As 2015 winds down and a new calendar year is set to begin, the nutrition-supplements industry can take heart that, despite some very public challenges, sales are up, around 2.5%–3%, from 2014. Data collected from both SPINS and Euromonitor International data-analysis firms support this assertion, indicating that negative media attention directed at the supplements market this year has had minimal, if any, lasting impact on total industry growth so far.

Chris Schmidt, senior analyst, consumer health, Euromonitor International, says that, in general, the “total vitamin and supplement category performed pretty well in 2015, growing 3% in constant terms. In the United States it’s a pretty mature category,” he adds, so “when you examine the entire category, you’re not going to see explosive growth rates, because the industry is so large and well-established.” What you will see, he says, is what he calls “underlying demand growth.”

The current underlying demand growth of the supplements market is respectable. Schmidt explains. “It is still pretty strong, especially for a mature market.”

Longtime industry leader Jim Emme, CEO of NOW Foods, confirms what the numbers show: “Our experience is that the industry is in good shape, it’s strong, there’s still a lot of consumer demand for supplements and natural products,” he says, noting that demand for NOW Foods’ supplements is up in the United States and Canada, so much so that the company has had to “add capacity” to keep up.

Still Growth…Despite Negative Media and Government Attention

It’s no secret that industry was the subject of greater scrutiny than usual in 2015, particularly from 

New York Attorney General Eric Schneiderman

 beginning early in the year, then broadening to include a 

 that included Connecticut’s George Jepsen, Indiana’s Greg Zoeller, secretary of Puerto Rico’s Department of Consumer Affairs Nery Adames Soto, and, later, Oregon’s attorney general Ellen Rosenblum. These public figures appeared to be crusading for efforts to “eliminate misleading and deceptive labeling for the benefit of consumers,” as Indiana’s Zoeller put it in a press release, with a particular focus on herbal supplements sold at well-known retail outlets GNC, Target, Walmart, and Walgreens.

GNC later reached an agreement with Schneiderman

 regarding its Herbal Plus products; however, in late October GNC Holdings Inc.’s stock dropped 21% and the bad press continued after Oregon’s state attorney general, Ellen Rosenblum, pronounced that some supplements sold by GNC contained the substances picamilon, described by Rosenblum as a Russian prescription neurological drug, and BMPEA, an amphetamine-like substance, according to Rosenblum. The state of Oregon has filed a 

 over this matter. For its part, GNC issued a statement saying that “the claims made by the Oregon Attorney General are without merit and GNC intends to vigorously defend against these allegations.”

Compounding the bad PR, one month prior to Rosenblum’s filing the lawsuit, New York AG Schneiderman issued cease-and-desist letters instructing 13 dietary supplement manufacturers (including NOW Foods and other established industry names) to stop selling, distributing, and marketing “adulterated or misbranded” 

. The letters cited a study performed by the New York Botanical Garden that used a DNA-barcoding technique to conclude that the devil’s claw supplements from these manufacturers contained a cheaper related species that is considered “less desirable,” according to Schneiderman’s office. (The American Botanical Council promptly refuted the “less desirable” interpretation, as well as the other conclusions reached by Schneiderman’s office, in a press release.) The AG asked the manufacturers who received the letters to recall any “adulterated” devil’s claw supplements, compensate consumers who purchased the mislabeled products, and reform their quality-control measures.

Finally, unrelated but also in October, a study was published online in The New England Journal of Medicine concluding that dietary supplements send at least 

23,000 Americans per year to hospital emergency rooms

 and cause at least 2,000 to be hospitalized. The report has motivated some health and consumer advocates to again call for heavier FDA regulation of supplements.

So, with dietary supplements under attack, so to speak, in a very public way, how is it that industry has still grown 2%–3% over the course of the same year?

“Negative media stories can have fairly meaningful impacts,” says Euromonitor’s Schmidt, “but those tend to be fairly short-lived. Consumers don’t have really strong long-term memory in terms of any sort of press affecting their consumer purchasing. As soon as a negative story comes out, it’s refuted with positive coverage from the industry or a physicians’ group, etc. We don’t see long-term magnitudinal changes from negative coverage, but it can hit an individual category, like the fish oil category” was hit a few years ago. That category, of course, has been 

rebounding, thanks to the Global Organization for EPA and DHA Omega-3s

’ (GOED) consumer-education campaigns, and was even a notable contributor to industry growth in 2015.

NOW Foods’ Emme, who calls himself an optimist, says that in the more than 20 years he’s been in the supplements industry, 2015 “has been the most prolific year I’ve seen in my natural products career for negative press about the industry.” However, he adds, the silver lining is that industry will renew its focus on supply-chain quality and transparency, and “the role of DNA testing in our industry” will be examined by all stakeholders, with, hopefully, some sound conclusions being reached regarding what that role is. “We all, industry and government authorities alike, have a lot to learn about DNA testing,” he says.

Non-Herbal Supplements Led the Way in 2015

Products in the non-herbal/traditional vitamins and supplements category appear to be largely responsible for driving sales growth and keeping the entire supplements industry humming in 2015, according to Euromonitor’s Schmidt. He points to eye-health supplements, proteins, and probiotics as being notable performers, as well as fish oils, which are making a solid recovery from their 2013 decline.

Eye-health supplements have seen consistent growth since 2010, Schmidt explains. Combination antioxidant products based on the formulas used in the National Institutes of Health’s Age-Related Eye Disease Study (AREDS and AREDS2), and standalone ingredients like lutein, “have done well,” he says.

Protein supplements, mainly in powder form but increasingly in new ready-to-drink formulations, continued to do very well overall in 2015. Kimberly Kawa, natural products specialist, SPINS, calls plant-based and animal-based proteins-especially the multiple-sourced formulations-“the best performers based on both sales volume and percent growth.” Her data show, for instance, that multi-sourced animal-based proteins saw U.S. sales of $368 million in 2015 (in the channels for which SPINS collects data), up about 20% from the prior 52-week period. Protein products formulated with a combination of both animal- and plant-based proteins led the whole protein category in dollars with U.S. sales of $1.4 billion, up just a bit-a little under 1%-from the previous year.

Likewise, Euromonitor’s Schmidt concurs that protein supplements continued to grow “really strongly” in 2015. He points specifically to non-sports–positioned products, such as Vega, and the more generic proteins marketed for general wellness or for promoting energy throughout the day.

Euromonitor puts the size of the U.S. probiotics-supplements market, listed as retail-sales price (RSP), as $1.7 billion in 2015. SPINS reports 15% growth in sales of probiotics from 2014 to 2015 in all combined U.S. retail sales channels for which the firm collects data (natural supermarkets [excluding Whole Foods], specialty supermarkets, conventional multi-outlet [includes Walmart]). Both SPINS and Euromonitor agree that growth of the probiotics market has been strong for a few years, despite the category’s maturation, particularly in the mass market, notes Schmidt. He adds that probiotics have “always been pretty strong in the specialty and health-food channels, but a lot of the category’s recent growth was related to promotion from brands like Align and Phillips’ Colon Health that were really targeting the average-Joe mass consumer.”

Interestingly, fish-oil products are “growing pretty strongly,” says Schmidt. This is a category that is, of course, in recovery after 

growth dropped off pretty sharply in 2013

 because of negative press coverage. “Fish oils were growing 10% a year until 2013, when they dropped significantly, to about 3%, then growth climbed back up to about 5% or 6%,” Schmidt says. He credits GOED and what he calls its “holistic consumer education” campaign for “

” after the 2013 decline. GOED Executive Director Adam Ismail explains the group’s efforts this way: “We have found that providing small amounts of positive reinforcement through educational campaigns like this one can have a significant impact. Our campaign focused on getting reinforcing messages in front of the consumer via television, Internet search, digital ads, social media, and public relations. Ideally, we would continue this campaign throughout the year, or in multiple waves to sustain this effect.”

Ismail agrees with Schmidt that growth in fish oils is generally good but varies by sales channel. Schmidt’s figures are “representative of what we are seeing in the natural foods, practitioner, and direct-to-consumer channels,” he confirms, “but the food, drug, and mass channels are still down slightly.”

Beyond eye-health supplements, proteins, probiotics, and fish oils, sales of non-herbal vitamins and supplements also show letter vitamins D, C, and B12 as doing particularly well, with sales of each from all combined channels studied by SPINS (again, natural supermarkets [excluding Whole Foods], specialty supermarkets, conventional multi-outlet [includes Walmart]) growing more than 10% from the 52-week period ending on September 7 of this year. Vitamin D’s sales growth was 13%, vitamin C (not including Ester-C) was 11%, and vitamin B12 was 11%.

Herbals/Botanicals Only Slightly Less Robust

The way this category is defined and the products contained therein vary depending on who’s crunching the numbers. But, generally speaking, herbal and botanicals are roughly holding steady, despite the media fallout they experienced this year. Euromonitor puts the total U.S. market size for herbals/traditional dietary supplements in 2015, as listed RSP, at $3.5 billion. SPINS notes a very slight decline in herbal/botanical sales, from all channels for which it collects data, from September 2014 to September of this year: less than 1%. And NOW Foods’ Jim Emme says his company, for one, is seeing growth in botanicals and herbs.

Euromonitor’s Schmidt remarks that “as a total category, herbal/traditional dietary supplements are growing slightly slower than the entire nutritional-supplements industry overall, slightly less than 2% annually from 2010 to 2015” by his firm’s calculations, but he points to “some pretty strong divergence among some of the subcategories.” Some of the products that have been around a long time, such as garlic, are growing very modestly, holding steady, or dropping a little bit year over year. “They are not quite as relevant; there hasn’t been as much innovation there. But then we see categories like fiber, for instance, which has recovered strongly from recalls thanks to new promotion around digestive health and satiety. Also, we are seeing some of the more trendy ingredients popping up a little bit more.”

These trendier, new-to-the-U.S.-consumer herbs and botanicals include ivy leaf and acacia fiber, according to SPINS data.

Herbs and botanicals showing strong sales volume in terms of U.S. dollars for 2015 include horehound, Echinacea, cranberry, flax seed/oil, green teas and supplements, and turmeric, according to SPINS sales data. Whether sales of devil’s claw will be significantly affected by New York AG Schneiderman’s targeting of the herb this summer remains to be seen. The herb is not a cash cow in the United States anyway, and it had already undergone a 14% dip in the 12 months that preceded the attorney general’s actions, according to SPINS data.

It is remarkable how well industry has taken a difficult, year-long (and counting) public-relations experience and turned it into an opportunity for self-reflection and consumer education. Trade associations and other industry groups have been quick to respond to the bad press, and as NOW Foods’ Emme puts it, “They’ve all been doing a very good job responding to the educational needs of consumers and trying to set the record straight.”

These groups include the nonprofit, educational American Botanical Council, whose proactive measures included printing a 12-page feature article about the NY attorney general’s laser-focus on herb testing in its HerbalGram publication, as well as a summary of two DNA barcoding-related white papers, an editorial on Schneiderman’s misuse of DNA methods, and a press release responding quickly to the devil’s-claw testing and issuance of cease-and-desist letters.

The Council for Responsible Nutrition has been vocal as well, issuing a number of statements, press releases, white papers, and infographics with information regarding DNA testing of herbal supplements, FDA’s oversight of supplements, and industry’s commitment to quality and supply-chain management. In a late-October e-mail message to Nutritional Outlook, Judy Blatman, senior vice president, communications, CRN, stated that the organization “does not think that negative media attention has had much of an impact on the industry, particularly from a sales perspective,” and adds that “consumers may be tuning out the noise.” However, she states that “even though it’s good news that, according to our [most recent consumer] survey, 68% of American adults take supplements and over 80% have confidence in the products, we can’t become complacent. As our industry continues to grow and mature, we need to ensure accountability to consumers through self-regulatory and quality-control initiatives, and to support FDA and FTC when it makes sense on the regulatory front.”

NOW Foods’ Emme echoes Blatman’s sentiments, saying, “We’re always looking for ways to partner with our ingredients suppliers to make sure the supply chain is reliable. We’ve always been vigilant with our supply chain, we will continue to do so, and we’re encouraging others to as well.

“We believe the next big industry trend is going to be more companies making sure they know exactly where their ingredients are coming from. Going out to visit the source, going out to visit the manufacturers if they aren’t in North America. Some companies do this already, but it’s going to be more and more important for us to make sure that our supply chain is reliable and, frankly, meets the standards that we all set.”

He adds, “The best testing methods in the world won’t protect against a bad supply chain.”

Dietary Supplement Industry in the Crosshairs: Takeaways from the New York Attorney General Investigation

U.S. Herbal Supplement Sales Up 6.8% in 2014

Articles

The supplements industry is surviving-even thriving-in a difficult year.

The Dietary Supplements Market in 2015: Business Is Good

In the last year, U.S. sales of products labeled as “made with ancient grains” have grown by 35% to reach more than $209 million, according to SPINS

 (Schaumburg, IL). And while quinoa may still be the most ubiquitous, much of the growth is driven by up-and-coming ancient grains, such as farro.

SPINS data indicate sales of packaged farro bearing the label “made with ancient grains” grew by 26.4% in the past year. Bakery foods marketer Bob’s Red Mill (Milwaukie, OR) says farro is now its second-bestselling grain behind quinoa.

So, what’s to love about this surging grain?

Confusingly enough, there are actually three different ingredients commonly marketed under the name 

 emmer, einkhorn, and spelt. While each grain has a different nutrient profile, the farro grains share some key formulation traits and a long and storied history of human use.

“The history of farro swirls with romance,” says Dennis Gilliam, vice president of sales and marketing, Bob’s Red Mill, which offers farro made from lightly scored spelt. “Once a mainstay of the daily diet of ancient Rome and a staple source of nourishment for the Roman legions, it is considered by some the ‘mother of all wheat.’”

Grain supplier Honeyville (Brigham City, UT) has also seen significant sales growth for spelt, according to Tim Devey, corporate marketing director. Beyond ancient grains’ perceived health benefits, he claims it’s also the unique stories of each ancient grain that are driving growth.

“Consumers and companies are looking for grains and seeds that have numerous health benefits, and the more rare or exotic they seem, the better,” says Devey.

Farro also stands out as an “extremely easy” substitute for wheat and barley, says Devey. Part of that is due to farro’s slightly nutty taste, as well as its formulation behavior.

“Farro grains tend to react somewhat similarly to wheat, which makes them a semi-easy transition in standard baking applications,” says Honeyville’s Devey. “Spelt, for example, can be switched out with standard wheat with little or no alteration to the formula or application.”

Similarly, Gilliam from Bob’s Red Mill calls farro “a very approachable grain,” especially among consumers new to cooking with whole grains. He points out that farro “cooks much faster than other ancient grains” and can add a creamy texture to certain formulations.

“Farro is a pretty stellar grain,” says Gilliam. “Because it is semi-pearled it cooks quickly, but the remaining bran helps to ensure against overcooking and grain blowout. Plus, it works in a variety of dishes: soup and stews, porridge, warm and cold salads, and stuffings. It’s hard to go wrong with farro.”

Cost is another factor in farro’s favor, suggests Gilliam. While the price of quinoa and chia seed has risen as demand has “skyrocketed,” Gilliam says farro has remained more moderately priced.

Turning to other ancient grains on the rise, Bob’s Red Mill has seen millet achieve new popularity in the past year. A combination of millet’s high protein content, mild and sweet flavor, and quick cooking time is driving the growth, says Gilliam. He adds that unlike other grains, millet is alkaline and therefore easier to digest.

Honeyville’s Devey sees teff, quinoa, and sorghum as performing especially well recently. Sorghum and quinoa may be benefiting from their gluten-free status and growing use in cereals and snack foods, says Devey, while teff is a relative newcomer to the U.S. market that may be leveraging its African heritage to tap into the desire for unique and exotic grains.

Don’t be fooled by the name; the emerging interest in these grains is anything but ancient.

Move Over, Gluten-Free. Ancient Grains Are Back!

Can an Ancient Grain Reduce Cardiovascular Risk in Patients?

Minerals in Ancient Grains Are Celiac-Friendly

Farro, the ancient grain of the Roman legions, is reaching new heights today.

Farro Is Driving the Ancient Grain Trend

By Becky Wright, Marketing Director, Aker BioMarine Antarctic US

 Earlier this year, scientists, NGOs, and krill oil supplier Aker BioMarine (Oslo, Norway) 

established The Antarctic Wildlife Research Fund

 (AWR) to obtain more scientific information on the Antarctic ecosystem. The AWR works with both commercial supporters, including dietary supplement firms, and individuals to raise donations for funding research on Antarctic ecosystem and wildlife. The Antarctic Wildlife Research Fund is supported by: BioMar Group, Blackmores, Dr. Mercola, Ridley Corp., and Swisse Wellness. The fund recently secured its first round of grants, marking an important moment and the culmination of an enormous amount of effort by the AWR.

AWR issued its first call for proposals in March 2015, inviting applications from scientists working on priority research areas. AWR used a multistep process to ensure that the best proposals were chosen, based on scientific advice from an independent Science Advisory Group, comprised of eight of the world’s leading Antarctic scientists.

In August, three recipients were awarded the Fund’s first-ever research grants. Scientists from five different countries will study whales, penguins, and krill, addressing knowledge gaps regarding krill and its dependent predators.

Dr. Phil Trathan, chair of the AWR Science Advisory Group, believes the AWR is an example for other industries to follow in terms of sustainable management. “I am particularly pleased to see the launch of this research fund as I believe it shows a real commitment from the fishing industry to engage in sustainable practices that are built upon the solid foundation of scientific evidence,” he said in an earlier press release. “Not only will this fund help build a sound basis for management, but it will hopefully also help foster closer collaboration between scientists from many different nations.”

Adelie, Chinstrap, and Gentoo penguins rely on predictable aggregations of krill in order to successfully raise and fledge chicks during their austral-summer breeding seasons. Dr. Andrew Lowther and his colleagues from Norwegian Polar Institute and British Antarctic Survey will explore how non-breeders can potentially exploit a much wider range of habitat types and locations. The scientists will aim to address the knowledge gap on adult, non-breeding, and therefore more mobile, birds in a region where most of the krill fishing in the Southern Ocean takes place.

Dr. Christian Reiss (NOAA Fisheries) and his colleagues at the University of New Brunswick and Australian Antarctic Division will explore a new, direct aging methodology for Antarctic krill based on previously developed technology that looks for annual growth bands in the krill’s eyestalk. Reiss 

 will conduct studies to validate this technique, comparing the eyestalk of krill to other crustaceans like shrimp and crab. An understanding of the variability in population structure (growth, recruitment, and size at age) is necessary for developing spatial management frameworks for the krill fishery.

Dr. Ari Friedlander at Oregon State University and his colleagues at Duke University will conduct a long-term ecological study on the foraging behavior of humpback whales around the Antarctic Peninsula. The goal is to determine how critical foraging areas relate to historic catches of krill in the region. By deploying satellite-linked time depth recording tags on whales throughout the Antarctic feeding season, the scientists aim to quantify if, when, where, and to what extent commercial fishing and humpback whale feeding co-occur. This information is critical for managing both the amount and location of fishing, while also providing useful information on the biology and ecology of these top predators in a changing environment.

For the future, Dr. Rodolfo Werner, scientific advisor to the AWR, said, “These projects are crucial to our understanding of the Antarctic marine ecosystem, helping us to improve our knowledge on the interactions between krill and its predators. Only through better understanding of the role of Antarctic krill in the Southern Ocean can we comprehensively protect the animals that depend on it for survival and ensure precautionary management of the fishery.”'

Aker BioMarine Commits to Krill Sustainability

Here’s a White Paper on Krill Sustainability

Researchers from the newly formed Antarctic Wildlife Research Fund embark on krill-based research initiatives that will further strengthen sustainable management of the fishery and the omega-3 ingredients industry as a whole.

Krill-Based Research Initiatives Will Strengthen Industry Sustainability

In many ways, there has never been a better time to launch a new food and beverage brand.

 means are fragmenting and becoming very individualized-

 in effect. This is producing a massive fragmentation of markets and the proliferation of niches, which entrepreneurial companies are perfectly placed to serve. As a result, more and more, products have narrower targets.

Added to this trend is increased consumer openness to small, new brands, new ingredients, new tastes, and new textures. And it’s not just millennials entertaining new possibilities; people of all ages are becoming “food explorers.” This receptiveness is the reason that snacks based on seaweed are already a $250 million market in the United States and the number of snacks based on chickpeas has doubled in Europe in the last two years.

Being a small business gives you several advantages in this fragmenting marketplace:

You can make a good business by focusing on the new niches where the volumes are too low to attract big companies. If you start small, you are making the right choice, according to the late Professor Peter Drucker of Harvard Business School, one of the best-known writers on innovation of the 20

 century. Drucker is very clear on the importance of aiming at “only a small, limited market.”

The new niches are low volume, but they come at higher price points-meaning profitability can be good if your product resonates with the consumer. Many small, new brands begin by targeting “lifestyle” consumers-the 20%–30% of people (depending on which country you are in) who are willing to pay a premium for something that delivers health and wellness benefits. This is a smart move, because most brands that attempt to jump straight into the more price-driven mass market often fail.

New brands can, at least in the first few years, use all kinds of alternative distribution channels that are better suited to low-volume products than the traditional supermarket-think convenience stores, cafes, health food stores, gyms, and others.

You can go direct-to-consumer using e-commerce. The Hint brand of no-sugar fruit drink earns 25% of its sales this way. E-commerce enables you to earn better margins and build better relationships directly with consumers.

You can take your time growing the business. Big companies often kill ideas that might have become successes if management had the patience to wait out slow sales growth during the first couple of years. In the United States, Kind nutrition bars are held up as the model of a successful entrepreneurial business-but the brand took 10 years to achieve success. For entrepreneurs, 10 years is a realistic timescale for victory.

On the other hand, the life of the entrepreneur is demanding, takes up all of your time, and comes with some very distinct risks:

You must keep very close to changing shopper behaviors and beliefs. Pop Chips snacks started in 2007 with a focus on low-fat “popped” chips. But in 2015, being “popped” is no longer a point of difference, and “low fat” interests fewer and fewer consumers. Pop Chips has seen its sales stagnate at a level far below the targets its founders once set.

Your new brand has no established credibility, and you will need to be willing to build it patiently and slowly, by means such as investing in targeted PR and sampling (the two most effective marketing techniques for small companies). Sampling is particularly important-many people want reassurance that an unknown brand tastes good before they risk buying it.

You will find it difficult-to-impossible to grow if you rely on cash flow from your own sales. Sooner than you think, you will need investment to enable you to secure new distribution, to create new products to keep consumers interested, to market your product, and to grow your business. Unless you have $100,000 of your own to risk, then you will need to find an investor who is compatible with you and believes in your plan.

Although the prospects for healthy food and beverage startups are better than in the past, those prospects are hyped. The failure rate of small, new businesses still stands at 80% and higher. Entrepreneurs can expect many bumps and catastrophes along the road into the unknown. More than branding, marketing, ingredients, or great package design, your personal resilience will be the biggest driver of your success.

Dietary Supplement and Natural Product Brand Building: From Lightbulb to Launch

Branded Ingredients for Food, Dietary Supplements: A Two-Way Street

Millennial Marketing Strategies: SupplySide West Report

Julian Mellentin is one of the world’s few international specialists in the business of food, nutrition, and health. He is director of New Nutrition Business, which provides case studies and analysis of success and failure in the global nutrition business and is used by more than 1,700 corporate subscribers in 42 countries. Visit our website 

 for more information. For all of our latest updates, follow us on Twitter @NewNutritionB and LinkedIn.

“Food explorers” open up opportunities in the health and wellness market for entrepreneurs and startups, but do the opportunities outweigh the challenges?

What Challenges Do Food and Drink Entrepreneurs Face? Expert Advice

This is a great time for fiber. In the midst of increasingly difficult health-claims challenges in some countries, food and beverage firms are increasingly promoting more-general health and wellness benefits and renewing attention on well-known ingredients that consumers already link with health-ingredients like fiber. Fiber has long been associated with a range of benefits, including digestive/gut health, cholesterol reduction, weight management, and blood sugar maintenance.

Nearly 3.6% of global food and drink launches recorded by Innova Market Insights in the 12 months ending June 2015 used “high fiber,” “source of fiber,” or “added fiber” claims. In North America, these claims rose to 4.8% of launches and over 9% in Australia/New Zealand. (In Asia, however, fiber claims fell to about 2% of launches.)

Fiber claims are used for many types of food and drink products, but two-thirds of U.S. fiber-claim launches were in one of four categories: cereal, bakery products, snacks, and ready meals/prepared foods.

Cereals account for the highest number of fiber-related claims overall-about a quarter of total fiber claims. Taking into account the relatively low number of launches in the cereal category, fiber-related claims thus accounted for over one-third of total cereal introductions, including both breakfast cereals and cereal bars, many of which are also marketed on a whole-grain platform. The use of oats in cereals has been rising for some time, for instance, with many products based on high-fiber and whole-grain platforms.

With high-fiber-claim activity ongoing in both hot and cold oat cereals, recent launches of granola-type products include Barbara’s Better Granola, with 6 g of fiber per serving as well as 28–30 g of whole grains and 9–10 g of protein. In the hot-cereals market, the ThinkThin cereal bar brand launched its Protein & Fiber product in the instant-oatmeal category in early 2015, featuring whole rolled oats, steel-cut oats, and quinoa, with 10 g of fiber per serving. In the cereal bars category, GoMacro launched its Thrive organic bars range, with different SKUs aimed at specific health issues but all featuring 3 g of fiber per serving.

In the United States, bakery products are the second-highest user of fiber-related claims, accounting for just over 15% of such claims in food and drink launches. Within the bakery market, 36% of biscuit launches featured fiber-related claims. But the larger market overall is bread, where over 11% of launches featured a high-fiber claim.

In the biscuits market, a key area of high-fiber activity is in the breakfast category. Virtually all breakfast biscuit launches were promoted as high in fiber and/or whole grain, and many included fruit and fiber. Eating biscuits at breakfast time is a commonplace ritual in some parts of the world, but brands like Mondelez’s Belvita are aiming to take the concept to new countries. The company began expanding a few years ago in the UK with the 2010 launch of Belvita there as a whole-grain biscuit, promoted as rich in cereals, vitamins, and fiber. The launch created a new breakfast biscuits sub-category and heralded activity in other countries, including Germany, the United States, and Australia, as well as helping to revamp existing markets in France and Spain. In the United States, Belvita launched in 2012 under the Nabisco biscuits umbrella, where it also had to pioneer a niche in either a new sweet biscuits sector in the breakfast foods market or a new breakfast option in the cookies market. Kellogg followed Nabisco into the market with its Kellogg’s To Go Morning Breakfast Biscuits in 2013, while General Mills’ Nature Valley cereal bars brand entered the biscuits market in early 2014, as did Post Foods’ Honey Bunches of Oats in 2015. Belvita extended its own biscuits range in early 2015 with Belvita Bites-mini, snack-sized biscuits.

The United States also has its own specialized high-fiber brands, led by General Mills’ Fiber One, which started in breakfast cereals and today covers a range of foods, including cereal bars, cookies, bread products, desserts, and cottage cheese. The brand further extended its range in 2015 with Chocolate Chip Crunchy Cookies, Mint Fudge Brownies, and Cookies & Creme Bars, all with 20% of the daily recommended intake of fiber in each serving.
 

While more companies are moving to a more-general health and wellness positioning for their fiber products, one thing to remember is that, overall, while consumers seem to understand that fiber is needed for a healthy diet, the more-specific health benefits of fiber are not always so clearly understood, especially now that traditional health-benefit associations with whole grains, oats, and fruits and vegetables are now offered alongside different benefits offered by newer fiber sources such as prebiotics, resistant starch, and beta-glucans.

Innova Market Insights is your source for new-product data. The Innova Database (

) is the product of choice for the whole product-development team, offering excellent product pictures, search possibilities, and analysis. See what food manufacturers are doing around the world: track trends, competitors, ingredients, and flavors. In today’s fast-moving environment, this is a resource you cannot afford to be without.

Innova Market Insights is your source for new-product data. The Innova Database (www.innovadatabase.com) is the product of choice for the whole product-development team, offering excellent product pictures, search possibilities, and analysis. See what food manufacturers are doing around the world: track trends, competitors, ingredients, and flavors. In today’s fast-moving environment, this is a resource you cannot afford to be without. - See more at: http://www.nutritionaloutlook.com/authors/innova-market-insights#sthash.uVoHnLcJ.dpuf

Ever multifunctional, fiber has found its sweet spot.

Fiber Market Flourishes in 2015

It seems only fitting that an industry dedicated to health and wellness would attract a level of investor interest that’s, well, 

 And that’s exactly what companies in the nutrition and health-and-wellness sector attracted in 2015. According to the Nutrition Capital Network Transaction Database, 2015’s transaction total closed in on 2014’s before the year had even passed its midpoint.

Grant Ferrier, CEO, principal and cofounder of Nutrition Capital Network (NCN; San Diego), noted the record-setting pace early on. Looking broadly at the nutrition and health-and-wellness industry, he says, “M&A activity is notably up in 2015 compared to the prior two years.” Meanwhile, in 2015’s first two quarters alone, the NCN Database listed 32 investment financings in branded food-and-beverage companies, compared to 33 in 2014’s entirety.

As the industry enjoys the rosy glow of investor attention, some segments are getting more attention than others. One real “looker” is what NCN calls “foodtech”-that is, computer and mobile technologies that consumers or businesses use to “access and share information or order food, nutrition, and healthy-lifestyle products and services,” Ferrier says. Comprising everything from e-commerce and delivery services to apps, information, and media, the segment accounted for 62% of the financing transactions that NCN tracked in 2015’s first half. With delivery and apps-and-info “leading the way,” as Ferrier says, U.S.-based companies like Instacart (recipient of a $220 million investment) and Blue Apron (beneficiary of $135 million), and Hello Fresh (welcoming an infusion of $125 million) in Europe, grabbed headlines and cash.

Biotech and ag-tech also courted suitors, accounting for 15 transactions in the NCN Database during the first half of 2015. Ferrier highlights the $50–$100 million that companies like microbiome-focused Seres Therapeutics and Allergen Research received, as well as the $39 million and $22 million, respectively, that went to the more nutritionally focused Pronutria and Gelesis.

As far as transactions in the branded natural and organic food-and-beverage sectors went, equity investments and M&As were both up, per NCN’s database, with the prevailing theme of the transactions centering on protein. “Three of the largest deals so far in 2015 are WhiteWave Foods’ purchase of the plant-based protein shake and snack bar company Vega, Hormel Foods’ acquisition of Applegate Farms natural and organic deli meats, and Hershey’s acquisition of Krave, a maker of artisanal, gourmet jerky,” Ferrier notes.

And if such traditional proteins are too pedestrian for you, consider the buzz surrounding “engineered proteins” and meat substitutes. Companies like Beyond Meat and Soylent “continue to raise eyebrows with large capital raises and high valuations,” Ferrier says. Their appeal lies largely in the traction that their environmentally sound meat alternatives have gained with millennials and “new generations of health-minded consumers who want protein for energy and exercise, but not in unsustainable animal forms,” Ferrier says.

Exhibit A: Beyond Meat (Manhattan Beach, CA) aims to replace animal protein with plant-based alternatives like its Beast Burgers made from pea protein, or its “chicken” strips made with soy protein isolate and pea protein. It raised $17 million in a Series E round from existing investor Obvious Ventures, Ferrier notes, with Closed Loop Capital, Kleiner Perkins Caufield & Byers, Bill Gates, and S2G Ventures also pitching in.

So amidst all this innovation and “disruptive” tech, one might ask: Whither supplements? They’re still out there, Ferrier says, although “we haven’t seen as many transactions in 2015 so far as market growth should merit.” He says interest remains “very high” in specialty and condition-specific ingredients and in finished supplement products, but suggests that the lethargic deal flow may stem from regulatory uncertainty and its chilling effect on investment, especially given “recent attention to product quality and ingredient integrity in supplements brought about by attorneys general in New York, Oregon, and elsewhere,” Ferrier says.

But if the supplement skies look cloudy to some, others see breaks of sun. Scott Steinford, CEO and founder, Trust Transparency Consulting (Spring, TX), believes that interest in supplement M&As “remains strong” thanks to the high confidence that investors have in the quality and reliability of U.S.-made product. “The Asian market in particular has demonstrated a significant appetite for U.S.-manufactured products and, subsequently, U.S. manufacturing companies,” he notes.

As a result, prospects for vertical integration seem to be driving recent North American supplement M&As. “While the majority of dietary supplement brands internationally are manufactured in North America,” Steinford explains, “the vast majority of ingredients used within those products are sourced elsewhere. Ingredient manufacturers are increasingly finding opportunities to purchase North American manufacturers and brands.”

As an example, he points to Vitatech Nutritional Sciences Inc.’s September 2015 sale of its nutritional-products manufacturing business to Kingdomway USA LLC. According to a Vitatech press release, the new company will call itself Vit-Best Nutrition Inc. and will continue to use Vitatech’s pharmaceutically licensed, cGMP facility in Tustin, CA, to manufacture the powders, capsules, tablets, custom coatings, and other products that built its contract-manufacturing reputation and made it an attractive target for Kingdomway. As Steinford says, “This acquisition reflects a continuing trend in this and other industries where vertical integration provides better operational costs and increased market opportunities.”

So: Some acquirers happily absorb proven players with established track records while others, Ferrier says, “seek to be on the leading edge of innovation, or at least not to be left behind when a major trend appears ready for a breakthrough.” With health-and-wellness and nutrition companies covering that waterfront and more, the numbers from 2015 prove that everyone can win.

Healthy Food Sector Nourished by Mergers and IPOs

Healthy interest is driving M&A activity for dietary supplements and food.

Key Dietary Supplement, Food Mergers and Acquisitions in 2015

 Over the last decade, sustainability has grown from a fledgling consumer preference to an overwhelming priority among global consumers. Whether it’s out of concern for environmental consequences or social impact, 66% of global consumers now say they are willing to pay more for sustainable goods, according to the 2015 Nielsen Global Corporate Sustainability Report.

Considering that 55% of global consumers responded the same in 2014 (and 50% in 2013), it’s striking how quickly sustainability is becoming a priority among consumers from all over the world (the survey polled more than 30,000 consumers in 60 countries).

“Sustainability is a worldwide concern that continues to gain momentum-especially in countries where growing populations are putting additional stress on the environment,” says Grace Farraj, senior vice president, public development and sustainability, Nielsen. “An increasing number of consumers in developed regions consider sustainability actions more of an imperative than a value-add.”

The preference for sustainability is also evident in product sales. In the past year, sales from brands with a demonstrated commitment to sustainability grew more than 4% globally, compared to just 1% global growth from brands without a similar commitment, says Nielsen. Has the time arrived when sustainable appeal is now a requirement for business success?

“Consumer brands that haven’t embraced sustainability are at risk on many fronts,” says Carol Gstalder, senior vice president, reputation and public relations solutions, Nielsen. “Social responsibility is a critical part of proactive reputation management. And companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and importantly, consumers.”

In terms of producing foods and dietary supplements with sustainability in mind, many ingredient suppliers have begun taking a closer look at where their ingredients come from. But what about where those ingredients end up-and the materials that are discarded by-product?

Some ingredient companies are now tapping into the trend of “repurposed ingredients,” or “second-generation ingredients,” to create new ingredients from materials typically thrown away in the past. Aside from enhancing a company’s sustainability profile, repurposed ingredients can also be a lucrative and convenient way to make the most of materials already on hand.

BI Nutraceuticals (Long Beach, CA) has rolled out several ingredients made from raw materials that were previously being discarded, including its sugar cane fiber powder, carrot fiber powder, and asparagus stem powder.

The sugar cane powder is made from leftover sugar cane after cane juice has been removed for sugar production. The carrot fiber powder is made from leftover pumice from carrot juice production. And the asparagus stem power is made from the thick part of the stem normally discarded from fresh asparagus production, according to Alison Raban, certified food scientist, BI. She says the powders are easily incorporated into supplements, beverages, baked goods, and snack foods.

“With the increased consumer demand for environmentally friendly, sustainable ingredients, customers are using these ingredients as a marketing tool,” says Raban. “In particular, carrot fiber and sugar cane fiber are being utilized as clean-label, natural sources of fiber.”

Carrot juice production also yields leftover pumice by-product, which BI Nutraceuticals uses to create its carrot fiber powder.

Aside from BI’s customers asking for eco-friendly ingredients, the company was inspired to repurpose these raw materials upon realizing that viable, nutritious plant parts were going to waste during the course of its vendor audits. Additionally, Raban explains, the concept of repurposing the by-products of food processing has become much more popular in recent years.

“There used to be a stigma around repurposed ingredients because they were considered ‘food waste’,” says Raban. “However, as the definition of food waste changed from valueless by-products to nutritious by-products not being utilized, the stigma faded.”

Raban says using second-generation ingredients has also been a profitable strategy for the company, but not because the ingredients are cheaper to produce. Although the raw materials themselves are cheaper to acquire since they were just being discarded in the past, the production process is still expensive due to the high fiber content of the ingredients.

BI had to develop a unique process to maximize the fiber content of the ingredients and construct a special “low-humidity cool-down and packing room” to ensure the naturally hygroscopic fibers meet the low moisture content customers demand. Fortunately, the sustainable appeal of the repurposed powders has made up for the production costs, the company says.

“Repurposing ingredients is a profitable strategy in the sense that they are sought-after ingredients,” says Raban.

BI’s sugar cane fiber and asparagus stem powders just launched last year, while the carrot fiber powder has been available for more than two years, according to Raban.

Sugar cane powder, an ingredient left over from sugar production, is now being marketed as a clean-label source of fiber.

Xylitol, a natural sweetener derived from corn, has risen in popularity as a low-calorie alternative to table sugar. But AIDP (City of Industry, CA) recently found that a by-product of xylitol production can also be a nutritious and popular ingredient.

PrecticX, a new prebiotic from AIDP, is made from the corncobs left over after xylitol production. The company says it has already seen a “tremendous response” from customers since launching the ingredient at the 2015 Natural Products Expo West trade show, thanks in large part to the growing market for digestive-health products.

“The primary messaging has been around the science and health benefits,” says Kathy Lund, vice president of business development and marketing, AIDP. “The sustainability aspect is also promoted to customers, which is a growing interest. Having a repurposing message is an additional benefit to a strong ingredient like PrecticX.”

Before PrecticX, the corncobs were just being burned and placed back into the soil for nutritive value, says Lund. Instead, AIDP now produces the prebiotic from the corncobs via a proprietary procedure involving enzymatic hydrolysis. 

One of the biggest strengths of PrecticX, a xylooligosaccharide, may be that it requires a relatively small dosage to be effective. AIDP says that compared to other prebiotics, such as fructooligosaccharides or galactooligosaccharides, xylooligosaccharides have the lowest minimum effective dosage. This can translate to more competitive prices and reduced gastrointestinal side effects versus other prebiotics, according to AIDP.

 found that compared to a placebo, PrecticX supplementation significantly increased 

 counts in the gut microbiota of healthy adult subjects.

For several years, Ganeden Biotech (Cleveland) has offered an ingredient derived from the by-product of an established ingredient. Ganeden’s Bonicel is a skin-care ingredient made from a metabolic by-product that is left over from production of the company’s Ganeden BC30 probiotic strain.

During normal production of Ganeden BC30, a supernatant is created during the bacterial fermentation process, explains Michael Bush, senior vice president, Ganeden. Ganeden uses that supernatant to create Bonicel, which has been studied to show improvements in skin pore size, redness, moisturization, elasticity, the appearance of wrinkles, and more, says Bush.

Yet, even though the supernatant is a by-product of Ganeden BC30 production, Ganeden uses separate production processes to create Bonicel and Ganeden BC30.

“When we make Ganeden BC30 for oral consumption, we utilize a method that maximizes the growth of spores and not the by-products in the supernatant,” says Bush. “When we make Bonicel for topical use, we are producing it from Ganeden BC30, but utilize a method that maximizes the by-products in the supernatant instead of the spores.”

Because there are two separate production processes, Bonicel is not strictly a repurposed waste product, but Bush says the ingredient’s second-generation status still carries a sustainable message.

“When marketing Bonicel, we do discuss the sustainability factor and that it is derived from another ingredient,” says Michael Bush, senior vice president, Ganeden. He adds that interest in sustainability is growing, but Ganeden’s customers remain most interested in the science behind its ingredients.

Bonicel first launched in 2012. More recently, it was included as an ingredient in the Prevaleaf Probiotic Boost Soothing Cream, which launched a few months ago.

Avocados are one of the most well-known fruits, but Ecuadorian Rainforest (Belleville, NJ) recently discovered that the overlooked avocado seed can also be an ingredient in its own right. The company began selling its avocado pit powder earlier this year after taking a second look at the large seed inside avocados that most people simply discard. 

“We wanted to know if we were throwing away a useful part of the fruit,” says Steve Siegel, vice president, Ecuadorian Rainforest. “It turns out avocado seeds are rich in nutrients indeed. The seed may contain up to 70% of the total antioxidants found in avocados, making it a valuable ingredient.”

The avocado seed is also a good source of potassium and soluble fiber, according to Ecuadorian Rainforest. Siegel says customer response has been positive in the short time the company has been offering the seed as a standalone ingredient.

“Consumers have been intrigued by the avocado seed’s benefits and many were surprised to learn of its potential benefits,” says Siegel. “Manufacturers looking for the benefits of avocado fruit and seed are now looking for ways to incorporate both ingredients into their products.”

Aside from use in functional foods and beverages, the avocado pit powder also works as an exfoliant, says Siegel.

“Cosmeceutical manufacturers who create body scrubs, facial cleansers, and other natural beauty products may benefit from using avocado seed as an ingredient,” he explains.

Acid whey, an ingredient left over from the production of Greek yogurt, cottage cheese, and cream cheese, was long considered a waste by-product of the dairy industry. But two years ago, Arla Foods Ingredients (Viby J, Denmark) found a way to make better use of the ingredient.

Arla uses a unique process of combining acid whey with its milk-based Nutrilac protein to convert the acid into other dairy products, including fermented beverages, syrups, yogurts, dips, cream cheeses, and processed cheeses.

In the past, acid whey was simply thrown away or used in animal feed, according to Nikolaj NÃ¸ddebo Knudsen, account manager, functional milk proteins, Arla.  However, with Arla’s process of repurposing the ingredient, he says it’s now possible to save all of the acid whey.

As with other repurposed ingredients, it can be a challenge finding the right marketing message for acid whey. Ironically, some consumers may carry a negative perception of acid whey due to negative media coverage of the ingredient as harmful to the environment when discarded, says Knudsen. He suggests that further consumer education may help remedy this, but companies using Arla’s acid whey technology can also promote a simpler message about sustainability.

“You also can state that you have 100% usage-that you don’t have any waste,” says Anne Poulsen, business development manager, health and performance nutrition, Arla. “I think that really resonates well with the consumer.”

Arla earned an IFT Food Expo Innovation Award in 2014 for its acid whey technology.

In addition to the ingredients mentioned above, Nutritional Outlook’s recent story on joint health features two other noteworthy inclusions: eggshell membranes and apple peels.

NEM eggshell membranes from ESM Technologies (Carthage, MO) may be best known as a joint-health ingredient, but the ingredient is also a second-generation by-product from the egg products industry. The company sources its eggshells from facilities that produce liquid egg ingredients for a variety of food applications, including bakeries and ice cream production. If the eggshells were not being used for the NEM membranes, they would be spread on fields as fertilizer or discarded in a landfill, where they can cause a harmful nitrogen buildup in the soil, according to ESM.

Another repurposed joint-health ingredient, AppleActiv, is an organic dried apple peel powder made from apple by-product left over from applesauce production. The apple peels were being composted until supplier Leahy Orchards Inc. (Franklin, QC, Canada) began using them to make AppleActiv.

To learn more about these two ingredients, see the full story on joint health at 

Between opening new revenue streams and enhancing an ingredient’s sustainable appeal, using second-generation ingredients can help an ingredient company go the extra mile with its existing ingredients. 

Cacao Pulp: It's Not Just a Waste Product of Cocoa Anymore

SM Finegold et al., “Xylooligosaccharide increases 

Learn how resourceful firms are repurposing ingredient by-product for the utmost in sustainability, convenience, and profitability. 

Repurposing Ingredient By-product and Giving Ingredients a Second Life

 show 46% of U.S. consumers believe the government regulates “natural” food-marketing claims, according to the Natural Marketing Institute and The Organic and Natural Health Association.

Those of us in the industry know better, of course.

FDA has consistently declined to formally define what is or isn’t natural and as such has left companies wide-open to class action lawsuits anytime someone takes umbrage with a firm’s “natural” claims. But there could be an end in sight.

In November, FDA began requesting public comments on 

, what the definition should be, and how it should be regulated. While the agency is only asking for comments at this point, and has not said it intends to engage in further rulemaking, you could excuse some for being hopeful that FDA could, in the near future, finally define 

Hypothetically, then, what types of changes could a standardized definition bring?

Pending litigation comes to mind, first and foremost. General consensus is that a formal definition should help reduce the amount of future litigation. But what of cases currently standing? Would courts be willing to stay pending lawsuits on the chance that FDA could, at some point soon, define 

What does a world with a "natural" definition look like?

Nutritional Outlook Vol. 18 No. 10

The Dietary Supplements Market in 2015: Business Is Good

Farro Is Driving the Ancient Grain Trend

Krill-Based Research Initiatives Will Strengthen Industry Sustainability

What Challenges Do Food and Drink Entrepreneurs Face? Expert Advice

Fiber Market Flourishes in 2015

Key Dietary Supplement, Food Mergers and Acquisitions in 2015

Repurposing Ingredient By-product and Giving Ingredients a Second Life

What If FDA Regulates “Natural” Claims on Food Labels?

Most Successful Superfruits: Which Superfruits Had Greatest Market Share in 2015? Baobab, Cherry, Maqui, and Blueberry

Superfruit Stars: Where Are They Now? Acai, Gogi, and Pomegranate

Clinical Trials of the Year for Dietary Supplements

Structure Function Claims Win in Bayer vs the FTC Case

Millennial Marketing Strategies: SupplySide West Report