Market Insight and Trends for Gut Health Ingredients Shaping the Digestive Health Market

MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS
SHAPING THE DIGESTIVE HEALTH MARKET
EWA HUDSON
GLOBAL HEAD OF HEATH AND WELLNESS RESEARCH
FOOD MATTERS LIVE
NOVEMBER 2016

GLOBAL DIGESTIVE HEALTH
FOCUS: UK
FUTURE OF DIGESTIVE HEALTH

© Euromonitor International
3
General Wellbeing £248 bn
Weight Management £67 bn
Digestive Health £44 bn
Energy Boosting £24 bn
Free From £21 bn
Oral/Respiratory Health £13 bn
Endurance £13 bn
Bone and Joint Health £10 bn
Cardiovascular Health £5 bn
Vision Health £4 bn
Brain Health and Memory £3 bn
Immune Support £2.5 bn
Urinary Tract Health £0.5 bn
Beauty from Within £0.1 bn
Digestion - the 3rd largest health trend within the £476 bn HW industry
MARKET INSIGHT AND TRENDS FOR GUT HEALTH INGREDIENTS SHAPING THE DIGESTIVE HEALTH MARKET, FOOD MATTERS LIVE 2016
Global Retail Sales (£ billion) 2016

4
Digestive health food and drinks equally important across key regions

5
Probiotics and fibre key in digestion-positioned packaged food
0
10
20
30
40
50
60
2011 2016 2021
£billion,fixed2016exchangerates
Global digestive health by categories 2011-2021
Others
FF Bottled Water
Milk
Juice
High Fibre Noodles
FF Bread
High Fibre Pasta
FF Milk Formula
High Fibre Sweet Biscuits
NH Rice
Sour Milk Drinks
High Fibre Breakfast Cereals
Probiotic Yoghurt
High Fibre Bread

6
Digestive health fragmented, an opportunity to establish or re-establish
brand’s health credentials
0 10 20 30 40
2015
Digestive health by leading brands, World
Yakult (Yakult Honsha Co) Activia (Danone, Groupe)
Chobani (Chobani LLC) Cheerios (General Mills Inc)
Quaker Oatmeal (PepsiCo Inc) Mengniu (China Mengniu Dairy Co)
Yili (Inner Mongolia Yili Industrial Group Co) Nature's Own (Flowers Foods Inc)
Lieken Urkorn (Agrofert as) Bimbo (Grupo Bimbo )
Quaker (PepsiCo Inc) Oroweat (Grupo Bimbo )
Nido (Nestlé SA) New Yakult (Yakult Honsha Co)
Bio Danone (Danone, Groupe) Almarai (Almarai Co)
Barilla (Barilla Holding SpA) Kellogg's Mini Wheats (Kellogg Co
Joie (Yakult Honsha Co) Stonyfield Farm (Danone, Groupe)
£ billion

7
Be aligned with yourself, in sync, find your balance

8
0
1
2
3
4
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
£billion
Western Europe – Retail Sales of Probiotics by Type 2002-2021
Probiotic Supplements Probiotic Yoghurt Sour Milk Products
Western Europe - the setback of probiotic claims in food to bring market
opportunities for supplements
Consumption gap between probiotic
yoghurt and supplementsnarrowing
Probiotic supplements to outpace sour milk drinks

4 billion
US$ retail value of
probiotics supplements
in the world 2015
11%
Retail value up from
2014
38%
Expected growth from
2016 to 2021
9%
Retail value growth
expected in 2016

10
Probiotic supplements to outpace all others throughout year 2021

11
£10.5 billion worth of digestive remedies sales highlights the need for
improved preventative approach
0
500
1,000
1,500
2,000
2,500
3,000
3,500
North
America
Asia
Pacific
Western
Europe
Latin
America
Eastern
Europe
£million
Digestive Remedies by Regions 2016
IBS Treatments
Motion Sickness Remedies
Paediatric Digestive
Remedies
Diarrhoeal Remedies
Laxatives
Indigestion and Heartburn
Remedies

12
0
10
20
30
40
50
60
70
80
90
Egypt
Romania
Hungary
Russia
Ukraine
Slovakia
Bulgaria
Germany
Mexico
UnitedKingdom
Finland
Poland
CzechRepublic
Portugal
Spain
Chile
Belgium
Japan
Denmark
Italy
France
Austria
Argentina
Brazil
Netherlands
Switzerland
USA
Canada
Sweden
Greece
Thailand
Norway
SouthKorea
SouthAfrica
Ireland
Philippines
HongKong,China
Australia
Colombia
Indonesia
Taiwan
NewZealand
Venezuela
Morocco
Israel
India
China
Vietnam
Malaysia
Turkey
Singapore
SaudiArabia
Death by Diseases of the Digestive System (per 100,000 inhabitants)
2015
Diseases of digestive system cause 49 deaths per 100 k people in the UK

14
Weetabix the largest digestive health brand in the UK
Leading digestive health brands in the UK (% share),
2015
Weetabix (Bright Food (Group) Co)
Oatso Simple (PepsiCo Inc)
Warburtons (Warburtons Ltd)
Kingsmill (Associated British Foods Plc)
Hovis (Premier Foods Plc)
Shreddies (Cereal Partners Worldwide SA)
Kellogg's All Bran (Kellogg Co)
Alpen (Bright Food (Group) Co Ltd)
Dorset Cereals (Associated British Foods
Plc)
Others
10g of fibre per 100g

15
Not just fibre&wholegrain, but also locally produced and in a responsible
way with less fertilizer

16
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
India China US EU UK
£million
Digestive health 2016
Post Brexit digestive health? EU key but China the land of opportunity
Digestive health 2021
EU data excludes UK

18
Food and mental disorders on the rise, as well as allergies, skin
conditions, arthritis, autism, gut – the second brain

19
Food and mood, gut and brain axis

20
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
£million
Free from 2016
At £21 billion globally, the free from movement grows from strength to
strength; improving digestion at its heart
Free from 2021
EU data excludes UK

21
Consumers look beyond traditional digestive approach
Steroids
Pesticides
Local Sourcing Artificial
Ingredient
s
Safety
Artificials
HFCS
MSG
GMOs
rBST
Aspartame
Southampton
Study
Artificial
Enzymes

22
Clean label a new entrant in digestive health?
Euromonitor Clean Label Types
All Natural
No Artificial Additives
No Artificial Colours
No Artificial Preservatives
No Artificial Flavours
No Artificial Sweeteners
GMO Free

23
UK the second largest in the global £107 billion clean label movement
0
5
10
15
20
25
30
0
5
10
15
20
25
30
35
40
45
£billion
Top 10 clean label markets
2015 2015-2020 % Growth

24
Which claim is most important from the consumer perspective?
No artificial colours, flavours
and preservatives
No artificial colours
or flavours
Zero added preservatives
Add taste, nothing else
Nothing artificial,
no added refined sugar
No artificial preservatives, no added
MSG, free from artificial colours
Made with real fruit, no artificial colours,
preservatives or sweeteners
100% pure & raw
Water, lime cucumber, BC
…and that’s it
No added sugar,
no additives
No artificial colours
or preservatives
100% natural
ingredients, skin & collagen
No artificial colours, flavours or preservatives
No added MSG
Vegetarian, vegan and coeliac friendly
Gluten and lactose free
Cold pressed (never heat)
100% natural ingredients – yes!
Say no to…
Added sugar
Added sweeteners
Added preservatives
Added water

25
UK’s £13.3 billion clean label driven by concerns around artificial colours
0 5,000 10,000 15,000 20,000 25,000 30,000
2015
Clean label by leading categories, UK
No Artificial Colours No Artificial Flavours No Artificial Preservatives
All Natural No Monosodium Glutamate No Artificial Sweeteners
GMO Free No Artificial Additives BPA Free
£ million

26
Turkey, China and Indonesia to drive the global growth

THANK YOU FOR LISTENING
Q&A
Ewa Hudson
Global Head of Health and Wellness, Nutrition
and Ethical Labels Research
ewa.hudson@euromonitor.com
@ewa_hudson

28
Ethical labels research
PEOPLE
Clean Label:
•All Natural
•No Artificial Additives
•No Artificial Colours
•No Artificial Flavours
•No Artificial Preservatives
•No Artificial Sweeteners
•No MonosodiumGlutamate
•GMO Free
•BPA Free
Origin:
•Locally Sourced Prominent
Religious Labels:
•Halal
•Kosher
Charity/Sponsorship
ENVIRONMENT/
SUSTAINABILITY
Sustainable Trade and Farming:
•Fairtrade
•UTZ Certified
•Other
Responsible Forestry:
•Rainforest Alliance
•FSC
•Other
Sustainable Palm Oil System
•RSPO/ISPO/MSPO
•Other
Recycling Label:
•Widelyrecycled
•Can be recycled
•Terracycle
•From Sustainable/Renewable
Sources
•Other
Carbon Footprint/NoAir MilesFood
ANIMAL
WELFARE
Free Range
Marine Sustainability
Bird/InsectsFriendly
Grass fed/pasture raised
Vegetarian/Vegan

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Ethical labels methodology
BRAND SALES (RETAIL VALUE)
OF PACKAGED FOOD,
SOFT DRINKS AND HOT DRINKS
CHECK PACKAGING
FOR 38 ETHICAL LABELS
Allocation of brands to categories based on recorded label
2015:
SUM OF BRANDS
WITH AT LEAST
ONE ETHICAL LABEL
EXCLUDED:PRIVATELABEL, OTHERS
Scan of CSR reports of
leading players for commitments that
directly affect our forecasts
Application of commitments from CSR reports to overwrite
the base line growth
Use of packaged food, soft drinks
and hot drinks 2015-2020 growth
as a base line for forecast growth
FORECAST MODEL:
2015 VALUE OF ETHICAL LABELS
+ PK, SD, HD BASE LINE
+ CSR COMMITMENTS

30
Clean label defined by packaging claims
 GMO free/Non-GMO: GMO (geneticallymodified) foodsinvolve introducingforeign genetic material into an organismartificially, usually to –
increaseyield, increaseresistance todisease, extend shelf life or improve food properties (texture,flavour, nutrient value). This category
quantifies sales of products under our coverage with a GMO-Free/Non-GMOclaim.
 All Natural/100%Natural:These terms refer to the natural propertiesof the product. Both All Natural and 100%Natural are to be
recognised asthe same ethical label. This includes referencesto 'all natural anything'.
 Artificial Additives:This category aggregatessalesof products with a claim "no artificial additives” and “free from artificial additives“ on
product packaging.
 Artificial Flavourings: This category aggregatessalesof products with a claim "no artificial flavours/flavourings” and “free from artificial
flavours/flavourings”on product packaging.
 Artificial Colours: This includesall productswith a claim "no/free from artificial colours". Several artificial colours have been banned by
food standardsauthoritiesafter being linked to an increasednumber of cases of attention deficit hyperactivitydisorder(ADHD) and are thus
avoided by certain consumers.
 Artificial Sweeteners: This category captures aggregated salesof all productswith the claim "no/free from artificial sweeteners“ on product
packaging.
 Artificial Preservatives: Thisincludesall productswith a claim "no/free from artificial preservativesand productswith a claim "no/free
from parabens". Parabensare a form of artificial preservative and when presentin food usually come in the form of E numbers.
 BPA Free: All products with a claim referringto "BPA free". BPA (bisphenol A) is an industrial chemical that is used to make certain plastics
and resins.BPA is often used in containersthat store food and beverages,such as water bottles.
Lacking a formaldefinition,Passport: EthicalLabel bases its definitionin the variousclaimsfound on
product packagingthat stress a shift away from complexartificialingredients,toward familiar,natural
alternatives.

Market Insight and Trends for Gut Health Ingredients Shaping the Digestive Health Market

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Market Insight and Trends for Gut Health Ingredients Shaping the Digestive Health Market