THE EUROPEAN MARKET FOR PROBIOTICS AND PREBIOTICS by jrskeirwta

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									THE EUROPEAN MARKET FOR PROBIOTICS AND PREBIOTICS

Probiotics have been described as “live microbial supplements that
beneficially affect the consumer by improving intestinal microbial balance.”
Prebiotics, on the other hand, are said to feed the good bacteria that already
live in the digestive system and provide “bulk”. They comprise non-digestible
carbohydrates and include oligosaccharides, such as inulin,
fructooligosaccharides (FOS), galartooligosaccharides (GOS), lactulose and
lafinose.

Whatever their respective merits, the European consumer currently seems
keen to consume products that promise to aid digestive health. Although
these markets are relatively small both pre and probiotic foods have been
showing substantial value growth rates of between 10% and 20% per year.
This has to be compared to a total food market growth of only 1% to 2%.


FUNCTIONAL FOODS

Sales of functional food and drink in Europe have experienced considerable
growth, with a doubling of sales between 2000 and 2005, at prevailing prices.
RTS puts the value of European sales of functional foods at €8bn, currently,
and destined to reach in excess of €10bn by 2010.

Consumers are becoming more ‘health aware’ and are interested in what they
eat as well as food’s relationship to health. Many have gone beyond looking
to food simply to maintain normal health and are seeking to optimise
performance and wellness in addition to reducing the risk of some diseases
such as cardiovascular disease, cancer and osteoporosis. In addition,
populations across Europe are ageing, disposable income is increasing and
there is a desire for convenience. This has set the scene for increased
demand and development of functional foods.

Whilst functional drinks still occupy the largest market share (at around 50%
of all sales) probiotics (mainly dairy products) and prebiotics (comprising
mainly dairy products, cereals and baked goods) are the next largest sectors.
Across Europe, the probiotic industry accounts for more than €1.4bn at
consumer prices, whilst the prebiotics sector is valued at €0.9bn (RTS
research).
Western Europe: Consumer market for probiotic and prebiotic products,
2000 to 2010
Market value (€m)

                                                    cagr                      cagr
                             2000     2005p        00-05          2010f      05-10
Probiotics                   824.2   1,447.1       11.9%        2,100.4       7.7%
Prebiotics                   365.3     878.6       19.2%        1,370.6       9.3%


Source RTS Resource Ltd


The market for prebiotics is growing rapidly from a small base. Prebiotics are
mainly associated with breakfast cereals, baked goods, cereal bars and baby
foods, as well as some dairy products. The probiotics market has become
better established, based primarily on the launch of special yogurt and
fermented milk drinks.

Synbiotics are a mixture of prebiotics and probiotics. The theory being that
synbiotics load the colon with good bacteria whilst ensuring there is a plentiful
supply of the right food on which to thrive. This also seems to be a rapidly
growing market.


PROBIOTICS

Western Europe: Forecast consumer market for probiotic products
by segment, 2005 to 2010
Market value (€m)


        1,600

        1,400

        1,200

        1,000
                                                                     2005p
   €m




         800
                                                                     2010f
         600

         400

         200

           0
                Yog & dess    Milk     Breakfast     Biscuits



Source RTS Resource Ltd
Probiotics are “good bacteria” that help maintain a healthy balance of bacteria
in the digestive system. There are two main types of probiotics, namely
lactobacillus species and bifidobacteria, with up to seven different
alternatives. They perform a natural function within the gut, which is to:
    protect the body against harmful bacteria
    prevent the growth of harmful bacteria
    help with gut problems, for example, constipation and wind
    help maintain cholesterol levels
    produce some B vitamins, folic acid and some amino acids
    help the body absorb vitamin B1.

Probiotics are most commonly suited to use in yogurts, yogurt drinks, cereals,
capsules or tablets.

Probiotics, like most functional foods, are classed as foods or food
supplements so are not affected by regulations controlling the advertising of
medicines. However, this means that manufacturers are restricted to making
non-specific “health” claims and that much marketing depends on the
consumers’ own knowledge.

Most foods containing probiotic bacteria are found in the refrigerated sections
of the supermarket as the bacteria are destroyed by heat and other
processing conditions. This has given the dairy sector, already used to
handling live bacteria for the manufacture of yoghurt, a major advantage in
probiotic foods. Probiotic drinking yoghurts are currently the largest users of
probiotics as well as the fastest growing dairy product in Europe.


KEY MANUFACTURERS & THEIR BRANDS

The main European probiotic brands are fermented dairy drinks from Danone,
Yakult and Nestlé LC1. Yakult was the first probiotic drink to be launched in
Europe in 1996, followed by Nestle’s LC1 “Go” and Danone’s Actimel in 1999.
Whilst these are positioned as functional drinks, spoonable probiotic products
tend to take a general health and taste positioning. This is demonstrated by
the launch of Muller Vitality, for example, which is a low fat probiotic yogurt.

The development of new probiotic products has not always met with success
and some notable brands have been withdrawn from the market in recent
years.

Groupe Danone
Danone markets Actimel, a probiotic yoghurt drink containing a unique culture
called L.casei Imunitass, which is exclusive to Danone.

Yakult
Yakult is a fermented milk drink containing lactobacillus casei Shirota.
Developed by Dr Minoru Shirota, the drink has been around for about 70
years in some form. It was initially only produced in Japan but is now made in
Holland for distribution throughout Europe.
Nestlé
Nestlé probiotic products are mainly based on its LC1 brand and include:
  Ski BioVita: a probiotic yoghurt containing LC1 culture
  Sveltesse Optimise 0%: a probiotic, fat free, dairy drink containing a
  probiotic and fibre, available in Strawberry and Pineapple flavours
  Munch Bunch Drinky (UK): a yogurt drink designed for children, containing
  fruit puree and a gentle probiotic for children. It is claimed that the
  probiotic, lactobacillus fortis, is specially designed for children

Müller Dairy
Müller Vitality drinks and yogurts contain two strains of good probiotic
bacteria, La-5 and Bb-12. Müller also uses inulin as a prebiotic.

Orchard Maid (UK)
Orchard Maid organic yogurt drinks (250ml) are marketed with an attached
probiotic straw. The LifeTop straw, developed by Bio Gaia, contains the
probiotic bacteria, lactobacillus reuteri (patented Reuteri), which is claimed to
be one of the most effective probiotics available

Onken Dairy
The Onken Biopot contains a combination of three biocultures: lactobacillus
acidophilus, bifidobacterium longum, and streptococcus thermophilus.

Rowan Glen Dairy (UK)
The company produces a range of yogurts, which include fat-free Probiotic
Yogurt for Tesco, Sainsbury's, Safeway and the catering trade throughout the
UK.


PROBIOTIC MARKET

The probiotic dairy market continues to develop after a particularly slow start.
Bio yogurts have been eaten throughout Europe for their mild taste more than
their health benefits. Only relatively recently, with the introduction of dose-
delivery fermented milk drinks, have terms such as gut health, digestion and
bacteria been used in promotion and advertising.

Whilst the European market for probiotics is showing healthy growth in
demand it is not without controversy. Despite being beneficial to health, many
products have been criticised for containing too few bacteria to have any
practical effect.

Food is the largest sector of use, although probiotics supplements are also
seeing good growth. However, in Europe, the sector of food supplements has
been contentious due to the lack of specific legislation. Profitability of the
supplements sector seems high with some probiotic materials commanding as
much as €900 per kilo of capsules at consumer prices.
Key drivers driving the functional dairy products sector include consumer
health concerns, the traditional healthy image of yogurt, and the good taste
perceptions of the probiotic yogurts.

As the market has become more established this has enabled familiar brands
to be developed into the broader “health” arena. For instance, Benecol started
out with yellow fat and cheese spreads, then moved into yogurts in the UK
and snack bars and dressings in the US. A further development has been the
“mixing” of health ingredients into one product for example, probiotics with
prebiotics (synbiotics) and probiotics with Omega-3 or vitamins.

There does appear to be an element of fashion attached to the market sector
which could pose problems for sustaining growth in the future whilst probiotics
in supplement form will continue to compete with probiotic foods.


Western Europe: Share of market for probiotics as industrial food
ingredient by main country, 2005
% Share of market value (€m)




                     Rest of WE
                        19%             Germany
                                          29%
                    Spain
                     6%
             Netherlands
                 7%
                          UK
                          9%          France
                                       21%
                            Finland
                              9%



Source RTS Resource Ltd
Western Europe: Forecast growth in market value of probiotics as
industrial food ingredient by main segment, 2005 to 2010
Forecast additional market value (+/- €m)



   Yogurt & desserts                                    +£4.44m



   Milk & milk drinks                         +£3.17m



   B'fast cereals, bars    +£0.20m



     Biscuits/cookies     +£0.02m




Source RTS Resource Ltd




NEW TECHNOLOGY

Although the use of probiotics in food is largely restricted to refrigerated dairy
products, technology is developing and there are now several ways in which
probiotics can be added to these and other foods and yet remain stable.

Arla Foods
Swedish probiotics producer, Medipharm, has revealed plans to launch a
coated bacteria that can resist the damaging conditions in ambient foods like
cereals, or even the low temperatures of ice cream. The Arla Foods
subsidiary has worked with Sensient Flavors (the Nordic division of US-based
Sensient Technologies) to create a probiotic that remains stable when stored
in dry conditions at room temperature for six months.

The coating layer contains Medipharm's lactobacillus F19, already available in
Arla's Culture brand, and shown in studies to boost the immune system. This
creates the opportunity to add probiotics to other foods such as cereals and
nutrition bars

Chr Hansen
Probiotics supplier, Chr Hansen, claims to have developed a new, flexible
formulation system for adding probiotics directly to finished products. The
technology uses Tetra Pak's aseptic dosing machine, Flex Dos, which allows
the bacteria to be added to liquids just before they are filled into cartons. The
innovation is expected to significantly boost the market for probiotic
beverages, which have so far been restricted by the delicate nature of the
ingredient and concerns over contamination.
Chr Hansen is predicting strong growth in demand for probiotic beverages as
the drinks sector has traditionally been one of the most innovative in adding
healthy ingredients.

Valio
Meanwhile, Finnish dairy processor Valio, claims to have succeeded in
creating a probiotic juice (its Gefilus brand) by improving the stability of its
probiotic bacteria. The product is said to enjoy the largest share of the chilled
drinks segment in Finland.


Western Europe: Industrial market for probiotics and prebiotics,
2000 to 2010
Market value (€m)

                                            cagr              cagr
                          2000    2005p    00-05   2010f     05-10
Probiotics                 12.0     19.6   10.2%    27.4      7.0%
Prebiotics                  8.2     21.1   20.9%    32.1     8.8%


Source RTS Resource Ltd




PREBIOTICS

Prebiotics are defined as: “non-digestible food ingredients that beneficially
affect the host by selectively stimulating the growth and/or activity of one or a
limited number of bacteria in the colon, which can improve host health.”

Materials include oligosaccharides, such as inulin, fructooligosaccharides
(FOS), galartooligosaccharides (GOS), lactulose and lafinose.

According to LFI, there are many new prebiotic materials coming onto the
market, including isomalto-oligosaccharide, soya-bean oligosaccharide,
lactosucrose and xylo-oligosaccharides. Many others, such as tagatose,
pectin, dextrins and larch arabinogalactan, are currently being assessed.

Prebiotics provide food for the growth of lactobacillus and bifidobacteria.
These non-digestible carbohydrates occur naturally in foods such as wheat,
oats, bananas, asparagus, leeks, onion, garlic, chicory, and artichokes.
However, they are only present in small amounts. The commonest prebiotic in
the diet is the fibre found in fruit and vegetables.

Although it is preferable to obtain prebiotics from natural sources, this may not
always be practical. Prebiotics can be incorporated into the diet through foods
such as cereals and dairy products, which are supplemented with them.

According to prebiotic producer, Orafti, infant formula manufacturers looking
to replicate the qualities of breast milk are turning to prebiotics to boost gut
health. Children under the age of five are one of the groups most susceptible
to gastrointestinal infections, particularly when starting attendance at nursery
schools. Orafti says there is increasing interest in using prebiotic ingredients
in infant and follow-on formulas on both sides of the Atlantic. Researchers
have found that breast milk naturally contains oligosaccharides.


Western Europe: Forecast consumer market for prebiotic products
by segment , 2005 to 2010
Market value (€m)


        600
        500
        400
                                                                                                                                2005p
   €m




        300
                                                                                                                                2010f
        200
        100
         0
                                                     Bread




                                                                                                     Milk

                                                                                                            Butter

                                                                                                                     Biscuits
                                                                         Confectionery
              Yog & dess

                           Breakfast




                                                             Pet foods
                                       Soft drinks




                                                                                         Ice cream




Source RTS Resource Ltd


PREBIOTICS RESEARCH

New research is being proposed to establish just how effective prebiotic
ingredients substances are in different food applications.

Where probiotic products add more of the healthy bugs found naturally in the
gut, prebiotic ingredients feed those that are already present. There has been
a rapid increase in companies marketing such ingredients on the basis that a
good balance of gut flora protects the digestive system and bowel against
various cancers and other illnesses.

Leatherhead Food International (LFI) and The University of Reading have
proposed a collaborative project with ingredient suppliers and healthy product
manufacturers to research such products. The project will look at the
performance of individual prebiotic ingredients and examine whether blending
one or more ingredients gives increased activity. It will also investigate how
well they work in different food applications.

It is hoped that the project will not only help suppliers of prebiotic ingredients
to understand and establish the benefits, but will also help manufacturers of
yoghurts, confectionery, snacks, spreads and beverages to look at potential
applications and establish scientifically backed health claims.
KEY MANUFACTURERS OF PREBIOTIC PRODUCTS

As prebiotics are closely associated with products containing some form of
fibre, product usage tends to be wide – bread and baked products, breakfast
cereals (such as Kellogg’s Rice Krispies Multi-Grain), baby foods, dairy
products and even soft drinks and pet food. However, these products are less
well established than probiotic ones and tend to be confined to niche sectors
of more established markets. It is surmised that this is mainly because
prebiotics, as a group, have been less well supported by advertising and
consumer awareness.

PREBIOTIC MARKET

As with probiotics the global market for prebiotics is showing a healthy growth
in demand and there appears to be good scientific evidence to underpin
health claims, which should further sustain growth in the future. Prebiotics can
also be purchased in supplement form with some prebiotics commanding as
much as €700 per kilo of supplement capsules. Food products command
much less of a premium.

RTS calculates that the strict market for added prebiotic ingredients in
functional foods, as defined, in the EU, USA and Asia, totals some 25,000
tonnes, which is forecast to rise in volume by more than 6% per year.
However, the European market remains relatively small at €880m in terms of
finished product sales values. Market potential though is considered high.
Growth could occur at an even higher rate than our predictions if the industry
develops more new products and markets them successfully, given legislative
restrictions.
Western Europe: Share of market for prebiotics as industrial food
ingredient by main country, 2005
% Share of market value (€m)




                      Rest of WE
                         17%                      UK
                                                 24%
              Netherlands
                  6%
                    Spain
                     7%
                       Italy
                        7%                         Germany
                                                     22%
                               France
                                17%




Source RTS Resource Ltd




Western Europe: Forecast growth in market value of prebiotics as
industrial food ingredient by main segment, 2005 to 2010
Forecast additional market value (+/- €m)


                 Yogurt & desserts                            +€3.2m

                B'fast cereals, bars                          +€2.9m

   Juices, soft drinks & carbonated                           +€2.8m

           Bread & morning goods                     +€1.3m

                          Pet foods       +€0.3m

                    Confectionery       +€0.2m

                Milk & milk drinks      +€0.2m

      Ice creams & frozen desserts      +€0.1m

               Butter & yellow fats     +€0.1m



Source RTS Resource Ltd
CONCLUSIONS

Both pro and prebiotics represent different but potentially exciting parts of the
market for healthy food and drink. All the signs are that consumers will
continue to favour products with specific health benefits and this factor should
ensure that these sectors continue to enjoy above average growth. However,
as can be seen in the history of the development of probiotic dairy drinks, the
consumer must feel both comfortable and somewhat knowledgeable about
the products and their benefits before markets can develop. Perhaps the most
significant barrier to future growth, therefore, is legislation. New EU legislation
is likely to curb the use of specific health claims that lack the scientific
evidence to back them up.

There is also a danger that health-giving foods such as these may suffer from
changes in food fashion – what is “in” today may be “out” tomorrow.

At the same time, the market is starting to become more complex. What
began as a relatively simple message with the addition of bacteria or soluble
fibre to existing products is now becoming a battleground for more complex
mixes. Not only are we being offered synbiotics, but also the addition of other
health ingredients such as Omega-3 and plant sterols. Whilst some of these
health “packages” are interesting the danger is that they will simply confuse
the consumer who will then turn away from the sector as a whole.

Meanwhile, technology now seems to be available capable of expanding the
use of both pro and prebiotics into new ranges of foods and drink and this, in
turn, could provide the industry with a classic win-win for the future – better
health for the consumer and an opportunity for growth and adding value for
the manufacturer and retailer – providing the health benefit is effective and the
message is kept simple.

								
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