Outlook 2016: Health-focused innovation

DEVELOPING ingredients that promote better consumer health is at the center of most new technologies in the food and beverage industry, from sugar and sodium reduction to functionalizing products to cleaning up labels. While surrounded by challenges, it has clearly become the dictum for the industry in recent years. Asia, a region of very diverse preferences, has its complexities but companies we interviewed agree the market as a whole is opening up to the latest trends.

Sharing his views on the industry, Baldur Hjaltason, Strategic & Key Account Manager, Epax Omega-3, FMC Health and Nutrition said, “The overall driving force for innovation, development and success in this market is creativity and the desire of Asian consumers, more than any other region, for new and unique product experiences. To develop these products, manufacturers must have an understanding of regional differences and preferences and the expertise and ingredients to translate their understanding into product formulations that are novel and exciting in texture, color, taste and functionality,” he said.

Baldur Hjaltason, Strategic & Key Account Manager, Epax Omega-3, FMC Health and Nutrition

“In countries like Japan products can have a lifespan as short as six months, at which point consumers are already looking for the next new texture, color and flavor coming around the bend. Manufacturers are always trying to create something new and buzzy to capture consumer imaginations and appetites and create exciting experiences, while at the same time upholding staple feel good flavors and delivering safe and trusted products. In such a rapidly evolving environment, an understanding of the consumer audience and their unique regional preferences is key to creating products that will delight consumers. Consumer insight must be matched with formulation and ingredient expertise. Naturally derived ingredients and EFA concentrations offer the health and clean label benefits that are becoming more important to customers in the region.”

Ignacio Cartagena, Vice President of Sales & Marketing at Monteloeder, a developer, manufacturer and distributor of ingredients for nutrition and cosmetics, sees creativity at work with customers. “At Monteloeder, our customers are mainly in the food supplement as well as beverage industries. These types of customers always look for innovative concepts. The ASEAN market is not an exception to that trend. As an example we have an oral UV protector ingredient, in powder form, called Nutroxsun™ and our ASEAN customers want to add it in many different presentations such as capsules, drinkable shots, jellies, beverages, tablets etc.”

Ignacio Cartagena, Vice President of Sales & Marketing, Monteloeder

At trade shows such as Vitafoods Asia, more visitors often inquire about new ingredients, or ingredients with recent studies, Mr Cartagena said. “We have noticed an increase in ASEAN companies asking about clean label and the naturalness of the ingredients.”

Global solutions to growing health issues

Harry Boot, Tate & Lyle SVP and General Manager, SFI Asia Pacific said, “Across the globe and here in Asia consumers are concerned about rising obesity and the related health issues. They are increasingly concerned about the quality, and traceability of the food they eat. And there is general perception that less processed, more wholesome ‘clean-label’ foods are better for you.”

The company has met such needs with products like Splenda® low calorie sweetener, Promitor® range of fiber products, and clean-label products such the Claria® functional starches.

Kalsec^®, a producer of natural colors, natural flavor extracts, hop extracts, and nutritional ingredients, expects the market to embrace clear labeling.  Kathleen Koh, Managing Director, Asia Pacific of Kalsec^®, Asia Pacific said, “With the growth of the Asian middle class, we believe the desire for simpler, fewer artificial ingredient listings is increasing in importance to this market.  In a 2014 global Innova Survey, 6 percent of Asian consumers find it important to recognize most names on a product’s ingredient list.  This creates an opportunity for food manufacturers to formulate with more naturally-sourced ingredients to meet the requests of Asian consumers as well as consumers around the world.” 

Kathleen Koh, Managing Director, Asia Pacific of Kalsec^®, Asia Pacific

Behind the strong market of course is the expanding middle class as well as the Millennials.

Ms Koh said, “With the emerging middle class in ASEAN estimated by Nielsen to double to 400 million by 2020, this group of educated consumers are more discerning in their choice of food and moving towards the intake of healthier foods. There is also a positive trend of consuming food containing basic food ingredients commonly found in one’s kitchen due to its familiarity.”

Tate & Lyle’s Mr Boot agreed, “The demand for healthier, more transparent, recognizable food ingredients will continue to grow. And within this, the shift to newer ingredients/products and clean label trend is here to stay and expand. Customers want simpler ingredient lists they can understand. And this is proving especially true here in Asia where new product launches in the clean label space have steadily increased over the last decade. Today, one in three APAC yoghurt NPD has cleaner-label positioning. For example, South East Asia also has high levels of clean label penetration – at over 20 percent in Thailand, Malaysia, the Philippines and Singapore for example.”

DuPont Nutrition & Health Regional President, ASPAC, Kobus de Klerk said, “Globally, as the middle class rises in developing countries we see increasing incidences of health issues. Health concerns are driving food purchase behavior as consumers look to manage or prevent future health issues. This will be an ongoing trend as regular food becomes industrialized. We believe it is a key focus to keep on offering both global and local expertise to focus on consumers’ needs.”

Kobus de Klerk, President, DuPont Nutrition & Health, ASPAC

According to Mr de Klerk, the ASEAN market is highly receptive to new ingredients and products. “Finding an approach to offer new ingredients to produce local food and introduce new products to market will stimulate the growth of ASEAN food industry. In a dynamic food industry that is growing at 4-7 percent annually, innovation is crucial.”

Giving an example from a customer in Indonesia, he said, “Our specialists have helped our customer develop a soy-based vegan ice cream with improved functionality and texture. We were able to reduce total solids in the product without compromising ice cream structure and mouthfeel.”

Of Omega-3 products, Mr Hjaltason said,  “We are witnessing some consumer demand for organic in countries like Japan, South Korea, Australia and Singapore and in some of the major cities in China, and we have seen encouragement of the use of natural alternatives to synthetic colors in countries like Malaysia, Vietnam and the Philippines. We’re also seeing some appetite for health profile improvements, like sugar reduction, and a general overarching trend towards healthier lifestyles, creating demand for health supplements like Omega-3s,” he said.

“Currently, China, Japan and Australia are the largest marine-based EPA/DHA Omega-3 markets in the Asia-Pacific, but consumers throughout the ASEAN region have been increasingly turning to supplements for a number of reasons. Market drivers for Omega-3s range from supporting the aging population to a general trend towards healthier lifestyles and fully nourished diets. These trends can partially be attributed to an increase in consumer awareness surrounding the health benefits of Omega-3s,” Mr Hjaltason added.

Growth in the emerging markets

Most companies remain generally optimistic about their prospects in the ASEAN, and rest of the Asian region.

“We feel upbeat with the prospect of the food industry in ASEAN, driven mainly by increased prosperity and greater health awareness,” said Mr de Klerk. “As the food industry keeps innovating novel products and with constant opportunities for new consumption, we will continue to provide world-class technical and commercial support to our customers. DuPont has a strong innovation pipeline and takes a very optimistic view with regards to growth expectation in ASEAN next year.”
“As reported by Euromonitor, Asia Pacific is one of the fastest growing regions globally, with a forecast CAGR of 4 percent over 2012-2017.¹ Indonesia, Vietnam and Philippines have been forecasted to be strong ingredient markets and we are particularly optimistic about the  bakery and beverage industry.”

This year marks the start of the AEC.

“The ASEAN Economic Community (AEC) is the centerpiece of ASEAN’s aspirations for greater economic integration among the 10 member countries on 31 December 2015. The AEC will bolster ASEAN’s attractiveness to investors within and outside the region, will boost trade, and will promote increased competitiveness. We will see positive outlook from Indonesia, Philippines and Vietnam in 2016,” Ms Koh adds.

Mr Cartagena says, “According to some analysts it is expected that the economies of all the ASEAN countries will generally continue to grow in 2016 with Thailand and Indonesia, the main economies of the area, expected to lead the trend. This expected economic growth would lead to an active industry which would be very positive for the industry. We are also optimistic about the current ASEAN trend on prevention and treatment of illness with natural remedies as this ties in very well with the ingredients we offer such as MetabolAid. If the economy grows the industry will remain active. There is also a trend towards prevention and treatment of illness with natural remedies.”

Tate & Lyle is also seeing promise for its clean-label products in the region. “Globally, we’re seeing a rise in clean-label claims across multiple categories," says Mr Boot. "For example, according to reports from Innova Market Insights, more than 1 in 3 yoghurt products and 40 percent of soups introduced globally in 2013 had clean-label positioning.  Nearly 25 percent of all new products launched around the world in 2013 were positioned as clean label - and this number rises to as much as 47 percent in for example Australasia.  South East Asia also has high levels of clean label penetration- at over 20 percent in Thailand, Malaysia, the Philippines and Singapore for example.”

¹  http://www.euromonitor.com/asia-pacific-bright-prospects-for-food-and-beverage-ingredients/report