Probiotics Snapshot: A Look at Today's Market

June 5, 2013
Innova Market Insights

Regulators are still raising questions about probiotics’ efficacy. Even as probiotic food and drinks grow mainstream-and, increasingly, consumers themselves gain a better understanding of the link between probiotics and digestive, gut, and immune health-regulators still appear doubtful about the substantiation behind probiotic claims. This has been most apparent in the EU and the European Food Safety Authority’s (EFSA) ongoing refusal to approve probiotic health claims, despite extensive scientific dossiers presented by a number of major multinationals.

Regulators are still raising questions about probiotics’ efficacy. Even as probiotic food and drinks grow mainstream-and, increasingly, consumers themselves gain a better understanding of the link between probiotics and digestive, gut, and immune health-regulators still appear doubtful about the substantiation behind probiotic claims. This has been most apparent in the EU and the European Food Safety Authority’s (EFSA) ongoing refusal to approve probiotic health claims, despite extensive scientific dossiers presented by a number of major multinationals.

In the face of a rocky regulatory sea, is it any wonder that many probiotic manufacturers-especially dairy companies-are treading water with a much softer approach to health claims, instead focusing on other benefits?

Many probiotic brands have been downplaying their products’ digestive health benefits and focusing instead on general health and wellness angles such as fat and calorie reduction or nutrient fortification, as well as on other factors such as naturalness, purity, and, perhaps, most significantly, taste and indulgence.

Still Growing

Despite these regulatory setbacks, the global probiotic market is still strong. The global market for probiotic foods is estimated at over US $20 billion per year, with dairy products the key market.

While the probiotic sectors in some developed economies-particularly Europe-are having some difficulties with issues such as health claims, there is still a generally upward sales trend and high level of interest in dairy products with digestive health benefits. Part of the reason for this, it can be argued, is that the association between health and probiotics is already firmly entrenched in many consumers’ minds, creating demand for these products while perhaps making the actual health claims used less important.

How are sales growing? According to research by Innova Market Insights, the number of products marketed specifically on a probiotic platform more than doubled over a five-year period, now equivalent to about 0.7% of total global food and drink launches. Probiotic dairy products continue to dominate, accounting for nearly 60% of probiotic launches recorded in 2012. But dairy’s share of the probiotic market is slightly down from numbers recorded in 2007, indicating how probiotic applications have diversified since then. (Baby food took second place, with 13%, ahead of dietary supplements, with just over 11%.)

Within the dairy market, products marketed on a specifically probiotic platform accounted for 5% of global launches in 2012; a much more significant 15% used more-general digestive- or gut-health positioning of some kind.

Competition from Greek Yogurt

Probiotic yogurts, the initial founder of the functional dairy products market, is now in competition with rising-star Greek and Greek-style strained yogurts. Although most of these Greek yogurts are also probiotic in nature, they have tended to divert attention away from digestive health and toward nutrient content, focusing particularly on their higher protein content.

More-traditional probiotic brands, led by market pioneer Danone Activia, have responded not only by introducing their own Greek-style strained yogurt lines but also by extending the indulgence positioning of their standard products and introducing luxury sub-brands. In Europe, where probiotic claims have softened, Activia is promoting an “indulgence” image with premium lines such as Activia Intensely Creamy/Creme Genuss. The Activia Creme Genuss range in Germany relaunched in early 2013, claiming its creamiest formulation ever; a stracciatella version launched at the same time, offering the first-ever Activia product to contain fine chocolate.

Activia is also striving to remain competitive by extending usage occasions, introducing breakfast products and dessert-style snacks in a number of countries.

Meanwhile, back in the United States, the Greek-style yogurt movement has spread to other areas of the probiotic market. Hain Celestial moved its Greek Gods yogurt brand into the kefir fermented drinks aisle, with the launch of low-fat cultured milks with probiotics and 12 g of protein per serving.

Probiotic drinks have shown patchy performance in recent years. Dose-delivery active health drinks remain in their infancy in the United States, and sales are largely static in much of Europe. Innovation options appear more limited for this type of product. However, new flavors continue to launch, often on a limited-edition basis, and there have been some attempts to position products on an all-natural basis, as evidenced by Danone’s relaunch of Actimel in Germany in mid-2012 featuring a formulation free of sugar substitutes/artificial sweeteners. This followed a similar initiative the previous year, when Danone Activia introduced an Activia Pur version. A similar trend happened in the United States in mid-2012, when probiotic drinks pioneer Yakult introduced a Light version featuring the natural stevia-based sweetener Reb A and two-thirds less sugar and one-third fewer calories than the standard Yakult product.

Stay tuned for more news on how this very strong sector will fare in the face of these developing challenges.