Market Developments
According to Freedonia Group, Cleveland, OH, the demand for flavors and fragrances in the U.S. is forecast to increase 3.5% per year to $4.4 billion in 2007. In its report, "Flavors & Fragrances," Freedonia indicates that the growth will be driven by consumer interest in more complex and authentic flavors and fragrances. Furthermore, strong growth in low-fat and low-carbohydrate foods and beverages will also spur demand. Healthy gains in anti-aging skin care products, tooth whitening dentifrices and fortified foods will also present opportunities for flavor and fragrances that can enhance the sensory appeal of these products, while masking the unappealing taste and aroma of vitamins, minerals, bleaches and other active ingredients.

Nutraceutical products continue to become more popular with the masses and in order to prepare for consumer expectations, Debbie Johns, business unit manager-Nutrition, Firmenich, Princeton, NJ, suggests companies really understand the importance of taste to the mainstream consumer. "As nutritional products move into the mainstream, consumers will no longer accept unpleasant tasting foods and beverages just because they are good for you," she explained. "Flavors provide the great taste required to achieve repeat purchase and product success."

Working as a flavor house in the context of the nutraceuticals market is very time consuming because there is no such thing as a one-size-fits-all approach to flavoring these types of products. Indeed, nutraceutical applications require a lot more attention and effort, and customization frequently becomes the name of the game. To outsiders looking in, it seems like a lot of work. Is it worth it? Walt Postelwait, vice president and general manager, Blue Pacific Flavors, City of Industry, CA, seems to think so. "It is absolutely worth it from a flavor company's point of view to put more time and energy into this trend going forward," he said. "Adding functional ingredients will be the major driver for most food and beverage companies when it comes to product development in the future because they are constantly looking to differentiate their products and expand market share."

Expressing similar thoughts was Jean Gallagher, technical manager-Sweet Flavors, Flavors of North America (FONA), Carol Stream, IL. "The nutraceuticals market is a very high priority for many flavor houses," she said. "Products that are laced with nutrients are flying off the shelves because consumers are interested in eating healthier and extending their quality of life."

Donald Wilkes, president and CEO, Blue Pacific Flavors, also feels the amount of work going on in this area is well worth the effort. He said what will be crucial for companies to decide is what to focus on-taste or dosage. By and large, he says nutritional beverage companies in the past have put more emphasis on active ingredient dosage. "I think when you talk about expanding the consumer base and distribution opportunity, it very much depends on how these products will be pereceived, as well as how they taste compared to traditional refreshment or indulgent drinks," he said. "Getting products into mainstream distribution channels when they were historically sold in the therapeutic/health beverage or food aisles or in health food stores as dietary supplements will be challenging."

He continued, "North American consumers still lack literacy in basic nutrition, so mainstream distribution may not guarantee sales volumes on these efficacious nutraceutical or functional active drinks or bars unless the consumer understands the health benefits of these products or the science behind them." Instead, Mr. Wilkes believes it is more practical for companies' products to target more of a lifestyle/wellness positioning in order to avoid medicinal messages and dosing, and obtain greater consumer acceptance, which will result in higher volume sales revenues.

With the health and wellness products segment becoming a more appealing target for companies, it is likely to attract those who have limited knowledge with regard to these types of products. For example, Maureen Draganchuk, vice president of business development, Virginia Dare, Brooklyn, NY, commented, "Say an executive comes into this industry from the carbonated beverage industry and they are interested in moving into protein products," she said. "What they frequently do not realize is that the cost structure for those types of products is entirely different." She continued, "If you have lived in the carbonated beverage industry your whole life, you know you want the cost for your finished product to be less then 20 cents per case. When you move over to a protein product that just can't happen."

Engineering Flavor Solutions
Most flavor companies say that working with nutraceutical products is like mastering a very complex balancing act. No longer are companies just offering masking solutions or adding flavors to products. These days, companies seem to be doing a lot of both. "It is really about finding a delicate balance of everything," said June Montanari, marketing manager-Beverage Flavors, International Flavors & Fragrances (IFF), Dayton, NJ. "It is not as simple as covering up the off-notes anymore, there is a whole balancing act that has to take place between the functional ingredients and the flavor."

FONA's Ms. Gallagher agreed. "We have come to know that there really isn't one magic flavor that will resolve the off-notes from nutraceutical ingredients," she said. "Most often you are dealing with a complex system that requires the flavor house to understand the various ingredients and how they interact with other ingredients within a formula." As a result, she said the overall trend is to take a "total approach" to these types of products to not only resolve the off-notes of the nutraceuticals but also to understand ingredient interaction, while designing flavors that will complement ingredients within a system. She added, "I think there are certain flavors that tend to lend themselves to certain functional ingredients. For example, some of the citrus flavors work well with the bitter ingredients and the chocolates work better with proteins."

The flavor industry has made several advancements in terms of technology and know-how when it comes to producing flavors for nutraceutical products. Discussing this was Blue Pacific's Mr. Postelwait, who said, "The industry has risen above the challenges posed to it and has responded with several products that help mask these off-notes. It has even progressed into technologies that involve bitter blocking, which are very advanced and so far pretty successful. The challenge is that once you have created an ingredient that blocks, you have to figure out what else it blocks relative to the flavor system you are going to incorporate."

Even though Mr. Postelwait says bitter blocking technology does an amazing job, it doesn't block everything. "When you are developing the flavor compounds for a product, you still have to work with what's left. So if the active is providing an astringent profile then you need to work with those types of flavors that would also have a similar astringency," he said. "It really is about working with the problem instead of beating it down."

Explaining bitter blocking in more detail was Richard Barndt, senior director of business development, Linguagen Corporation, Cranbury, NJ. "I think in general there is a challenge to make nutraceutical products for the mainstream more pleasant tasting. Products will have a primary or secondary taste characteristic that is not always enjoyable for the consumer, so you have a wide variety of taste profiles that need to be dealt with through taste masking, flavor modification and bitter blocking," he explained. "Linguagen is working in the area of bitter blocking with its lead bitter blocking compound adenosine monophosphate (AMP). We have found that AMP is useful in a couple of contexts such as blocking or suppressing the bitter or metalic off-taste of postassium chloride, which is typically used as a salt substitute alternative to sodium chloride. With 60 million people becoming hypertensive today, sodium chloride is becoming more of an issue again." He said another example where AMP can be beneficial is in suppressing the vitamin and mineral off-notes picked up in some of the leading meal replacements and diet beverages.

Whether it's bitter blocking, masking or adding flavors, Agneta Weisz, V.P. Flavors and Technology, Comax Flavors, Melville, NY, says the difficulty of the task hinges on the expectations of the finished product manufacturer. She said it is important to work very hard to meet those expectations because she describes the role of flavors in the nutraceuticals market as "the honey that makes the pill go down." "Our customers want to produce 'good for you' and convenient products and make them taste decadent at the same time," she said. "Replacing sugar, covering up the taste of milk, soy protein, vitamins and fish oil, and replacing fat are just a few of the expectations for flavors from our customers."

Virginia Dare's Ms. Draganchuk, expressed a similar view, saying besides the few challenges that remain, the flavor industry must overcome new obstacles today. "I think some of the same challenges are still there based on the ingredients being used (i.e., EGCG from green tea or caffeine or protein). However, with proteins, just because you were able to mask or flavor something three years ago doesn't mean you will be successful today because it may be a different product," she said. "The protein industry cannot be stagnant; it has to continue to evolve and change and better its products. For example, with whey protein it used to be about masking the 'dairy' notes. But today, companies are overcoming this issue and producing more versatile protein combinations."

Speaking of proteins, Ms. Gallagher noted that the proteins today are much cleaner than years ago. "Companies that manufacture soy and whey proteins have really cleaned them up significantly," she said, adding, "Because the bases are getting cleaner, the end product is becoming much more palatable."

Hot Flavors & Categories
Due to convenience and portability, it is no surprise that bars and beverages hog the spotlight versus other product areas for flavor companies. According to Mr. Postelwait, "Soy and fortified waters are the hottest trends in beverage category. On the food side, I think bars will move away from their sweet profile and move into products that have more savory flavor characteristics." He added, "I think bars will transition from being meal replacements to being delivery systems relative to the snack category."

More often flavors are being selected and developed based on their health perception and natural/organic positioning. Flavors like green tea and pomegranate are popular examples of this trend. IFF's Joy Merritt, senior food technologist, spoke to this new aspect of flavor development. "Some of the hot flavors include pomegranate, which has really taken off due to the fact that it is perceived to be full of antioxidants," she said. "Blueberry is also very popular, along with white and green tea, chai and honey because they offer the perception of added healthfulness to products."

Karen Wood-Brasel, marketing manager, Chr. Hansen, Inc., Milwaukee, WI, pointed out a variety of trends permeating the flavor market. "We see more variety, natural and organic offerings, more authentic flavors (not just orange, but fresh-squeezed Valencia oranges) and unusual combinations, such as cherry and mint," she said.

FONA's Ms. Gallagher said the exotic and traditional fruits are still popular in the nutraceuticals area because they typically lend themselves well to these types of products across the board. In more detail, she explained, "Kids still prefer Grape, Cherry and Orange flavors because they like the basics. With bars, because you are adding the grains and the fiber, the Chocolate and Peanut flavors, and occasionally fruits, will be in demand. However, I enjoy working with the creamy indulgent blends like the Cheesecake and Cookies 'N Cream flavors because they are interesting and make people feel like they are not taking a medicine."

Speaking of indulgence, Virginia Dare's Ms. Draganchuk said there continues to be a lot of development in this area, especially with the bars. "There are a lot of applications going after decadent desserts. In the old days you saw Chocolate and Peanut flavors but today you are seeing Pecan Cheesecake and other enticing flavors," she said, adding, "In the future you will continue to see the decadent flavors and flavor combinations."

Making the Grade and Predicting the Future
The flavor industry has had to overcome some monumental obstacles in the nutraceutical products area over the last few years, so it would only be natural to wonder if significant progress has been made in making these products taste better.

Blue Pacific's Mr. Postelwait commented on the flavor industry's evolution and future. "I would say the industry was on its heels for about 10 years but over the last five has made some significant progress," he said. "The reality is that flavor companies didn't realize this was going to be a true trend in the U.S. until about five or six years ago. They were playing a bit of 'catch up' but since then have done a pretty good job flavoring these products."

Mr. Postelwait also believes that there will be a lot more activity in the flavor arena from companies like Linguagen. "I think you are going to see a lot more activity and technology generated in the next five to 10 years in this segment," he said. "Linguagen is just one example of a company (that isn't even a flavor company) that was able to get off the ground because it possessed a technology that would aid in the flavor process. In the future, I think the industry will see more companies like that."

Frank Farello, flavor chemist, Technology Flavors & Fragrances (TFF), Amityville, NY, said flavors will continue to play an important role in the progression of nutraceutical products. "Every day we are introduced to a variety of new concepts and scientific studies that can help us live longer, healthier lives through diet and nutrition," he said, adding, "But without flavors, a sports beverage would be just a salty, sweet and sour liquid instead of a well-balanced, refreshing orange beverage. Without flavors, energy drinks would be nothing more than a dissolved vitamin in lightly carbonated club soda, not a unique tasting experience that people enjoy everyday."

In the future Ms. Draganchuk believes a significant amount of attention should be paid to the aging population. "I think more people will be over 55 than any other category very soon and this is the population that will have to take a lot of medications. It will be important to offer this segment multiple ways to take their medicine," she said. "It is just not realistic to think that this population will be compliant when it comes to taking eight to 10 pills per day."

Mr. Wilkes said companies entering the functional/wellness category will continue to be torn between creating a product with an efficacious dosage and making a product that tastes great. In addition, he said, they will also face the challenge of how to market these products. "From an ingredient company's perspective, as this category expands toward traditional conventional foods and beverages, the issue of delivering great taste and efficacy in active ingredient dosages will be on the shoulders of product formulators," he said.