The U.S. Market for Nutraceuticals

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Published Sep 1, 2000 | 199 Pages | Pub ID: LA592

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With consumers demanding more control over their own wellness, nutraceuticals, also called functional foods and beverages, are worth a bullish $15.0 billion at retail. Now, a new Packaged Facts report examines the market for these products that are positioned on either preventing or treating diseases and medical conditions. Starting with clear definitions of nutraceuticals as opposed to fortified foods and supplements, the report moves on to both historical sales, and a sales forecast through the year 2005. Among the market drivers discussed are consumer awareness, the convenience of nutraceuticals and the surprising range of products for diverse age brackets. The strategies of key players, such as Campbell, Johnson & Johnson, Kellogg, Unilever and more, are laid out in-depth. Valuable Simmons demographic data and IRI brand share data are also given.
  1. Executive Summary

    Scope and Methodology

      The Scope of This Report
      Report Methodology

    The Products

      Definition of "Nutraceutical"
      Ten Main Nutraceutical Categories
      Nutraceuticals Also Classed by Applications

    The Market

      Sales of Nutraceuticals Soar to Nearly $16 Billion
      Table 1-1: U.S. Retail Dollar Sales of Nutraceutical Food Products, 1995-2004 (dollars)
      The New Wedding of Medicine and Nutrition
      Infant Formula and Adult Nutritional Drinks Take One-Third of Sales
      Figure 1-1: Share of Retail Dollar Sales of Nutraceutical Foods, by Product, 1999 (percent): 11 categories/segments

    The Marketers

      Number of Nutraceuticals Marketers Difficult to Gauge
      The Field of Nutraceuticals Marketers Is Still Not Crowded
      Growing Pains: No Proven Pattern of Entry into the Mass Market
      Nutraceuticals Advertisers Hike Spending to $313 Million

    Distribution and Retail

      Nutraceutical Channels Include Grocery, Pharmacy, Mass Merchandise, Other Outlets
      Sales Forces Target Retailers and Doctors
      Nutraceuticals Still Scattered about the Supermarket
      Assortment Is at Once Vast and Small

    The Consumer

      Almost 32 Million Decision Makers Controlling Their Diets
      Weight, Fat Intake, Cholesterol Are Top Reasons for Controlling Diet
      Table 1-2: Reasons for Controlling One's Own Diet, 1999 (number and percent): 12 reasons
      Demographic Factors in Diet Control versus Noncontrol of Diet
      Other Demographic Data
  2. The Products

    Introduction

      The Scope of This Report
      Still a "Virtual" Market
      Definition of "Nutraceutical"
      "Functional" Often Synonymous with "Nutraceutical"
      Fortified Foods and Dietary Supplements Are Related but Separate Markets
      Some Overlap Is Unavoidable
      Glossary
      Amino Acids
      Astragalus
      Carbohydrates
      Designer Foods
      Diuretic
      Echinacea
      Enriched
      Enterals (Enterics)
      Flavonoids
      Fortified
      Garlic
      Genistein
      Gingko Biloba
      Ginseng
      Glucosamine—Chondroitin
      Green Tea
      Gotu Kola
      Guarana
      Hyper-Nutritious
      Isoflavones
      Kava Kava
      Mineral
      Monoterpenes
      Mood Food
      Optimum Food
      Parenterals
      Pharmafoods
      Phytochemicals
      Polyphenols
      Probiotics
      Protein
      Pyruvate
      Reservatrol
      Ribose
      Smart Food
      Spirulina
      Stanol Ester
      Vitamins
      Xylitol
      Zinc

    The Products

      Ten Main Nutraceutical Categories
      Infants' Nutritional Products
      Comprehensive Nutritional Drinks
      Confections/Desserts
      Cereals
      Other Beverages (Teas, Soft Drinks...)
      Dairy and Dairy Substitutes
      Baked Goods
      Ingredients/Condiments
      Salty Snacks
      All Other
      Nutraceuticals Also Classed by Applications

    Regulatory Issues

      The Agencies Involved
      The Food and Drug Administration (FDA)
      United States Department of Agriculture (USDA)
      The Federal Trade Commission (FTC)
      Key Legislation
      Nutrition Labeling and Education Act of 1994 (NLEA)
      Dietary Supplement Health and Education Act of 1994 (DSHEA)
      The Orphan Drug Act of 1983 (ODA), and The Orphan Drug Amendments of 1988
      The FDA's Eleven Permissible "Relationship" Claims
      Disclaimers
      The Lack of Patent Protection
      Pending: The Nutraceutical Research and Education Act
  3. The Market

    Market Size and Growth

      Sales of Nutraceuticals Soar to Nearly $16 Billion
      Table 3-1: U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 1995-1999 (dollars)
      Figure 3-1: U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages (dollars)
      Health Awareness, Regulation, Convenience, and Age Trends Have All Driven Sales
      A Host of Highly Disparate Market Estimates

    Factors in Future Growth

      The New Wedding of Medicine and Nutrition
      Overall Wellness a New Idea
      The State of the Nation's Health
      Convenience of Nutraceuticals Helps Folks to Comply with Restricted Diets
      The Nutraceutical Image: Medicine or Punishment
      But Does It Taste Good?
      The Graying of America
      Table 3-2: Projection of U.S. Population by Age, 2000, 2005, 2010 (number): 6 age brackets
      Boomers = Middle-Agers
      Nutraceuticals and Generations X, Y, and Z
      X
      Y
      Z
      Assortment Boosted by Improved Biological Measurements
      Science Considers Foods to Be Delivery Systems
      Global Marketing Calls Attention to the Nutraceutical Way
      Respect for Alternative Medicine
      Outlooks for Particular Categories
      Infant Nutritional Products
      Comprehensive Nutritional Drinks (CNDs)
      Confections/Energy Bars/Sweets
      Cereals
      Other Beverages
      Dairy and Dairy Substitutes
      Baked Goods
      Ingredients/Condiments
      Salty Snacks
      All Other

    Projected Sales

      Nutraceuticals to Break the $20 Billion Mark by 2004
      Table 3-3: Projected U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages, 1999-2004 (dollars)
      Figure 3-2: U.S. Retail Dollar Sales of Nutraceutical Foods and Beverages (dollars)

    Market Composition

      Infant Formula and Adult Nutritional Drinks Take One-Third of Sales
      Table 3-4: Share of Retail Dollar Sales of Nutraceutical Foods, by Product, 1999 (percent): 11 categories/segments
      The Grocery Channel Captures over Half of Sales
  4. The Marketers

    The Marketers

      Number of Nutraceuticals Marketers Difficult to Gauge
      Types of Marketers Involved
      Some Marketers Associated with Specific Retail Channels
      Table 4-1: Selected Nutraceutical Foods Marketers and Their Brands, 2000 (listing): 32 marketers, 71 brands

    Marketer and Brand Shares

      Special Note on Share Data
      Unilever/Slim-Fast Dominates Nutritional Drinks for Adults
      Table 4-2: Share of U.S. Retail Dollar Sales of Comprehensive Nutritional Drinks, 1998-1999 (percent); 7 marketers, 15 brands
      Mead Johnson Has Command of Concentrated Infant Formula Segment
      Table 4-3: Share of U.S. Retail Dollar Sales of Infant Formula and Electrolyte Balancers in Concentrated Liquid Form, 1998-1999 (percent); 3 marketers, 9 brands
      Mead Johnson Also Rules Powdered Infant Formula
      Table 4-4: Share of U.S. Retail Dollar Sales of Infant Formula and Electrolyte Balancers in Powdered Form, 1998-1999 (percent); 4 marketers, 12 brands
      Ross the Dominator in R-T-D Infant Formula
      Table 4-5: Share of U.S. Retail Dollar Sales of Infant Formula and Electrolyte Balancers in Ready-to-Drink (R-T-D) Form, 1998-1999 (percent); 3 marketers, 9 brands
      Johnson & Johnson, Owner of Benecol, Is Top Margarine Marketer
      Table 4-6: Share of U.S. Retail Dollar Sales of Nutraceutical Margarines, in Supermarket Outlets, 1998-1999 (percent); 3 marketers, 3 brands
      Share Perspective: Quaker's Presence in Hot and R-T-E Cereals Markets
      Share Perspective: Other R-T-E Brands Follow Quaker into Nutraceutical Territory
      Share Perspective: Celestial Seasonings and Traditional Medicinals Tea Bags/Loose Tea
      Share Perspective: SoBe Bottled Teas
      Share Perspective: Lactaid Milk

    The Competitive Situation

      The Field of Nutraceuticals Marketers Is Still Not Crowded
      Range of Retail Channels Fragments the Market
      Growing Pains: No Proven Pattern of Entry into the Mass Market

    Competitive Focus: Abbot Laboratories/Ross Laboratories

      Abbot Has Net Sales of $13.2 Billion in 1999
      Ross Most Visibly a Force with Ensure
      Abbot Also a Major Player in Other Liquid Nutrition Segments
      Abbot a Pharmaceutical Powerhouse

    Competitive Focus: Bristol-Myers Squibb/Mead Johnson
    Nutritional Group

      Bristol-Myers Squibb a $20.2 Billion Company in 1999
      Mead Johnson Positions Infants' Products on Treatment and Maintenance
      A Similar Focus on Nutraceuticals for Adults
      Other Bristol-Myers Squibb Products

    Competitive Focus: Campbell Soup Company

      Net Sales of $6.4 Billion
      Four Principal Business Segments
      Campbell's Intelligent Quisine Effort Goes Unappreciated

    Competitive Focus: Hain Celestial Group, Inc.

      A $366 Million Company
      The Merger of Hain and Celestial Seasonings

    Competitive Profile: Johnson & Johnson

      J & J Reports Sales of $27.5 Billion for 1999
      Three Main Business Segments
      The Benecol Story
      Other J & J Consumer Brands

    Competitive Focus: Kellogg Company

      Net Sales of $7 Billion in 1999
      The Ensemble Line Debuts and Disappears
      Ensemble Replaced by an Acquisition Campaign
      Some Famous Kellogg Marques

    Competitive Focus: Procter & Gamble Co.

      Sales Approach $40 Billion in 2000
      A Cautious P & G About to Enter U.S. Nutraceuticals Market
      Product Development Time Accelerated
      Prospects for Olestra
      Famous P & G Consumer Brands

    Competitive Focus: The Quaker Oats Company

      A $4.7 Billion Company
      Food and Gatorade Segments Combined
      Quaker Oatmeal Products Are World's Best-Selling Nutraceuticals
      Altus: Quaker's New Partnership with Novartis
      Increased Efficiencies
      Other of Quaker's Household Names

    Competitive Focus: Robert's American Gourmet

      An Exemplary Tale for Small Entrepreneurs
      Robert's Is Shrewd Regarding Health Claims

    Competitive Focus: Traditional Medicinals

      Sales of at Least $7 Million
      A Longtime Positioner on Medical Value

    Competitive Focus: Unilever/SlimĀ· Fast Foods Company

      Slim-Fast's New Owner Is a $43.6 Billion Giant
      Unilever's Four Major Business Segments
      Table 4-7: Unilever's Dollar Sales by Segment, 1999 (percent): 4 segments
      Slim-Fast Acquired for $2.3 Billion
      Slim-Fast's Positioning Broadened to Encompass Healthfulness
      Unilever Already Stressing Nutraceuticals
      Other Famous Unilever Brands

    Marketing Trends

      Accentuating the Positive
      Frank versus Implied Product Claims
      Repositioning Products for Multiple Audiences, Multiple Distribution Channels

    Product Trends

      Perhaps a Thousand Nutraceutical Food Products Debut Annually
      Extensions Proliferating
      SKUs with Herbal Actives
      Repositioned Products
      Table 4-8: Selected New Product Introductions, 1998-2000 (listing): 33 marketers, 39 brands

    Consumer Advertising Expenditures

      Nutraceuticals Advertisers Hike Spending to $313 Million
      Slim-Fast Leads Field of Ten Major Spenders
      Abbot Spending Breaks $51 Million Mark
      Quaker Spends $45 Million
      Nestle Pumps Ad Monies to $41 Million
      Bristol-Myers Squibb in Jump to $34 Million
      J & J Ups Budget to $17 Million
      Unilever Spends $13 Million to Enter Market
      Nabisco Allocates $5 Million
      Kellogg's First Foray Supported by $3 Million
      GFA Reduces Buys to $1 Million
      Other Spenders

    Positioning

      Dressing Up the Medicine Pitch
      Real People
      Celebrity Endorsements
      Women's Health
      A Dual-Positioning: Weight Control and Overall Health
      Preventing Dehydration
      An Advertorial Regarding Tomato Content

    Consumer Promotions

      Couponing the Principal Tactic
      Two-for-One Offers and Packs
      A Book Tie-In
      A Customer Service Line That Charges a Fee
      Examples of Consumer Promotional Advertising

    Trade Shows

      Nutracon 2000
      The Natural Products Expo
  5. Distribution and Retail

    Distribution

      Nutraceutical Channels Include Grocery, Pharmacy, Mass Merchandise, Other Outlets
      The Traditional and DSD Grocery Paths
      Direct Store Delivery
      The Pharmacy, Mass Merchandiser, Natural Foods Paths
      Sales Forces Target Retailers and Doctors
      Some Nutraceuticals Are Rack-Jobbed
      Other Factors Affecting Choice of Distribution Mode
      Marketing Services/Micromarketing
      Grocer Consolidation
      Preservatives Use

    At the Retail Level

      Nutraceuticals Still Scattered about the Supermarket
      Margins Vary Enormously
      Table 5-1: Supermarket Retailers' Average Gross Profit Margins on Selected Food Products, Including, But Not Limited to Nutraceuticals, 1993-1998 (percent): 18 product categories
      Assortment Is at Once Vast and Small
      Multipacks, Cases Popular
      The MedMax Phenomenon
  6. The Consumer

    The Consumer: America's Major Illnesses

      AIDS/HIV Has Killed Over 400,000 Americans
      Arthritis Sufferers Number 43 Million
      Cancer Has Stricken 8.4 Million Living Americans
      Cardiovascular Ailments Trouble 60 Million
      Table 6-1: Number of Americans with Cardiovascular Disease (CVD), by Type, 2000 (number and percent): 8 diseases/conditions
      CVD Mortality by State: A Surprising Regionality
      Table 6-2: Rate of Cardiovascular Disease Mortality, by State, 2000 (listing): 4 ranges of mortality
      The Common Cold: Children Account for Lion's Share of 60 Million Cases
      Diabetes Afflicts as Many as 16 Million
      Tens of Millions with Mental Health Problems
      Half of All Adults Are Overweight

    The Consumer: Lifestyles and Attitudes

      Almost 32 Million Decision Makers Controlling Their Diets
      Almost 70 Million Decision Makers Do Not Control Their Diets
      Weight, Fat Intake, Cholesterol Are Top Reasons for Controlling Diet
      Table 6-3: Reasons for Controlling One's Own Diet, 1999 (number and percent): 12 reasons
      Demographic Factors in Diet Control versus Noncontrol of Diet
      Specific Reasons for Diet Control Skew to Women and Older Decision Makers
      Table 6-4: Demographic Factors Favoring Controlling or Not Controlling Diet, 1999 (listing): 12 factors
      Table 6-5: Demographic Factors Favoring the Controlling of Diet, by Reasons, 1999 (listing): Blood Sugar, Calcium Intake, Cholesterol Level, Diabetes, Fat Intake, Food Allergy, Heart Disease, Hypertension, Lactose Intolerance, Salt Intake, To Lose Weight, To Maintain Weight, Other; 12 factors
      America Says: I Want to Exercise More, I Like Bans on Smoking, I'm Trying to Eat Healthier
      Table 6-6: Strong Agreement With Given Statements Concerning Health/Nutrition, 1999 (number and percent): 12 statements
      Patterns in Agreement with Health/Nutrition Statements
      About Half of Decision Makers Exercise Regularly
      Exercisers Are Younger and More Upscale
      Table 6-7: Demographic Factors Favoring Strong Agreement with Given Statements Concerning Health/Nutrition, by Statement, 1999 (listing): 12 statements, 12 factors
      Table 6-8: Demographic Factors Favoring Regular Exercise within the Past Year, 1999 (listing): 12 factors
      One-Third of Americans Choose Foods for Medicinal Value

    The Consumer: Brand Use of Nutraceuticals

      Slim-Fast, Carnation, Ensure Are Most Popular Nutrition Drinks
      Table 6-9: Use of Comprehensive Nutritional Drinks, by Brand, 1999 (number and percent): 10 brands, private label
      Disparate Profiles of Nutritional Drink Brand Purchasers
      Table 6-10: Demographic Factors Favoring Use of Comprehensive Nutritional Drinks and Weight-Loss Drinks, Brand Used Most Often, 1999 (listing): Boost, Carnation Instant Breakfast, Ensure, Nestle Sweet Success, Slim-Fast, Ultra Slim-Fast; 12 factors
      Quaker Instant Oatmeal Is Most Favored Nutraceutical Hot Cereal
      Table 6-11: Use of Quaker Hot Cereals, by Brand, 1999 (number and percent): Quaker Instant Oatmeal, Quick Quaker Oats, Old Fashioned Quaker Oats
      Patterns in Purchase of Quaker Hot Cereals
      Table 6-12: Demographic Factors in Use of Hot Breakfast Cereals, by Brand Used Most Often, 1999 (listing): Quaker Instant Oatmeal, Quick Quaker Oats, Old Fashioned Quaker Oats; 12 factors
      Cheerios, Kellogg's Raisin Bran Are Most Popular R-T-E Cereals
      Table 6-13: Use of Ready-to-Eat (R-T-E) Cereals, by Brand, 1999 (number and percent): 7 brands
      Profiles in R-T-E Cereals Purchase
      Table 6-14: Demographic Factors in Use of Ready-to-Eat (R-T-E) Breakfast Cereals, by Brand Used by Most, 1999 (listing): Cheerios, Kellogg's Raisin Bran; 12 factors
  7. Appendix I: Examples of Consumer and Trade Advertising and Promotions: Available Only in Bound Editions

    Appendix II: Addresses of Selected Marketers

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