Health and Wellness Trends for Canada and the World. October 2011

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1 Health and Wellness Trends for Canada and the World October 2011 The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein. Please address any comments or suggestions you have on this report to: Ben Berry ben.berry@agr.gc.ca

2 Health and Wellness Trends for Canada and the World October 2011 Table of Contents Glossary of Key Terms...2 Executive Summary...4 Overview...4 Key Consumer Groups...6 Lifestyles of Health and Sustainability (LOHAS)...6 Women & Children...6 The Ageing Population...7 Health and Wellness Trends...7 Better-For-You (BFY) Food Trends...7 Canadian Market...8 International Market...9 Key Regional Growth Organic Food Trends Canadian Market International Market Key Regional Growth Fortified/Functional Food Trends Canadian Market International Market Key Regional Growth Naturally Healthy Food Trends Canadian Market International Market Key Regional Growth Intolerance Food Trends Canadian Market International Market Key Regional Growth Halal/Kosher Diets Upcoming Trends Healthy Snacking Tea Beverages Mediterranean Foods Opportunities for Canadian Exporters Useful Links Key Resources Health and Wellness Trends for Canada and the World: October

3 Glossary of Key Terms Antioxidants: Substances or nutrients found in foods which can prevent or slow the oxidation process within our bodies that damages our cells. Health problems such as heart disease, macular degeneration, diabetes, and cancer are all attributed to oxidative damage. Antioxidants can be found in brightly coloured vegetables and fruits, particularly within vitamins A, C and E. Better-for-you (BFY): This is a category of premium products that are positioned in the market place as offering BFY health aspects, such as having reduced fat, sugar or salt content, while maintaining taste and texture. The BFY marketing term cannot be used in advertising or as an attribute on food and beverage labels. Convenience Stores: With extended opening hours, this 400 square metres retail outlet typically sells food, beverages, tobacco and other grocery items. Often, products sold may also include audio-visual merchandise, newspapers, magazines, and take-away food. Daily Dose: A medical term which is being applied to some foods, particularly single serving portions that contribute a high percentage of the recommended daily intake of a vitamin or mineral. DHA: Docosahexaenoic acid is an omega-3 polyunsaturated fatty acid (C22:6n-3) essential for normal growth and development. Research to date suggests that DHA reduces the risk of coronary heart disease and aids in brain and visual development during the infancy stages. Discounters: A store mainly selling items from either limited product lines or leading brands at discounted prices. Hard discounters typically stock fewer than 1,000 product lines, while soft discounters usually carry 1,000 to 4,000 product lines. Forecourt Retailers: According to Euromonitor, this retail outlet has a selling space of under 400 square meters, and principally sells food, beverages, tobacco and other groceries. It is located on the open space of petrol, service and gas stations. Functional Food: Health Canada defines functional food as being similar in appearance to, or maybe being a conventional food, that is consumed as part of the usual diet, and is demonstrated to have physiological benefits and/or reduce the risk of chronic disease beyond basic nutritional functions. Additional information on functional foods can be found on Health Canada s website at: Glucosamine: Glucosamine is a compound found naturally in the body, made from glucose and the amino acid glutamine. Glucosamine is used in the formation and repair of cartilage and other body tissues. Halal: Halal literally means "what is permissible" under Islam. Halal food must be free of alcohol, pork and other prohibited substances. In addition, meat and meat products must be from animals slaughtered according to Islamic guidelines. The process is inspected by a halal certification organization before a company can advertise its products as halal. Hypermarkets: Hypermarkets are chained or independent retail outlets with a selling space of over 2,500 square meters, and with a primary focus on selling food, beverages, tobacco and other groceries. They may also sell a range of non-grocery merchandise. Independent Small Grocer: Independently owned, this type of distribution channel primarily sells grocery products. Health and Wellness Trends for Canada and the World: October

4 Internet Retailing: This form of retailing entails the selling of consumer goods over the internet, and may include transactions made via mobile phones, smart phones or other wireless devices. Kosher: Kosher, which means right or clean, describes foods and practices that are specifically permitted by Jewish dietary laws. The entire production process is closely monitored by specially trained Rabbis. Naturally Healthy: Unprocessed or minimally processed foods that remain very close to their complete, original state. They are consumed for their natural health benefits, such as naturally occurring vitamins and nutrients (fibre, calcium, etc.). The Naturally Healthy marketing term cannot be advertised as an attribute on food and beverage labels. Nutraceutical: A product that is isolated or purified from foods and generally sold in medicinal forms that are not usually associated with food. A nutraceutical is demonstrated to have a physiological benefit or provide protection against chronic disease. Omega-3 Fatty Acids: Polyunsaturated fatty acids that are found in certain fish, flax and hemp seeds, walnuts, and canola oil, which may provide health benefits. An Agriculture and Agri-Food Canada (AAFC) fact sheet on omega-3 Fatty Acids can be found at: Organic Foods: Foodstuff produced without chemical fertilizers, synthetic pesticides, hormones, irradiation, and genetic engineering. An AAFC fact sheet on the organic industry can be found at: Other store-based retailing: According to Euromonitor, this is the collection of other nongrocery and grocery retailers. Prebiotics: According to the International Scientific Association for Probiotics and Prebiotics (ISAPP), a prebiotic is a selectively fermented ingredient that results in specific changes in the composition and/or activity of the gastrointestinal micro biota, thus conferring benefit(s) upon host health. More information can be found on the ISAPP website at Probiotics: The current definition by the Food and Agriculture Organization (FAO) and the World Health Organization (WHO) for probiotics is live micro organisms which when administered in adequate amounts, can confer a health benefit on the host. Probiotics can be found in dairy product foods, such as yogurts and cheese, or can be sold in a non-food format. An AAFC fact sheet on probiotics can be found at: Supermarkets: A retail outlet of 400 to 2,500 square metres mainly selling grocery items. Supermarkets do not include discounters, independent grocery stores or convenience stores. Whey Protein: A collection of proteins that can be isolated from whey, a by-product of cheese manufactured from cow's milk. Whey is a reduced lactose protein containing a variety of nutrients and essential amino acids. Health and Wellness Trends for Canada and the World: October

5 Health and Wellness Trends for Canada and the World October 2011 Author s Note The following report addresses the health and wellness market trends for Canada and the world for the purpose of introducing evolving market trends within this dynamic category. This report does not address the regulatory restrictions that may apply to these products within different markets. The Canadian regulatory environment is based on a strict policy framework managed by Health Canada. Regulations vary greatly by market and should be examined on a case-by-case basis, well in advance of any key business decisions. The difference between common marketing terminology and regulatory terms can be significant and additional research should be undertaken to ensure the viability, from a regulatory perspective, of a product type within a given market. Euromonitor has grouped health and wellness products into the following subcategories: better-for-you (BFY), organic, fortified/functional, as well as naturally healthy and intolerance foods. Executive Summary Parents are increasingly purchasing BFY, naturally healthy, organic and fortified/functional food products for their children, in order to help them maintain a healthy lifestyle. Senior consumers are highly interested in maintaining a healthy lifestyle and a certain level of vitality long into their retirement. As a result, this consumer segment spends a significant amount of money on healthier foods, exercise equipment, and supplements, and has now become a major target group for the health and wellness industry. There has been an overall snacking trend internationally, with particularly healthy snacking experiencing significant growth. Consumers are now shopping for quick food solutions that are both nutritious and satisfying. Due to consumers now opting to purchase healthier products, with no preservatives, pesticides or other chemicals, sales of unprocessed and naturally healthy products have significantly grown. There has been a slight shift towards more traditional distribution channels for health and wellness products, with supermarkets/hypermarkets accounting for the largest share from 2005 to Overview The health and wellness food market has seen particularly significant growth in recent years in both developed and emerging markets. Many consumers across the globe are receiving "healthy eating" messages from governments and industries, stressing the importance of maintaining a healthy lifestyle. Consumers are not only paying attention to what ingredients are in their food, but are also taking into consideration how their food is produced. As a result, health and wellness is a major factor affecting purchase decisions, and retailers worldwide are now adopting the health and wellness trend into their products. This movement has taken a firm hold across North America, Europe and Asia. Health and Wellness Trends for Canada and the World: October

6 In terms of how health and wellness is defined, 73% of consumers say that it means being physically fit, while 66% say that it signifies not being overweight. Many consumers are looking for products that help them feel healthier, whether it is losing weight, having less stress and more energy, or feeling younger. Health has come to be thought of in holistic terms, as it involves not only eating healthier foods, but also reducing stress, exercising regularly, and taking the time to relax. The health and wellness trend is becoming one of the key growth areas and marketing strategies within the food industry. Due to the saturation in many categories of food and the emergence of private labels which create an increasingly competitive market, the health and wellness trend has provided food manufacturers with a point of differentiation to help their products stand out from competitors Market Share of Health and Wellness Products by Type 38.5% 4.3% 30.3% 25.5% 1.3% Better For You (BFY) Food Intolerance Fortified/Functional (FF) Naturally Healthy (NH) Organic Source: 2011 Euromonitor Statistics An ageing population, high obesity rates, and a raised awareness of un-healthy foods are some of the main factors fuelling the increasing importance of health and wellness in both Canada and the world. Some of the major trends affecting the food industry and eating habits, include the advancing age of the baby boomer generation and their keen interest in maintaining a healthy lifestyle, as well as the increasing prevalence of illnesses and diseases associated with high-fat and high-cholesterol foods. Food manufacturers all over the world are now investing in the research and development of new healthy products, as well as the healthier reformulation of existing food items. Due to the prevalence of the health and wellness trend, the global pet food market has now developed natural, functional and healthy products. Health and Wellness Trends for Canada and the World: October

7 Global Sales of Health and Wellness Products by Region Western Europe North America Region Middle East and Africa Latin America Eastern Europe Australasia 2015 Projected Sales 2010 Asia Pacific US $ Billion Source: 2011 Euromonitor Statistics Consumers are no longer seeking to simply address health and wellness issues once they arise, instead, consumers are increasingly looking at adapting a health and wellness lifestyle in order to prevent diseases and achieve a better quality of life. Many consumers are now using technology to help them shop for healthier products and to help them count their daily calorie intake. When it comes to shopping for health and wellness products, recent studies have suggested that 58% of Canadian consumers prefer to purchase a healthier version of a product, while 57% of shoppers switch a product for a healthier alternative. Some Canadian consumers have completely stopped purchasing un-healthy products (47%), and other Canadian consumers now purchase healthier products which they did not buy in the past (Store Brands, August 2010). Even if reality does not exactly match survey results, the fact remains that 50% of Canadian consumers have health and wellness on their shopping radar. Key Consumer Groups Lifestyles of Health and Sustainability (LOHAS) LOHAS is an acronym for Lifestyles of Health and Sustainability, which is a market segment that mainly focuses on health and fitness, the environment, personal development, sustainable living, and social justice. LOHAS consumers are interested in products covering a range of market sectors and sub-sectors, including organic foods, socially responsible products, integrative healthcare, dietary supplements, and green products. This is a relatively small but growing group of 41 million individuals who are dedicated to a specific lifestyle, which makes them a very attractive niche market. Women & Children Manufacturers of healthier foods continue to mainly target female consumers, although men are now also emerging as a lucrative health and wellness consumer group. Generally, women are more concerned with body image and health, and they are often the ones making purchasing decisions within their households. Health and Wellness Trends for Canada and the World: October

8 Parents are also monitoring their children s diets much more closely, as they are becoming more aware of the increasing global prevalence of childhood obesity and the dangers associated with it, such as diabetes, heart disease, and high cholesterol and blood pressure. In order to try and prevent childhood obesity and improve overall health and wellness, parents are purchasing healthier snacks, and more organic fruits and vegetables for their children. Manufacturers are also heavily advertising the nutritional benefits of certain functional ingredients to parents, such as omega-3, which is believed to aid in brain and eye development, and fibre, which is thought to improve digestive health, control hunger and improve heart health. Pregnant women have also become a significant target group, as they increasingly purchase organic and fortified/functional foods to help ensure a healthy pregnancy and child. According to a recent Mintel study, 62% of children surveyed indicated that they like eating healthy snacks. Snacking has become the 4 th meal of the day, and parents are increasingly looking to buy healthy snacks for their children. The Ageing Population A significant portion of the world population is now over 55 years of age, especially within North America, Western Europe, and China. This consumer segment has now become a major target group for the health and wellness industry, due to their increasing concern for improving their health and maintaining their lifestyles. The ageing population spends a significant amount of money on healthier foods, exercise equipment, and supplements. The number of baby boomers aged 65 and/or older in Canada is predicted to rise from 4.8 million in 2010 to 6.5 million by This means that in 10 years, one in six Canadians will be over the age of 65. This particular group of consumers is highly interested in maintaining a healthy lifestyle and a certain level of vitality long into their retirement. Today s ageing population is also highly educated because of the increasing amount of information available to them. Health and Wellness Trends Better-For-You (BFY) Food Trends The Better-For-You (BFY) category refers to products where the amount of unhealthy substances has been actively reduced or removed during production (i.e. fats, sugars, salt, and carbohydrates). In 2010, global BFY sales totalled US$160.3 billion, with beverage and food sales achieving 6.1% and 4.4% growth from 2009 respectively. BFY food and beverages are most prevalent in the regions of North America and Western Europe, due to the growing number of government campaigns promoting healthy eating and targeting obesity. Traditionally, these regions have been the best markets for BFY products and have become very mature markets. As a result, exporters may find the most success in targeting emerging markets such as Latin America, Asia and Eastern Europe, since the demand in these regions is likely to rise. Due to increasing consumer awareness about the health risks associated with highfat and cholesterol foods, as well as high-sugar and salt products, manufacturers are responding to the intense scrutiny of packaged foods by providing BFY product Health and Wellness Trends for Canada and the World: October

9 reformulations. These include reduced-fat, whole-grain, high-fibre, sugar-free, and portion-controlled products. As a result, there are many healthy packaged food options now available to consumers in grocery markets, including no-salt added canned soups, vegetables, whole wheat pasta, whole grain cereals, 100% fruit juices, and many sugar-free snacks. Canadian Market Today s consumers are much more educated on the quality and nutritional value of the products they purchase, as many consumers now opt to purchase fat-free or low-fat products. However, one of the main challenges facing the growing market of BFY foods in Canada is convincing consumers that they taste great, in addition to having nutritional value. Although products containing whole wheat and whole grains are becoming a growing trend, consumers are still looking for products that combine health benefits with good taste. As a result, tasty food products that also deliver health and nutritional benefits are purchased by more consumers. When purchasing BFY foods, many consumers look for products with added vitamins and minerals, as well as ingredients for a healthier digestive system and stronger immune system. Consumers are also looking for products with more antioxidants, fibre, and calcium, and less sodium, fat, and sugar. Examples of BFY products include reduced-fat, reduced-carbohydrates, and low-sugar foods. Consumers are paying closer attention to the labels of the products they purchase and are making sure they purchase the healthiest products available. According to the Canadian Childhood Obesity Foundation, obesity rates in Canadian children aged 2 to 17 have almost tripled over the past 25 years. Currently, approximately 1.6 million Canadian children are considered obese or overweight. As a result, parents are increasingly purchasing BFY products for their children to help them maintain a healthy lifestyle. More people are considering the barbecue as a way of preparing healthier meals. Consumers are now using their barbecues to grill smaller portions of fish, chicken and vegetables. Some cookie manufacturers are launching BFY products with less than 2% of saturated fat per serving, a lower concentration of sodium, no trans fats and smaller portion sizes. With increasing consumer demand for healthier products, Sun-Rype is manufacturing products only made completely with fruits and vegetables. Healthy snacks, such as nuts and dried fruit, are being purchased by a growing number of Canadian consumers who perceive these products to be BFY choices. Consumers are looking at purchasing products which are not only healthy, but are also tasty. An opportunity especially exists for products which can be used as a way of preventing obesity in children. Shoppers are willing to pay more for frozen products that are organic, low-fat and high in fibre. An increasing number of consumers are eating smaller meals throughout the day, and often snacking on items such as veggies and dip. Dried fruits, kettle chips, and whole grain crisps are expected to increase in popularity as consumers look at purchasing healthier snacks. Health and Wellness Trends for Canada and the World: October

10 The market for raw foods is also likely to grow, as demand for pumpkin seeds, flax seeds, hemp seeds, and walnuts increases. The following is a table indicating the BFY product distribution within the Canadian market from 2005 until Supermarkets/hypermarkets make up the largest share of BFY products sold at 67.6% in This value represents an overall growth of 1.2% from In contrast, other store-based retailing has experienced a steady decline, and has decreased by 18.3% from BFY Product Distribution in Canada from % Breakdown-Retail Value RSP Outlets Supermarkets/Hypermarkets Discounters Convenience Stores Independent Small Grocers Forecourt Retailers Other store-based retailing Total Source: 2011 Euromonitor Statistics International Market With global sales of US$160.3 billion in 2010, the BFY category is expected to grow by 24.6% to over US$199.8 billion by Packaged food represents the strongest sub-sector within the BFY category, with current sales at US$ billion. In 2010, BFY packaged foods accounted for 6% of global packaged food sales. This sector is expected to continue to dominate the health and wellness category through to 2015, with BFY packaged food forecasted to comprise 71.7% of total BFY product sales. In North America, BFY products generated 11% of total sales of packaged food, while in Australasia and Western Europe the share reached 10.5% and 6.7% respectively. In less developed markets, where demand for BFY products is much smaller, the BFY sector accounted for 5.4% in Eastern Europe and 3.8 % in Latin America. In Asia, where the population is not as receptive to this trend, BFY food makes up 2.4% of the packaged food market. As this is an extremely health conscious region, BFY packaged food and beverage products are largely seen as unhealthy and not fresh. Consumers fears over obesity have largely driven demand for BFY products, with global manufacturers benefiting from the trend by introducing new packaged food and beverages. In 2010, North America was the largest BFY food market with sales of US$57.9 billion, followed by Western Europe with sales of US$50.7 billion. Together these regions represent 67.7% of total international sales. Despite their small market share, the highest growth in the BFY food and beverage market in 2010 can be found in Brazil (27.0% growth), Indonesia (25.5%), India (23.2%) and China (15%). In order to compete in this developed market, manufacturers are now focusing on portion controlled servings, flavour extensions, attractive and Health and Wellness Trends for Canada and the World: October

11 innovative packaging, and combination products (i.e. pairing BFY products with functional ingredients) in attempts to build consumer demand. Key Regional Growth North America The U.S. was the largest BFY market in North America with sales of US$50.1 billion in 2010, accounting for 31.3% of global value sales. North America has seen a high level of BFY food and beverages sales; although growth in the sector is expected to level off as the market matures. Lower sales growth will come largely as a result of pricing, as competition between major manufacturers and private labels will mean that BFY products are sold at a price almost equal to conventional products. Latin America The BFY food segment has strong potential in Latin America, with value sales forecasted to increase 50.8% between 2010 and Brazil s sales were the strongest in this region, as 2010 sales reached US$6.4 billion. BFY beverage sales are expected to perform better than BFY food from 2010 to 2015, with a forecasted growth of 64.1%. Growth of this sub-sector can be attributed to strong retailer interest, with BFY promotional efforts expected to create more consumer interest over the forecast period. Europe Eastern Europe is a relatively small market; however, sales of BFY foods reached more than US$9.8 billion in This region offers much growth potential given rapid economic development, an educated consumer base and rapid product introduction. Poland and Russia have seen strong growth in their BFY food and beverage categories, with sales growing by 18.3% and 10.5% respectively, in In the future, sales are expected to be boosted by public education for healthy living in Eastern European countries such as in Russia, Poland, and the Czech Republic. Asia Product introduction and growth are currently slow in mostly Asia, with two exceptions being the Indian market, which is experiencing phenomenal sales growth. The market grew by 23.2% from 2009 to 2010 to reach US$4.1 billion. The Japanese have also experienced strong growth with sales increasing 10.1% from 2009 to 2010 to reach US$4.2 billion. Premium pricing of BFY food and beverages is still a restricting factor for most consumers. Therefore, exporters should carefully consider this market before attempting to launch BFY products in developing Asian countries. Organic Food Trends The days of organic food being a small scale niche market are long gone. The organic food market has now grown into a US$27.1 billion global enterprise. Organic foods include products which are grown without genetically modified organisms (GMOs) and without the use of synthetic chemicals, fertilizers, pesticides, hormones, or antibiotics. The organic market is particularly remarkable in the U.S. where total sales reached US$11.9 billion in 2010, ranking it as the largest market for organic Health and Wellness Trends for Canada and the World: October

12 food and beverages. The global organic food and beverages industry, with value sales predicted to rise 33% by 2015, is expected to reach combined sales of US$36.1 billion due to increased consumer health awareness and broader distribution. Organic food has become a popular option among those concerned about the environment, and has been championed as a method of sustainable farming. Consumers have become more educated about the ecological benefits of organic farming, and when organics first emerged, the original concept was to support local and small farmers. However, the organic sector has become so successful that mass production is supplying the growing demand for these products. Now, even large companies are introducing organic versions of their most popular products. Organic food and beverage items are also growing in sales, as manufacturers increasingly integrate organic products with non-organic products lines. Organic products can now be found in every food aisle, everywhere from baby food, to dairy products, to popcorn. Both in Canada and globally, shoppers are looking to purchase more organic products, especially if they are competitively priced. Consumers view organic products as environmentally friendly and healthy for their families. Higher income consumers are the dominant consumer group for this trend; however slight decreases in prices, due to more competition, wider distribution and consumer education, are helping to boost sales across a wider consumer segment. Organic dairy products, bakery products, ready-made meals and baby food are some of the global top selling organic items. With growing concerns over the use of preservatives and other chemicals commonly used in processed food, parents are opting to purchase organic products for their children. Canadian Market Fuelled largely by consumer demand for more natural, minimally-processed and pesticide-free food, the Canadian organic sector has seen dramatic growth in recent years with consumer demand currently outpacing domestic production. According to recent statistics from the Canadian Organic Growers, there are currently 3,914 organic farms operating in Canada, representing a growth of 5.4% from In 2010, organic foods were the highest growing trend in the Canadian health and wellness market at a 5.4% growth rate. Sales are especially strong in the Canadian organic packaged food market. In June 2009, the Canadian National Organic Standard required mandatory certification for agricultural products represented as organic in import, export and inter-provincial trade, or that bear the federal organic agricultural product logo. The Canadian Food Inspection Agency (CFIA) was also established as the authority providing oversight for this system. As a result of these regulations, manufacturers can voluntarily use the "Biologique Canada Organic" designation and logo, to identify their products as certified organic. The logo was mainly developed to help Canadian consumers identify and feel confident about the organic products they buy. Successful and growing organic products in the Canadian market include bakery products, dairy products, sweet and savoury snacks, ice cream, snack bars, as well Health and Wellness Trends for Canada and the World: October

13 as chilled and frozen processed food and meat. With $1.1 billion in sales in Canada, organic packaged food heavily outweighs organic beverages; however, beverages are emerging as a particularly strong market with a growth of 7.7%. Canadians spent $40.3 per capita on organic purchases in 2010, representing a growth of 4.4% from the previous year. The Canadian market for organic produce has been growing at an average rate of 20% a year and many consumers are interested in organic products as they believe them to taste better and be healthier. Health-conscious consumers are often willing to pay more for organic products, if it means greater health benefits overall. Only 12.3% of Canadian consumers say that they purchase organic food for themselves, while more than 20% of shoppers say that they purchase organic foods for their children. Organic meat products, particularly chicken, are gaining popularity, with purchase rates of 13.5% for chicken, and 84% for other meats. In terms of consumer purchases, fresh fruits are the most purchased organics at a 27% market share. Fresh vegetables come in second at 26%, followed by eggs (17%), milk (16%), chicken (13%), red meat (6%), frozen vegetables (6%), frozen fruit (4%) and ice cream (4%). Organic dairy products experienced a significant growth of 15.4% in 2010, and new introductions such as yogurt, are not only being promoted as certified organic, but also as not having artificial flavouring, or preservatives. Many manufacturers have recently introduced organic and natural frozen beverages and foods, which continue to be very popular although they tend to be much more expensive than non-frozen organic foods. More consumers are opting to purchase beverages with organic fruit, antioxidants, and added vitamins, instead of colas and energy drinks. More information about Canadian organics can be found on AAFC s website. The following is a table indicating the organic product distribution within the Canadian market from 2005 until Convenience stores and forecourt retailers steadily remained at 0.1% each, while other store-based retailing decreased to 10.3% in Similar to BFY product distribution, supermarkets/hypermarkets also accounted for the largest share of organic product distribution at 52.4%. Health and Wellness Trends for Canada and the World: October

14 Organic Product Distribution in Canada from % Breakdown-Retail Value RSP Outlets Supermarkets/Hypermarkets Discounters Convenience Stores Independent Small Grocers Forecourt Retailers Other store-based retailing Total Source: 2011 Euromonitor Statistics International Market In 2010, the global organic food and beverage industries were worth US$24.4 billion and US$2.7 billion respectively. However, organic foods only made up 1.3% of total world food sales, with penetration of organics highest in North America and Western Europe. North America has been a leading player with sales of organic food and beverages totalling US$13.2 billion in Strong products in the organic food and beverage market included dairy products, bakery products, and ready-meals. Specifically, within the organic packaged food market, rice was the most dynamic sub-segment in 2010, with 10.4% value growth to reach US$322.6 million. In organic beverages, coffee outperformed tea as the fastest growing category, with value sales up 11.6% to reach US$791.2 million. Global Organic Product Share in 2010 Packaged Food Dairy Products (28%) Bakery Products (18.1%) Other Packaged Food (11.1%) Ready Meals (9.9%) Baby Food (7.5%) Sweet and Savoury Snacks (6.5%) Oils and Fats (4.5%) Sauces, Dressings and Condiments (3.3%) Confectionary (2.9%) Spreads (2.7%) Health and Wellness Trends for Canada and the World: October

15 Beverages The organic industry has been driven by increasing consumer social, health and environmental awareness, and fair trade Fruit/Vegetable Juice (38.7%) ethos. However, organics will face strong Coffee (29.2%) competition from other health and wellness categories such as functional Tea (21%) or BFY products, which are also benefiting from the consumer trend Concentrates (3.5%) Other Organic Soft Drinks (6.0%) towards health and nutrition. Prices for organic foods and beverages are dropping as competition grows, with more private label options becoming Other Organic Hot Drinks (1.5%) Source: 2011 Euromonitor Statistics available in mature markets. Strong retail activity is allowing the organic sector to appeal to more consumers, as the organic trend is developing both among high-income consumers, as well as middle- to lower-income consumers. In the European Union (EU), there are programs to increase future awareness among young consumers with the slogan "Organic Farming: Good for nature, good for you." Organic baby food, for instance, has become a huge niche market within the organic foods category, with global sales of over US$1.8 billion in This has turned into a booming trend, as parents are increasingly concerned with their children s health, and the difference in price is marginal. In many outlets, the price difference for organic products, like baby food, is only a few cents. Making products like baby food a truly viable option based on selection, quality and price, has genuinely spurred growth. Key Regional Growth North America Sales of organic food and drinks in North America reached US$13.2 billion in 2010, and are expected to grow by 35.1% reaching US$17.8 billion in The U.S. led sales of organic foods and beverages internationally as the largest market with sales of US$16.1 billion in 2010, accounting for 43.8% of global value sales. Europe Western Europe had the second largest market for organic products, and grew by 1.6% to reach US$11.6 billion in Sales of organic products experienced the most growth in Sweden at 22.6%, followed by France and Switzerland at 8.0% each. Germany is the largest market for organic products in the EU, with a third of all EU organic products sold in Germany. In 2009, Germany s imports of organic products increased by 15.3%. Asia Within Asia, China and India are expected to have the highest market growth from 2010 to 2015, at 171.6%, and 105.3% respectively. Japan had the largest market for organic foods and beverages, with sales reaching US$672.9 million in Health and Wellness Trends for Canada and the World: October

16 Fortified/Functional Food Trends The fortified/functional food category is rapidly expanding in both the Canadian and international food and beverage marketplace. Fortified/functional foods are products which contain added vitamins, herbs or nutraceuticals (a product isolated or purified from foods), and are largely consumed for a specific health benefit. Although there is no consensus on the terminology used to describe these products or on their health benefits, for this report, Euromonitor s marketing category of fortified/functional foods is used to gather market information. This product category also presents a number of regulatory challenges as its legal status varies across jurisdictions. Examples of products included in this category are omega-3 enhanced eggs, calciumenriched juices, probiotic breads with insulin, and yogurts enriched with probiotics and antioxidants. It is clear that this growing US$190.3 billion market is increasingly finding its way into the mainstream food and beverage category. In the wake of a growing health movement, processed foods in particular have lost their lustre, and are at the heart of a number of issues which contributed to the growth of the health and wellness trend. In light of this consumer perception towards processed foods, manufacturers have attempted to entice consumers with products that are enriched with vitamins and nutrients. For instance, as a result of the decrease in fish consumption in North America over the past 50 years, an opportunity was created for products which contain DHA (an essential omega-3 fatty acid found in fish), to position themselves in the marketplace. Many manufacturers are now adding DHA with food ingredients or as an encapsulated, powered ingredient to their products. In many instances, a number of these products are simply benefiting from a re-branding of sorts, as producers promote the nutritional and health benefits to capitalize on the growing health and wellness trend. Now with the latest introduction of super foods, manufacturers are developing new products that contain powerful antioxidants to help in the prevention of such things as cancer and heart disease. Pomegranates are one of the most popular ingredients used, especially in beverages, and the açaí berry has also been gaining popularity, as it is loaded with antioxidants, amino acids, essential fatty acids, fibres, and protein. A berry native to the Amazon, it lends itself well to premium and indulgence positioning, and is said to offer all of the health benefits of other super food ingredients. In fact, the makers of V8 vegetable juices introduced V8 V-Fusion fruit and vegetable juices which are available in five different flavours, including Pomegranate Blueberry and Açai Mixed Berry. Dairy Functional products are very strong within the dairy sector, with probiotic & prebiotic yogurt being fortified with vitamins and added fibre. There are opportunities to increase omega-3 content in cheese products, as this was a previously neglected area in terms of fortified/functional developments. Probiotic yogurt is becoming increasingly popular in Canada, with options such as Danone s Activia and DanActive. These probiotic yogurts contain good bacteria that remain active in the digestive system. Probiotics also Health and Wellness Trends for Canada and the World: October

17 Parents are buying more functional foods for their children, especially yogurt products with added omega-3 and vitamins. Confectionary Dark chocolate has been recently touted to have numerous health benefits, including lowering cholesterol levels and being rich in anti-oxidants. In North America, cocoa-rich dark chocolate with heart-healthy antioxidants and flavanols is becoming increasingly popular. Also, due to its rich taste and polyphenol antioxidants, consumers, particularly those aged 35 and over, are purchasing a significant amount of dark chocolate. Oils and fats The fortified/functional oils and fats category is expected to see an upsurge in growth over the next couple of years. According to EatRight Ontario, omega-3 fatty acids, and in particular EPA and DHA, have been shown to be beneficial to heart health, as the help to increase "good" (or HDL) cholesterol, by decreasing the levels of triglycerides in the blood and lowering blood pressure. Omega-3 fish oils have also gained popularity because of their many perceived benefits, including atherosclerosis and cancer prevention, improving heart health, as well as decreasing the occurrence of age-related memory loss and increasing cognitive function. Canadian company Ocean Nutrition is recognized as a leading supplier of omega-3 EPA and DHA ingredients, which are sourced from fish oils. More information on omega-3 can be found on AAFC s website. Cereal, snacks and other packaged foods Kraft, Kellogg s and General Mills are the key brands which are adding fibre to their cereals, snack bars and other packaged products. This trend has been particularly apparent in Western Europe and North America. U.S. based Orange Peel Enterprises recently released their Greens + Peanut Butter Natural Protein Bar, which combines the benefits of organic super foods, 100% whey protein isolate and agave nectar. This is the first cold processed, alkaline-forming, protein-rich, green food bar, which helps to build lean muscle and balance blood levels. It is targeted to consumers of all ages, and is a source of low glycemic carbohydrates, essential fatty acids and biologically complete protein sugar. Meat Canadian company NutraSun Foods Ltd. has recently expanded its product line to include NutraSun omega-3 and Selenium Enriched Chicken. This functional meat product is produced from chickens that are fed a diet enriched with vitamins and minerals and supplemented with a plant-source of essential fatty acids. Bottled water, juice and energy drinks The functional and fortified juice market in Canada was valued at $1 billion in 2010 with sales expected to increase by 23.7% to $1.2 billion by Fortified/functional enhanced water products have been gaining exposure in Canada, and with the launch of Glaceau s Vitamin Water and other companies Health and Wellness Trends for Canada and the World: October

18 introducing new options, the sales of these products are forecasted to strengthen over the next couple of years. The Canadian energy drink market is currently valued at $318 million, and is forecasted to reach $404.8 million by While the segment has suffered from some negative perceptions, some new products on the market are trying to counter the negative stigma associated with energy drinks, and are introducing varieties that have no taurine, lower sugar and contain all natural ingredients. Juice products aimed specifically at healthy brain development for toddlers have also appeared with clear messaging and a target audience. Canadian Market Compared to other countries, such as the U.S., United Kingdom and Japan, the Canadian market is still relatively young for fortified/functional foods and only makes up 2.5% of total global fortified/functional product sales. The current value of the Canadian fortified/functional food market is $4.9 billion, which is expected to increase to $5.8 billion by In 2010, Canadian consumers spent US$140 per capita on functional/fortified packaged food and beverages, while U.S., Japan and United Kingdom per capita estimates were valued at US$162.7, US$158 and US$115.5 respectively. Food and beverages, with added fibre, omega-3, and probiotics, are becoming commonly advertised products in Canada. Such products include dairy, baked goods, cereals, meat, enriched fats and oils, as well as bottled water, juice and energy drinks. The increase of omega-3 fortified products has significantly impacted other packaged food sectors, such as chocolate confectionery, biscuits, bread, pasta and spreadable oils and fats. However, Canadians seemingly have a cautious attitude toward artificially fortified/functionally enriched foods with vitamins, minerals and other nutritional supplements, as most consumers prefer foods which are naturally healthy. For more information on Canada s Functional Food Industry please visit AAFC s website. The following is a table indicating the fortified/functional product distribution within the Canadian market from 2005 until Convenience stores experienced the highest growth, with their market share increasing by 12.5% from Other store-based retailing decreased by 44% from 2005, and currently compromises 2.5% of total fortified/functional product distribution. Health and Wellness Trends for Canada and the World: October

19 Fortified/Functional Product Distribution in Canada from % Breakdown-Retail Value RSP Outlets Supermarkets/Hypermarkets Discounters Convenience Stores Independent Small Grocers Forecourt Retailers Other store-based retailing Internet Retailing Total Source: 2011 Euromonitor Statistics International Market The global sale of fortified/functional food and beverages increased by 7.1% and 8.5% in 2010 to reach US$127.4 billion and US$62.9 billion respectively, with new innovations and ingredients helping to achieve dynamic growth. By 2015, combined functional/fortified food and beverage sales are forecast to total more than US$244.6 billion. Of all the available foods containing probiotics, the largest category has been dairy, which includes yogurt and other cultured beverages. In the US alone, yogurt sales reached US$6.6 billion in 2010, and are significantly driving the growth and innovation in the dairy aisle. The overall outlook for incorporating functional ingredients in packaged foods and beverages is very positive, as consumers are becoming more educated about the health benefits of fortified/functional foods. According to industry estimates, the largest increases in nutraceutical ingredient demand during the next few years are expected to be for glucosamine, probiotics, sterol esters, whey protein, and omega-3 fatty acids. Other lucrative business opportunities may be found by looking at the highly innovative Japanese fortified/functional beverage market for inspiration in introducing products in other key markets. Japan, with its less restrictive health and food systems, is the world leader in fortified/functional beverages after the U.S. Japanese manufacturers are using innovative ingredients and packaging for such things as functional bottled water, daily dose functional yogurt, and energy drinks. Although probiotics have only just grown in popularity with Canadian consumers, Japanese consumers have been demanding this nutraceutical ingredient in their products for years. One of the key constraints affecting the growth of the fortified/functional market is differing legislation about health claims on fortified/functional products. Canadian companies are well placed regardless of differing policies due to the strength of preexisting domestic regulations. Nevertheless, to ensure increased sales, large fortified/functional product multinationals have begun marketing specifically to key demographics that are common to key markets. This includes the ageing population, young adults, and mothers concerned with their children s health. Fortified/functional products that attract ageing consumers include cholesterol-reducing spreads, milk Health and Wellness Trends for Canada and the World: October

20 and yogurt, while parents are attracted to similar products which will benefit their children s health in the long term. Products currently gaining popularity include omega-3 and DHA-enriched products for brain development. Given the amount of influence children have on household spending in the developed markets of North America, Western Europe, Asia and Australasia, child-specific fortified/functional products may allow for much success as this trend continues to expand. Global Fortified/Functional Product Share in 2010 Packaged Food Dairy Products (44.1%) Bakery Products (22.4%) Baby Food (16%) Confectionary (9.1%) Oils and Fats (3.6%) Snack Bars (2.9%) Other FF Food (1.7%) FF Soup (0.1%) Beverages Sports Drinks (28.6%) Energy Drinks (27.5%) Fruit/Vegetable Juice (17.1%) Bottled Water (12.3%) Concentrates (3.6%) Carbonates (1.5%) RTD Tea (1.3%) Source: 2011 Euromonitor Statistics Key Regional Growth Latin America Sales of fortified/functional food and drinks in Latin America reached US$27.6 billion in 2010, and are expected to grow by 41% reaching US$38.9 billion in Asia Japan has the largest fortified/functional food and beverages market in this region, and it is currently valued at US$20.1 billion. China follows closely behind, as its food and beverage value sales grew by 15.7% to US$15.9 billion in Developing countries in Asia have also experienced significant growth in the fortified/functional food and beverage market. Most notably, Indonesia experienced the highest growth of 29.5% among all of the countries in Asia, and reached a value of US$5.4 billion in Europe From 2010 to 2015, emerging Eastern European markets such as Russia and Hungary are expected to grow by as much as 113.3%, and 76.7% respectively. Naturally Healthy Food Trends Naturally healthy foods tend to be minimally processed and generally include ingredients that naturally contain vitamins, minerals and other nutrients which are essential to a healthy diet. A number of natural products are made using no hormones and antibiotics, and also contain a lower percentage of fat, sugar, and sodium. Health and Wellness Trends for Canada and the World: October