R&D / New Food Products / Wellness Foods

How Big a Category is Wellness?

Low-carb is slowing but not gone; organic and low-sugar are soaring in sales.

By Diane Toops, News and Trends Editor

Although it's no longer a craze, maybe it's too early to write off the low-carb diet.

Diet plans may move into and out of vogue, but consumers increasingly are looking for the weight loss “magic bullet.” There are two good-for-you food segments — organic and no-/low sugar generating — especially strong and sustained growth, according to new research from ACNielsen, a leading global provider of consumer and marketplace information.

The “carb-conscious” segment (products with label claims such as “for your low-carb lifestyle”) actually topped the list of 11 good-for-you segments tracked by Chicago-based ACNielsen for generating the highest growth in the first 12 weeks of 2005 — up 20.2 percent versus the same period last year. However, that increase was off sharply from the segment’s peak one-week growth rate of more than 200 percent in mid-June of 2004.

In fact, sales within the carb-conscious segment have been slowing steadily ever since. For the one-week period ending March 19, sales of such products actually declined (-2.5 percent) compared with the same period last year. It was the first one-week sales loss for the segment since ACNielsen began tracking carb-conscious products in 2000.

“Clearly, many consumers want to lose weight and eat more healthily overall,” says Alice Fawver, senior vice president of marketing for ACNielsen-U.S. “The sales numbers show that people will flock toward diets that promise results. However, keeping people on such diets has proven more challenging. The good-for-you product segments that are enjoying the most sustained success are those that offer health benefits without requiring a whole new way of eating.”

That may account for the fact that the growth rate for the no/low-fat product segment has been in the low single digits. One must remember that no/low fat is the largest good-for-you segment. With more than 3,000 new no/low-fat items launched and sales topping $32.6 billion in 2004, even modest percentage gains translate into significant dollar and volume gains. Sales in that category far exceed sales of the second-largest segment — products offering low and no sodium with sales of $15.5 billion.

The carb-conscious segment registered the strongest year-over-year sales gains in 2004. Most of those gains took place in the first half of 2004, with sales moderating in the second half. During the third quarter of 2004, while low-carb sales continued to increase, the month-to-month increases got progressively smaller. Sales increases continued declining until the first four-week period of the New Year, when sales rose in accordance with the “January effect,” which results in higher sales for products promising in weight loss. Usually, consumers forget their New Year’s resolutions quickly after January and return to their normal eating patterns.

Health and wellness aficionados

Health and wellness industry sales in 2004 totaled $68 billion, according to the Natural Marketing Institute (NMI), Hartleysville, Pa. The largest gains since 2003 were in organic foods and beverages, up 18 percent. Despite double-digit growth, many consumers still don’t understand what organic is — particularly the specific benefits of using organics.

NMI’s general population consumer segmentation model classifies consumers into five categories:
  1. Well Beings: They’re driven to health by all means, including foods, supplements and other products. Strong preference for concepts that are “natural,” strong environmental linkage. Values-based option leaders. Percent of general population in 2004 — 23 percent, up 10.6 percent over 2001.

  2. Food Actives: Dedicated to health through food, especially those products with nutritional benefits. Also have high belief in supplements for health. Driven by desire for balance of diet, exercise and nutrition. Percent of general population 2004 — 26 percent, up 7.4 percent vs. 2001.

  3. Magic Bullets: High belief in the value of supplements for health, less concerned with foods, artificial ingredients and environment. Driven by weight loss. Late adopters, highly driven by price, less by brand. Percent of general population 2004 — 12 percent, down 21.7 percent vs. 2001.

  4. Fence Sitters: Neutral on most health issues, with some leanings toward natural foods. Low belief in the value of supplementation. Somewhat price-sensitive, although they splurge when dining out. Percent of general population 2004 — 18 percent, down 1.8 percent vs. 2001.

  5. Eat, Drink & Be Merrys: Less concerned about health or the food they eat, although they are beginning to see the value of supplementation. Highly price-sensitive, but also influenced by brand image. Most likely to know they should eat healthier, but just don’t. Percent of general population 2004 — 21 percent, up 5.3 percent vs. 2001.
Those percentages seem to indicate consumers are changing their lifestyles toward healthier products. “Product functionality related to health and wellness will be the foundation for growth in the decades to come,” says Maryellen Molyneaux, president and managing partner of NMI. “Consumers believe they are deficient in calcium, soy protein, fiber, Omega-3 fatty acids, soy isoflavones, water, whole grains, iron, antioxidants, vitamin C, lutein and folic acid, in that order.”

Molyneau says recent reports show Americans are buying more healthy foods than ever before. “Healthier snacks for on-the-go, convenient foods with nutritional fortification, and an ever-broadening range of organic foods are the first steps to capture this increased consumer desire for healthy options,” she explains, adding, beverages in particular offer wellness opportunities. On the trend watch, she says, “The three F’s — fiber, functionality and fat — provide opportunities. Consumers appear predisposed to choose foods for specific health issues. And look for a new definition of fat, moving from low/no products to those containing specific types of fats.”

As for low-carb, once closely linked with weight loss, it’s been redefined as slow-carb. “The low-carb market has faced trials and tribulations in the past year,” says Molyneau. Watch for the alignment of low-carb with the diabetic market, concepts related to glycemic index levels and the overall balance of blood sugar levels related to energy management.”

Demographics are key as well. “Some 84 percent of boomers believe they can manage many of their health issues through proper nutrition,” says Steve French, executive vice president, managing partner of NMI.

Taste is the primary driver for boomers, while Gen X looks for value. The most important wellness attributes for boomers are low-fat/fat-free, sugar-free and low-calorie. Gen Y, on the other hand, is looking for weight-friendly and healthier foods. “Gen Y has significantly increased their use of low-carb, low-calorie, low-fat, fat-free and vegetarian,” he says.

But there is a contradiction. “It is apparent the American population is becoming polarized with regard to wellness, with the healthiest getting healthier and the unhealthiest becoming less healthy,” says Molyneau. “This trend is clearly evidenced by a fundamental shift of almost 20 million American adults who have migrated to either end of the health and wellness spectrum during the past four years.”

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