Pierce Hollingsworth

DEVELOPINGFOODS.COM is a new quarterly section covering the interaction of Research & Development and Marketing in the development of food products. This special report is also available on the Internet at www.developingfoods.com.

Yogurt Reinvents ItselfCulture Wars
History has seen many culture wars, but perhaps nothing quite like the one shaping up in grocery and health food stores around the globe. This one is not based on societal ferment, however, but the real thing: microorganisms in the form of friendly bacteria known as probiotic microflora. And the war is among food companies attempting to exploit mounting evidence that these probiotics have an amazingly positive effect on the human body.

Over the course of the past 24 months, the market for probiotic-enhanced foods and supplements has exploded because of a rash of new products, many based on patented “designer” bacteria, and growing media attention. Last January, U.S. News & World Report ran a feature about probiotics under the headline, “Stomach-Friendly Bugs? Don’t Get Butterflies.” Such articles are fueling consumer interest and retail sales for probiotics in the $17-billion United States functional foods market.

New Market Entries
The two main battlefronts are cultured dairy foods and supplements in both drinkable and capsule forms. The common denominator is live bacteria processed in such a way that most of it remains alive by the time it reaches the gastrointestinal tract. One of the newest entries is Actimel, a probiotic supplement beverage introduced to the Colorado market by Dannon Co. in late 1999. The probiotic formulation includes Lactobacillus bulgaricus, Streptococcus thermophilus, and Lactobacillus casei cultures. And while it is made from milk, skim milk, sugar, and glucose and marketed alongside Dannon’s yogurt, it is positioned as a unique health beverage. Dannon’s parent, Danone Group, sells Actimel worldwide. It is the company’s first international brand and was introduced in Belgium in 1994. Today Danone sells more than a million bottles of Actimel per day in Europe. 

The positioning of the product next to yogurt in the Colorado test market is designed to help U.S. consumers understand its health role. “We have to help people understand what Actimel is,” states Fredericka de Saint Perier, Dannon’s director of kids and health marketing. “The awareness about probiotics is not top-of-mind in the United States. We want it to be next to the yogurt so the link with cultures is established.” 

Global competitor Nestlé also entered the U.S. market last year with a probiotic supplement called LC1. It is based on its patented Lactobacillus johnsonii, a proprietary strain of acidophilus bacteria that better survives the digestive process. Because Nestlé does not have a chilled dairy business in the U.S., it decided to market the probiotic as a powder through health and nutrition outlets. The product has been available in Europe since 1994, primarily as a probiotic yogurt of the same name. Claims for the product target immune health and the reduction of gastrointestinal disorders like diarrhea, gastritis, and peptic ulcers. Some evidence suggests that probiotics such as LC1 can even reduce the incidence of the common cold. 

--- PAGE BREAK ---

The European market may well be a harbinger of things to come to the U.S. market over the next several years. “It seems that the markets of probiotics are replacing more and more of the natural yogurt market, and I think this trend will continue,” Andrea Pfeifer, Nestle’s Research Center director, said. While natural yogurt is one of the world’s first and oldest health foods, probiotic yogurts, in which bacterial cultures are added, deliver more friendly bacteria to the gut alive and ready to work. In addition, probiotic yogurts and supplements can be fine-tuned to specific health conditions or demographic targets. They represent 20% of the European yogurt market today, and Pfeifer predicts that they will soon dominate. 

“Probiotic yogurt has cultures which survive the gastrointestinal passage. The major health benefits are immune function, immune stimulation, and a positive balance of the microflora,” he stressed. 

One major target is the prevention of infant diarrhea, a major cause of infant mortality in many countries. Nestlé markets LC1 products as infant formulas under various brand names as a means to eliminate this condition. A surprising side benefit emerged as the company evaluated field trials. “We found statistically significant less diaper rash, which has to do with the anti-inflammatory effects of the probiotics,” Pfeifer noted. 

Spoonable and liquid probiotic yogurts are common in Europe, as is kefir, a yogurt-like beverage. In Italy, cheesemaker Latteria Montello even markets a probiotic soft cheese using L. casei varieties, said to help alleviate stress. 

The U.S. market is being spurred by a flock of new probiotic supplements from both large companies like McNeil Consumer Healthcare, which markets Probiotica tablets, and numerous small companies such as Natren, based in Westlake Village, Calif., which markets a variety of probiotic supplements such as Healthy Trinity, which contains Lactobacillus acidophilus, Bifidobacterium bifidum Malyoth, and L. bulgaricus. It claims that the product helps minimize yeast infections such as candidiasis, detoxify the gastrointestinal tract, and aid in digesting nutrients and carbohydrates. 

Collectively, these products are incubating a market that may quickly move beyond supplements to mainstream foods such as yogurt and cultured dairy products, which represent the other prime battleground. 

One of the most aggressive players is Stonyfield Farm, a New Hampshire–based regional processor that has climbed to a number four share, behind General Mills’ Yoplait and Columbo, Dannon, and Kraft’s Breyers based largely on its emphasis on probiotics. 

Most of Stonyfield Farm’s products contain six live cultures: L. bulgaricus, S. thermophilus, L. acidophilus, Bifidobacterium, L. casei, and Lactobacillus reuteri. In addition, Stonyfield recently introduced inulin, a prebiotic fiber-like carbohydrate that increases the activity of live active cultures. Inulin is a source of dietary fiber and helps the body absorb calcium. 

--- PAGE BREAK ---

Like Nestlé, Stonyfield is demographically targeting several of its probiotic yogurts. YoBaby is an organic whole milk yogurt specifically formulated for infants and toddlers. Like many of the new probiotic foods on U.S. shelves, it has European roots. “This explosion in the U.S. market is a new phenomenon on this side of the Atlantic,” Stonyfield CEO Gary Hirshberg said. “But we need to remember that when you talk to the average consumer in Europe, they long ago figured out that they need a daily shot of one or another beneficial organisms. Yogurt is better understood in places where they’ve been eating it five times as much and ten times longer than we have.” 

Both YoBaby and the introduction of inulin are European inspirations that Hirshberg says were timely for the U.S. market. “We’ve always believed that it’s our mandate as a niche player to search the planet for the healthiest and most progressive approaches to improving on our products,” he stressed. 

Consumers in Europe and Asia may have a greater appreciation for probiotics, so the challenge for U.S. marketers is education. 

“Our strategy is to keep adding and pushing as far and as fast as we can,” Hirshberg said, “because our bottom-line goal is to produce a product that lives up to the promise of promoting long-term health.” 

In addition to the competitive land-scape, he also points to a changing attitude in the medical community. Doctors today are far more knowledgeable about the role of nutrition in disease prevention and treatment. As such, physicians represent a growing factor in the developing market for probiotics. 

“With all manner of medical disciplines,” Hirshberg explained, “there’s a recognition now that when you take antibiotics, there’s some damage done—you’re knocking out good bugs with the bad. And they see probiotics as a way to offset this effect.” 

In addition, probiotics are seen as a means to fight increasingly antibiotic-resistant bacteria such as Staphylococcus, which is a growing problem in hospitals. Instead of killing the bacteria with drugs, good bacteria are used to either consume or crowd out the bad. 

If a downside to the probiotic trend exists, it relates to its newness and the lack of scientific evidence to back some of the claims made by supplement companies seeking to carve out market share. Many foods touting probiotics actually fail to deliver a live culture, or one that remains active in the digestive tract. This was a particular challenge to Stonyfield when it incorporated L. reuteri. “It’s a voracious, aggressive culture,” Hirshberg explained. “If you grow it in the same medium with the other cultures, it will consume them. It took a lot of technology to figure out how to get this very beneficial organism into the product.” 

Some companies are not as careful. According to Nestlé’s Pfeifer, “Our concern is the products in the market which have not been evaluated sufficiently. We need standards for probiotic yogurts that require live cultures at the end of the shelf life and in a concentration that assures a health benefit.” 

--- PAGE BREAK ---

What Lies Ahead
New strains are under development on both sides of the Atlantic, and new applications are being researched. “We’re thinking about the future and what could be,” Pfeifer said. Targets include allergy prevention, inflammatory diseases, cholesterol reduction and prevention of colon cancer. 

In addition, probiotics can be fine-tuned to certain demographic targets. Nestlé, for instance, is studying products for the aging population. “Probiotics have certain anti-aging effects related to better uptake of nutrients and micronutrients,” Pfeifer said. “These aspects play an important role for the elderly.” Additional applications include the stimulation of bone growth and the prevention of pathogenic-based or -linked diseases, she added. “The data are very strong.” 

Stonyfield already has plans for a product specific to women called YoSelf, a followup to its popular YoBaby. And Hirshberg said that more demographically targeted products are in the pipeline. 

The future for probiotics also entails new packaging and product concepts. Yoplait, for instance, markets Go-Gurt, a liquid yogurt in a single-serve tube, and Dannon recently introduced Danimals, a drinkable yogurt packaged in molded-plastic character shapes. Both are aimed at kids, with more of an emphasis on fun than function. Nevertheless, they open up markets into which stronger probiotic products can flow. Stonyfield, for instance, introduced its own tube yogurt, YoSqueeze, with inulin as a stabilizer and agar in place of gelatin. 

Another probiotic product ripe for expansion is kefir, a cultured drink well established in Europe and Russia. Lifeway Foods, Morton Grove, Ill., is one of the largest processors of kefir in the U.S. It contains seven live cultures, and, according to president Michael Smolyansky, it has superior probiotic qualities to yogurt. “Kefir provides significant benefits to the immune system,” he said. 

The Japanese drink a probiotic drink called Yakult, which is consumed by 24 million people daily. 

Several companies also are actively working on new forms of soy yogurt. Stonyfield, for instance, will soon launch Fountain of Yo, a probiotic soy-based yogurt. “There’s no question that we’re riding a wave, paddling with the current,” Hirshberg says. In addition to new bacterial strains, he foresees formulations that incorporate additional healthful ingredients such as dietary fiber, natural vitamins, and folic acid for women. “I think you’llsee an emphasis on the amount of sweetener. It will be going down, and you’ll see more natural sweeteners. Drinkable probiotic products also will become a macrotrend. We will have one shortly.” 

Looming over the horizon is the debate over genetically modified cultures. Many marketers, including Stonyfield, promote their products as free of genetically modified organisms. This relates to ingredients other than the cultures, which to date are not the result of genetic engineering. In the future, however, new disease-fighting strains may be developed that will force a new debate over the role of GMOs. “Our attitude is, don’t let the genie out of the bottle until it’s been thoroughly tested, Hirshberg said. “We’re not saying never. It is possible that some GMOs will be healthier than organic, but this is an area that will be challenging at least and provocative at best.” 

Despite these challenges, the market for probiotics appears headed for intensifying global competition and rapid expansion, particularly in the U.S. Driving this expansion is mounting evidence of profound health benefits, and product formulations that combine these health benefits with product appeal and versatility. Global giants like Danone and Nestlé, as well as innovative companies like Stonyfield Farm and Lifeway, are working hard to apply lessons learned in Europe and Asia, where probiotics are widely accepted, to the emerging U.S. market. In addition, science continues to yield new strains and applications of both probiotics and prebiotics. 

Nestlé’s Pfeifer predicts that “we will see probiotics for many different markets going well beyond what we know today.”

DEVELOPINGFOODS.COM is a new quarterly section covering the interaction of Research & Development and Marketing in the development of food products. This special report is also available on the Internet at www.developingfoods.com.

by Pierce Hollingsworth
Contributing Editor
The author is President, The Hollingsworth Group, P.O. Box 300, Wheaton, IL 60189.