Although the last decade has seen huge sums invested in researching and commercializing bioactives that can be added to foods and beverages to deliver new health benefits, the most common strategy in the global nutrition business today is still, as we hope to show, that of marketing intrinsic healthfulness.

The rapid evolution of nutrition science over the last decade has revealed the intrinsic health benefits of many components of the diet, which have been turned into marketing messages. Some obvious examples of this include olive oil, oats, green tea, oily fish, whole grains, almonds, walnuts and blueberries. But one of the best examples of the power of this strategy is cranberry juice, which has seen its sales rise steadily since 1994 when the link between cranberries and their intrinsic ability to reduce incidence of urinary tract infection (UTI) was first established.

The reasons behind the popularity of this strategy aren't hard to figure out. For one, drawing consumers' attention to the healthfulness of what you already sell is a low-risk strategy. In other words, there's little need for the kind of expensive R&D and new product development efforts that go hand-in-hand with bringing new bioactives to market. Furthermore, marketing investment in a new health message becomes an additional selling point for your existing brand.

It's also possible to get traction for your intrinsically healthful product message by connecting to public health messages, which get media support that helps embed them in consumer awareness. General Mills' reformulation of its entire range of breakfast cereals with whole grains, for example, enabled it to explicitly link its brand to the increased consumption of whole grains called for by the new U.S. dietary guidelines. For the same reason there's an upsurge in the U.S. in launches of breads made with whole grains, American pear marketers are highlighting the natural high-fibre benefits of pears and reminding consumers that pears figure at the top of the list of healthy fruit in the dietary guidelines.

It's also easier to achieve an "all-natural" type of positioning if you are marketing the intrinsic healthfulness of a food because the natural message is something that resonates strongly with health-conscious consumers, as steadily growing sales of U.S. natural product superstores like Whole Foods Market and Wild Oats bear out.

Among the biggest beneficiaries of the intrinsically healthy, all-natural message will be companies involved in fruit, fruit drinks and those who make fruit a significant ingredient and/or marketing proposition within their products. Indeed, fruit may turn out to be the future of functional food.

Blueberries, for example, have experienced surging consumer demand in recent years not just in one region but globally, propelled in part by their image as being intrinsically healthy (thanks to their high content of antioxidants). Sales in Japan are on the rise every year, while in Europe sales growth has recently been running at 100% annually, leaving growers unable to meet demand.

What's key to the growing interest in fruit is not just health benefits, it is that fruit tastes good. Examining case studies of fruit successes, it's clear that the health proposition works best when it's coupled with taste and convenience. Even better for companies, using fruit as a selling point connects to most countries' dietary guidelines and the "5-a-day" initiative.

Beverages seem to have the edge in terms of perceived convenience benefits and it's in beverages that demand for products based on healthy fruit is strongest. The case of the Californian pomegranate drink brand Pom Wonderful, which came from nowhere and is suddenly an $80 million brand, is a model of how to take health benefits to market. Pom Wonderful combines innovative packaging, clever merchandising and delicious taste to deliver a health benefit.

But it's not only an American trend. In the U.K., the "Pomegreat" brand-a two-person company-has seen sales soar to $5 million within three years of launch.

The last 12 months in Europe has seen the daily dose drink-65 ml-125 ml bottles that deliver a single shot of a drink with a health benefit-become the standard packaging format for any innovation-focused company that wants to clearly signal that "this product is innovative and healthy."

Unilever, for example, has chosen this packaging format for all its European functional drink launches over the last 12 months. In mid-2005, for example, it launched Knorr Vie, a shelf-stable100 ml "daily-dose" drink (even though it's actually merchandised in the chiller cabinet) that delivers two portions of fruit and vegetables in a single convenient shot. This marks the first time that this benefit has been made available anywhere in the 100 ml daily-dose format. Each 100 ml bottle contains 50% of the recommended daily value (RDV) of vitamin C derived from what is naturally present in the ingredients. There is no fortification and the product contains no additives other than fruit. The product also carries a "no-added sugar" message-one that is increasingly resonant with health-conscious consumers. It is a new and unique product concept in Europe and perhaps globally.

It's also new because the daily-dose concept has thus far in Europe been synonymous with probiotic dairy drinks, a market which has grown from zero to €4 billion ($3.7 billion) in the space of a decade, with the Danone Actimel brand holding an impressive 50% market share. Knorr Vie is, however, the first dairy-free, fruit/vegetable-based drink of its kind. It is not a probiotic.

Daily-dose packaging is also transforming the plant sterols business. The Benecol brand pioneered the cholesterol-lowering sector but has experienced slow growth. All of this changed, however, when Emmi-a small but highly entrepreneurial Swiss dairy, which is a marketing partner for Benecol-developed a product that provides the complete daily dose of stanols you need to help lower cholesterol in a single 70-gram shot. The idea was quickly taken up by other Benecol partners.

Daily dose packaging has triggered a transformation in the fortunes of Benecol. From zero, sales of the Benecol dairy drink shot to $113 million in its first year on the market-even though it was only on the market in four of the 25 European countries. It doesn't take a genius to see the potential in extending the concept to the rest of Europe, and even the rest of the world.

Hot on Emmi's heels, Unilever brought to market its own 100-gram cholesterol-lowering dairy drink under its Flora Pro.activ brand, recording $20 million in sales in the first 12 months on the U.K. market alone.

Latterly Unilever has also debuted, in Portugal, the U.K. and Ireland, a 100-gram daily-dose drink to lower elevated blood pressure, using a peptide sourced from Calpis, which used this ingredient in its own blood-pressure-lowering brand on the Japanese market. Unilever was actually second to market in Europe with blood pressure-lowering daily-dose products; the first to market was Spanish dairy Iparlat, which launched blood pressure-lowering drinks in co-operation with Emmi, who licensed the patented peptide technology from Valio Dairy in Finland. This is just a small selection of the dozens of launches of different types taking place in Europe in the daily-dose segment.

But Americans shouldn't comfort themselves in the idea that this is just a European phenomenon-the daily dose format actually originated in Asia, where it is very well-established. In fact, to date, there are thousands of products on the market offering a wide variety of health benefits. Thais drink over a million bottles of Yakult every day-more than the whole of Europe; and China offers a wealth of daily-dose products-two of the country's biggest brands are in fact 100 ml dairy drinks for children.

If your company's product development plans don't include some serious thinking about how and where your company could exploit consumers' acceptance of this ultra-convenient format, then you risk missing out on one of the fastest-growing segments of the global market. No matter how much science your functional food or beverage has behind it, when it comes to building functional brands, packaging is as important as the science behind the product.

There has been no shortage of predictions over the last five years that sales of a particular "hot" health ingredient were about to "explode." The reality, though, is that very few science-based bioactives have moved much beyond dietary supplements and/or a niche category foods.

Lutein is one example of an ingredient that has great science, a clear health benefit and can readily be formulated into a wide variety of foods and beverages. However, although it's been successfully incorporated into thousands of supplements, it can be found in very few beverages. What's more, none of these lutein-fortified products have seen any significant sales growth that can be attributed to the presence of lutein.

The reason is simply that despite a heroic five-year communication effort by market leader Kemin Foods, most consumers still don't understand enough about lutein or find its benefits a compelling reason to pull products with lutein off the supermarket shelf.

So how do you move a health ingredient category like omega 3s out of its current niche? In the case of omega 3s, there are two successful brands to learn from: Australia's George Weston Foods Tip Top Up brand, which achieved a 13% share of Australia's bread market in 2005 just three years after launch; and Spain-based Puleva dairy group's omega 3 milk, which surpassed $100 million in sales in 2005, which is impressive in a country of 40 million people-if you were to pro-rate that success to the U.S., it would be a $700 million brand!

So what's driven these successes when omega 3s in most other countries have yet to make a dent in food markets? One important factor is that Australians have the highest levels of awareness in the world of omega 3 fatty acids, thanks partly to local media attention to the research endeavours of omega 3s in Australia's scientific community and also partly to public health communication about omega 3s. The Australian consumer is also willing to be experimental. The Spanish, too, are very willing to try new things and are the most health-aware consumers in Europe, providing a fertile market for omega 3-based products.

However, it's important not to confuse consumer awareness with motivation to purchase. High consumer awareness alone will not cause anyone to buy a product. The Australian and Spanish companies support their brands with significant investments in communications including:

a) PR to the consumer press.

b) Health professional communications, fronted by scientifically credible spokespersons; providing information and education to dietitians and nutritionists through websites, information packs and conference participation.

c) Sampling-people want to have the confidence that something tastes "good enough to eat" before they part with their hard-earned dollars for a food containing some new ingredient. In the case of omega 3s, the need to sample is very strong for one simple reason-fear of fishy tastes.

If marketers of omega 3 products can apply the lessons that have been learned in Spain and Australia then 2006 might at last become the tipping point for omega 3s.

Other important factors that help ingredients to expand are media interest and the ease with which consumers can understand the ingredient and its benefit. Pomegranate, for example, has benefited from the fact that health-conscious consumers have become significantly conscious of the overall benefits of antioxidants and that media coverage of the benefits of blueberries, green tea and other foods affirms the importance of these substances-and their "naturalness"-in consumers' minds.

The media is always hungry for stories about naturally healthy foods and keen to tell stories about them. As a result, claims don't need to be made on a product label if the media is doing the work for you-cranberries, blueberries, green tea and tomatoes are just a few of the many, many products that have benefited from media attention and the resulting consumer word-of-mouth. These foods also have easy-to-understand messages. Remember, in today's over-communicated world, where consumers are bombarded with advertisements and information from every direction, including an ever-rising number of claims for the health benefits of foods, they cannot take on complex or unfamiliar messages.

It is in this respect, in fact, that cranberries have excelled-Ocean Spray's message about cranberry juice's scientifically substantiated ability to fight UTIs is easy to understand. It also relates to a real problem that afflicts 25% of all women.

With a finger of blame being pointed at some categories of foods and beverages by anti-obesity campaigners and increasing expectations from consumers who believe they should be able to combine indulgence with health, confectionery, ice cream, sweetened carbonated drinks and other "pleasure" categories will be increasingly seeking to earn themselves a healthier halo, some in the hope of boosting sales, others with the aim of defending a static category.

Right now the most prominent strategy that's being adopted is the chocolate industry's one of highlighting the intrinsic healthfulness of certain types of chocolate, which contain potent antioxidants called flavanols.

No western company has done more than Mars to invest in research looking into the health benefits of cocoa and then turn that research into the basis for a business strategy that's really taking off. The Mars approach is two-pronged: First, highlight the health benefits of dark chocolate and underline the fact that these benefits are only available from Mars products because of its proprietary processes that guarantee high levels of cocoa flavanols. The second part of that strategy is to add sterols to dark chocolate, as it did for its CocoaVia brand, and market these types of product for their heart health benefits. The latter strategy is producing satisfactory but nonetheless niche levels of sales, while the former strategy is boosting sales of existing dark chocolate brands.

Rival Hershey is taking the opposite approach by choosing to market the intrinsic healthfulness of cocoa as an ingredient (just like General Mills did with the whole grain strategy), building on the fact that "more and more consumers are becoming aware of the natural antioxidant benefits of cocoa and dark chocolate," Tom Hernquist, senior vice president, said in a recent company release.

Recently the company published research showing that all products containing natural cocoa have flavanol antioxidants and that the level of antioxidants in "commonly available chocolate products is directly related to the amount of natural cocoa contained in that product."

Hershey's communication strategy about the intrinsic health of cocoa includes a new cocoa label communicating that cocoa is a natural source of flavanol antioxidants, as well as a new seal listing the total percentage of cocoa solids-both are steps designed to help consumers better identify which cocoa and chocolate products contain higher levels of flavanol antioxidants.

In the ice cream arena, Unilever has already test marketed a fortified ice cream in Ireland and is said by industry sources to have a strong interest in marketing functional ice creams. This is something that the market can expect rival Nestlé to also adopt. But new ingredients and benefits take time to gain traction with consumers. The combination of added, overtly healthy ingredients with food types that are perceived as being about pure indulgence will simply reach a disconnect with consumers.

It is for this very reason that Hershey's strategy is a smart one-as evidence from other categories shows that people are receptive to health messages if they perceive them as being natural and intrinsic to the food. There will be new functional ice creams and confectionery, but their growth curve will be a slow one and they may be niche products for years to come.

You can always tell when a brand is doing well because retailers start to copy it with their own label, under-cutting it on price and so initiating the long, slow erosion of prices that inevitably follows as the retailer tries to build the category. It's an inevitable process which in some countries has gone much further than others. In some European countries, for example, own-label penetration may be as low as 15% of supermarket sales-in the U.K., by contrast, it's 40% and heading quickly toward 50%. The trend everywhere, however, is for own-label to grow and it's a trend that's being helped along as retailers see the huge profits earned by companies like Tesco.

The own-label trend is already causing a wealth of difficulties for some brand owners. Danone, for example, finds itself confronted with private label products that taste as good as its own and are as well-packaged and highly price-competitive right on its own doorstep in France, where Carrefour is making inroads into Danone's dairy market share. In this circumstance, Danone's Actimel and Activia probiotic brands are the last line of defense of its profit margins.

Health and nutrition are areas that many companies, like Danone, have seen as the part of the market where they could develop branded products that could add extra value and offset the declining prices being experienced in other parts of their business as a result of intensifying own-label and discount retailer competition.

That hope is now about to be tested. European retailers are beginning to apply the own-label strategy with increasing vigor in the field of nutrition and health. Albert Heijn, for example, the biggest Dutch supermarket chain, has done what no retailer has done before in Europe (or the U.S.): it has launched a new own-label product with a product-specific health claim. What's more, the claim (relating to oat beta-glucan) is the first of its kind on the Dutch market. That's a significant move, for in the past retailers have left such innovations in health up to brand owners.

Indeed marketers of functional ingredients now seem to be targeting major retailers with health innovations as much as they are targeting brand owners. In South Africa, for example, the Woolworth's supermarket chain launched the first-ever dailydose probiotic dairy drink by working in close co-operation with probiotic culture supplier Danisco.

In a sign of the same trend, the first food product in Europe using Forbes Medi-Tech's Reducol sterols was brought to market in 2005, not by a brand owner, but under a retailer's own label. In Finland, yogurts were recently launched under the name Pirkka, a private label brand of Kesko, which is Finland's leading food retailer. This is an important strategic move since private label dairy products are rare on the Finnish market. In a recent statement, Harri Sivula, deputy managing director of Kesko, said, "Kesko has made a strategic decision to invest in the development of healthy food products under the Pirkka premium brand." Kesko's yogurts carry a cholesterol-lowering claim and sell at a 15% discount to similar cholesterol-lowering yogurts sold under the brand from Valio, which is Finland's largest dairy company.

American retailers have not yet latched on to private label functional foods with the aggression of European retailers, but it can only be a matter of time before they do.

About the author: Julian Mellentin is an expert on the business of functional foods and has been involved in this area for over 10 years. He is director of The Centre for Food & Health Studies, a company that has provided research, analysis and forecasting of the global nutrition business since 1995. The company is based in London, U.K., and has offices in Finland and New Zealand. He is also editor of New Nutrition Business, the long-established international journal on the global nutrition business, which his company publishes. He can be reached at 44-20-7533-6595; E-mail: julian.mellentin@new-nutrition.com; Website: www.new-nutrition.com.