Growing Global Health Awareness Could Mean Big Business For Manufacturers

49% believe they are overweight, and 50% are trying to lose weight.

88% say they are willing to pay a premium for foods with healthy attributes.

Developing markets lead the way in desire for health attributes.

Jan 20, 2015, 19:00 ET from Nielsen

NEW YORK, Jan. 20, 2015 /PRNewswire/ -- The battle against the bulge is a global phenomenon that could translate into real opportunity for manufacturers, according to a new study by Nielsen, a leading global provider of information and insights into what consumers watch and buy. Nearly half (49%) of the global respondents in Nielsen's Global Health & Wellness Survey consider themselves overweight. Obesity rates around the world are accelerating and not just in developed countries. In fact, 62% of the world's 671 million obese individuals live in developing markets, according to the 2013 Global Burden of Disease Study. The study estimated that 2.1 billion people (nearly 30% of the global population) were overweight or obese. Nielsen's study shows that consumers are attempting to take charge of their health—50% are actively trying to lose weight and 88% are willing to pay more for foods with healthy attributes to some degree.

The obesity crisis and consumer desire to become healthier could be a growth driver for manufacturers who better align their offerings to consumer needs and desires for healthier food. Roughly 75% of global respondents believe they "are what they eat" and nearly 80% are actively using foods to forestall health issues and medical conditions, such as obesity, diabetes, high cholesterol and hypertension.

"There is a tremendous opportunity for food manufacturers and retailers to lead a healthy movement by providing the products and services that consumers want and need," said Susan Dunn, executive vice president, Global Professional Services, Nielsen. "While diet fads come and go overtime, innovative, back-to-basics foods that taste good, are easy to prepare and provide healthful benefits will have staying power. The first step is knowing where to put your product development efforts."

The Nielsen Global Health & Wellness Survey polled 30,000 online respondents in 60 countries to identify how consumers feel about their body image and the steps they're taking to get healthier.

ARE CONSUMERS WILLING TO PAY MORE FOR FOODS WITH HEALTHY ATTRIBUTES?

Consumers believe health attributes in the foods they eat are important, but are they willing to pay more for the benefits they provide? The answer is yes—to a degree. Dividing global respondents into four buckets of spending intent, the highest percentages are only moderately willing to pay a premium for health claims—an average of 38% across 27 attributes included in the study. About one-quarter of global respondents are very willing to pay a premium (27%), followed by 23% who are slightly willing and 12% who are not willing. While there was not one health attribute that swayed dramatically from these spending intention buckets globally, a few regional differences prevail.

A willingness to pay a premium for health benefits is higher in developing markets than elsewhere. More than nine-in-10 respondents in Latin America (94%), Asia-Pacific (93%), and Africa/Middle East (92%) say they're willing to pay more for foods with health attributes to some degree, compared to eight-in-10 in Europe (79%) and North America (80%).

For most attributes, there is also a gap between the percentage of respondents that say a health attribute is very important and the percentage that are very willing to pay a premium. For example, 43% of global respondents say the absence of GMOs is very important in the foods they purchase, but only 33% are very willing to pay a premium for these products—a 10-percentage point difference.

One notable exception is organic foods. Thirty-three percent of respondents say organics are very important and the same percentage is also very willing to pay a premium for these products.

A willingness to pay a premium for health attributes declines with age. Generation Z (under 20) and Millennials (21-34) are more willing to pay a premium for all attributes, even those that are more important to Generation X (35-49) and Baby Boomers (50-64). Percentages believing they are very important are lowest among the Silent Generation (aged 65+) for all 27 attributes. Attributes gaining the most favor include products that are GMO-free, have no artificial coloring/flavors and are all natural.

"While age often dictates a need for foods that contain certain health attributes, it is the youngest consumers who are most willing to back up their sentiments with their wallets," said Dunn. "As Millennials' purchasing power increases, manufacturers and retailers that make the effort to understand and connect with this generation's needs increase their odds of success."

The generation gap is particularly pronounced for functional foods that reduce disease risk or promote good health and for socially/environmentally responsible foods. For example, 41% of Generation Z and 32% of Millennial respondents are very willing to pay a premium for sustainably sourced ingredients, compared to 21% of Baby Boomer and 16% of Silent Generation respondents. Generation Z and Millennials are also leaders in the gluten-free movement. Thirty-seven percent of Generation Z respondents and 31% of Millennials are very willing to pay a premium for gluten-free products, while only 22% of Baby Boomer and 12% of Silent Generation respondents are willing to do so.

WHICH HEALTHY ATTRIBUTES ARE CONSUMERS LOOKING FOR?

Developing markets lead the way in the desire for healthy attributes but not all ingredients are equally important across the globe. So what healthy attributes are global consumers looking for?

When it comes to the foods we eat, consumers are going back to the basics. Respondents were asked to rate health attributes from very important to not important in their purchase decisions. The top desirable attributes are foods that are fresh, natural and minimally processed. Foods with all natural ingredients and those without genetically modified organisms (GMOs) are each considered very important to 43% of global respondents—the highest percentages of the 27 attributes included in the study. In addition, about four-in-10 global respondents say the absence of artificial colors (42%) and flavors (41%) and foods made from vegetables/fruits (40%) are very important.

In addition, consumers are looking for functional foods that provide benefits that can either reduce their risk of disease and/or promote good health. Thirty-six percent of global respondents rate foods that are high in fiber as very important, and about three in 10 seek foods that are high in protein (32%), have whole grain (30%) or are fortified with calcium (30%), vitamins (30%) or minerals (29%) to fulfill their nutritional needs.

Less is more for roughly one-third of global respondents who say it's very important that foods are low in cholesterol (38%), salt (33%), sugar (32%) and fat (30%). In addition, about one-quarter believe the absence of high fructose corn syrup (26%) and caffeine (23%) is very important, and one-fifth rate foods that are gluten free (21%) as very important.

Environmental and socioeconomic concerns also factor into purchase decisions. One-third think sustainably sourced (35%) and organic (33%) ingredients are very important in their purchasing decisions, and more than one- quarter (26%) say local herbs/ingredients are very desirable.

In Asia-Pacific, the importance of attributes largely mirrors the global averages, with a few exceptions. The desire for sustainably sourced ingredients (43%) is higher in Asia-Pacific than in any region except Latin America (tie) and it is the second most important attribute for respondents in the region. The absence of caffeine is also rated more important in Asia-Pacific (28%) than worldwide (23%).

In Europe, comparatively smaller percentages rate health attributes as a very important influencing factor for purchase decisions. The number of respondents who say a given attribute is very important is below the global average for 24 of the 27 attributes included in the survey. Only GMO-free products are more important in Europe than globally (47% vs. 43%, respectively).

Beneficial ingredients are particularly important to Africa/Middle East respondents, with foods that are high in protein (43%) and fortified with calcium (44%), vitamin (43%) and minerals (40%) considered very important—all above the global average.

"Consumers with limited disposable income need to get the most out of the products they buy, which is oftentimes the case in developing countries," said Dunn. "Foods that help meet essential nutritional needs are very appealing, while those with positive social and environmental benefits may be considered less essential or 'nice to haves'."

In Latin America, the percentage of respondents who think a given attribute is very important exceeds the global average for all attributes measured. In fact, the region is more than 20 percentage points above the global average for eight of the 27 attributes. The "less is more" attributes are particularly appealing in this region, including low/no cholesterol (25 percentage points above the global average), low/no fat (+24 percentage points {pp}) and low salt/sodium (+22 pp).

In North America, the absence of high fructose corn syrup is cited as very important by 32% of respondents (compared to 26% globally), and it is tied with GMO-free as the most important attribute for North American respondents (it's No. 21 worldwide).

HOW ARE CONSUMERS LOSING WEIGHT?

Around the globe, the majority of respondents rely on tried-and-true methods to lose weight—diet and exercise. Three quarters of global respondents who are trying to lose weight plan to change their diet, and nearly as many (72%) plan to exercise. Eleven percent say they take diet pill/bars/shakes, 7% use medicine prescribed by their doctor and 6% use other methods not described in the survey.

Among those who are changing their diet to lose weight, nearly two-thirds (65%) say they are cutting down on fats, a decline from 70% reported in Nielsen's 2011 Global Health & Wellness Survey, and 62% are eating less chocolate and sugary sweets, a percentage that holds steady from 2011. Conversely, more than half of global respondents (57%) are expanding their diets with more natural, fresh foods, up from 55% reported three years ago.

Eating smaller portions is the diet method of choice for four-in-10 global respondents (41%) and nearly as many are choosing to consume fewer processed foods (37%). A low-carbohydrate diet has increased in popularity since 2011, rising seven percentage points to 25%. One-in-five (19%) respondents are following another non-specified diet plan, and one-in-10 (11%) are opting for commercial slimming programs like Weight Watchers.

Fat's reputation as dietary enemy No. 1 is fading in North America. Between 2011 and 2014, the number of respondents (59%) saying they are cutting down on fats dropped by double-digits (14 percentage points). Over the same period, the number of North American respondents following a low-carb diet (23%) increased 10 percentage points. While the low-carb movement appears to be gaining momentum in North America, the region still trails Asia-Pacific in adoption, where 34% of respondents say they follow a low-carb diet to lose weight—the highest of any region.

Eating smaller portions to lose weight is most popular in North America (49%) and Latin America (48%), and the percentage of respondents eating fewer processed foods is highest in North America (46%). The use of commercial slimming programs in Asia-Pacific and Africa/Middle East (17% in each region) exceeds the global average (11%).

DO CONSUMERS PRACTICE WHAT THEY PREACH?

While consumers may genuinely want to make healthier choices, intentions and actual behaviors aren't always in alignment. Globally, sales of both selected healthy and indulgent categories grew between 2012 and 2014, but healthy categories outpaced indulgent categories (+5% and +2%, respectively). Over the same period, sales in semi-healthy categories fell 1%. Healthy categories include dairy-based shakes, fruit, sports drinks, tea, vegetables, water and yogurt. Indulgent categories include carbonated soft drinks, chips, chocolate and cookies/biscuits. Semi- healthy categories include bread, cheese, cereal, granola bars, juice, popcorn and pretzels.

"The growth of healthy options does not automatically come at the expense of indulgent offerings," said Dunn. "There is room for both healthy foods and occasional treats in consumers' diets. It is the semi-healthy options that are most impacted. To drive growth for these offerings, manufacturers should look for areas where they can improve the nutritional profile of foods and highlight the health benefits their products provide to consumers."

Around the world, healthy categories report the strongest growth in developing markets. Sales grew 20% in Africa/Middle East, 16% in Latin America and 15% in Asia-Pacific. Indulgent categories are also growing in developing markets, but at a slower rate than healthy categories (+11% in Africa/Middle East, +7% in Latin America, +5% in Asia-Pacific).

In North America, sales of healthy categories grew 7% over the two years, but both indulgent categories and semi- healthy categories declined (-2% and -3%, respectively). The decline in indulgent categories in the region was driven by the decline in carbonated soft drinks, which fell 8% the past two years. Conversely, chips and chocolate grew 3% and 5%, respectively, over the same period. Conversely, only indulgent categories grew in Europe, rising 1%, while both healthy and semi-healthy categories declined (-2% and -1%, respectively).

Healthy fuels, such as sports drinks, water and fruit are among the strongest-growing healthy categories. Sales of sports drinks increased 8% globally, (rising in all regions except Europe [-6%]), but developing regions primarily drove growth. Over the past two years, sports drinks sales increased 51% in Asia-Pacific, 25% in Africa/Middle East and 10% in Latin America. Sales of water (+7% globally) also grew in all regions, particularly developing regions (+23% in Asia-Pacific, +18% in Africa/Middle East and +19% in Latin America).

Consistent with the uptick in healthy beverage sales, carbonated soft drinks sales were down 1% globally over the past two years. The largest declines were in North America (-8%), but Asia-Pacific was also down (-1%) and Europe was flat. Nevertheless, soft drink sales grew in Africa/Middle East and Latin America (16% and 6% respectively).

And there's still a place for treats in consumers' diets. Chips, chocolate and cookies/biscuits all grew globally (6%, 4% and 1%, respectively), but carbohydrate staples like bread and cereal declined 3% and 8% respectively. It's not all bad news for these categories, however. While developed regions (North America and Europe) drove the global decline, sales in developing regions grew in the two-year time period. In Africa/Middle East, bread was up 3% and cereal was up 5%; in Asia-Pacific, bread grew 13% and cereal increased 8%; and in Latin America, bread sales were up 12%.

THE POWER OF THE PACKAGE LABEL

A review of purchasing data indicates health claims are strongest when added to products already considered healthy. Healthy products with packaging callouts tended to outperform the category as a whole. The effectiveness of label claims for semi-healthy and indulgent categories, however, seems to depend on consumers' perceptions of the product. Potato chips with whole-grain labeling, for example, decreased 11% in the two-year period, but potato chips with low or reduced sodium increased 18%. Consumers may think of potato chips as a salty snack, so a low-sodium option may be more appealing than whole grain.

"When adding health and wellness claims to products, manufacturers must first understand how consumers perceive their products," said Dunn. "If the product is perceived as healthy, any claims regarding the health benefits of a product are likely to resonate with consumers. For semi-healthy and indulgence categories, however, manufacturers must be more selective and choose claims that address a particular product attribute. For example, while consumers may be skeptical of heart-health claims for potato chips, they may be more open to claims about low or reduced sodium because this is compatible with their view of chips as a salty indulgence."

Consistent with consumers' rating of the importance of attributes, sales of products with "natural" and "organic" claims have grown 24% and 28%, respectively, over the past two years. Also consistent with the interest in more pure/natural products, sales of artificially sweetened "diet/light" products declined -12%, while products naturally sweetened with Stevia grew 186%.

Sales of products with healthy ingredient claims are also growing across categories. Products with claims about salt content (low or reduced sodium) and the addition of real fruit to products both grew 7% over the past two years, while products with reduced or no fat content claims grew 4%.

WHAT THE FUTURE HOLDS

Given the high interest in getting healthier, "good-for-you" products are strongly positioned for growth. Forty percent of global respondents say they plan to buy more fruit (41%) and vegetables (39%) in the next six months. In addition, one-quarter plan to buy more fish and seafood (25%), yogurt (24%) and water (23%), and one-fifth plan to buy more nuts and seeds (22%), cereal (20%), juices (20%) and meat and poultry (18%).

While respondents intend to eat healthier in the next six months, everyone needs a treat sometimes. The largest percentage of respondents expect to buy the same amount in nearly all categories, including indulgences such as cookies and cakes (47%), ice cream and frozen novelties (44%) and potato chips/salty snacks (38%).

For indulgence categories, the biggest growth potential may come from the developing world, particularly Africa/Middle East. The percentage of African/Middle Eastern respondents planning to buy more of all the categories measured (except cereal) in the next six months exceeds the global average. Nearly one-fifth of respondents in Africa/Middle East plan to buy more chocolate candy (19% vs. 9% globally), ice cream (18% vs. 9%) and salty snacks and chips (18% vs. 9%).

About the Global Survey

The findings in this survey are based on respondents with online access in 60 countries. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective only on the habits of existing Internet users, not total populations. In developing markets where online penetration is still growing, audiences may be younger and more affluent than the general population of that country. In addition, survey responses are based on claimed behavior rather than actual metered data.

Where noted, the survey research is supplemented with actual behavior using Nielsen's retail and consumer purchase data.

About Nielsen

Nielsen N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA, and Diemen, the Netherlands. For more information, visit www.nielsen.com.

SOURCE Nielsen



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