largest Category
• Fortified Beverage Sales Grow a Robust 20%
• Baby Foods and Snacks/Desserts Grow Much More Modestly
• Staples Now Largest Category
• Food Stores Dominate Sales
• Factors in Future Market Growth
• Figure 1-1: The U.S. Fortified Foods Market: Share of Dollar Sales by Retail Channel, 1999 (percent): Food stores, Convenience Stores, Vending, Mass merchandisers, Natural food stores, Drugstores, Other

The Marketers
• Food Companies, Healthcare Companies, Diversified Consumer Products Companies, and New Age Start-Ups
• Baby Food and Infant Formula Marketers
• Ready-to-Eat Cereal Marketers
• Juice and Juice Drink Marketers
• The Natural Niche in Fortified Juice
• Dairy, Milk, and Milk-Alternative Marketers
• Marketers of Fortified Desserts and Snacks
• Cereals Take the Lead
• Juices and Juice Drinks: A Complex Environment
• Herbs for the New Agers
• Vitamins and Minerals for the Mainstream
• Procter & Gamble Relatively Inactive
• Fortified Milk a Niche Market
• Kellogg Rules Desserts and Snacks Thanks to Nutri-Grain
• Fortified Infant Formulas Growing Slowly and Consolidating
• Fortified Baby/Toddler Foods Also Grow Slowly
• New Product and Marketing Trends
• Herbal Ingredients in Single-Serve Beverages
• Calcium in Everything
• Fortification of Key Existing Ready-To-Eat Cereal Products
• Many New Fortified Milk and Milk-Alternative Products
• Fortified Desserts Continue to Multiply
• Future Fortifiers: Soy Isolates, Anthocyanin, Polyphenol, and Lycopene
• Advertising and Promotion

Distribution and Retail
• Two Distribution Methods: Standard and Direct
• Where Fortified Foods Are Sold
• Most Fortified Food Line Extensions Priced at Parity
• No Separate Display for Fortified Foods

The Consumer
• The Overall Fortified Foods Consumer

II. The Products

Scope of Market
• Foods and Beverages Fortified to Enhance Nutritive Value
• A Market of Line Extensions
• Four Major Categories
• Definitions: Enriched, Fortified, Functional, Nutraceutical, Supplements
• Enriched
• Fortified
• Dietary Supplements
• Functional Foods
• Nutraceuticals
• Products Fortified by Government Mandate or Industry Custom Are Not Included
• Sports Nutrition, Energy Bars, Meal Replacements Are Not Included

History of Food Fortification
• Deficiency Diseases and Discovery of Vitamins
• Fortification Introduced in 1920s and 1930s to Prevent Deficiency Diseases
• Medical Establishment Promotion Helps Make Fortification an Industry Norm
• FDA at First Promotes Food Fortification...
• ...Then Discourages It
• Fortification in the Postwar Era
• Controversy over Fortification Decided in Marketers' Favor in Late Sixties
• Questions Raised by the FDA and the Natural Food Industry
• Complaints and Public Whim Take Their Toll
• The 1980s: Technology Answers Absorption Issue and Revives Fortified Juice
• Rise of Vitamin Chains Changes Climate of Opinion
• Trend toward Segmentation and Related Changes in Grocery Favor Fortification
• Changes in Regulation Have Positive Effect

Ingredients Commonly Used to Fortify Foods
• Vitamins, Minerals, Dietary Fiber, Probiotics, and Herbs are the Most Common Fortifiers
• Vitamins
• Vitamin A
• Vitamin B1, Thiamine
• Vitamin B2, Riboflavin
• Vitamin B3, Niacin
• Vitamin B5, Pantothenic Acid
• Vitamin B6, Pyridoxine
• Vitamin B12, Cobalamin
• Folic Acid
• Vitamin C
• Vitamin D
• Vitamin E
• Vitamin K
• Minerals
• Calcium
• Chromium
• Iodine
• Iron
• Magnesium
• Manganese
• Phosphorous
• Potassium
• Selenium
• Sodium
• Zinc
• Table 2-1: Reference Daily Intake of Selected Vitamins and Minerals
• Dietary Fiber
• Probiotics
• Herbal Fortifiers
• Chamomile
• Echinacea
• Ginger
• Ginkgo
• Ginseng
• Oregano
• Spirulina
• St. John's Wort

Regulatory Environment
• The Nutrition Labeling and Education Act of 1990
• NLEA Allows for Nine Health Claims
• Foods Claiming Benefits Must Be Healthy by FDA Standards
• Dietary Supplement Health and Education Act of 1994
• Infant Formula Regulated Separately and More Strictly

Packaging and Labeling
• Packaging Is Standard
• Labeling Is Half Regulation and Half Marketing

III. The Market

Market Size and Growth
• A Challenging Market to Track
• Sales Exceed $5.5 Billion in 1999
• Figure 3-1: U.S. Retail Sales of Fortified Foods, 1995-1999
• Table 3-1: U.S. Retail Sales of Fortified Foods, 1995-1999 (dollars)
• Staples, More than Doubling, Are Now the Largest Category
• Fortified Beverage Sales Grow a Robust 20%
• Baby Foods Grow Much More Modestly
• Snacks Grow 12% in 1999
• Table 3-2: U.S. Retail Sales of Fortified Foods by Product Category, 1995-1999 (dollars): Staples, Beverages, Baby Foods, Snacks/Desserts

Market Composition
• Staples Account for Almost 42% of Fortified Food Sales
• Most Popular Ingredients Used in Fortified Foods
• Figure 3-2: U.S. Fortified Foods Market: Share of Dollar Sales by Product Category, 1995 vs. 1999 (percent): Staples, Beverages, Baby Foods, Snacks/Desserts
• Food Stores Sell Around 85% of Fortified Foods
• Market Overall Is Not Significantly Seasonal
• Figure 3-3: The U.S. Fortified Foods Market: Share of Dollar Sales by Retail Channel, 1999 (percent): Food Stores, Convenience Stores, Vending, Mass Merchandisers, Natural Food Stores, Drugstores, Other
• Per Capita, Sales Are Greatest in the Northeast

Factors in Future Market Growth
• Fortification Rides the Long-Term Health and Marketing Trends that Promote Functional Foods
• The Aging of the U.S. Population
• The Self-Medication Trend
• Food Is Seen as a Path to Health
• Food Must Be Convenient and Fun as Well as Healthy
• The Promise of Biotechnology
• Marketers Need the New Sales Opportunities That Fortification May Provide
• European and Japanese Markets Raise Tantalizing Prospects
• Gradual Relaxation of FDA Regulation
• High Stakes Bring Nonfood Marketers into Play
• Potential of New Cholesterol-Reducing Margarine
• New Soy Claim Sure to Expand Market in the Short Term
• Ensemble's Failure May Have Dampening Effect
• The Potential for Disenchantment
• Figure 3-4: Projected U.S. Retail Sales of Fortified Foods, 1999-2004

Projected Market Growth
• Sales of Fortified Foods Will Reach Almost $7.8 Billion by 2004
• Table 3-3: Projected U.S. Retail Sales of Fortified Foods by Product Category, 1999-2004 (dollars): Staples, Beverages, Baby Foods, Snacks/Desserts

IV. The Marketers

The Marketers
• Hundreds of Marketers
• Food Companies, Food Co-ops, Healthcare Companies, Diversified Consumer Products Companies, and New Age Start-Ups
• Brands and Marketers Can Be Classed by Sales Venue
• Baby Food and Infant Formula Marketers
• Ready-to-Eat Cereal Marketers
• Juice and Juice Drink Marketers
• The Natural Niche in Fortified Juice
• Dairy, Milk, and Milk-Alternative Marketers
• Marketers of Fortified Desserts and Snacks
• Table 4-1: Selected U.S. Marketers of Fortified Foods by Brand and Product Category

Competitive Overview
• Cereals Take the Lead
• Juices and Juice Drinks: A Complex Environment
• Herbs for the New Agers
• Vitamins and Minerals for the Mainstream
• Ocean Spray Turns to Fortification
• Procter & Gamble Relatively Inactive
• Fortified Milk a Niche Market
• Kellogg Rules Desserts and Snacks Thanks to Nutri-Grain
• Fortified Infant Formulas Growing Slowly and Consolidating
• Fortified Baby/Toddler Foods Also Grow Slowly

Competitive Profile: Abbott Laboratories
• Worldwide Revenues of $13.1 Billion in 1999
• Best-Known Infant Formula Products
• Abbot Benefits from Wyeth-Ayerst's Exit
• Promoting Breast-feeding while Putting Its Name Before the Public
• Expansion in "Emerging Markets" Planned

Competitive Profile: Campbell Soup Company
• Sales Placed at $6.4 Billion in Fiscal 1999
• V-8 Splash Makes Campbell a Leading Fortified Food Marketer

Competitive Profile: The Coca-Cola Company
• Net Operating Revenues of $18.8 Billion in 1998
• Coca-Cola's Juice and Fortified Beverage Brands
• Minute Maid vs. Tropicana
• Hi-C Is the Oldest Fortified Juice Brand
• Hi-C vs. Hawaiian Punch
• Minute Maid Calcium-Fortified Apple Juice

Company Profile: General Mills, Inc.
• Sales of $2.6 Billion in Fiscal 1999
• Fortifying Products to Support Nutrition Claims

Competitive Profile: H.J. Heinz Company
• Sales of $9.3 Billion in Fiscal 1999
• More than Sauces
• Nutrition's Place in Heinz's "Formula for Growth"
• Heinz and Fortified Foods

Competitive Profile: Hain Food Group Inc.
• A Major Producer of Packaged Organic Foods
• Fortified Food Initiatives
• Heinz Buys Stake in Hain

Competitive Profile: Kellogg Company
• 1999 Sales of $7.1 Billion
• Familiar Brands and Worldwide Operations
• The Trouble with Cereal
• Commitment to Change through Innovation
• Betting Big on Fortified Foods
• The Ensemble Initiative
• Ensemble's Challenges
• Ensemble's Prospects as of Late 1999

Competitive Profile: Land O'Lakes
• Net Sales of $5.2 Billion in 1998
• Growth in a Consolidating Industry
• Fortification Helps Add Value

Competitive Profile: Nantucket Allserve, Inc./ Subsidiary of Ocean Spray Cranberries
• Privately-Owned New Age Drink Company Became Ocean Spray Subsidiary in 1998
• Ocean Spray Is Warned by Example of Quaker Oats and Snapple
• Two "Juice Guys" Succeed with Carefree Lack of Professionalism
• On the Fortification Bandwagon with Other New Age Drinks

Competitive Profile: Ocean Spray Cranberries, Inc.
• Sales Almost $1.5 Billion in 1998
• Into Tropical Blends and Single-Serve
• Nantucket Allserve Purchase Makes Ocean Spray a Marketer of Fortified New Age Drinks
• Tiny Co-op Competitor, Northland, Challenges Ocean Spray
• Fortification to Stem Sales Decline

Competitive Profile: Odwalla, Inc.
• Net Sales of $68 Million in 1999
• Recovery from the Contamination Incident
• From Founding in 1980 to IPO in 1993
• Good Works and Profit Go Hand in Hand
• Odwalla Began Fortifying Juice in Early 1990s
• Odwalla Nutritionals

Competitive Profile: PepsiCo/Tropicana
• Sales of $18.6 Billion in 1999
• Tropicana Acquisition Puts PepsiCo into the Juice Business
• Providing Choices
• Recent Initiatives in Fortified Juice

Competitive Profile: Philip Morris Companies
• Worldwide Operating Revenues of $78 Billion in 1998
• The Company that Marlboro Built
• Five Business Segments
• Fortified Food Products

Competitive Profile: The Procter & Gamble Company
• Net Sales of $38.1 Billion in Fiscal 1999
• A Pioneer of Modern Marketing Techniques
• Procter &Gamble Needs to Move into Growth Markets
• Still the Leader in Fortified Beverages
• The FruitCal System
• Hawaiian Punch
• Sunny Delight
• Competitive Threats from PepsiCo, Coca-Cola, and Others

Competitive Profile: South Beach Beverage Company
• Privately Owned Company with Headquarters in Connecticut
• Lack of Distributor Interest Sparks Search for Point of Difference
• Herbs with Name Claims Help SoBe Stand Out on the Shelf
• Continued Progress in 1999

Competitive Profile: Triarc Companies Inc.
• A Restaurant and Beverage Company with 1998 Revenues of Above $735 Million
• A Company Renamed and Refocused
• Snapple Acquisition
• Snapple Elements Puts Snapple on Herbal Bandwagon
• Mistic, Too, Fortifies Some of Its Drinks

New Product and Marketing Trends
• Herbal Ingredients in Single-Serve Beverages
• Name Claims in Herb-Fortified Beverages
• Table 4-2: Selected New Herb-Fortified Foods, 1998-1999
• (listing): 10 products
• Calcium in Everything
• Table 4-3: Selected New Calcium-Fortified Foods, 1998-1999 (listing): 36 products
• Fortification of Key Existing Ready-To-Eat Cereal Products
• Many New Fortified Milk and Milk-Alternative Products
• Table 4-4: Selected New Fortified Milk and Milk-Alternative Products, 1998-1999 (listing): 14 products
• Fortified Desserts Continue to Multiply
• Ensemble and the Potential for Integrated Lines of Fortified/Functional Foods
• Table 4-5: Selected New Fortified Desserts, 1998-1999
• (listing): 16 products
• Future Fortifiers: Soy Isolates, Anthocyanin, Polyphenol, and Lycopene
• Soy Isolates
• Anthocyanin
• Polyphenol
• Lycopene

Advertising Positioning
• Advertising Is Linked to Promotion
• Media Choice Depends on Budget and Audience Size
• Fortification Used to Define Women's and Children's Niches
• Calcium Fortification of Minute Maid Helps Reposition Orange Juice for the Morning
• Kellogg's Ensemble: Brand Change Instead of Lifestyle Change
• The Place of Professional Communications
• Image and New Age Ads
• Advice for Functional Food Advertisers

Consumer Promotion
• Beverage and Cereal Consumer Promotions Are Large and Elaborate
• Sports Tie-Ins Common
• Convenience Store Marketers and Natural Foods Marketers Have Different Promotional Emphasis
• Kellogg and Minute Maid Co-Brand for Contest
• Kellogg Offers Private Health Coach for Ensemble Users
• Publicity to Health Professionals
• Good Works and Other Publicity

V. Distribution and Retail

Distribution
• Two Distribution Methods: Standard and Direct
• Warehousing vs. Direct Store Delivery
• Direct Store Delivery Growing
• Advantages of Warehouse Distribution
• Disadvantages of Warehouse Distribution
• Advantages of Direct Store Delivery
• Disadvantages of Direct Store Delivery
• Small Marketers Frequently Work through Brokers
• Distributor Networks Serve Different Classes of Trade
• Distributor Margins
• Distributor Networks Motivate Marketer Alliances and Acquisitions
• The Battle for Distribution

At the Retail Level
• Where Fortified Foods Are Sold
• Supermarkets Have 83% of Overall Fortified Food Sales
• Supermarkets' Share of Staples and Baby Food Is Higher, Lower for Beverages
• Supermarket Selection Is Expanding
• Convenience Store Selection Best in Beverages
• Health Foods Store Selection Limited Except for Herb-Fortified Beverages
• Limited Selection in Warehouse Clubs
• Most Fortified Food Line Extensions Priced at Parity
• No Separate Display for Fortified Foods
• Fortified Breakfast Cereals Receiving More Facings Per Stock-Keeping Unit Than in the Past
• Natural Foods Store Selection

VI. The Consumer

Note on Sources
• Simmons Market Research Bureau Data

The Overall Fortified Foods Consumer
• Fortified Food Shoppers Tend to Be Young and Female
• Certain Segments and Products Can Be Exceptions to Young and Female Rule
• African-Americans Purchase More Fortified Foods than Other Ethnic Groups
• Forty-Five Percent of Americans Take Dietary Supplements

The Fortified Beverages Consumer
• A Quarter of Tropicana Refrigerated Orange Juice Users Purchase Fortified Version Most Often
• Table 6-1: Number of Shoppers Purchasing Selected Brands of Fortified and Unfortified Orange Juice, 1998 (number): 6 Minute Maid items, 10 Tropicana items
• Women More Likely to Buy "With Calcium" Orange Juice than Men
• Minute Maid's "Plus Calcium" Users Younger and More Upscale than Minute Maid Premium Users
• Consumers of Calcium-Fortified Tropicana Young and Female
• Table 6-2: Demographic Factors Favoring Purchase of Fortified/Unfortified Orange Juice by Brand, 1998 (listing): 11 factors; Minute Maid Premium, Minute Maid Premium Plus Calcium, Tropicana Premium Original, Tropicana Premium Plus Calcium
• Three All-Fortified and One Unfortified Drinks
• Table 6-3: Number of Shoppers Purchasing Selected Brands of Fruit Drink, 1998 (number): Sunny Delight, Hawaiian Punch, Hi-C, Snapple
• Three Best Selling Fortified Fruit Drinks Have Similar Brand Profiles
• Snapple User: Young and Single
• Table 6-4: Demographic Factors Favoring Purchase of Fortified Fruit Drinks by Brand, 1998 (listing): 11 factors; Hawaiian Punch, Hi-C, Sunny Delight, Snapple

The Fortified Staple Consumer
• Kellogg's Frosted Flakes Is Most Widely Used Fortified Cereal
• Table 6-5: Number of Shoppers Purchasing Selected Fortified Ready-To-Eat Cereal Brands: 1998 (number): 7 brands
• The Fortified Ready-To-Eat Cereal Consumer Is Fortified Staple Consumer
• Chex Buyers Older and Downscale Relative to Other Fortified Cereals
• Kellogg's Fortified Brands Preferred by African-Americans and Americans of Hispanic Origin
• Multi-Grain Cheerios Provide a Mixed Profile
• Table 6-6: Demographic Factors Favoring Purchase of Fortified Ready-to-Eat Cereals by Brand, 1998 (listing): 11 factors; Kellogg's Frosted Flakes; Kellogg's Apple Jacks; Kellogg's Corn Pops; Multi-Grain Cheerios; Corn Chex; Rice Chex; Wheat Chex

The Fortified Dessert/Snack Consumer
• Nutri-Grain vs. Quaker Oats Granola Bars
• 23.3 Million Principal Shoppers Buy Granola Bars
• Few Differences in the Brand Profiles of Chewy Granola Bars and Nutri-Grain
• Table 6-7: Demographic Factors Favoring Purchase of Nutritious Snacks by Brand: 1998 (listing): 14 factors; Kellogg's Nutri-Grain, Quaker Oats's Chewy Granola

The Fortified Baby Food and Infant Formula Consumer
• Young, Married Mothers Who Are Homemakers
• Few Surprises in Profile of Infant Formula Buyers
• Table 6-8: Demographic Factors Favoring Purchase of Baby Food by Brand: 1998 (listing): 13 factors; Heinz, Gerber, Beech-Nut
• Table 6-9: Demographic Factors Favoring Purchase of Infant Formula in Last 30 Days, 1998 (listing): 14 factors

Appendix I: Examples of consumer and trade advertising and promotions

Appendix II: Addresses of selected marketers