Saturday, January 2, 2010

Functional food Baobab could bring healthy returns for Africa

Multinational food giants like Danone and Unilever and specialist dairy groups like Valio to a small army of nutrition scientists -- searching for the next carefully engineered miracle food.

No one knows yet whether it will be a yogurt that helps slow down the progress of Alzheimer's disease or a milky drink that staves off depression. But it will undoubtedly yield its inventor very healthy returns. Baobab as a food additive is a major contender because of its phyto chemical and health prevention properties.

Over the past decade the market for cholesterol-lowering spreads, immunity-boosting drinks and other functional foods has flourished as food manufacturers have latched on to the idea of selling food as an alternative to medicine.

French dairy and water giant Danone is undoubtedly the first multinational to have grasped the potential of health as a motto and marketing tool, selling yogurt in pharmacies in Barcelona as far back as 1919. During the next decades though, it expanded well beyond yogurts. But then in 2007, convinced it would grow faster if it refocused its portfolio on health, it took a major step and sold its less virtuous biscuit division to Kraft Foods it was a return to its roots.
he health obsession: prevention is better than cure. What Danone has latched onto is our growing obsession with treating the body as a temple.

"Like any trend, health first became a focus with the early-adopter group. We're now in the phase where it's in the mainstream, and it's going gangbusters," said Barbara Katz, president of HealthFocus International, a consulting firm specialized in food and nutrition issues.

"Back in the nineties, the focus was on low-fat, low-sugar products. That's how we were defining healthy. Then it became what we were adding rather than what we were taking away: omega 3, calcium, fiber, probiotics," she added.

The reason for the extraordinary success of functional foods and nutraceuticals -- a subcategory that further blurs the line between food and medicine and includes products such as special nutrition-heavy yogurts for the elderly -- is simple.

In developed markets, where the population is aging, life expectancy is rising and the demands of modern life putting many under strains, the notion that eating particular foods enriched in components like antioxidants or fatty acids can help prevent diseases has struck a powerful chord with consumers. Many, after all, would rather eat a fiber-enriched yogurt every day than pop laxatives. The food aisles of supermarkets, loaded with immunity-boosting yogurts, antioxidant smoothies and a wide array of dietary supplements, are a testament to the success of the idea that eating the right foods can make us healthier. Baobab is a prime example of this trend.

For the food companies, and increasingly some of the pharmaceutical ones, ignoring the trend is a risky bet. The global market for functional foods, including sport drinks and dietary supplements, is expected to reach $262 billion in 2012 from $150 billion in 2002, according to Euromonitor. Excluding dietary supplements and drinks, it should still grow to $117 billion in 2012 from $102.5 billion in 2008. It is the fastest growing food category and has proved particularly resistant to the economic downturn.

Marketing may be a key component of success, but so is innovation.
And in that realm, smaller, narrowly focused firms like Finnish dairy group Valio are giving the big boys like Nestle a run for their money.

"Innovation can sometimes be quicker in a smaller company. That's why it's always interesting to keep an eye on the smaller brands in the health section of the store," said HealthFocus' Katz.

Still, scale has its advantages, and larger firms can more easily afford the years of research and development it often takes to develop a new product with a key health benefit. The R&D investment, for firms big and small, can represent quite a drain on cash flow, particularly at a time of economic turmoil, but the rewards of hitting on a successful product cannot be overstated.

Together, Activia, Actimel and Danonino, three Danone brands focused on health benefits, generated sales of 4.4 billion euros ($6.5 billion) last year, representing more than half of the group's dairy division.

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