Heart health dairy suffers high product failure rate

In its latest functional foods report, the research company valued the heart health dairy market, which consists largely of yoghurts and drinks made with plant sterols and omega-3 milks, at $900m.

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Falling demand​

But the report authors suggested the figure may be disappointing considering the weight of the marketing push behind the category.

“Although levels of new product activity remain on the high side, the market has witnessed falling levels of demand in some countries, which has led to high product failure rates in some instances,”​ said Leatherhead.

In France, in particular, the research firm said interest in the category has started to wane as sales of omega-3 milks and anti-cholesterol drinks fall.

And in the UK, the report noted that new product development continues although some products have been reformulated or withdrawn and sales growth has not been spectacular.

One problem for the new products may be the recession which has made consumers reluctant to buy more expensive, unfamiliar products.

Leatherhead cited the economy as one of the factors behind the lack of development in Germany.

But Leatherhead analyst Jonathan Thomas told this publication that economic factors were not only to blame.

“What seems to be happening is that an element of ‘consumer fatigue’ is creeping in, as a result of which growth levels have slackened markedly compared with much of the last decade.”​

This is one of the factors cited by Muller when it decided to remove omega-3 from its Muller Vitality yoghurt in summer 2008.

But failure has not stopped brands from trying to pursue the category. In February this year Danone launched Danacol in Canada – a drinkable yogurt with plant sterols. So far the company claims that sales are ahead of expectations.

Functional dominance​

Overall though, heart health has proved a difficult market for dairy companies, who have enjoyed more success with other functional segments.

Dairy continues to dominate the global functional foods market. Using a definition that excludes energy drinks, Leatherhead said dairy holds a 38 per cent share of the global functional foods market.

Its strong position is expected to continue as probiotic yoghurts make strong headway in the US and become staples in some European markets.

“Given the fact that the Actimel and Activia brands now account for around a quarter of market leader Danone’s annual revenue, the dairy sector is expected to retain its dominant position for some years to come,” ​concluded Leatherhead.