Trends in the International Cultured Dairy Market

1
Trends in the International Cultured Dairy
Market

• Global Cultured Dairy Report 2004
• Shannon Neuens
• Danisco USA Inc.

2
Key Trends in Dairy Products

• Nutrition
• Rise of functional food
• Organic food
• Diets and obesity
• Food Safety
• Demand for natural ingredients
• Concern over genetically modified food
• Convenience Single-Serve, Portable packs,
  Vending
• Ethnic Variety
• Globalization of dairy products
• ? Sophisication and Indulgence

Euromonitor, January 2004
3
Nutritional Focus for Dairies
Nutritional Key Trends to follow

• Organic and natural products
• Vitamins and minerals fortification
• Reduced-fat and sugar content
• Prebiotics and Probiotics

Euromonitor, January 2004
4
Development Focus for Dairies
Development Focus for Dairies
Whats Needed Today
Stagnitos New Products Magazine, Feb 2004
5
The Low Carb Craze

• Low Carb Yields High Profits with no sign of
  stopping. Drug Store News, January 2004

Low Carb Grows BEEF, Feb 04
Money saving tips for low carb dieters. CNN
News, May 8, 2004.
More Low Carb Launches Food Engineering
Ingredients, April 2004

• Restaurant chains look to lure dieters with low
  carb rollouts. Nations Restaurant News, Jan 04

in a world beyond bread, low carb foods have
become big business! Time Magazine, May 3, 2004.
6
The Low Carb Craze

• 11 of Americans or 24 million adults are on a
  low carb diet.
• "low net-carb" dieting approach looks like it
  will be sustainable over time due to obesity,
  diabetes and other weight-related health issues.
  Dairy Foods, January 2004

• If executed correctly by the food industry, low
  carb will become a permanent shift in the way
  Americans eat, and will lead to real public
  health benefits. Dairy Foods, January 2004

• Two thirds of adults 163 million are
  consciously or subconsciously watching carbs as
  part of a lifestyle change - to eat and live
  healthier. Food Technology, April 2004.

Low Carb Craze
7
Low Carb Cultured Dairy New Product

• Carb Control - Reduced Carb Cultured Dairy Snack
  with 3g of carbohydrates having 80 less sugar
  than regular lowfat yogurt. Dannon/USA
• LeCarb YoCarb - a low carb cultured dairy yogurt
  with half the calories of regular low-fat yogurt.
  Southwest Foods/USA
• Low Carb Sour Cream. Dean Foods/USA

GNPD 2004
8
Pre-Probiotics on the Rise

• Ease your digestive woes naturally. Better
  Nutrition, Sept 1999

Make friends with good bacteria Natural Health,
March 2002

• Immune System Enhancement Prepared Foods, July
  03

Gut Check Health Issues of the gastrointestinal
system Nutrition Action, April 2004
9
Top 10 Functional Food Components in the News

• 2003 2001 1999
• Omega-3 fatty acids 29 10 4
• Fiber in general 17 23 21
• Lycopene 9 2 5
• Vitamin C 7 18 15
• Beneficial Fatty Acids in General 5 1
  11
• Plant Sterols in General 5
• Prebiotics/Probiotics 4 --- ---
• Plant estrogens in general 4 7
  5
• Vitamin E 3 11 7
• Carotenoids 2 8 5
• Total Number of Stories 193 299 384

IFICFood For Thought V
10
Prebiotic Probiotic Development Technology
Probiotics are living micro organisms, which
when ingested a demonstrated beneficial bacteria
supports intestinal health. A Good Bacteria for
immune boosting.
PROBIOTICS
INTEGRATED SYNBIOTICS
SYNBIOTICS
PREBIOTICS
Prebiotics are nondigestible carbohydrates
that pass through the small intestine undigested
and are fermented in the colon. Primarily serves
as an excellent source of fiber
Better Nutrition March 2002
11
Digestive Health US

• Digestive disorders plague 70 million people
• Issues increase with age, sufferers expected to
  grow by 90 by 2005 with greatest increase
  in 50-64 age category
• Irritable bowel syndrome Growth with Stress
• Occur more frequently with women
• Lactose Intolerance increasing 30-50 million
  Americans
• Estimated minorities effected 75 African and
  Native Americans, 90 of Asian Americans
• Cost 107B, 87B direct medical costs and 20B
  indirect such as disability and mortality
• Result in 200,000 absences from work NIH, 1999

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Pre-Probiotics on the Rise

• The yogurt/fermented milk sector is the key
  motor of growth

• A growing importance in functional foods

Actimel/Germany

• Geared to reach the health conscious consumer

• Convenience and functionality

Euromonitor, January 2004 / GNPD / Food
Processing 2004
13
Pre-Probiotics on the Rise

• More Cultured Dairy with Probiotics
• Sour cream, cottage cheese, kefir, and infant
  formula.
• Ice cream and cheese
• Other Probiotic Products
• Dietary supplements and energy bars.

Dairy Foods, August 2003/Euromonitor 2004
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Probiotic YOGURT/Fermented Milk New Product

• Probio GG Yogurt, a probiotic yogurt drink for
  children. Maeil Dairy/South Korea
• Yogurt Muesli Drink A probiotic, peach/apricot
  flavored yogurt drink with muesli. Woolworths/S.
  Africa
• Plus Probiotic Yogurt Drink combines natural
  cranberries with bio cultures for positive
  balance for the digestive system. Ocean
  Spray/U.K.
• Actimel/Danactive dairy based probiotic
  supplement beverages helps strengthen the bodys
  natural defenses. Dannon/USA

GNPD 2004
15
Pre-Probiotic OTHER New Product

• Gain IQ Growing Up Milk, a probiotic milk based
  formula for babies. Abbott/Singapore
• Burgen Rye Bread Bürgen Rye bread with natural
  ingredients including Rye-plus, fiber and
  prebiotics beneficial for digestive balance.
  George Weston Foods/Australia
• Whey Fresh Juice Drink peach and maracuja fruit
  juice probiotic cultures and vitamins.
  Nom/Austria
• Nutrimax Nutrition Bar macro nutrient nutrition
  bar with vitamins minerals and prebiotics for
  digestive function.Nutrigen /South Africa
• Chewies freeze-dried granules individually
  wrapped flexible sachets
• Malayn Pharmaceuticals/Malaysia

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Convenience Trends

• Convenience drives food buys. Drug Store News,
  February 2004

Make convenience a part of your business plan.
Food Mgmt, Oct
03
Convenience is the King of Cool Japan, Inc., May
2003

• New portable, affordable Asian fast food concept
  just may wow American diners. Nations
  Restaurant News, August 2003.

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Convenience Trends

• Do-it-for-me meals reached 12.7 billion with
  12 growth

• Quickservice
• drive-thrus and fast casual dining
• vending machines
• multi-packs
• individual servings for immediate consumption

Kids Minute Meal
New Zealand
USA
Organic Smoothie
Food Technology, February 2004/Food Management
Magz, October 2003
18
Convenience Trends

• Handy food
• Drinking yogurt
• Cheese breadstick dips
• Veggies and Dips
• Tube packaging
• On a stick

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Convenience New Product

• Nouriche A Nonfat Yogurt Smoothie with
  nourishment of a meal that can be eatin on the
  go. General Mills/Yoplait USA

• Activia Probiotic drinking yogurt and cup
  yogurt packaged for convenience. Danone/Mexico

• Phildelphia Mini Tubs snacks with soft white
  cheese dip served in mini tubs, ideal for people
  on the go. Kraft/U.K.

• Skyline Chili chili kit containing chili,
  cheese and sour cream dip. Pre-packaged meal kit.
  Skyline Foods/USA

GNPD 2004
20
Nutritional Trends

• A Drink to Better Health. Food Product Design,
  Jan. 2004

• Manufacturers begin to focus more on health, as
  evidenced by the increase in health and wellness
  claims.
• Prepared Foods,
  March 2004

Fitness Food Healthy opportunities for new
bally food and beverage products
New Product Magz, Oct 2003

• Belt-Tightening the Diet Aisle.
  Food Processing, October 2003.

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Nutritional Trends

• Food as Medicine Functional Foods
• Calcium good for bones. and weight loss?!!!
• Probiotics/prebiotics
• Organic and Natural Ingredients
• Low fat - No trans fats

Euromonitor, January 2004
22
A growing demand for whole natural foods and
organics - a healthier and tastier option!
Nutritional Trends

• Table 6 Global Sales of Organic Foods 1998-2003

US million, current rsp
1998 1999 2000 2001 2002
2003 growth
Western Europe 6,655 8,175 9,550 11,375
13,380 14,640 120.0 US
5,000 6,000 8,000 10,000 12,500
13,450 169.0 Japan 1,500
2,000 2,500 3,000 3,600 3,825
155.0 Canada 500 690
825 990 1,190 1,290
158.0 Australia 90 110
150 200 265 285
215.0 Others 250 350
525 810 1,295 1,395
458.0 TOTAL 13,995 17,325 21,550
26,375 32,230 34,885 149.3
Euromonitor, January 2004
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Ethnic Trends

• International foods gaining shelf space. DSN
  Retailing, November 2003

• Evolution of Ethnic Cuisine.
• QSR Magazine, May 2004

Spicy ethnic cuisines add zip and zing to
everyday fare New Product Magz, Oct 2003
Ethnic interests see better slotting. DSN
Retailing, January 2004
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Ethnic Trends

• Mainstream consumers are expected to purchase 75
  of ethnic foods over the next decade.
• Ethnic populations desire different combinations
  of sweetness, flavor and aroma.
• This trend is also prevalent in Asia-Pacific,
  where a wide range of both western and
  Asian-influenced flavors are available.
• By 2020, 17 of the the U.S. will be Hispanic,
  the largest minority in the U.S.

Dairy Foods 2004/Food Navigator 2004
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Cultured Dairy
Cultured Dairy Trends

• Yogurt
• Sour Cream
• Cottage Cheese
• Refrigerated Dips

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Global Growth of Dairy Products Euromonitor 2004
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Yogurt News Trends

• Fortified (Probiotic, Added Calcium, DHA)
• Smoothie (Fruit and Yogurt combos)
• Regional Targeting
• Age Specific and Gender Targeting

Dairy Foods, April 2004/Euromonitor 2004
28
Global Sales of Yogurt by Subsector Value
Growth 1998 - 2003
Source Euromonitor 2003
29
Yogurt New Product

• VitaSnella Frutta FrullataYogurt - low fat creamy
  yogurt blend with liquidized melon fruit pulp,
  sweeteners and fructose. It is claimed to contain
  only 0.1 fat with no compromise on taste.
  Danone/Italy

• Orchard Maid Probiotic Yogurt Drink fat free,
  reduced calorie yogurt made in mango and passion
  fruit flavors. Comes with a probiotic LifeTop
  straw which helps deliver LABs to the digestive
  system. Orchard Maid/U.K.

• Yomi Lala vanilla flavored yogurt drink. Ultra
  Lala /Mexico

• Dannon Creamy Fruit Blends fruit based and
  creamy flavored yogurt. Dannon /USA

30
Sour Cream News Trends

• Despite the minimal new product innovations in
  this category, per capita consumption is up 2.9
  thanks to increased use of sour cream in
  foodservice, primarily as a condiment
  specifically on Hispanic-style foods. Dairy
  Foods, April 2004

31
Sour Cream New Product

• Noche Buena Lite Sour Cream a light version
  Mexican style sour cream. New Zealand Milk
  Co/Mexico

• HOF Sour Cream Sour cream with only 10 fat.
  Hamburger Warenkontor/Germany

• Blue Bunny Lite Sour Cream contains 2/3 less
  fat and 45 fewer calories. Wells/USA

32
Cottage Cheese News Trends

• Cottage cheese in single-serve units and fruit
  flavored varieties.

Sgl serve, fruit flavored Nicolait/Denmark

• Per capita consumption and sales are down.

Dairy Foods, April 2004
33
Cottage Cheese New Product

• Flavored Cottage Cheese spring sliced with
  butter. Spak/Hungary

• Vitality Cottage Cheese low fat all natural
  cottage cheese with carrots, horseradish, chives,
  cucumber and dill. Claims to be the lightest
  cottage cheese in the market with only 0.5 fat.
  Nordmilch Milram/Germany

• Hood Low Fat Cottage Cheese with fruit fruity
  varieties available in a 1 milkfat small curd
  variety.H.P.Hood/USA

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Dips - News Trends

• Snacking and entertaining are the two overall
  hottest food trends for 2003.
• Maybe eating veggies while snacking can be as fun
  as eating chips and candy.

• DMI/Extraordinary Dairy, Summer 2003

35
Refrigerated Dips New Product

• Deans Green Chili Dip made with real sour
  cream designed to appeal to the hispanic
  consumers. Deans/USA

• Country Goodness Garlic Dip roasted garlic dip
  with herbs . New Zealand Dairy Foods/New Zealand

• Lunch n Go dip with breadsticks Designed for
  having lunch on the go. Copperpot Pate/U.K.

• Litehouse Ranch Dip made with no MSG or
  preservatives. Litehouse/Canada

• Naturally Fresh Ranch designed for kids,
  colorful vitamin packed ranch dip for snacking.
  Deans/USA

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Trends leading to Opportunities

• Opportunities
• Increasing consumer health consciousness
• Obesity concerns in children
• Boycotts of GMO
• Increase awareness of gastrointestinal health
• Single serve convenience

• Growth Area
• Low-fat/half fat, low calorie, probiotics
• Dairy drinks as alternative to soda
• Organic dairy products
• Fermented milks and yogurts with clinically
  proven probiotics
• Yogurt, drinkable yogurt, single serve cottage,
  dairy based snack packs.
• Euromonitor 2004

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Cultured Dairy Trends - Conclusion

• Capitalize on the key trends
• Nutrition Healthy Products
• Convenience Products
• Ethnic Products
• Products dealing with obesity concerns
• Products addressing food safety