Speaking at Zenith International’s InnoBev Global Soft Drinks Congress in Lisbon (May 7-9), Markus Lotsch highlighted global growth in launches (and by extension sales) of products with health benefits.
EU food and beverage launch numbers on a health platform significantly outstripped nearest rivals North America and Asia/Australasia from 2004-2012 according to Innova Market Insights, with circa. 20,000 in 2012.
So what is the secret of successful innovation in this field? “Everything starts with the consumer – that’s the most important, the most complex construct that we have, and it’s a challenge for the industry to understand, clearly, what is our consumer?” Lotsch said.
'The retailer is a gatekeeper, but retailers are changing'
“There is no one consumer, no one behaviour that matches what the consumer thinks or says. A lot of effort is necessary to understand this properly,” he added.
“Crowd sourcing ideas, co-creation – all these things we’ve been hearing in this area are very important,” Lotsch said.
He noted that the 2006 European Health Claims regulation – with a positive list of permissible claims – is also a vital market consideration, as are a growing number of consumer protection organizations “who will also jump into that area and given their opinion on the subject”.
“Then the retailer is a gatekeeper. When we talk about health innovations it’s important that we find the right way to market, and it might not always be through traditional retailers and thinking in volumes,” Lotsch said.
“On the other side, we also see that retailers are changing. We see a lot more happening with old own-label products going towards premium retail brand goods,” he added.
The first crucial market driver is naturalness, Lotsch said, with 64% of EU consumers (Innova) avoiding products with a high proportion of artificial ingredients or preservatives, and a resultant demand for natural innovations, natural sweeteners, natural colors and flavors.
“We see the World of Nature products from Pago, launches on the energy side [Red Bull Cola] in carbonates, where Orangina, a large CSD brand, also skipped preservatives. The direction is towards natural,” he said.
Gluten free - Statistics don't support hype!
Lotsch said sugar reduction was his second key driver, with 1.4bn people in the worldoverweight, and one third considered obese – 7% of the world’s population.
“There’s more than just sugar behind this – the likelihood of a child to become obese is 50% higher if you are an only child, so there is more behind this than just consumption habits,” Lotsch said.
Thirdly, enhancement and functional ingredients are important innovation driver, WILD Flavors’ MD insisted, with the “perceived value” for consumers (claims around, say, ‘balance’, ‘relaxation’ and ‘natural’) a challenge for brands to get right.
“We need to understand what’s important for consumers,” Lotsch said. “Take gluten – it’s very fashionable to claim gluten-free in restaurants, but gluten intolerance in Germany is only 0.2-05% of the population. There’s big hype, it’s a big subject, a big trend, but it’s wholly irrelevant.
'Last but not least, make it happen!'
Successes in this space included enhanced waters sparked by Coke brand Glaceau’s success in the US, Lotsch said, and speaking generally of successful innovations, he encouraged brands to understand the consumer.
“This is the absolutely essential No.1 point – what you think and what you anticipate is not necessarily what your consumer needs, wants and will buy,” he said.
“Secondly, trends are multi-dimensional, which aspects are relevant for you? Use these as an energy driving forward,” Lotsch added.
“Thirdly, the concept – look at the whole concept. Just using a certain ingredient or positioning is not going to make you a success. It needs to be the whole composition that works together and fits,” WILD’s MD said.
“Last but not least, make it happen. I’ve seen so many interesting concepts that didn’t make it to the market in the end,” Lotsch added.