Omega Fatty Acids: Trends in the Worldwide Food and Beverage Markets, 2nd Edition

Omega Fatty Acids: Trends in the Worldwide Food and Beverage Markets, 2nd Edition

Omega-enriched foods and beverages have entered an explosive growth phase in the global retail market. Since 2003, thousands of foods and beverages enriched with omega fatty acids have been introduced worldwide. Marketers really did not start touting the omega content of enhanced foods until late 2004, after the Food and Drug Administration (FDA) moved to allow a number of nutrient content claims for these powerhouse fatty acids. Nearly 1,300 new omega-3-enriched products were introduced in Europe and North America in 2007. In 2008, the omega-enriched food sector is operating under what is termed a “healthy halo,” defined by three primary parameters—public awareness of omega fatty acids, proven scientific benefit and a willingness by the consumer to purchase these products. The global market for foods and beverages enhanced with omega-3, omega-6 and omega-9, as defined in this report, has been estimated by Packaged Facts at $4.6 billion the end of 2007. The compound annual growth rate for the period from 2003 to 2007 is estimated to be 60.7%.

A number of drivers are propelling this market in addition to an avid consumer base. These include innovative formulations and technology advancements that are expanding the products amenable to enhancement with omegas. Also, methods of stabilizing omega-containing products to inhibit oxidation (which causes the fishy smell associated with fish-oil-based omega-3) have resulted in improved taste as well as extended shelf life. In the U.S., the FDA in 2007 implemented guidelines for Good Manufacturing Practices (GMP) for nutraceuticals companies, resulting in greater oversight of and confidence in the companies producing omega-enhanced products.

Omega Fatty Acids: Trends in the Worldwide Food and Beverage Markets, 2nd Edition contains comprehensive data on the global market for foods and beverages enhanced with omega-3, omega-6 and omega-9 fatty acids. Historical retail sales data (2003-2007) and forecast data (2008-2012) are provided for the global and selected international markets (U.S., Europe, Asia/Australia). The report discusses key trends affecting the marketplace, trends driving growth and consumer demographics. The report profiles major marketers of omega-enhanced products and suppliers of omega fatty acids as well as innovative companies in both of these sectors.

Report Methodology

The information in this report was obtained from both primary and secondary research. Primary research entailed in-depth, on-site examinations of supermarkets, drug stores, mass merchandisers, convenience stores, health/natural foods stores, specialty stores, and club stores. Company, distributor, and retailer interviews were conducted to obtain information on new product and packaging trends, marketing programs, distribution methods, and technological breakthroughs. Secondary research entailed data gathering from relevant sources. Included were consumer and industry publications, newspapers, government reports, financial reports, company literature, and corporate annual reports.

Overall market data is for the retail industry. No foodservice sales are included.

What Is Provided in this Report

Omega Fatty Acids: Trends in the Worldwide Food and Beverage Markets, 2nd Edition offers market and trend analysis to allow succinct assessment of this booming sector. The report balances insight into qualitative aspects of this market with comprehensive quantitative analysis.

The report addresses all retail foods and beverages marketed as containing any or all of the three omega fatty acids; however, most of the discussion, particularly market size, focuses on foods and beverages especially formulated to contain omega-3 fatty acids. Foods that inherently contain omega fatty acids such as canola oil, cranberry seeds, flaxseed, mustard seeds, salmon, walnuts, etc., all of which contain omega-3, are not the focus of this report. This report also includes a lengthy qualitative discussion of the various omega ingredients available to food formulators, including profiles on the following suppliers of these ingredients:

• Arista Industries, Inc.
  
  
• Croda Health Care
  
  
• Denomega Nutritional Oils AS
  
  
• DSM Nutritional Products
  
  
• Epax AS
  
  
• Frutarom USA Inc.
  
  
• Hormel Specialty Products
  
  
• Martek Biosciences
  
  
• Ocean Nutrition Canada Ltd.
  
  
• Omega Protein Corp.
  
  
• Pizzey’s Milling USA
  
  
• Zymes LLC

This report provides a valuable, timely and comprehensive exploration of the omega-enhanced food and beverage market aimed at companies already participating in this sector, companies that are considering entering this market or companies and organizations interested in activities and trends in this sector. The current market is assessed in detail, and markets and trends are projected through 2012.

This report will assist:

• Marketing managers in identifying market opportunities and developing targeted promotion plans for omega-enhanced food and beverage products
  
  
  
  
  
• Research and development professionals in being up-to-date on competitor initiatives
  
  
  
  
  
• Advertising agencies working with clients in the banking and retail industries to understand the product buyer as an aid in developing successful advertising programs
  
  
  
  
  
• Business development executives to understand the dynamics of the market and identify possible partnerships
  
  
  
  
  
• Information and research center librarians in providing market researchers, brand and product managers and other colleagues with vital information necessary to their projects and decision-making
  
  

Chapter 1: Executive Summary

Scope and Methodology

Report Methodology

Products and Ingredients

How Fatty Acids Vary in Their Impact on Health

Which Fats are Essential and Why

The Essential Fatty Acids

Products

Ingredients: Omega-3s Used to Enhance Foods and Beverages

Alpha Linolenic Acid

DHA and EPA

The Market

$4.6 Billion in Global Retail Sales in 2007 for Omega-3-Enhanced Food and Beverage Products

Table 1-1: Global Retail Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2007 (in millions of dollars and percent change)

Global Retail Sales Are Projected to Approach $8.2 Billion by 2012

Table 1-2: Global Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2012 (in millions of dollars)

Number of DHA/EPA-Enhanced Foods Overtake ALA-Enhanced Foods in the U.S. Market in 2008

Table 1-3: Projected U.S. Retail Sales of Omega-Enhanced Products, by ALA, DHA, and EPA, 2007-2012 (in millions of dollars and percent change)

Market-Dominant Grain-Based Foods Loses Share to New Categories in U.S. Market

The Retail Market

Where Consumers Are Buying Omega-Enhanced Foods

Table 1-4: Omega Foods and Beverages: Share of Dollar Sales by Outlet, 2007 (percent share of dollar sales)

The Consumer: Awareness of the Need for Omega-3 is Very High

Two Different Consumers Are Primarily Targeted

New Products, Trends and Opportunities

Beverages and Snack Bars Lead in Total Global SKU Introductions from 2003 and 2008

Table 1-5: Top-Five New SKUs Introduced Carrying an Omega Content Reference, Excluding Fish, 2003-November 30, 2008 (percent)

More Categories of Food and Beverages Each Year That Contain Omegas

Research Into New Sources of Omegas

Global Regulatory Situation Relating to Omega-Enhanced Food and Beverages

Qualified Health Claim for Foods and Beverages Containing DHA and EPA

Chapter 2: Products and Ingredients

Key Points

Overview

A Primer on Fatty Acids

How Fatty Acids Vary in Their Impact on Health

Which Fats are Essential and Why

The Essential Fatty Acids

Omega-3, Omega-6 and Omega-9 Fatty Acids and Their Sources

Linolenic Acid (Omega-3)

Linoleic Acid (Omega-6)

Oleic Acid (Omega-9)

Studies Support Health Benefits of Omegas in Heart Health, Cognition and ADHD

Benefits to Heart Health

Cognitive Benefits in Infants and the Elderly

Omega-3 and Omega-6 Benefit Children Suffering from Attention Deficit Hyperactivity Disorder

Omega-3 Benefits Psychiatric Conditions

Essential Fatty Acid Deficiency Very Common

Research on EFAs Suggests Many Benefits

Table 2-1: Health Benefits Reported from Balanced Consumption of Omega-3, Omega-6 and Omega-9 Fatty Acids

Benefits of Fish Oil Outweigh Contamination Risks

From Supplements to Foods and Beverages

American Dietetic Association Advises Food Better than Supplements for Intake of Omega-3

Fortifying Foods and Beverages with Omega Fatty Acids Advantageous over Supplements

2008—the Ascension of the Omegas

The “Healthy Halo” Surrounds Omegas

Products

Products Excluded From This Report

Ingredients

Omega-3s Used to Enhance Foods and Beverages

Alpha Linolenic Acid

DHA and EPA

Table 2-2: Omega-3 Fatty Acids: Nomenclature, Structure and Food Source

Omega-6s Used to Enhance Food and Beverages

Omega-9s Used to Enhance Food and Beverages

Formulations of Omega-3 Used in Foods and Beverages

The Use of Preservatives

Sources of Omega-3 Used as Ingredients in Enhanced Foods and Beverages

Fish Oil

Algal Oil

Plant Oils

Choosing the Best Oil

Fish versus Algae versus Flax

The Basics on Flaxseed

Walnuts A Good Source of ALA

New Seed Oil Sources of ALA

Do Marine and Plant Sources of Omega-3 Oils Vary in Functionality?

Fortification Capabilities and Formulation Strategies

Omega Fortification in Organic Foods and Beverages

Omega-3 Suppliers

Chapter 3: The Market

Key Points

Market Definition

Accelerating Roll-out of Omega-enriched Foods and Beverages

Steady Annual Increase in the Number of Global Omega-Enhanced Products from 2003 to 2008

Table 3-1: Global Omega-Enhanced* Food and Beverage Product Introductions, 2003-2008E (percent change)

Table 3-2: Global Food and Beverage Product Introductions with High Omega-3 Claims*, 2003-2008E (percent change)

$4.6 Billion in Global Retail Sales in 2007 for Omega-3-Enhanced Food and Beverage Products

Table 3-3: Global Retail Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2007 (in millions of dollars and percent change)

Table 3-4: Global Omega-Enhanced Food and Beverage Product Introductions, Excluding Fish, by Geographic Region, 2003-2007

Global Retail Sales Are Projected to Approach $8.2 Billion by 2012

Table 3-5: Global Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2012 (in millions of dollars and percent)

Table 3-6: Projected Global Retail Sales of Omega-3-Enhanced Food and Beverage Products, 2007-2012 (in millions of dollars and percent change)

Global Market for Omega-3-Enhanced Beverages Shows Steady Growth

U.S. Omega-3-Enhanced Product Introductions Increase 444% from 2003 to 2007 and Escalates in 2008

Table 3-7: U.S. Omega-3-Enhanced Food and Beverage Product Introductions*, 2003-2008E (percent change)

$2.7 Billion in U.S. Sales in 2007

Table 3-8: U.S. Retail Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2007 (in millions of dollars and percent change)

U.S. Retail Sales Are Projected to Approach $5.7 Billion by 2012

Table 3-9: U.S. Sales of Omega-3-Enhanced Products, 2003-2012 (in millions of dollars and percent)

Table 3-10: Projected U.S. Retail Sales of Omega-3-Enhanced Products, 2007-2012 (in millions of dollars and percent change)

Figure 3-1: Projected U.S. Retail Sales of Omega-3-Enhanced Products, 2007-2012 (in millions of dollars)

Table 3-11: Projected U.S. Retail Sales of Omega-Enhanced Products, by ALA, DHA, and EPA, 2007-2012 (in millions of dollars and percent change)

Figure 3-2: Projected U.S. Retail Sales of Omega-3-Enhanced Products, Percent Share of ALA vs. DHA/EPA, 2007-2012

European Omega-Enhanced Product Introductions Increase from 2003 to 2007 but Slow in 2008

Table 3-12: European Omega-Enhanced Food and Beverage Product Introductions*, 2003-2008E (percent change)

European Market for Omega-Enhanced Foods and Beverages Approaches $1.4 Billion in 2007

Table 3-13: European Retail Sales of Omega-3-Enhanced Products, 2003-2007 (in millions of dollars and percent change)

Asian and Australian Market for Omega-3-Enhanced Foods and Beverages Approach European Market in Sales

Table 3-14: Asian and Australian Retail Sales of Omega-3-Enhanced Food and Beverage Products, 2003-2007 (in millions of dollars and percent change)

Few Blockbuster Products

Market-Dominant Grain-Based Foods Loses Share to New Categories in U.S. Market

Figure 3-3: Omega-3-Enhanced Foods and Beverages: Share of Dollar Sales by Product Category, Excluding Fish, 2007 (percent)

Global Sales of Essential Fatty Acids Ingredients

Table 3-15: Global Retail Sales of EFAs, 2003-2007 (in millions of dollars at the manufacturers' level and percent change)

Table 3-16: U.S. Retail Sales of EFAs, 2003-2007 (in millions of dollars at the manufacturers' level and percent change)

Sales of Supplements (Nutraceuticals)

Fish Oil/Omega-3 Supplements Posts Biggest Usage Gains

Chapter 4: Retail and Distribution

Key Points

Different Types of Retail Outlets

Shopping Options for Omega-Enhanced Foods and Beverages

Table 4-1: Stores Frequented for Food Shopping in Past 30 Days (percent)

Where Consumers Are Buying Omega-Enhanced Foods

Table 4-2: Omega Foods and Beverages: Share of Dollar Sales by Outlet, 2007(percent share)

Figure 4-1: Omega-3 Foods and Beverages: Share of Dollar Sales by Outlet, 2007 (percent)

Different Formats Attract Consumers for Their Varied Needs

Number of Stock-keeping Units by Retail Channel

Omegas in the Mail

Options for Retail Distribution

Direct Delivery Advantages

Advantages of Warehouse Delivery

Smaller Marketers Work Through Brokers

Introducing Functional Foods to the Marketplace

Chapter 5: The Consumer

Key Points

Consumer Awareness of the Need for Omega-3 is Very High

Table 5-1: Ingredients on Product Nutrition Panels Sought by Shoppers, 2005-2008 (percent of Shoppers Who Consider Information About an Ingredient or Specified Content “Very Important”)

Table 5-2: Ingredients on Package Claims Sought by Shoppers (percent of Shoppers Who Look for Claim)

Not Only Boomers Interested in Improving Their Eating Habits

Reasons for Increasing Consumer Interest in Fortified Foods

Two Different Consumers Are Primarily Targeted

Table 5-3: Awareness and Consumption of Omega-3s for Certain Health Benefits, 2005 (percent)

Consumers Aware About Fat Types and Forms

Consumers’ Perceptions of Fats and Fatty Acids

Figure 5-1: Consumers’ Perceptions of Omega-3 Fatty Acids and Fish Oils, 2005 (percent)

Consumption Trends

Figure 5-2: Consumption Trends for Omega-3 Fatty Acids and Fish Oils, 2005 (percent)

What Consumers Want

Table 5-4: Nutrients and Substances Americans Want More of in Their Diets, 2006 (percent)

Chapter 6: New Products, Trends and Opportunities

Key Points

Global Organization for EPA and DHA Omega-3 Forms to Meet Opportunities and Challenges of Omega-3 Market

GRAS Status Awarded to Two Conjugated Linoleic Acid Suppliers

Concerns about Continued Sourcing from Fish

Beverages and Snack Bars Lead in Total Global SKU Introductions from 2003 and 2008

Table 6-1: Top-Five New SKUs Introduced Carrying an Omega Content Reference, Excluding Fish, 2003-November 30, 2008 (percent)

Figure 6-1: Top-Five New SKUs Introduced Carrying an Omega Content Reference, Excluding Fish, 2003-November 30, 2008

Table 6-2: Total SKUs Introduced to the Global Marketplace with a High Omega-3, High Omega-6 or High Omega Tag/Claim, 2003-November 30, 2008

More Categories of Food and Beverages Each Year That Contain Omegas

Development Trends

The Trend Toward DHA and EPA

Revamping the Snack Bar Market

Potential Untapped Consumers

New Achievements in Formulation Expand Product Horizon

Selected New Products Introduced in 2007 and 2008

Biomedical Laboratories Offers Cereal Bars to Help Kids Concentrate

Danone Introduces Cardivia Omega 3 Plus Yogurt in Canada

Hain Celestial Group Introduces Omega-3 Organic Pretz-Os and Baked Pita Chips

Kemps and Ocean Nutrition Canada Introduces DHA/EPA-Enhanced Milk

Kirin’s DHA-Enhanced Power Water For Schoolchildren

Omega Farms Introduces Omega-3-Enhanced Chocolate Milk

Premier Foods Launches Omega-3-Enriched Baked Beans to the U.K. Market

J.M. Smucker Introduces Canola Oil with Omega-3 DHA

Sorrento Introduces Omega-3 String Cheese

Sun Gold Foods Introduces Omega-3 Sunflower Spread

Tropicana Introduces Orange Juice with Omega-3 EPA and DHA

Unilver Introduces DHA/EPA/ALA Enhanced Margarine and Omega3/Omega-6-Enhanced Margarine in Austria

Selected Innovative New Omega Products Introduced in 2008

Table 6-3: Selected New Innovative Products with Omega Claims/Tags, January 1 to November 30, 2008

Discontinued Products and Formulations

New Algal Oil Competitor

Research Into New Sources of Omegas

Chia to Become the “Pet” Source of Omegas?

Omega-Enriched Beef and Chicken

Chapter 7: Regulatory Environment

Key Points

Global Regulatory Situation Relating to Omega-Enhanced Food and Beverages

The U.S. Regulatory Situation Relating to Omega-Enhanced Foods and Beverages

The U.S. Dietary Supplement Health and Education Act of 1994

Labeling Overview

Labeling Nomenclature

Provide the Facts: Nutritional Information Requirements

Trans Fats Content Must Be Stated

Products that Are Exempt

Adding Beneficial Nutrients to Conventional Foods

Table 7-1: Permitted Nutrient Content Claims for Omega-3s in the United States

A Variety of Possible Claims

Types of Health Claims

Health Claims that Meet Significant Scientific Agreement

Qualified Health Claims

Qualified Health Claim for Foods and Beverages Containing DHA and EPA

Structure/Function Claims

Table 7-2: Structure/Function Claims on Selected Omega-Fortified Foods and Beverages

Figure 7-1: Stonyfield YoBaby Plus Fruit & Cereal Yogurt with DHA

Figure 7-2: Uncle Sam Toasted Whole-Wheat Flakes & Flaxseed with Real Mixed Berries

Table 7-3: Nutrient Content Claims on Selected Omega-Fortified Foods and Beverages

Figure 7-3: Farmland Dairies Special Request 1% Plus with Omega-3 Milk

Figure 7-4: Promise Buttery Spread

Allergen Issues

Dietary Recommendations for Consuming Omega-3s

Efforts to Establish Recommended Daily Allowances for EPA/DHA

Standardizing the Percentage of DHA and EPA in Fish Oil

Chapter 8: The Suppliers

Key Points

Leading Suppliers of Omega-3

Table 8-1: Leading Suppliers of Omega-3, by Sales

Collaborating with Suppliers to Shorten Development Time and Improve Product

Selected Suppliers of ALA

Selected Suppliers of DHA/EPA

Leading Suppliers of Marine-sourced Omega-3 Fish Oils

Leading Suppliers of Algal-sourced Omega-3 Fish Oils

Leading Suppliers of Plant-sourced Omega-3 Oils

Omega-3 Ingredient Options

Competitive Profile: Arista Industries, Inc., Wilton, CT

Company Overview

Omega Oil Products

Competitive Profile: Croda Health Care, Yorkshire, U.K.

Company Overview

Financial Information

Technology Highlights

New Omega Products

Competitive Profile: Denomega Nutritional Oils AS, Fredrikstad, Norway

Company Overview

Denomega Offers Omega-360 Co-branding Arrangement with Marketers

Competitive Profile: DSM Nutritional Products, Heerlen, The Netherlands

Company Overview

New Omega-Enhanced Products

Company Back in Full Production Following Fire in 2006

Educating Educators and Curious Consumers

Competitive Profile: Epax AS, Alesund, Norway

Company Overview

Omega-3 Products

Competitive Profile: Frutarom USA Inc., North Bergen, New Jersey

Company Overview

Financial Information

Business Strategy

Omega Products

Competitive Profile: Hormel Specialty Products, Austin, MN

Company Overview

Omega Products

Competitive Profile: Martek Biosciences, Columbia, MD

Company Overview

Financial Information

Beyond Infant Formula

Selected for NIH Study

A Bump in the Road

Cutting Exclusivity Deals with Major Marketers

Competitive Profile: Ocean Nutrition Canada Ltd., Dartmouth, Nova Scotia, Canada

Company Overview

Omega Products

Unique Double Shell Protection Debuts in 2006

Business Strategy

Competitive Profile: Omega Protein Corp., Houston, TX

Company Overview

Omega Products

Table 8-2: Application Chart for OmegaPure Menhaden-Derived Fish Oil (percent)

Competitive Profile: Pizzey’s Milling USA, Gurnee, IL

Company Overview

Technology Highlights

Omega Products

Competitive Profile: Zymes LLC, Hasbrouck Heights, NJ

Company Overview

Technology Advancements

Chapter 9: The Marketers

Key Points

Marketers Big and Small

Product Development Timelines Increase

The Five Leading Marketers of Nonfish Omega Foods and Beverages in 2007 and 2008

Table 9-1: Global Omega-Enhanced Foods and Beverages: Five Leading Marketers and Brands, 2008

Competitive Situation

IRI Data Is Not Available for Most Marketers

Competitive Profile: Barilla G. & R. Fratelli S.p.A., Parma, Italy

Company Overview

Competitive Profile: Clif Bar Inc., Berkeley, CA

Company Overview

Omega Products

Competitive Profile: Eggland’s Best, Inc., King of Prussia, PA

Company Overview

What Makes the Eggs so Special?

Competitive Profile: GFA Brands, Inc., Cresskill, NJ

Company Overview

Omega Products

Competitive Profile: General Mills, Inc., Minneapolis, MN

Company Overview

Financial Information

Omega Products

Competitor Profile: The Hain Celestial Group, Inc., Melville, NY

Company Overview

Omega Products

Competitive Profile: Kellogg Co., Battle Creek, MI

Company Overview

First Omega Product from Agreement with Martek Introduced

Competitive Profile: Omega Farms, Hayward, CA

Company Overview

Complete Product Line

Proprietary Marine Source of Omega-3s

Competitive Profile: Parmalat S.p.A., Parma, Italy

Company Overview

Business Strategy

Omega Products

Competitive Profile: Stonyfield Farm, Londonderry, NH

Company Overview

Omega Products

Business Strategy

Competitive Profile: Unilever, London, U.K.

Company Overview

Omega Products

Appendix I: Suppliers

Appendix II: Marketers