New frontiers in functional foodsDate posted: October 14, 2003
From cancer fighters to heart boosters, the next generation of food products are far more than just tasty meals. A leading research manager provides perspective on the fast-rising trend toward functional foods and the dramatic potential it holds for western Canadian agriculture.
The functional food and nutraceutical industry is one of the fastest-growing areas of opportunity in food production, and western Canadian agriculture is well-positioned to cash in, says Kelley Fitzpatrick, Marketing and Research Development Manager at the Richardson Centre for Functional Foods and Nutraceuticals at the University of Manitoba.
"Interest by the general public is growing worldwide in the prospect that food and food products can promote and maintain health," says Fitzpatrick. "Currently, Canada accounts for three percent of the global market, but there's major opportunity for that to grow. The Canadian nutraceutical and functional food industry has garnered a great deal of attention in recent years from several sectors, and several crops grown in the Prairies have been identified as excellent candidates for value-added processing as functional foods."
Current world consumption of nutraceuticals and functional foods is estimated to be between $70 and $250 billion annually, depending upon the product categories that are included in the statistics, she says. Predictions are that the value of the functional foods and nutraceuticals industry will expand ten-fold over the next decade, growing three-to-four times the rate of the conventional food industry.
"It's becoming increasingly clear that people prefer to get their health benefits from the kitchen cabinet rather than the medicine cabinet," says Fitzpatrick. "This is a growing trend worldwide. The Canadian agricultural community needs to determine where we fit and where our potential lies within this trend. Once identified, we can then really push the button to develop these products and capture the full market advantage of the unique health-enhancing properties of our crops."
The new world of functional foods and nutraceuticals
A functional food is a food that is similar in appearance to conventional foods and is consumed as part of a usual diet, but also has demonstrated physiological benefits and/or reduces the risk of chronic disease beyond nutritional functions, says Fitzpatrick.
"Basically, many foods could be considered functional. We're interested in those foods that have inherent health qualities or those in which we can enhance natural constituents - essentially we would like to be able to make a health claim based on scientific identification of efficacy."
"Among specific functional food products, one of the best known is oat based Cheerios cereal, which in the U.S. carries a health claim that it can help reduce the risk of coronary disease through the consumption of soluble fibre. On the more tailored side, another high-profile product is calcium-fortified Tropicana orange juice, which markets the health benefits of added calcium."
Similar in appeal to functional foods are nutraceuticals, she says. A nutraceutical is a product produced from foods but sold in pill, powder, potion or other medicinal form not generally associated with food, but demonstrated to have a physiological benefit or to provide protection against chronic disease.
"In Canada, we now have a brand new regulatory area called 'natural health products' (NHPs), which encompasses nutraceuticals," she says. "This recognizes that while nutraceuticals aren't the same as foods, they aren't the same as drugs either. They're a unique health product that deserves their own recognition."
One example of a natural health product with potential for our producers is barley beta-glucans sold as dietary supplements. "Beta-glucans are a component of barley known to help lower blood cholesterol. They represent significant sales in pill form in the U.S." Another example is herbs and botanicals used in numerous nutraceutical products.
Driven by consumer health demands
The reason for dramatic growth forecasts in functional foods and nutraceuticals is no secret, says Fitzpatrick. The consumer and marketing craze toward health enhancing products has risen steadily for the past 50 years and is reaching unprecedented heights as science delves deeper into the functional components of food, unhinging a tidal wave of further potential to identify and market health claims.
"Functional foods and nutraceuticals will continue to grow at a strong and steady pace as consumer interest and acceptance of these products, as well as scientific substantiation of safety and efficacy, increases," says Fitzpatrick. "Consumers are interested in natural ingredients and products that can promote a longer and healthier life."
Both consumers and health care professionals are moving away from a prescription approach to disease treatment, instead focusing on long-term disease prevention, she says. "What we are seeing among both groups is a rise in awareness of the connection between certain constituents in foods and supplements and their role in disease prevention. A good example is the connection between fibre and cancer - consumers are aware of importance of good fibre in the diet.
"Contributing to this trend is an aging population. The baby boomer sector of the population will continue to ensure that issues related to health and health products are the forefront of public attention for the foreseeable future."
From an industry point of view, functional foods and nutraceuticals offer one of the most lucrative ways to add value to existing agricultural products and to innovate with new ones, she says. "These products are being developed by companies globally in response to growing consumer demand as well as to create higher-margin, value-added products for the manufacturers and inevitably their customers and shareholders."
Regulatory framework, labeling key to market success
Crucial to tapping into the potential for functional foods and nutraceuticals is establishing a market-friendly regulatory framework, says Fitzpatrick. Japan was the first jurisdiction in the world to put in place regulatory reforms to encourage companies to utilize health claims to develop healthier foods and to communicate those messages to consumers. Japan introduced a new legislative category for functional foods called FOSHU, or "foods for specific health uses" and the country now allows over 200 health claims.
"Part of the reason that we have seen a more open regulatory system develop in Japan is due to that country's great concern over its aging population. Food retailers and marketers are constantly looking for opportunities to directly address problems associated with aging. Functional foods and nutraceuticals represent product categories that fall between traditional foods and pharmaceuticals, and in Japan these areas are growing at a faster rate than 'regular' foods or drugs."
Europe is another leader, benefiting from excellent public awareness of the health benefits of foods, a significant focus upon research and in many EU states, a favorable regulatory environment. "They are probably 10 years ahead of North America with regard to the consumption of foods for health purposes and in the development of the science around these food products. The European industry is extremely sophisticated in that regard. Many EU countries have also traditionally viewed natural health products for the most part as medicine."
The U.S., Canada's primary export market for functional foods and nutraceuticals, is well established as another health-claim friendly environment for both food and supplement products, she says. "In 1994, the Food and Drug Administration (FDA) approved ten food specific health claims and there are now 17 different disease-reduction claims allowed in the U.S."
By contrast, Canada's regulatory environment has been very conservative in dealing with functional foods and nutraceuticals, she says. Currently, "functional foods" are not recognized by Health Canada and are not able to carry health claims. "In my opinion this has had a major detrimental effect on the industry in this country."
But there are strong signs of improvement, she says. In June 2003, Health Canada announced new regulations related to Natural Health Products, which within two to six years is expected to allow various types of health claims on dietary "supplement-type" products. "This is extremely significant because we now have a new regulatory area that encompasses nutraceuticals. For example, if barley beta-glucan is extracted and sold in pill form, the expectation is the product would qualify under the new regulations as a natural health product that could carry a health claim."
For foods, Canada allows five generic disease risk reduction claims, but so far is missing out on key claims, such as those for specific grains, which are viewed currently as a lucrative area by the U.S. industry and others. "The market for snack foods, for example, is growing at a phenomenal rate, and these products often contain grain ingredients with very marketable and scientifically valid health benefits," says Fitzpatrick.
Strong potential for Canada
Canada may be on the slow end of embracing the potential in functional foods and nutraceuticals, but the opportunity remains strong for both the agricultural community and the health care sector, says Fitzpatrick.
"I believe our strength will be in the area of functional food ingredient innovation," she says. "We have a crop production base, along with government agencies and a scientific community that are very focused on finding ways to add value to agriculture. Historically, our researchers have been investigating what we can pull out of a commodity or a specialty crop and add into a capsule or to a food product. From this standpoint, we've made some real progress that could lead to significant market success with adequate funding support to carry the many innovations forward."
Case in point is Fitzpatrick's own home base at the Richardson Centre for Functional Foods and Nutraceuticals located in the University of Manitoba's SmartPark. The Centre is a $25 million facility where researchers from food production and nutrition, medicine and pharmacy work together to facilitate the development and standardization of functional, health-enhancing foods and nutraceuticals from Prairie crops. Research projects range from extracting the beneficial components of food more efficiently to food safety, quality control, processing, packaging and delivery of the products.
While the Canadian industry as a whole is just getting off the ground, there are already many examples of significant entrepreneurial efforts dotting the Prairies and country overall, she says. One recent example is the University of Alberta's partnership with Ceveva Bioproducts Inc. to license its patented extraction technology for barley beta-glucan and pursue its potential in the U.S. functional food market.
"From the herb and botanical side, we target our development to Asia because it is really enamored now with western herbs rather than traditional Chinese medicinals," says Fitzpatrick. "From the standpoint of functional food innovation, we have a hard time competing within Europe so many of our companies instead target the U.S.
"The general industry approach is to incorporate bio-active ingredients into supplements, market these mostly into the US to generate necessary cash flow, and then start looking at ways to move the ingredient into foods.
"What I advise is that companies develop the innovation to eventually move their ingredients into foods. There is generally less competition in the functional food area than the supplement area, which is notorious for 'borrowing science' and marketing 'me too' products."
Overall, the incentive to steer Canada more toward functional food development is rapidly increasing, she says. "Of specific interest to value-added agriculture, an approximate seven to 10 percent annual growth rate over the next three years is anticipated for dietary supplements, functional foods and nutraceuticals, with the greatest gains in mass market sales rather than health food stores. In comparison, the $466 billion conventional food business is growing at a yearly rate of only two to three percent."
Key Prairie crops
At a production level, there are several Canadian prairie crops with excellent opportunities to supply and generate new markets in functional foods and nutraceuticals, she says. And Canada has already demonstrated a strong capacity to identify and develop innovative products from these crops.
"In reality, it's not like functional foods and nutraceuticals are a new concept to us," says Fitzpatrick. "We have been developing functional food and nutraceutical innovation for a while, whether or not we've recognized this or realized how good we are at it."
Prairie crops with strong potential include everything from canola, flax and pulses, to more traditional crops such as wheat and barley. (For more on the specific potential in these crops and examples of progress, read a related article, "Breaking Forward with Functional Foods," on the Western Grains Research Foundation Web site.)
Moving from field to pill or plate
Whatever the crop or the potential, the Canadian agricultural community stands to benefit most from teamwork across sectors, she says.
"We cannot be everything to all players. Very few producers will be successful taking their products from the field to the pill or the plate. We have to recognize where our strengths lie in the supply chain and attempt to establish strategic alliances and partnerships with those players who are already in the market. Functional food and nutraceutical innovation can be a risky venture, but if it's based on solid science and smart approaches, it can also be a very rewarding one."
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