'Phood' industry poised for a marketing explosion

The introduction of iodine to Morton Salt in 1924 was instrumental in eradicating a dangerous thyroid condition called goiter from the U.S. population.

It was also the first time a food company purposely added a medically beneficial ingredient to food to help market that product.

Eighty years later, the food industry is intensively researching all kinds of other healthful ingredients it hopes to use to help sell otherwise everyday foods.

Functional foods, or "phoods" as they're sometimes called to connote the intersection of food and pharmaceuticals, have been trickling into supermarkets over the past several years -- think of calcium-enhanced orange juice and cholesterol-lowering margarine, for example.

But they have met with mixed success because consumers didn't know or care enough about the new ingredients.

Now, though, consumers' growing awareness of health and nutrition, and new regulatory rulings that will make it easier for manufacturers to make health claims on packaging, are reenergizing the "phood" business. Once again, food companies see functional foods as a way to boost sales in a highly competitive market.

"It's definitely a big deal," said David Lockwood, editor of a recent report on functional foods by market research giant Mintel International Group Ltd. "We expect [the functional foods business] to grow about 7.6 percent annually through 2008 -- that's about twice as fast as the overall food market is going to be growing."

That kind of prediction is pushing companies such as Kraft and Nestle headlong into nutritionally enhanced fare. At the recent annual meeting of the Food Marketing Institute, fully half of the 75 new products Kraft introduced had a "health and wellness" focus, the company said. That's up from 15 percent of its new products the year before.

Many of these products have added vitamins and minerals, such as a new Kool-Aid that provides 100 percent of a child's daily vitamin C requirement and the Creme Saver Smoothie boosted with calcium.

Lutein, linked to vision health, is now added to Sunsweet Prune Juice. Soy protein, which can help prevent heart disease, is being added to cereals such as Kellogg's Smart Start. Food giant Nestle is actively unveiling products overseas, including yogurt with probiotic bacteria, to aid digestion.

Nestle's nutritionally oriented products make up just 8 percent of company sales but account for 20 percent of its research budget, according to company spokesman Hans-Joerg Renk.

"There's a lot of research and development going on into what kinds of products people want, what kind of products can we produce to meet the demand -- that taste good and will be successful in the marketplace -- and how do we communicate the benefits?" said Michael Diegel, a spokesman for the Grocery Manufacturers of America.

Glaceau Vitamin Water, spiked with nutrients such as taurine, vitamin C, calcium, and potassium can be found on shelves of gourmet shops and supermarkets. Officials at privately owned Energy Brands Inc. attribute much of what they say has been dramatic growth in sales to consumers' rising interest in nutrition and wellness.

Company founder and Chief Executive J. Darius Bikoff said some major food companies rushed into the functional foods category several years ago without enough understanding of consumers and little patience when the idea didn't catch on right away.

"It's an evolution. We don't adjust our behavior overnight in any kind of meaningful way," he said. "The meaningful change comes over a period of time as we all want to feel better about what we're doing."

Food marketing professor Nancy Childs, of St. Joseph's University in Philadelphia, said the widespread awareness of the low-carb phenomenon has led many consumers to check food labels.

"It starts to make them think about their food in terms of its nutritional components," she said, which makes it easier to introduce other ingredients such as soy, fiber, and many lesser-known compounds.

Although more consumers may be ready to try the new products, the real driver behind the reborn interest of food manufacturers comes from science and the government.

Government labs, universities, and private companies are doing more research on the health effects of many nutrients, food scientists say, but much of it falls short of the full-scale clinical trials that the Food and Drug Administration has required for use in marketing.

Beginning this spring, the FDA started allowing "qualified health claims" telling consumers about ingredients that current science "suggests" might be helpful in preventing certain diseases and medical conditions.

"FDA feels that this does provide more information to the consumer," said Kathleen C. Ellwood, director of the agency's division of Nutrition Programs and Labeling. "It's more to empower the consumer to make them more aware of possible health benefits in these foods."

That allowance has opened the floodgates. Dozens of petitions have been filed with the agency seeking permission for such claims: Sports drink maker American Longevity wants to claim that lycopene reduces the risk of cancer; coral calcium producer Marine Bio USA has petitioned for a claim that calcium can reduce the risk of kidney stones; and the North American Olive Oil Association wants permission to use a claim that monounsaturated fatty acids can reduce the risk of heart disease.

Consumers will start seeing these claims on packages soon, though some nutritionists and scientists are concerned that the findings aren't rock-solid.

The nonprofit Center for Science in the Public Interest has filed suit against the FDA, arguing that the new program violates the 1990 Nutrition Labeling and Education Act, which mandated a higher level of scientific agreement for marketing the health benefits of ingredients.

Others fear there will be so many claims they'll just become more noise to already confused consumers.

"I'm concerned that too many such claims will cause consumers to tune out and make all of them ineffective," said Clare Hasler, executive director of the Robert Mondavi Institute for Wine and Food Science at the University of California at Davis.

So far, the FDA has approved only a handful of qualified health claims, and they show the limitations that this new system may have, for consumers and food companies.

The California Walnut Commission, for example, wanted permission to put this claim on packages of walnuts, which are high in Omega-3 polyunsaturated fatty acids: "Diets including walnuts can reduce the risk of heart disease."

The agency approved wording that's not quite as snappy for package design: "Supportive but not conclusive research shows that eating 1.5 oz. of walnuts per day, as part of a low saturated fat and low cholesterol diet, and not resulting in increased caloric intake, may reduce the risk of coronary heart disease."


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