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06.23.2005

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For more Hartman Group articles on FUNCTIONAL FOODS, click here...

06.02.2005 "What's on the Labeling?: How Consumers Evaluate Product Labeling"

03.31.2005 "How Consumers Make Sense of Functional Foods"

01.27.2005 "Redefining Our (Consumer) Understanding of Functional Foods"

01.15.2002 "Wellness Trends to Watch in 2002"

04.17.2000 "Organic Products: How Do Consumers Choose?"

For more Hartman Group articles on HEALTH BENEFIT CLAIMS, click here...

06.16.2005 "Why Selling on Health Benefits Alone May Be a Losing Proposition"

06.02.2005 "What's on the Labeling?: How Consumers Evaluate Product Labeling"

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Who Put The Function In Functional Foods?

General Motors and Ford used to take a production-driven approach to innovation: Design a product based on vague notions of various consumer groups, prototype it and then go hold some focus groups to see who'll actually go and buy it. Quite frankly, we see this theory of consumption quickly receding into the distance in our consulting mobile's rearview mirror. Why? Well, because this approach wastes an enormous amount of upfront R&D time and money by not leveraging ongoing, trend-oriented and ethnographic consumer research to develop initial prototype ideas.

BEYOND A PRODUCTION-DRIVEN APPROACH
TO FUNCTIONAL FOOD INNOVATION
Though in automobile consumption consumers may be easier to lead, in matters of alternative health and medicine we consistently find that consumer trends are what drives sustained interest in specific categories. Let's look at the subcategory most relevant to functional foods: supplements. Companies in the supplement world succeed to the extent that they align meaningfully with one of the more powerful consumer trends of the last 50 years: ordinary citizens challenging the vice grip of pharmaceutical drug industries by substituting and complementing drug use with the imbibing and swallowing of various herbal and natural supplements.

Supplements aren't really that different from pharmaceutical drugs in that both involve harnessing the power of chemical molecules; many from both categories being derived from natural plants. The difference in the supplement category is a symbolic one but with immense consequences for those trying to innovate within the category. Supplements succeed to the extent that they offer the promise of types of control beyond the ken of mainstream medicine. The symbolic halo of these drugs is actually sustained, because there is little regulation on their production, marketing or distribution. They are literally "outside the box" of modern medicine.

Supplements that succeed the most focus on offering up modes of control, including prevention, for critical anatomical processes for which modern medicine offers either poor solutions, last-minute solutions or no solutions at all. Understanding whether a supplement fits into this category requires extensive consumer research prior to developing chemicals to address a certain anatomical process. Why, for example, are there virtually no analgesic supplements on the market? Well, because most consumers are content with OTC products available to them and have few complaints. OTC products are part of modern medicine's core competency: last-minute (i.e., acute) solutions. Supplements will continue to have little success competing in this functional category.

And this is the primary lesson for functional foods producers, who tend to think first about what functionality they can add to foods before they ask a very simple question: do consumers really want this functionality in their food and drink? In many cases, they don't because they already believe that various pills are an adequate solution.

Before we can blithely speed ahead and figure out which functional food will float or sink, though, we need to understand a bit more about the cultural underpinnings that frame our contemporary understanding of how much "health functionality" we, as Americans, will tolerate in a food or a beverage.

THE ROLE OF ANATOMY IN THE PLAUSIBILITY OF FUNCTIONAL FOODS
Thanks to the lingering cultural residue of folk elixirs, tonics and at-home remedies from an era before pharmaceutical hegemony, we find that many Americans do have a vague sense that certain anatomical processes are more amenable to targeting with foods and drinks than others (even if they have lost the faith that food and beverage can achieve OTC levels of acute relief). Here are the ones we've isolated from recent years of consumer research on eating and health practices:

Digestive Function
Immune Function
Heart Health
Bone Health
Mental Alertness (energy foods, especially protein)

Of these, digestive function, mental alertness and immune function are anatomical processes consumers believe can be affected in the near term through the ingestion of solitary foods and beverages. When acute symptoms arise, more and more Americans are looking beyond OTC pills to find solutions for indigestion and poor immune response.

Heart health and bone health may attract consumer interest but primarily as prophylactic, long-term health orientations that end up not being deal-breakers at the shelf. There are so many ways to deal with heart health and bone health, well beyond the world of functional foods, that creating product loyalty here ends up relying on taste and texture in the end, not solely on functional health claims. The more evolved a wellness consumer is the more likely they are to use generalized dietary alterations to address heart health and supplements to address bone health. The unmet need for functional foods and beverages here is, therefore, low when seen in the broader context of evolving consumer strategies. If these evolved wellness consumers are suffering from symptoms related to their circulatory or skeletal systems, though, they may look to add in functional foods as a complement to other rituals and regimens.

Creating more targeted, aggressive heart health functions for foods or drinks strikes most consumers as bizarre and, in some cases, quite frightening. Targeted cardiac health benefits, especially, require drugs in the minds of most U.S. consumers, including advanced wellness consumers. Lowering blood pressure or cholesterol through the use of single product is unattractive to consumers, because they believe that something so powerful should be prescribed. And if it appears on the shelf, other consumers may assume it is so weak that it can't possibly create the benefit being promoted. Neither consumer reaction will drive sales.

SEEKING NATURAL FUNCTIONS: The Case for Tea
As consumers become more wellness oriented, they prefer to seek out foods or drinks that have naturally occurring ingredients oriented to achieving near-term and long-term health benefits. Their approach to their use, however, is not nearly as rational as many functional foods producers seem to assume. It has to do with how they have come to view the natural properties of various subcategories of food and drink.

Tea: Tea is still probably the biggest product category within functional foods that has drawn increasing consumer interest. Americans have largely adopted the Asian notion that tea is inherently medicinal, although how aggressive they view its benefits often depends on their wellness orientation. For example, Celestial Seasonings has pioneered tea as an American "functional food" with its hip product names. But it's not clear how many of their regular buyers actually dwell on each individual tea's functional benefits as opposed to dwelling on the overall ritual of imbibing what may be, for them, interchangeable tea varietals.

The enormous potential of tea as a functional food is that it is grounded in the natural order of health functions and rarely is seen with forced additives that don't naturally occur in the tea varietal itself. In addition, tea's strength is that it is water-based, at least in the U.S. and East Asia. This allows consumers to focus on tea bags as little packets of medicine, in a sense��as medicine soaked in hot water. It doesn't seem overly different from taking a supplement or a cough medicine. Part of the acceptance here is the perception that, with tea, you're actually looking at the active ingredient as you dip the tea bag in your cup.

There is no mystery and, consequently, much less anxiety, especially if the health functionality is bit obscure. With functional foods, however, added active ingredients are always hidden, creating, for many, a sense of tacit apprehension and aversion without a plausible relationship existing between the active ingredients and the food itself.

CONCLUSION
To be sure, this does not mean there is no market for functional foods; however, the way we go about understanding the adoption and diffusion of these products is not as simplistic as inventing a category and naming it. It needs an understanding of actual consumer behavior and the recognition that it is not as simplistic as addressing consumers' perceived attitudes. It incorporates a function beyond just adding ingredients and a benefit and requires an understanding of consumer lifestyles, how they relate to a lifestyle that includes other products, even beyond foods. As we have said often, real comprehension of consumer behavior is an integration of how consumers live, where they shop and how they use today's products and brands. In this potentially lucrative arena, it becomes even more important. Success is going to come, but the leaders will understand the rigor of the journey.

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