Despite the start of a gruesome economic downturn, functional food and beverage product development has been on the rise in the United States over the last two years. According to Mintel’s Global New Products Database, 785 foods and beverages with functional claims were launched in the United States in 2008 and 770 came out in 2009—up from 431 in 2007 and 193 in 2006. Although functional products now reside in nearly every product category and hit on a wide range of health conditions, a number of trends have emerged that promise to shape the functional food and beverage market in 2010 and beyond—as Nutrition Business Journal discusses in our recently published 2010 Functional Food and Beverage Issue.

Here’s a recap of some of the top functional food and beverage trends for 2010:

Functional Sweeteners: More Than Just Sweet

In 2009, high fructose corn syrup was out (much to the chagrin of the Corn Refiners Association) and recently GRAS-approved stevia was in for its zero calories and improved sweet taste (thanks to companies such as Cargill and Wisdom Natural Brands). Stevia, which is typically combined with other natural sweeteners such as xylitol, can now be found in everything from zero-calorie natural colas to 100-calorie yogurt snacks. During the first eight months of 2009, Mintel reported that 110 U.S. products made with stevia were launched. DSM Nutrition Products is one company working to capitalize on stevia’s functional health benefits. In 2009, DSM applied for a patent linking stevia to improved brain function and cognitive health. NXT Nutritional’s SUSTA natural sweetener ingredient is already being marketed for its functional health benefits. According to Kimberly Lord Stewart, editorial director of NBJ’s sister publication Functional Ingredients Magazine, “Functional sweeteners are going to be one of the most important product trends to watch in 2010.”

Digestive Health: Here to Stay

Two words describe the U.S. digestive functional food and beverage market: still hot. And these products aren’t just popular in the United States, where Activia spokeswoman Jamie Lee Curtis has made it normal—and fun!—to talk about the woes of irregularity. According to Mintel, digestive health topped all other functional food and beverage health claims in 23 out of the 24 countries tracked by the global research firm. The most common products carrying a digestive health claim are spoonable yogurts, drinking yogurts and cultured milk, tea, cheese, and snacks/cereals/energy bars, Mintel reported.

EFSA Rejections Won’t Kill Probiotics

The ingredient category perhaps most tied to digestive health is probiotics. Although probiotics have taken a hit in Europe—to date, the European Food Safety Authority (EFSA) has rejected every probiotic health claim it has reviewed—consumer and manufacturer interest in these healthy bugs continues to bloom. Technological innovations are enabling the cultivation of “designer” probiotic strains, as well as strains that can remain alive and active during processing. Ganeden Biotech’s patented probiotic strain GanedenBC30 is one showing up in a growing range of functional products, including Red Mango’s nonfat frozen yogurt and ice teas. Ingredient company Danisco announced in January 2010 that it is entering the niche—but growing—probiotic juice category with its probiotic strain HOWARU Bifido (Bifidobacterium lactis HN019). This will compete against Probi’s strain, which can be found in the GoodBelly brand from NextFoods.

Prebiotics: What Every Probiotic Needs

Research continues to demonstrate that probiotics work better when combined with prebiotic fibers, such as fructo-oligosaccharide (FOS), inulin and galacto-oligosaccaride (GOS), said Functional Ingredients Magazine Science Editor Todd Runestad, who added that he believes GOS could be the “big winner in the year ahead.” That’s because food formulators are beginning to formulate with GOS, which also benefits from the fact that companies can make fiber claims for it. One new prebiotic drink is PRE Beverage Co.’s PRE Probiotic Enhancer.

Fiber Bulks Up

Fiber sells—just ask General Mills, which is raking in revenue with its successful Fiber One brand. Today, consumers can find everything from “double fiber” sliced bread from Oroweat to fiber-fortified applesauce cups from Mott’s. The surge in fiber-packed foods was driven, in part, by the 2005 revision of the U.S. food pyramid, which emphasized the need for more fiber in the American diet.

‘Back to Basics’ Mentality Spurs Cleaner Labels

Consumers are embracing a “back to basics” mentality that favors simple, healthy foods and beverages. Companies are hoping to tap into this trend by developing natural lines with clean labels that emphasize the inherent functional benefits of whole food ingredients, such as fruit and whole grains. One example is Hero’s new Fruit2day beverages.

H1N1, Recession-Related Stress Push Immunity Center Stage

“Two years ago it was hard to sell an immune-support ingredient to food and beverage manufacturers,” said David Walsh, vice president of communications at Biothera, which makes the Wellmune ingredient. But that was before the economic meltdown and the H1N1 pandemic—both of which forced people to think more about supporting their immune systems. Wellmune, which has been clinically proven to enhance the immune system and can be consumed daily, is showing up in a growing range of products, including cookies and juices.

Culinary Spices: Tasty and Good For You Too

Cinnamon and turmeric are two culinary spices being studied for their health benefits. “Science is beginning to accumulate on a number of spices,” said Guy Johnson, executive director of the McCormick Science Institute, which is working to increase the scientific understanding of culinary spices. This research is spurring the creation of products such as Vosges Haut-Chocolat’s Naga chocolate bar, which features sweet Indian curry.

Subscribers can read NBJ’s full 2010 Functional Food and Beverage Issue via the NBJ Website. To order a copy or become a subscriber visit the NBJ subscription page.

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February 2010: Functional Food and Beverage

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The higher regulatory hurdles being constructed in Europe and, to a lesser extent, the United States for dietary supplements and functional food ingredients have many industry participants “wailing and gnashing their teeth”—as Nutrition Business Journal writes in our upcoming 2010 Functional Food and Beverage Issue. But, not everyone believes increased regulatory enforcement and claims scrutiny will spell bad things for the global supplement and functional food and beverage industries. In fact, according to David Atkinson, managing partner and founder of Circadia Ventures LLP, tighter regulation in both Europe and the United States is “supporting rather than inhibiting investor interest” in the functional food and supplement sectors.

Atkinson made this point during Nutrition Capital Network’s February 16 Webinar, “Trends in International Financing for health and Nutrition Companies.” Although he acknowledged that increased regulation is “setting high hurdles” and “increasing the costs to the industry,” Atkinson said he does not believe—as many in the industry do—that these consequences of stepped-up regulatory oversight “will kill the embryonic sector” of the health and wellness market. “We believe the high hurdles will bring much-needed barriers to entry to the industry and will increase and improve consumer confidence,” he added. “Ultimately, it will allow some higher pricing … and add value to the underlying IP and technology of the industry.”

Investors, Atkinson said, are increasingly interested in the health and wellness space because, “despite the increased regulatory environment the industry faces, it is still likely that a functional food ingredient with very clear, proven clinical benefits could be on the market in half the timeframe of a new drug—while the actual capital costs of getting that product to market are likely to be only a fraction of what a drug would cost.”

Atkinson cited the small, publicly listed U.K. company Provexis as an example of a functional ingredient company that is attracting growing investor interest. “Provexis’ current market cap is over £74 million ($116 million)—a year ago it would have been a fraction of that,” Atkinson said. Helping to fuel investor appetite for this small-but-growing ingredient company is the fact that Provexis was the first company to gain an Article 13.5 health claim approval from the European Food Safety Authority (EFSA) for its tomato extract, Fruitflow.

As NBJ discusses in detail in our upcoming 2010 Functional Food and Beverage Issue, EFSA’s positive opinion has made a huge difference to Provexis. “We got our approval on the 17th of December, and we have since received a very high level of interest from global food and beverage players,” said Provexis CEO Stephen Moon. “The change has been instant. It’s almost like we have got through the desert and finally arrived at the oasis. It has raised the profile of the company.” As Moon explained, the benefits have gone far beyond his company’s ability to commercialize Fruitflow, which has been clinically proven to inhibit platelet aggregation and has been licensed to DSM. “The financial and investment community has now seen the potential of Provexis, and it’s enabled us to raise substantial capital, which is going to help us drive forward our total pipeline.” Most recently, in December 2009, Provexis announced it had raised £2.1 million ($3.4 million) via an open offer to its shareholders.

NBJ’s 2010 Functional Food and Beverage Issue publishes later this month. To order a copy or become a subscriber visit the NBJ subscription page.

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Thanks to strides in technology and product formulation, which have allowed for better-tasting functional ingredients with a longer shelf life, the offerings in the functional food and beverage category continue to expand. Despite the recession, 770 new functional food and beverage products were launched in the United States in 2009.

But just how “functional” are these products?

It’s a question being asked with urgency by many in the functional food and beverage industry—and one Nutrition Business Journal explores in depth in our upcoming 2010 Functional Food and Beverage issue (which publishes later this month). As we learned, concern appears to be growing regarding the use of less-than-efficacious amounts, or varieties, of ingredients within functional foods and beverages products in order to boast them on product labels and command a premium price. The practice, which some refer to as “pixie-dust” dosing, has prompted an array of regulatory actions in the past year and is prompting some ingredient companies, such as Cognis Nutrition & Health, to establish mandatory guidelines for their clients on just how much of an ingredient must be used in a product and how it must be portrayed on the label.

In the meantime, manufacturers, including The Hain Celestial Group and Next Foods, are calling on their peers to be more clear and consistent in their labeling, while consumer watchdog groups are asking the government to force the industry to do so.

In surveying functional food and beverage companies and ingredient suppliers for NBJ’s functional food and beverage issue, we asked participants to rate the impact the lack of efficacious ingredient dosage levels in functional foods and beverages is having or will have on this product category. Thirty-five percent of those surveyed said it would have a large impact, while 36% said it would have a medium impact.

Here’s what one survey participant said about the dosage issue as it relates to label claims: “The number of profitable companies in the space making unsubstantiated claims indicates that this issue doesn’t really play into consumers purchase decisions. It is unknown whether that’s because consumers are uninformed or disinterested. Meaningful change will likely come only from increased government scrutiny of the industry.”

Another survey respondent had this to say: “Lack of evidence far surpasses dose issues. Dose is always a problem but it’s my opinion that functional foods and beverages should not necessarily be the same strength as dietary supplements.”

Subscribers can read more about this complex and perplexing issue in NBJ’s 2010 Functional Food and Beverage issue. To order a copy or become a subscriber visit the NBJ subscription page.

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Functional Food and Beverages Are Finally Making a Big Splash in the United States

Global Functional Food Sales by Region 1999-2008 - Chart 243

Kraft, NextFoods Tap Sweden’s Probi as Probiotic Functional Food Partner

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Probiotics: Strains Matter

The news for the U.S. dietary supplement industry was huge Wednesday: Sen. John McCain, R-Arizona, and Senator Byron Dorgan, D-North Dakota, unveiled a bill that would ramp up regulatory oversight of the entire $25 billion U.S. dietary supplement industry—from suppliers to manufacturers and marketers to retailers. Part of the impetus for the bill, named the Dietary Supplement Safety Act of 2010, are the numerous illegal steroids and drugs being sold as sports supplements. The bill is being championed by the U.S. Anti-Doping Agency (USADA) and sporting leagues, including Major League Baseball.

“Like many of you, I am looking forward to watching the Super Bowl this Sunday and the Winter Olympics later this month,” said McCain, who was surrounded by celebrity athletes from skiing, swimming, cycling, baseball and football during the press conference announcing the bill. “However, a little over a year ago the NFL suspended six players, including two players from one of the teams competing this Sunday, for violating the league’s anti-doping policy.”

Kimberly Lord Stewart, editorial director of Nutrition Business Journal’s sister publication Functional Ingredients, summarizes the proposed bill and the changes it would deliver to the Dietary Supplement Health and Education Act (DSHEA) of 1994 in a story posted on the magazine’s Website.

Immediately following the introduction of the bill, the Council for Responsible Nutrition (CRN), the Natural Products Association (NPA) and the American Herbal Products Association (AHPA) released statements.

“CRN looks forward to the opportunity to study the legislation and find common ground with the sponsors and supporters of this legislation,” said CRN President and CEO Steve Mister. “Where specific provisions are extensions of positions we have already supported and lobbied for, we applaud more voices joining with ours.”

“Our industry has long supported efforts to remove the relatively few bad actors who market adulterated products,” said John Gay, NPA executive director and CEO. “We have advocated for additional enforcement funds for regulators, and for giving regulators additional authority to act. What we cannot support is wholesale changes to a regulatory structure that is working, and could work better if the measures we have supported were adopted. A series of new laws for criminals to ignore is not the answer.”

“Though we have not yet examined this bill completely, it places new burdens on dietary supplements that are not required for any other class of food,” said AHPA President Michael McGuffin. “And at least in the case of the proposed policing responsibility for retailers, it appears to be more stringent than retailer requirements under current drug laws.”

NBJ will follow up in next week’s e-newsletter (which publishes on Tuesday) with an analysis of what such regulatory changes could mean for U.S. dietary supplement sales in the short and long-term. Sign up for our free weekly e-newsletter via the NBJ Website.

Functional Ingredients magazine will publish a podcast discussing the proposed bill with CRN on its Website later today.

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A literature review article published February 1 in the Journal of the American College of Cardiology demonstrated once again how deep the misunderstandings over herbal supplements and how these products are regulated runs in the United States—and how important the work of industry trade groups, such as the Council for Responsible Nutrition (CRN), to refute such misunderstandings is today. The article, titled “Use of Herbal Products and Potential Interactions in Patients with Cardiovascular Disease,” warned that herbal supplements may be dangerous for people taking heart disease medication. It also argued that there is a general lack of science proving the safety and effectiveness of herbs.

CRN quickly responded to the review article, which triggered a round of negative mainstream news stories on the risk of herbal supplements. “This article represents a biased, poorly written and contrived attack on herbal supplements,” said Douglas MacKay, ND, vice president of scientific and regulatory affairs at CRN. “We question how a peer-reviewed publication would even accept an article such as this, given the fact that the authors make conclusions about ‘herbal remedies’ based on their own uninformed, inaccurate, and outdated interpretation of the law which covers dietary supplements, including herbal supplements. The article contains sweeping generalizations, often not backed by relevant citations, and copious factual errors, including a reference to products—some of which are not actually herbal supplements—that produce adverse effects on the cardiovascular system.”

CRN went on to point out how U.S. supplement regulations have been strengthened by the implementation of good manufacturing practices and the serious adverse event reporting law for all dietary supplements. “In the first full year that the law requiring manufacturers to report serious adverse events was in effect, FDA reported receiving 1,080 adverse event reports, only 672 of which were considered serious—for all dietary supplement products,” MacKay noted. “For the same year, FDA received over 526,000 adverse event reports related to drugs and biologic products, over 300,000 of which were considered serious, including close to 50,000 deaths.”

In a bit of good news for the industry, CRN’s communication efforts on this article reached reporters, many of whom included at least some of MacKay’s comments in their news pieces. It is this type of outreach that earned CRN a 2009 Education Award from Nutrition Business Journal. Media education was a key focus last year for CRN, which engaged with reporters and responded to inaccurate stories about the industry or the safety of supplements.

Such efforts help address a major concern for responsible supplement companies: protecting and enhancing consumer confidence, said Randi Neiner, director of market research for Shaklee Corp. “CRN has taken a responsible, fact-based approach to informing writers about the supplement industry and to correcting communications that misrepresent the industry,” Neiner told NBJ. “They continually correct the misunderstanding that our industry is not regulated and respond to misrepresentations of research results that are inconclusive or not representative of the totality of available data. They cite good science that supports responsible supplementation, while at the same time communicating our industry’s ongoing concern over questionable ingredients, studies and claims. This serves not only our industry but the consumer as well.”

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2009 Education Award: CRN

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Top 50 Herbs in the U.S.: 2000-2008 - Chart 83