Market View: Riches in health niches?

Americans want great taste; that is what food is about. Taste rules!

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I recently gave a presentation to an international group of food marketers on the important issues for the U.S. food industry. I discussed convenience and taste, but I also felt compelled to mention health because food companies seem to be obsessed with this attribute. Almost every issue of today's food magazines contains an article about health and wellness foods, and a sister publication of Food Processing is called Wellness Foods: The Magazine for Nutraceutical Foods and Beverages.

 

When asked to define the "healthy" attribute of foods, I really wasn't sure how to proceed. Does it include organic food, which has no nutrient advantage, is possibly higher in E-coli, but is good for the environment? Or is it natural foods, which would include an orange (I guess)?  Is it food that is low in things or high in things, or both?  Is it functional foods, which almost no American consumer has ever heard of, or pharmafoods, which almost no one knows or understands? It is even more perplexing when you realize that it is people who are healthy -- or unhealthy , rather than food. It is the overindulgence of food that makes people unhealthy, not the food itself. Even the most conservative nutritionist would agree Godiva chocolate isn't bad for you, but if you eat too much of it you may develop health problems.

 

A member of the audience suggested that health must be a very important attribute for selling food since everyone seems obsessed with it, and asked me what data existed to support this notion. Given that I don't believe in health as a motivating attribute, I was left speechless. I could offer no evidence of success or why there was all the interest in the health attribute.

 

The facts, as I see them, are contrary to the health hype. The U.S. has an epidemic of obesity. Not only are adults fatter, but so are kids. They didn't get there by eating healthy foods. The sales of high-fat products such as ice cream are up, as are sales of the best quality beef such as porterhouse. Sales of low-fat products are down and in some cases out! As recently as 1998, one in three new food products carried a low-fat claim, but in 2002 only one in 10 new products did. Fat-free ice cream sales are down, low-fat cookies are down, and low-fat sausage is down. Guiltless Gourmet is down from $24 million to $6 million in 2002, and Ben & Jerry's fat-free sorbet, which once accounted for 12 percent of the company's total sales, fell so low it was dropped. When asked what they think of when buying a cookie, some 95 percent of survey participants ranked taste first while only 37 percent even factored in low fat. And the biggest profit growth in  foodservice was doughnut shops, with Krispy Kreme leading the way.

 

I pointed out that a number of very good marketers have withdrawn products targeted to this market. Kellogg failed with Ensemble; Nestle withdrew LC-1, a nutritional supplement; McNeil's Benecol has not reached its planned potential; Intelligent Cuisine was dropped by Campbell Soup Co.; Frito-Lay's Wow potato chips bombed; Hormel Health labs discontinued the nutraceutical Proventra; and Novartis Consumer Health group terminated Aviva, a functional food. The much-ballyhooed joint venture between Quaker and Novartis, which promised to introduce a line of cereals, snacks, and beverages under the Take Heart brand, failed to successfully bring one product to market. The venture has ended. Note that every one of the aforementioned companies is as solid as they come.

 

There are of course exceptions, such as orange juice with calcium. But that product is absolutely delicious and you give up nothing to consume more nutrients. If all health food were as delicious as orange juice with calcium, I might be whistling a different tune.  Americans want great taste; that is what food is about. Taste rules!

 

I'm completely baffled by all the interest and investment made on the part of food companies in the "health food market." I have not yet seen a realistic projection for the growth of the market, nor do I see a society that is asking, or even hinting, that it wants these foods, the exception being a very loyal core. A study by NPD indicates that a growing number consumers agree with the statements, "The taste of food is more important than how nutritious it is" and "Convenience is more important in the foods I eat." 

 

I think the "health food market" is a niche market, and there are riches in niches. But that does not mean that a trend is afoot here. Could someone explain to me what all the excitement is about?

 

John L. Stanton is a professor of food marketing at St. Joseph's University in Philadelphia. He can be contacted at (610) 660-1607; fax (610) 660-1604; e-mail at jstanton@sju.edu; or www.johnLstanton.com.

 

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