Industry Description
The plant sterols market is experiencing slow but steady growth, with a study by AC Nielsen revealing its value at $66 million in 2004, increasing to $93 million by August.
2005 Also, General Mills, producer of Nature Valley’s “Healthy Heart” snack bars had a 21% increase in sales growth in its granola bars over the past two years 21
CEO of Cognis, Dr Antonio Trius comments in a press release in November of 2007,
In recent years, approximately 35 million euros have been invested in the functional foods sector in Illertissen, reflecting Cognis' commitment to natural foods that offer enhanced health benefits This focus on health-oriented products is integral to our corporate strategy, and we recognize the importance of these markets for our future growth To sustain our leadership in the industry, we will persist in investing in cutting-edge facilities.
Cognis, an international Nutrition & Health company headquartered in Illertissen, Germany, specializes in nutritional ingredients with a strong emphasis on wellness and sustainability With a workforce of 7,700, Cognis operates in 30 countries worldwide.
21 General Mills 2007 Annual Report 3 April 2008 http://media.corporate- ir.net/media_files/irol/74/74271/GIS_AR07.pdf
22 Enhancing service and quality: Cognis expands sterol ester plant in Illertissen, Germany 14 November
2007 3 April 2008 http://www.cognis.com/company/Press+and+Media/Press+Releases/2007/Press+Room_Company+Novem ber+14_2007+(en).htm
23 Enhancing service and quality: Cognis expands sterol ester plant in Illertissen, Germany 14 November
2007 3 April 2008 http://www.cognis.com/company/Press+and+Media/Press+Releases/2007/Press+Room_Company+Novem ber+14_2007+(en).htm
Cognis is one of the many companies producing and marketing its plant sterol ingredients to companies for the production of plant sterol-enriched products.
B Future direction of industry & Potential Risks
The plant sterol-enriched food products industry is poised for growth, driven by the alarming prevalence of heart disease, which impacts nearly half of the US population High blood cholesterol levels are identified as a significant risk factor for this condition, highlighting the increasing demand for effective dietary solutions.
Plant sterol-enriched products may pose risks when used alongside statins or other prescription drugs that effectively lower cholesterol Many patients manage their cholesterol levels with statins, allowing them to avoid significant dietary changes According to Steve Snyder, Vice President of Sales and Marketing at Cargill, it's important to consider these interactions when incorporating plant sterols into a health regimen.
Statins are highly effective in managing high cholesterol levels; however, research indicates that many consumers prefer to avoid medication as a solution for their cholesterol issues.
Statin drugs can be costly and may cause undesirable side effects, whereas plant sterol-enriched products are similarly priced to traditional foods and have no documented adverse effects Additionally, statins have been shown to
24 “National Institute of Health.” June 2005 3 April 2008 www.nhlbi.nih.gov/health/public/chol/wyntk.htm.
The US market for sterol foods is experiencing slow growth, as reported in September 2006 and updated in April 2008 Plant sterols have been shown to significantly enhance the reduction of intrinsic high cholesterol synthesis, particularly by improving absorption in the gastrointestinal tract for individuals with elevated cholesterol levels.
The increasing saturation of the market with plant sterol-enriched products poses a significant risk for Kellogg's Co As numerous health and science companies innovate in this space, the availability of substitute products may lead to a loss of customers for Kellogg's.
C Life-Cycle of the Industry
The plant sterol products industry is emerging, with consumer awareness still on the rise Despite the FDA's endorsement of health claims for products that effectively lower cholesterol—requiring at least 1.7 g of plant stanol esters and 0.65 g of plant sterol esters—many consumers remain uninformed about what plant sterols are and how they can help lower cholesterol levels There exists a significant market opportunity to educate consumers about the benefits of plant-sterol enriched products.
26 Thomsen AB, Hansen HB, Christiansen C, et al Effect of free plant sterols in low-fat milk on serum lipid profile in hypercholesterolemia subjects Eur J Clin Nutr 2004;58:860–70.
27 FDA Authorizes New Coronary Heart Disease Health Claim for Plant Sterol and Plant Stanol Esters 5 September 2000 2 March 2008 http://www.fda.gov/bbs/topics/answers/ans01033.html
Since the FDA approved plant sterol-enriched products in 2000, their market growth has been slow due to low-medium entry barriers and the necessity for companies to possess the expertise to develop these ingredients Many firms hold patents for plant sterols, contributing to technological uncertainty among both companies and consumers, which indicates the industry's emerging status During this phase, companies are focusing on mergers and acquisitions, leveraging resource strengths, gaining expertise, targeting new customer segments, and expanding into foreign markets Despite a positive market outlook for plant sterol-enriched products, the industry remains classified as emerging due to its sluggish growth and low consumer awareness.
28 Crafting and Executing Strategy: Concepts and Cases, 16 th Edition C 2008.
The major industry leaders for producing plant sterols are 29 :
Leading companies in the production of plant sterols are now venturing into incorporating these ingredients into food products These large, research-driven organizations are competing on a global scale, supplying plant sterols to various industries Their focus on innovation is evident in their rigorous research and development efforts aimed at designing and patenting effective plant sterol applications.
There are several companies that are now producing plant-sterol enriched products, including:
29 “Plant Sterols-all hyped up and nowhere to go?” 5 March 2008 20 March 2008 http://www.new- nutrition.com/newspage/Plantsterols.htm
Kellogg’s, a leader in the global breakfast cereal market, is expanding its product line to include snack bars infused with plant sterols aimed at reducing cholesterol levels The company's primary competitors are those offering heart-healthy snacks, notably General Mills, which has launched its “Healthy Heart” granola bars featuring CoroWise plant sterols, clinically shown to lower cholesterol This strategic move positions Kellogg’s to compete effectively in the growing health-focused snack segment.
Competitors are businesses that sell similar products in the same market- Kellogg’s direct competitors are listed below 30
• Coca-Cola Company- Minute Maid Orange Juice
30 Corowise: Naturally Sourced Cholesterol Reducer 10 April 2008 http://corowise.com/products.html#oroweat
• OroWheat- Whole grain & Oat Bread
• Rice Dream- Rice Dream Heart Wise
• Giant Eagle- Fat Free Milk
• GNC- Heart Advance dietary supplement
• Centrum Cardio- Two Centrum Cardio® a Day
Indirect competitors are businesses that provide products addressing the same needs as your own For instance, Kellogg’s indirect competitors include companies offering heart-healthy products that may not specifically target cholesterol reduction.
• Power Bar- Harvest Whole Grain Snack Bars
• Kashi- Heart to Heart Product line of Hot & Cold Cereals, waffles
While these products provide heart-healthy benefits, they lack plant phytosterols and do not make health claims regarding cholesterol reduction or cardiovascular disease risk Despite this, they continue to compete with Kellogg’s heart-healthy snack bars, as consumers in this category are likely interested in plant-sterol enriched options Consequently, companies offering heart-healthy products are indirectly capturing market share from those that specialize in cholesterol-lowering products.
C Barriers & Obstacles to Market Entry
Major Industry Leaders …………………………………………………… …18-19 B Direct and Indirect Competition…………………………………………… …19-21 C Barriers/Obstacles to Market Entry…… …………………………………… 21-22 IV Market Potential (US and Global) …… …………………………………… 22-25 Target Market
The major industry leaders for producing plant sterols are 29 :
Leading companies specializing in the production of plant sterols are increasingly venturing into the food industry, leveraging their research capabilities to enhance product offerings These large, research-driven firms are actively competing in the global market, supplying plant sterols as key ingredients to other businesses Their focus on innovation in research and development is evident as they design and implement patented methods for plant sterol production, positioning themselves as leaders in this growing sector.
There are several companies that are now producing plant-sterol enriched products, including:
29 “Plant Sterols-all hyped up and nowhere to go?” 5 March 2008 20 March 2008 http://www.new- nutrition.com/newspage/Plantsterols.htm
Kellogg's, a leader in the global breakfast cereal market, is expanding its product line to include snack bars infused with plant sterols aimed at cholesterol reduction This strategic move positions Kellogg's against competitors like General Mills, which has successfully launched "Healthy Heart" granola bars featuring CoroWise plant sterols known for their cholesterol-lowering benefits.
Competitors are businesses that sell similar products in the same market- Kellogg’s direct competitors are listed below 30
• Coca-Cola Company- Minute Maid Orange Juice
30 Corowise: Naturally Sourced Cholesterol Reducer 10 April 2008 http://corowise.com/products.html#oroweat
• OroWheat- Whole grain & Oat Bread
• Rice Dream- Rice Dream Heart Wise
• Giant Eagle- Fat Free Milk
• GNC- Heart Advance dietary supplement
• Centrum Cardio- Two Centrum Cardio® a Day
Indirect competitors are businesses that provide alternative products addressing the same consumer needs as yours For instance, Kellogg’s indirect competitors include companies that market products promoting heart health, even if those products are not specifically designed to lower cholesterol.
• Power Bar- Harvest Whole Grain Snack Bars
• Kashi- Heart to Heart Product line of Hot & Cold Cereals, waffles
While these heart-healthy products lack plant phytosterols and do not make health claims regarding cholesterol reduction or cardiovascular disease risk, they remain competitive with Kellogg’s heart-healthy snack bars due to consumer demand Shoppers interested in heart-healthy options may also be inclined to purchase plant-sterol enriched products, suggesting a potential market for such items Consequently, companies offering heart-healthy products are inadvertently capturing market share from those that specialize in cholesterol-lowering product lines.
C Barriers & Obstacles to Market Entry
The plant sterol industry faces significant growth barriers due to the increasing competition from major companies like Arboris in the US, which aims to expand its production capacity in Georgia, and Forbes MediTech, which is now entering the European market.
The market is expanding annually at15%, and companies such as Forchem are counting on organic growth of the market, instead of stealing market share from its competitors 31
Market entry obstacles for Kellogg’s include the challenges of obtaining patents for plant sterols, high licensing fees, and low consumer awareness of new food technologies A recent International Food Information Council study revealed that many consumers have limited knowledge about plant sterols, probiotics, and soy protein To capitalize on this opportunity, Kellogg’s should invest significantly in marketing and promotional efforts to educate consumers about the benefits of their plant sterol-enriched snack bars.
31 New Capacity for Plant sterols at Finnish Plant 21 March 2005 10 April 2008 http://www.nutraingredients.com/news/news-ng.asp?nX862-new-capacity-for
IV Market Potential (US & Global)
Recent consumer trends indicate a significant shift towards healthy snack options, which have emerged as the preferred choice for satisfying hunger between meals According to Consumer Research, 36% of Americans are increasingly opting for these nutritious snacks.
Europeans overall consume healthy snacks one or more times per day 32
A recent study by the International Food Information Council revealed that 53% of Americans consider heart disease their primary health concern, with 13% specifically worried about cholesterol levels Notably, 85% of consumers are interested in functional foods that offer health benefits beyond basic nutrition, while 70% feel they have significant control over their health Additionally, 83% of Americans express a desire to learn more about functional foods and explore various options for health benefits This indicates a strong market for functional food products aimed at lowering cholesterol, presenting Kellogg’s with an excellent opportunity to expand its product line with plant sterol-enriched snack bars Consumers are increasingly health-conscious and proactive in improving their well-being.
32 Healthy Snacking: Future Trends & New Insights August 2007 23 March 2008 http://www.reportbuyer.com/food_drink/snacks/healthy_snacking_future_trends_new_insights.html
33 2007 Consumer Attitudes towards Functional Foods/Foods for Health October 2007 3 March 2008 http://ific.org/research/funcfoodsres07.cfm their health through purchasing functional food items such as cholesterol lowering products.
Many companies are actively pursuing innovative food technologies to promote health, with Unilever leading the way through products like the cholesterol-lowering Promise Spread and Activ Super Shots Similarly, Mars Inc has introduced Cocoa Via, a heart-healthy snack line designed to lower cholesterol and enhance circulation.
The manufacturing technology of foods enriched with plant sterols is highly safe, leading the FDA to authorize labeling claims on approved products that promote their cholesterol-lowering benefits.
The IFR permits health claims on labels for spreads and salad dressings that contain a minimum of 0.65 g of plant sterol esters per serving, as well as for spreads, salad dressings, snack bars, and soft gel dietary supplements with at least 1.7 g of plant stanol esters per serving, indicating a reduced risk of coronary heart disease (CHD).
The European phytosterol market is currently worth $75 million dollars and is forecasted to grow by 15% annually, in a study done by Frost and Sullivan This growth, they
34 Cocoa Via 2008 10 April 2008 http://www.cocoavia.com/
Recent studies indicate that the introduction of plant sterol-enriched products is expected to significantly impact the market, with predictions suggesting that cholesterol-lowering innovations will become the most profitable segment for food producers in the coming five years.
David Henstrom, overseer of operations at Cargill Health & food Technologies, indicates:
Cargill's research reveals that most consumers in select European markets prioritize health and nutrition in their food choices There is a growing acceptance of tasty and effective functional foods among mainstream consumers Our commitment to promoting heart health drives us to make CoroWise plant sterols more accessible to a wider audience.
David also commented on the good market growth of the functional food industry with respect to products enriched with plant sterols
The market for cholesterol-lowering foods is experiencing significant growth, exceeding 10%, and is projected to substantially outpace traditional food categories in the coming years.
The market for plant sterol-enriched food is growing as more and more people are becoming aware of how important it is to take action in supporting a healthy lifestyle
36 Multibene to enter US Food Market 28 October 2004 10 April 2008 http://www.nutraingredients.com/news/news-ng.asp?nX862-new-capacity-for
37 A healthier World 31 January 2007 4 March 2008 http://www.foodchain-magazine.com/article- page.php?contentidB2&issueid
Companies are providing more functional foods that are healthy, convenient and taste good as a result
The target market for cholesterol-lowering food products primarily includes individuals seeking to reduce their cholesterol levels Those on cholesterol-lowering medications may also benefit from plant sterol products; however, it is essential to consult a healthcare provider beforehand It is important to note that plant-sterol enriched foods are not recommended for children, pregnant women, or breastfeeding mothers.
Cognis, currently the global leader in producer of plant sterols, claims that the target market for sterol-enriched products are likely to be oil based and low-fat products
Customers' Needs and Price Expectations
Consumers increasingly seek convenient and functional food products that effectively lower cholesterol levels While products enriched with plant sterols tend to be priced higher than their counterparts without these ingredients, this pricing reflects the complex manufacturing process; it takes 2,500 parts of raw materials to extract just one part of a plant sterol.
38 Do We Need to Be Buying Plant Sterols? Food Magazine 67 Oct/ Dec 2004 p 16.
CoroWise plant sterols can be seamlessly incorporated into food and beverages without adding calories or altering flavor and texture, making it easier for consumers to integrate them into their daily routines to help lower cholesterol Additionally, these plant sterol-enriched products offer a more cost-effective alternative to drug treatments for reducing blood cholesterol levels For individuals with moderately high cholesterol, adhering to a strict diet and consuming these enriched products can help achieve target cholesterol levels While statin drugs are more effective for those with extremely high cholesterol, combining statin therapy with plant sterol-enriched foods may enhance overall cholesterol-lowering benefits.
When selecting snack foods, taste emerges as the primary factor influencing consumer choices, overshadowing other considerations Interestingly, brand recognition plays a minimal role, indicating that even well-known manufacturers cannot solely depend on their brand strength to drive sales of healthy snacks.
In a consumer survey taken by the US Food and Drug Administration in November of
2005, 93% of consumers agreed that by eating a healthy diet, it would greatly reduce the chances of getting heart disease (72% strongly agreed to this statement) 41
39 A healthier World 31 January 2007 4 March 2008 http://www.foodchain-magazine.com/article- page.php?contentidB2&issueid
40 Phytosterols—a new dietary aid for the treatment of hypercholesterolemia August 2003 Vol 93.8 http://search.sabinet.co.za/images/ejour/m_samj/m_samj_v93_n8_a7.pdf
41 FDA Health and Diet Survey-2004 Supplement http://www.cfsan.fda.gov/~comm/crnutri3.html#fat November 2005 10 April 2007.
The growing trend towards healthy products is significantly influencing companies' product development and marketing strategies A survey by Data Monitor reveals that health concerns are on the rise among consumers in Europe and the U.S., with income no longer serving as a reliable predictor of purchasing behavior Notably, 28% of U.S consumers are opting for higher-priced grocery items in categories they value Additionally, factors such as stress, work-life balance, and time constraints are reshaping how consumers acquire and consume meals, leading to an increasing demand for convenient health options—evidenced by nearly 59% of Europeans prioritizing convenience in their food choices.
In 2006, US consumers increasingly prioritized convenient and healthy food and beverage options compared to the previous year Historically, access to healthy convenience foods was limited, but the availability of these products has significantly improved, allowing consumers to embrace this positive change.
A Costs of manufacturing the product
Manufacturing a product with plant sterols incurs various costs, including research and development, production (including plant and equipment), labor, materials, marketing and promotion, legal processing, and the procurement of plant sterols While much of this data remains confidential to individual companies, I have gathered insights into the expenses associated with the plant sterol ingredient.
42 Food & Drink Weekly 6 August 2007 10 April 2008.
How Customers Benefit from Product(s) …… ………………………………26-27 V Costs A Costs of manufacturing the product
Conclusion A Recommendations
Kellogg’s should consider launching a line of plant-sterol enriched snack bars to meet the evolving demands of health-conscious consumers With a strong reputation in the food industry, Kellogg’s can leverage research indicating that a significant number of Americans suffer from high cholesterol and are at risk for heart disease By incorporating proven plant sterol technology into their products, Kellogg’s can effectively cater to this growing market and promote heart health among consumers.
43 Interview with Cargill Employee Colleen Ness 3 April 2008
The FDA endorses health claims regarding the cholesterol-lowering benefits of plant sterols, allowing companies to market their products accordingly This presents a significant opportunity for businesses to boost profits while promoting healthier options, demonstrating their commitment to consumer health, disease prevention, and fostering healthy lifestyles.
Incorporating a line of snack bars to lower cholesterol and improve heart health would be a great opportunity for Kellogg’s.
1 2007 Consumer Attitudes toward Functional Foods October 2007 3 March 2008 http://www.ific.org/research/upload/IFICExecSumSINGLE_vF2.pdf
2 A Healthier World 31 January 2007 4 March 2008 http://www.foodchain-magazine.com/article-page.php? contentidB2&issueid
3 Cargill Website.2008.3 April 2008 http://www.cargill.com/
4 Clarkson, Kenneth W West’s Business Law Text and Cases Tenth Edition 2006 Pp.161-162
5 Cocoa Via 2008 10 April 2008 http://www.cocoavia.com/
6 Competition Proliferates 2001 5 March 2008 www.new-nutrition.com/newspagre/plantsterols/htm.
7 Corowise: Naturally Sourced Cholesterol Reducer 10 April 2008 http://corowise.com/products.html#oroweat
8 Crafting and Executing Strategy: Concepts and Cases, 16 th Edition C 2008.
9 Do We Need to Be Buying Plant Sterols? Food Magazine 67 Oct/ Dec 2004 p 16.
10 Enhancing service and quality: Cognis expands sterol ester plant in Illertissen, Germany 14 November 2007
3 April 2008 http://www.cognis.com/company/Press+and+Media/Press+Releases/2007/Press+Room_Company+No vember+14_2007+(en).htm
11 FDA Authorizes New Coronary Heart Disease Health Claim for Plant Sterol and Plant Stanol Esters 5
September 2000 2 March 2008 http://www.fda.gov/bbs/topics/answers/ans01033.html F
12 FDA Health and Diet Survey-2004 Supplement http://www.cfsan.fda.gov/~comm/crnutri3.html#fat
13 Food & Drink Weekly 6 August 2007 10 April 2008.
14 Functional Foods Fact Sheet: Plant Stanols and Sterols April 2003 21 October 2007 http://www.ific.org/publications/factsheets/sterolfs.cfm.
15 General Mills 2007 Annual Report 3 April 2008 http://media.corporate- ir.net/media_files/irol/74/74271/GIS_AR07.pdf
16 General Mills Launches Nature Valley® Healthy Heart Granola Bars with Plant Sterols 24 March 2008 24
March 2008 www generalmills com/corporate/media_center/news_release_detail.aspx? catID 369&itemID208
17 Healthy Snacking: Future Trends & New Insights August 2007 23 March 2008.
18 Heinemann, T., Leiss, O and von Bergmann, K Effect of low-dose sitostanol on serum cholesterol in patients with hypercholesterima 1986.
19 Interview with Cargill Employee Colleen Ness 3 April 2008.
20 Katan MB et al “Efficacy and safety of plant stanols and sterols in the management of blood cholesterol levels.” August 2003 1 Nov 2007
21 Kellogg’s Co Website 2008 20 March 2008 http://www2.kelloggs.com/General.aspx?IDF6
22 Kellogg’s Annual Report 2008 20 March 2008 http://www.shareholder.com/visitors/dynamicdoc/document.cfm?
CompanyID=K&DocumentID!12&PIN=&Page=7&Zoom=1x
23 Kellogg’s Our Company 2008 22 March 2008 http://www.kelloggcompany.com/company.aspx?id2
24 Multibene to enter US Food Market 28 October 2004 10 April 2008 http://www.nutraingredients.com/news/news-ng.asp?nX862-new-capacity-for