The use of so-called functional foods, is on the rise, especially in China and Japan. Functional foods are those fortified with additional vitamins or minerals. Anchor Lisa Mullins speaks with Bob Jones of the management consulting firm Scientia Advisors about why one country will accept a particular functional food and another will reject it.
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LISA: It's no longer a surprise to go grocery shopping and see on the shelf products known as â€œfunctional foodsâ€. Functional foods are not genetically modified products, they're basic foods â€“ say milk, embellished with Vitamin D or chocolate with probiotics. And certain functional foods are becoming more popular. Scientia Advisers is a management-consulting firm that's released a report on functional foods. It found that the biggest growth outside the US may be in Japan and mostly in China. What's more, according to Bob Jones of Scientia, the overall sales of functional foods will surge about 50 percent worldwide from now to 2012. Mighty appetizing news for the food industry that's expanding only slowly. We began our conversation with Bob Jones for the definition.
BOB: Functional foods -- take a food or beverage that you're accustomed to consuming, again, Orange Juice, and augment it with an ingredient that's not ordinarily there such as calcium. Or takes a food product such as infant formula, which is familiar, and augments it with an ingredient like docosahexaenoic acid which isn't normally there but which science has demonstrated can improve visual acuity and brain health in infants.
LISA: And the government has said you can make these claims about it?
BOB: Absolutely. And that functional benefit is well documented and it comes about simply by adding an established ingredient into a food or beverage delivery vehicle, which makes it acceptable.
LISA: Isn't that part though controversial, that that's how it comes about? I mean, we all know that there's a lot of controversy around whether or not there's a magic bullet that comes from a blueberry, that if you insert it, you know, in a can of Coca-Cola if it will still have the health benefits that eating the actual â€“ the entire blueberry will?
BOB: And that is one of the issues. There are people who have studied the benefits, for example of carrots, concluded that the magic ingredient is Betakerotine. Put betakerotine in a capsule and discovered that in fact it didn't work anywhere nearly as well as eating the carrot. There are still innovative efforts which don't succeed because they are efforts to seek exactly the magic bullet you're describing. We all would love to have a magic pill that made us 20 years younger and 10 pounds lighter, or 10 years younger and 20 pounds lighter. Sadly, it doesn't exist.
LISA: So who has the strictest regulations? I mean, who has the most hurdles in terms of the regulatory process?
BOB: The U.S. U.S. has the greatest hurdles and there have been a number of places where the regulators just haven't stepped up to the plate to say, â€œHere's what the requirements will be.â€
LISA: So give me an example of what else marketers, being experts at their business, have learned about how to sell a particular product to a particular culture?
BOB: In Finland, the per capita consumption of margarine is about six to eight times what it is here in the US.
LISA: Margarine versus butter?
BOB: Margarine versus butter. And the Fins determined that these plant sterols that they had identified lowered cholesterol and thought, â€œWell, since our countrymen eat all this margarine, why don't we augment it with this cholesterol-lowering ingredient?â€ The population agreed, the product absolutely took off. The firm was called Rizioc, the product was called Benecol, and it did extraordinarily well. They brought it over to the States, and the company that got behind it looked at the science, looked at the regulatory status, and said, â€œThe science is superb. The FDA in fact has approved this. The NIH is recommending that one consume it. Let's go.â€ But they failed to consider a couple of consumer factors, to your question about marketing, that in fact, prove to be fatal. One, the U.S. consumer does not typically think of margarine as a delivery vehicle for good health. Two, in order to get these benefits, one had to consume a considerable amount of this three times a day.
LISA: And this is what the Fins had been doing?
BOB: Because the Fins already were consuming much more margarine than the U.S. population. This was not a change in consumer habit for the Fins. For the Americans, they would look at this and say, â€œLet me make sure I understand this. I have to eat a bathtub full of this margarine every day in order to lower my cholesterol, is that right? And by the way, it doesn't taste quite right and finally it appears to be somewhere between 8 and 14 times as expensive as my regular margarine.â€
LISA: Yeah. Good. Three strikes.
LISA: So give me another example of something that might sell well overseas but not necessarily here.
BOB: Well, there's a very interesting example that has popped up. It turns out that chocolate is a fabulous delivery vehicle for â€“
LISA: We can just end at â€œfabulousâ€.
BOB: Right. Chocolate is a fabulous medication. It turns out it works very well as a delivery vehicle for these healthful ingredients.
BOB: Well, this field is an interesting interpolation of the medical and the consumer, in that the doctor needs to recommend it but the consumer has to say, â€œYou know, I like the way it tastes.â€ So the challenge for formulators has been to figure out how to put the healthful ingredient in a food or beverage and make it taste good and then the consumer adopts it. The exception is if the food or beverage is viewed as a precious indulgence, like chocolate, in which case trying to make it healthy is antithetical to why people buy it.
LISA: Yeah. So here, for those people who consider chocolate a necessary but guilty pleasure.
BOB: Absolutely, In fact, maybe even a religious experience. Trying to make it healthful is antithetical to why they would buy it.
LISA: And is it a different story elsewhere?
BOB: In Japan, for example, where chocolate is relatively newer on the landscape and carries less emotional sizzle, they have no problem whatsoever with regarding chocolate as a delivery vehicle for something healthful. And consequently, sales of functionally fortified chocolate have taken off more rapidly in Japan than they have here in the States.
LISA: And give me in summary, what the playing field is like now for people who are selling functional foods.
BOB: There is a trend worldwide toward heath and wellness. Many of the food and beverage companies that are global are casting a net looking for where the next growth opportunity will come. And there's two consequences here. One is that consumers are encountering health problems that come with obesity. And the other is that the food companies are figuring out that they may well be able to charge more for products that do more. So the convergence of the trend toward health and the economic interest and the quality of the emerging science shows this to be a genuine opportunity worldwide.
LISA: That's the prediction of Bob Jones of Scientia Advisors on the growing popularity of so-called â€œfunctional foodsâ€.