Personal ROI on Functional Foods

By Maryellen Molyneaux
Contributing Editor

Today, more than ever, health and wellness is taking a more-prominent position in consumers lives. As more information emerges about the connection between diet, lifestyle and health, consumers are taking note and making behavioral changes to incorporate healthier practices into their daily regimens, including the use of functional foods. However, consumers are also demanding greater value from every product or service they buy, and desire to make the most of everything they have, including the investment of time and money. These value requirements, now being defined as personal return on investment (ROI), transcend product cost and functionality to include a value differential. The value differentials that encompass fair trade, resource management and the efficacy and productivity of corporate social responsibility programs are increasingly part of this emotional and social value equation, yielding a growing dimension to personal ROI.

Filling the gap

Consumers indicate that they feel deficient in many nutrients, as seen in their desire to obtain more fiber and calcium in their food and beverage choices. The value and convenience of getting these nutrients via consumption of everyday products, like calcium-fortified orange juice, is quite appealing to the health-conscious consumer. Many consumers who are concerned about preventing such health issues as osteoporosis, diabetes and high cholesterol levels indicate they increasingly believe in, and are willing to use, foods and beverages to prevent or treat them. Advances in science are helping to pave the way. Driven by sound clinical research, the benefits of nutrients such as omega-3 fatty acids for their anti-inflammatory properties and plant sterols for cholesterol reduction have recently provided new areas of opportunity in food functionality and fortification.

Except for a slight decline in 2009, the use of fortified and functional foods has shown an upward trend for the past 10 years. The consumption of functional foods, heightened by the self-care movement, has thus far been largely unaffected by the state of the economy. While the downturn in the economy has suppressed food sales overall, consumers continue to show high interest in foods and beverages with added health benefits. Fortified and functional foods deliver an economical ROI to consumers as they try to stretch every food dollar while trying to avoid medical costs. According to the Health and Wellness Trends Survey from the Natural Marketing Institute, Harleysville, PA, more than one-quarter of the U.S. population agrees that functional foods and beverages can be used in place of some medicines.

Psychological edges

The recession has made some consumers feel as though they are out of control. After an initial stage of feeling disconcerted, it has led them to exercise control where they can. It has forced consumers to reevaluate what gives them true pleasure and value, and many have realized that health, the environment and social issues provide more value than the material possessions they had been working so hard to accumulate.

Consumers are not only investing in their own personal health and well-being, but also in that of others, and they expect corporations to do the same. Coupling social and environmental responsibility with corporate values appeals to many consumers, who in turn vote for values with their dollars. Nearly three-quarters of the general population agrees that companies should be mindful of their impact on the environment and society, in addition to making a profit. As consumers are now interested in aligning their personal values with the brands and companies they buy, functional-food companies must raise the bar and clearly define and articulate their values.

The time for corporate action is now. Corporate social responsibility concerns are unlikely to diminish over the coming years, and ignoring this trend only gives the competition more time to establish market leadership. Alternatively, understanding what the trends mean to functional-food businesses and brands allows organizations to frame the conversation with their consumers and/or customers and capitalize on this exciting market transformation. Not only is there value in the functional benefit provided in their products, but there is a sense of personal ROI when the consumer also feels good about the company or brand from which they buy.

A fair trade

Perhaps more subtle than beliefs about the importance of corporate social responsibility, attitudes regarding a related dimension of value differentialsfair tradeare also strong. Issues such as products and ingredients being harvested by manual and child slave laborers in developing countries, as well as protection of land and the environment via support of local production and consumption, are regarded as important to U.S. consumers. Despite the economic recession, U.S. fair-trade sales grew 10% in 2008, to $1.06 billion. Functional-food companies can create an additional value proposition by ensuring consumers that the manner in which their products and ingredients are harvested and produced has encompassed fair-trade values.

Claim clarity

In order to increase trial of functional foods and beverages, its necessary to not only understand consumers perceived importance of their cost versus health benefit and the aforementioned opportunities for creating value differential, but also their barriers to use, including the believability of health claims. While almost two-thirds of consumers report using functional foods, only one-fourth see them as important to maintaining a healthy, balanced lifestyle. In addition, almost one-third feel overwhelmed by all the nutritional aspects of the foods and beverages they consume. It may be getting too complex for many mainstream consumers. Clinical substantiation of health benefits goes a long way to help consumers believe in the validityand, thus, the valueof product claims. Consumer education and communication will put control in their hands, allowing them to make a more-informed decision as to the value of the foods and beverages they choose.

As Albert Einstein said, Reality is merely an illusion, although a very persistent one. The reality of finite resources and time creates the desire to demand greater value.

Functional foods and beverages inherently pay dividends to the health-conscious consumer. However, as consumers seek to strengthen and diversify their consumption investment portfolio, opportunities exist for marketers of functional foods and beverages to set themselves apart from one another by allowing consumers to gain personal return on their investments in products that are manufactured by companies that promote value differential.

Maryellen Molyneaux is president of the Natural Marketing Institute (NMI), Harleysville, PA, an international strategic consulting, market research and business development company specializing in health, wellness and sustainability. For more information, log on to nmisolutions.com.