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Packaged Facts is a trusted provider of authoritative consumer market research. For over 30
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Thank You
PackagedFactswouldliketoextendaspecialthankyoutothemany
GOEDmemberswhocontributedtothecompilationofthisstudy.
Don Montuori
David Sprinkle
Author
Packaged Facts
Publication Date
September 2012
Table of Contents
Table of Contents
September 2012
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Table of Contents
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September 2012
Table of Contents
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Table of Contents
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September 2012
Chapter 1
Executive Summary
Scope of Report
This report focuses on the global market for EPA / DHA omega-3 packaged products by
category and global region. Products included in this study are fortified with eicosapentaenoic
acid (EPA) or docosahexaenoic acid (DHA). Traditional sources of EPA and/or DHA
omega-3s include fish oils from anchovy or cod livers but new sources include krill, squid (or
calamari) and algae. Excluded from scope of this study are non-fortified fish/ fish products as
well as products that only contain alpha linoleic acid (ALA) omega-3.
The geographic scope of this report is global, broken out into four regions: North America
(United States and Canada); Europe (Scandinavia, Western Europe, Eastern Europe and
Russia); Asia Pacific (China, Japan, South and Southeast Asia, Australia, New Zealand and
Oceania); and Rest of World (Latin America, Middle East and Africa).
Six categories of packaged consumer products are covered by this report: infant formula;
fortified foods and beverages; nutritional supplements; pharmaceuticals; clinical nutrition
(enteral and parenteral) products; and pet food, treats and supplements.
The base year for market sizing is 2011, with projections for 2016.
Report Methodology
The information contained in this report was obtained from primary and secondary research.
Primary research entailed approximately one hundred interviews with industry insiders across
geographic regions and product categories. Representatives from ingredient suppliers and
consumer product manufacturers were interviewed, including special and much-appreciated
cooperation by members of the Global Organization for EPA and DHA Omega-3 (GOED).
Consultations with other industry players and on-site examination of retail products also
formed part of this study.
Secondary research included extensive Internet canvassing and data gathering from relevant
business and industry media; company information in annual reports, press releases,
conference calls and investor presentations; product profiles in trade and consumer
publications; GOED presentations and databases; published reports and studies; and related
September 2012
Packaged Facts
food and nutrition market reports by Packaged Facts. Sales estimates and forecasts are based
on analysis of data and information from the above sources.
All market size figures and projections are calculated in U.S. dollars.
Packaged Facts
September 2012
Dollar Share
Overall
$25.42
100.0%
North America
10.83
42.6
Europe
6.67
26.2
Asia-Pacific
6.66
26.2
Rest of World
1.26
5.0
Figure 1-1
EPA/DHA Omega-3 Products: Global Market Share by Region, 2011
2011 Market Value
$25.4 B
5.0%
NorthAmerica
26.2%
42.6%
Europe
AsiaPac
26.2%
RestofWorld
September 2012
Packaged Facts
formula is EPA/DHA fortified, creating a $10.2 billion dollar market, or 40.0% of the total.
Fortified foods and beverages follow at $7.9 billion, or 31.0%. Nutritional supplements place
third at $3.2 billion, or 12.7%, followed by pharmaceutical products at $1.9 billion and
clinical nutrition products at $1.4 billion. The smallest of the product categories covered by
this report is the pet food, treat, or supplement arena, at $0.9 billion in EPA/DHA fortified
products. [Table 1-2; Figure 1-2]
Table 1-2
EPA/DHA Omega-3 Products: Global Market Size and Share by Category, 2011
Category
Dollar Share
Overall
$25.42
100.0%
Infant Formula
10.18
40.0
7.88
31.0
Nutritional Supplements
3.22
12.7
Pharmaceutical
1.90
7.5
Clinical Nutrition
1.35
5.3
0.89
3.5
Figure 1-2
EPA/DHA Omega-3 Products: Global Market Share by Category, 2011
2011 Market Value
$25.4 B
FoodandBeverage
7.5%
5.3%
31.0%
PetFood,Treat&
Supplements
NutritionalSupplements
InfantFormula
40.0%
3.5%
12.7%
ClinicalNutrition
Pharmaceutical
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September 2012
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favorable demographic shift and focus on health and wellness. In emerging economies, the
focus is on addressing nutritional deficiencies and fulfilling the needs of an expanding middle
class.
While supplements are targeted at the prevention and maintenance market segments,
pharmaceutical products are targeted at treatment of severe dyslipidemia. In this contextin
contrast to Rx-to-OTC switchesthe two product categories are complementary, each
boosting awareness of the other, and serving as a positive factor to overall market potential.
Currently there are only two approved omega-3 pharmaceutical products on the market.
The first product is commercialized in 57 countries and sold under the brand names of
Lovaza (U.S.), Omacor and Zodin (Europe and Asia), and Eskim, Esapent and Seacor (Italy).
The second product is produced by Mochida Pharmaceuticals (Japan) and sold under the
trade name of Epadel. Over the next five years these prescription products will be introduced
to additional national markets, including Brazil and Argentina, and are expected to be wellreceived. In addition, several new competitors will enter the omega-3 drug market over the
next few years, including Amarin Corp., Catabasis Pharmaceuticals, and Omthera
Pharmaceuticals. Amarin submitted a New Drug Application to the U.S. Food and Drug
Administration (FDA) in September 2011 for the use of its drug Vascepa as an adjunct to diet
to reduce triglyceride (TG) levels in adult patients with severe ( 500mg/dL)
hypertriglyceridemia, and announced FDA approval in July 2012. Generic manufacturers, in
addition, are attempting market entry as patents expire. The cardiovascular/metabolic market
is the largest pharmaceutical drug segment and market opportunities are increasing due to
westernization of lifestyles, aging populations, and increased access to healthcare.
Products in the clinical nutrition category, which includes enteral (oral or tube fed) as well
as parenteral (fed through an IV) formulations, benefit from the addition of omega-3 fatty
acids because these have anti-inflammatory properties and are beneficial to trauma patients
and those with chronic wounds. Clinical nutrition is also provided to cancer patients and
patients with general malnutrition. Factors driving growth include aging populations and
increased use of enteral products in homecare settings.
Growth in the pet food, treats and supplements category will be driven by the recent
humanization trend in companion animal products and services. Label claims and
ingredients found in human diets, such as EPA/DHA omega-3s, attract pet owners who want
to provide the very best for their pets, which are increasingly viewed as members of the
family. The global expansion of pet superstores will create more opportunities for
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September 2012
EPA/DHA fortified pet foods, especially in developing market like Asia-Pacific, Latin
America, and Eastern Europe. In more developed markets, additionally, private label pet food
is becoming more premium, including through fortification with fish oils.
September 2012
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2011
$25.42
2016
$34.72
Dollar Share
Overall
$34.72
100.0%
North America
13.04
37.6
Asia-Pacific
12.45
35.9
Europe
7.61
21.9
Rest of World
1.62
4.7
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September 2012
Figure 1-3
EPA/DHA Omega-3 Products: Projected Global Market Share by Region, 2016
2016 Market Value
$34.7 B
4.7%
NorthAmerica
37.6%
35.9%
Europe
AsiaPac
RestofWorld
21.9%
September 2012
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should post the highest regional growth rate at 5%, but will be followed closely in growth rate
by the other global regions.
Market size for the EPA/DHA fortified pet food, treats and supplements is projected at
$1.05 billion in 2016, reflecting a five-year CAGR of 3.4%. Rest of World will have the
highest regional growth at 8%, due largely to activity in Brazil. [Table 1-5; Figure 1-4]
Table 1-5
EPA/DHA Omega-3 Products: Global Market Size and Share by Category, 2016
Category
Dollar Share
Overall
$34.72
100.0%
Infant Formula
14.12
40.7
10.25
29.5
Nutritional Supplements
4.58
13.2
Pharmaceutical
3.06
8.8
Clinical Nutrition
1.67
4.8
1.05
3.0
Figure 1-4
EPA/DHA Omega-3 Products: Global Market Share by Category, 2016
2016 Market Value
$34.7 B
8.8%
4.8%
FoodandBeverage
29.5%
PetFood,Treat&Supplements
NutritionalSupplements
40.7%
3.0%
13.2%
InfantFormula
ClinicalNutrition
Pharmaceutical
10
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September 2012
Chapter 2
Market Review
Dollar Share
Overall
$25.42
100.0%
North America
10.83
42.6
Europe
6.67
26.2
Asia-Pacific
6.66
26.2
Rest of World
1.26
5.0
August 2012
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11
Figure 2-1
Share of EPA/DHA Omega-3 Products by Global Region, 2011
2011 Market Value
$25.4 B
5.0%
NorthAmerica
26.2%
Europe
42.6%
AsiaPac
RestofWorld
26.2%
formula is EPA/DHA fortified, creating a $10.2 billion dollar market, or 40.0% of the total.
Fortified foods and beverages follow at $7.9 billion, or 31.0%. Nutritional supplements place
third at $3.2 billion, or 12.7%. The remaining three categories are pharmaceutical products at
$1.9 billion, clinical nutrition at $1.4 billion, and pet food, treat, or supplements at $0.9
billion in sales. [Table 2-2; Figure 2-2]
12
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September 2012
Table 2-2
EPA/DHA Omega-3 Products: Global Market Size and Share by Category, 2011
Category
Dollar Share
Overall
$25.42
100.0%
Infant Formula
10.18
40.0
7.88
31.0
Nutritional Supplements
3.22
12.7
Pharmaceutical
1.90
7.5
Clinical Nutrition
1.35
5.3
0.89
3.5
Figure 2-2
Share of EPA/DHA Omega-3 Product Sales by Global Region, 2011
2011 Market Value
$25.4 B
FoodandBeverage
7.5%
5.3%
31.0%
PetFood,Treat&
Supplements
NutritionalSupplements
InfantFormula
40.0%
3.5%
12.7%
ClinicalNutrition
Pharmaceutical
September 2012
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13
DHA/ARA infant formula to become virtually extinct, unless some specific consumer
demand keeps it in play.
In 2011, the top five global players in the infant milk formula market were Nestle, Mead
Johnson, Danone, Abbott Laboratories and Pfizer. In April 2012, Nestle agreed to buy
Pfizers infant nutrition business, illustrating the industrys rapid consolidation with
manufacturers expanding their share of developing world markets. While the top five brands
account for 20.8% of the global market, the top five manufacturers have a commanding
57.6% market share.
14
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September 2012
Dollar Share
Overall
$10.18
100%
North America
3.46
34
Asia-Pacific
2.75
33
Europe
3.36
27
Rest of World
0.61
Figure 2-3
Share of DHA/ARA-Fortified Infant Formula Sales by Global Region, 2011
2011 Market Value
$10.2 B
6%
34%
33%
NorthAmerica
Europe
AsiaPac
27%
RestofWorld
September 2012
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15
the hospital with free samples of infant formula. The perceived endorsement by health-care
providers is key in developing brand awareness and in having consumers establish a
relationship with these products during the first week of an infants life.
Even though doctors and hospitals are placing greater emphasis on breastfeeding, infant
formula often becomes a more convenient option when mothers return to the workplace
following maternity leave. And while the high cost of formula is a consideration for some
parents who favor breastfeeding, the U.S. market is actually heavily subsidized through such
governmental programs as food stamps and the Special Supplemental Nutritional Program for
Women, Infants, and Children (WIC).
Emerging Market Trends
In emerging markets, high birth rates are spurring the infant formula market. In Africa,
notably, the number of live births per 1,000 in population is 36.20, roughly three times the
rate as in Europe (10.31) or North America (13.45). [Figure 2-4]
Figure 2-4
Birth Rates by Global Regions, 2010
Number of Live Births per 1,000 Population
Africa
36.20
Lessdevelopedregions
22.24
World
20.27
LatinAmerica
18.96
Asia
18.71
13.45
NorthAmerica
Moredevelopedregions
11.01
10.31
Europe
0
10
20
30
40
Increasing urbanization and a burgeoning middle class support further growth in sales of
infant formula. As with their developed world counterparts, women in the developing world
are increasingly returning to work after childbirth, fostering greater reliance on infant formula
16
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September 2012
India
22.83
Mexico
19.91
Brazil
15.75
UnitedStates
13.72
China
12.55
France
12.32
UK
11.90
RussianFederation
10.97
Spain
9.94
Italy
8.40
Germany
8.06
Japan
7.80
10
15
20
25
30
September 2012
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17
18
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September 2012
Table 2-4
EPA/DHA-Fortified Foods & Beverages: Global Category Size and Share by Region, 2011
Region
Dollar Share
Overall
$7.88
100%
North America
4.02
51
Europe
2.05
26
Asia-Pacific
1.42
18
Rest of World
0.39
Figure 2-6
Category Share of EPA/DHA-Fortified Food & Beverage Sales by Global Region, 2011
2011 Market Value
$7.9 B
5%
18%
NorthAmerica
51%
Europe
AsiaPac
26%
RestofWorld
Dairy Products
Dairy products have proven to be particularly suitable for fortifying with omega-3s, in terms
of both ingredient compatibility and popularity with consumers. In addition, fortified dairy
products have been available for many decadesin the U.S., fortification of milk with
vitamin D dates back to 1933and many consumers are comfortable with the concept of
dairy product fortification, whether with vitamins/minerals, probiotics, or omega-3. In the
U.S. market, additionally, dairy products are usually sold and stored cold and have a short
shelf live, which helps to maintain the stability of the omega-3.
September 2012
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19
yogurt (spoonable or
drinkable), milk drinks, fresh and UHT milk, and margarines and spreads. The U.S. and
Europe are the strongest markets for dairy products, but differ in their segmentation. Europe
has a much stronger yogurt market (four times larger than the U.S.), while the U.S. has a
stronger milk market.
A representative from one research institute said, The micro encapsulation technology that
we developed is naturally suited for dairy products; therefore, we have seen that market
become very active. Many of the products are branded towards children at this time as EPA
and DHA are well known among consumers to be a benefit for young brain development. It is
only natural for a parent who would spend extra for a DHA fortified formula to want to
choose a DHA fortified milk or yogurt as the child grows beyond formula. Any food that is
made with the dairy product can easily be fortified using our technology as we encapsulate
the fish oil with dairy proteins. Breads and cereals are another area in which we are seeing a
high-growth in omega-3 fortification.
A U.S company that sells an omega-3 milk product revealed the growth of our omega milk
product [is] higher than our average growth rate. This assessment was echoed in statements
from an organic dairy product supplier: fortified products will grow approximately 2 to 4%
faster than unfortified. Fortified yogurts represent a higher volume.
20
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September 2012
Soy milks also tout DHA omega-3 claims through fortification with DHA algal oil.
Spains omega-3 fortified-milks sector has been developing for a number of years, and in fact
makes up the majority of the heart-health milks sector, which accounted for nearly 6% of
total milk sales through Spanish food channels in 2011. Puleva, now part of Lactalis,
pioneered the market in the late 1990s. Its original Puleva Omega-3 UHT milk product line
has now been expanded to include Puleva Omega-3 with walnuts; both formulas are fortified
with fish oil. The sector has expanded to encompass a wide range of branded and own-label
products, with most major dairy companies having at least one omega-3 line in their
portfolio.
In China, DHA could formerly only be incorporated into infant formulas, but in January 2010
DHA as well as EPA ingredients won novel foods approval from Chinese authorities to enter
the mainstream food supply. Chinas largest dairy, claiming approximately 35% of the
domestic market, is Mengniu.
retailers, now uses algae oil DHA and has won several product awards.
In addition, EPA/DHA omega-3s can be easily added to butter and spreads. Many consumers
expect margarines and spreads to be enriched with additives or to offer special benefits, such
as plant sterol enrichment for lowering cholesterol. In the U.S., Smart Balance spreads are the
number 3 player in $1.3 billion spread category; EPA/DHA fortified spreads are key products
September 2012
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21
for the company. In Spain, Puleva has introduced Burgos Omega 3, a dairy product with fresh
cheese made from semi-skimmed milk.
Beverages and Juices
In the past, beverage manufacturers found it challenging to fortify drinks with omega-3 fish
oils due to the ingredient's 'fishy' taste and smell. However, through technological advances,
omega-3 ingredients with a neutral sensory profile are now available. This means that omega3 can be added to various beverage products, with one of the most popular being fruit juice.
In the U.S., market leaders in the fortified juice category include Minute Maid Enhanced Pom
Blueberry and Tropicana Pure Premium Health Heart Orange Juice. Indian River offers a
fortified grapefruit juice. Genesis Today introduced a line of orange juice, Omega Orange
that is fortified with algae oil. In Canada, A. Lassonde produces a variety of juices fortified
with microencapsulated fish oil. In the U.K, Big Shotz, described as a super-vitamin health
drink, offers over 70% of the new European recommended daily adult level of omega-3 in
one 120 ml bottle. In Norway, Smartfish Recharge is a fresh juice based drink for children
and adults fortified with marine fatty acids.
Globally, the market for omega-3 enriched drinks is growing steadily. A key marketing
advantage is that these products can be targeted to consumers of either gender and all ages.
22
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September 2012
A leading company spokesperson said, Nearly all infant formulas contain DHA fortification
for all brands. This is true globally as well as in the U.S. Baby food fortification is a newer
area. We anticipate broadening our line of DHA fortified children's products. An organic
baby food manufacturer indicated that among baby foods, DHA fortified products are
growing in the high single digits because it is a newer area of fortification.
Breads and Bakery
Bread plays a central role in the Western diet, and innovative ingredients such as omega-3 are
used by the bakery industry to offer products with added health benefits. High-quality
fortified breads are increasingly popular with consumers for addressing dietary priorities or
deficiencies. They're a good vehicle for providing EPA and DHA at adequate levels.
Breads and cereals are another area in which we are seeing a high growth in omega-3
fortification, commented one industry insider. An industry consultant agreed, stating, Dairy
products are a good match, as well as breads. A European Bakery spokesperson said, We
have a lot of bread that is targeted for 4 to 12-year-olds which contains microencapsulated
omega-3 fish oil. Product acceptance for this line of bread has been better than expected.
Our market truly appreciates our national concern for our children.
September 2012
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23
Chapte
er 2: Market Rev
view
Glob
bal Market for EP
PA/DHA Omega
a-3 Products
China is a prime
24
ackaged Facts
Pa
September 201
12
International launched its Arawana 3A+ premium cooking oil in China, fortified with fish oil.
In less than nine months, an estimated 25 million bottles had been sold, according to a
company spokesman.
Fortified cooking oils in the U.S. include Crisco Puritan Canola Oil and Pompeian Olive
Extra Plus with Omega 3 DHA.
Figure 2-7
Estimated Average Daily Intakes of EPA/DHA by Country
(in mg/day based on 2,000 kCAL diet)
Iceland
Japan
Malaysia
Norway
Finland
Korea
Portugal
Spain
Jamaica
NewZealand
Canada
UAE
Chile
Sweden
Denmark
France
Russia
Israel
Australia
Greece
USA
UK
Switzerland
Italy
Netherlands
Ireland
Germany
Austria
CzechRepublic
SouthAfrica
Poland
Argentina
Brazil
Colombia
Hungary
Romania
China
Bulgaria
783
673
614
439
410
392
365
306
288
283
263
259
259
250
250
245
214
212
203
198
185
185
173
173
164
162
151
128
126
124
119
95
94
83
77
74
49
41
0
100
200
300
400
500
600
700
800
900
Source: GOED (Global Organization for EPA and DHA Omega-3), derived from Hibbeln JR et al .(2006), American
Journal of Clinical Nutrition (83): 1483S-93S.
September 2012
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25
Ragasa, one of Mexicos largest providers of raw and refined oil products and makers of
Mexicos leading consumer cooking oil brand, Nutrioli, offers the Nutrioli DHA product
fortified with algae oil. While these products have not enjoyed the phenomenal success as
their Chinese counterparts, they are making solid inroads as niche products.
Prepared Products
Modern, fast-paced lifestyles have resulted in the more frequent consumption of prepared,
processed meals. Food manufacturers continue to capitalize on this trend by developing more
appealing and healthier products. Processed foods are often fortified to restore nutrients lost
in their production, while others are fortified to increase a product's added nutritional value or
to create a differentiated new product.
Infants and young children are one of the groups at risk of dietary deficiencies. They need a
high level of nutrients, but their food choices are limited and the amount they consume is
relatively low. At the same time, prepared products such as chicken nuggets or fish fingers
are very popular with children. In the United Kingdom, both of the leading frozen fish finger
brands, Birds Eye and Youngs, include an omega-3 fish fingers product in their ranges, and
the Birds Eye version is now the number-three frozen-fish brand line in the UK. The fish are
a natural source of omega-3s, and the batter is fortified with refined fish oil. Similar products
are offered throughout Europe, including Captain Iglo Omega-3 Fish Fingers in the
Netherlands. By offering EPA/DHA omega-3 enriched products, parents can help ensure that
their children are receiving their nutritional needs.
26
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September 2012
Other Foods
There are many other products targeted at children that provide good
sources of omega-3 DHA. Prime examples of other foods types that
lend themselves to fortification include peanut butter and breakfast
spreads. In the U.S., Smucker offers its Jif Peanut Butter brand in
both Creamy and Crunchy varieties with omega-3 DHA and EPA
from anchovy and sardine oils.
Australian company Natures Blend launched a new omega-3
breakfast spread aimed at children in late 2011. The yeast spread,
Omegamite, contains fish oils.
Fortified snacks are also designed to attract nutrition-conscious parents. Farm to Table
Canada developed an Omega-3 Kettle Corn fortified with fish oil. The product meets
nutrition guidelines of Ontario schools, and individual serving size packages are promoted to
children as great for lunches or as a snack. DrSEARS Family Essentials entire product line
is fortified with omega-3 DHA. Products include Omega-3 DHA Fruit Chews, Cool Fuel
Kids Bars, Popumz (natural whole grain crisps), and Cool Fuel (nutritional beverage).
September 2012
Packaged Facts
27
Dollar Share
Overall
$3,220
100%
North America
1,350
42
Asia-Pacific
900
28
Europe
810
25
Rest of World
161
28
Packaged Facts
September 2012
Figure 2-8
Category Share of EPA/DHA Omega-3 Nutritional Supplements by Global Region, 2011
2011 Market Value
$3.2 B
5%
NorthAmerica
28%
42%
Europe
AsiaPac
RestofWorld
25%
supplement sales due to the growing interest of its emerging middle class in nutrition and
supplements. Other growing markets include Brazil, India, and Eastern Europe.
Another global industry insider provided this overview: The North American market has
begun to plateau. It is still growing but not nearly at the rate that it initially had. Higher
grade supplements are definitely growing faster than low-grade within that market. Europe
has very slow growth. There is a very difficult regulatory process involved that will continue
to hinder growth. Asia-Pacific is growing by far the fastest but there are many difficulties;
mainly because there is no standard in regulation within the region. However product
acceptance is very strong.
Developed country dynamics include a favorable demographic shift and focus on health and
wellness. Even so, the North American market has slowed due to saturation of these types of
products among the group who readily buy supplements. There is now strong competition
between supplement manufacturers to highlight their products within the category. In 2011,
in the U.S. food/drug/mass merchandiser channel, fish oil supplement sales showed growth of
4%, while the newer segment of krill supplements surged by 72%.
September 2012
Packaged Facts
Krill supplements
29
currently hold a market share of approximately 8% in the U.S. omega-3 supplement segment.
There is a general movement towards krill oil and higher strengths in fish oils, using
descriptive terminology such as triple strength and pharmaceutical grade. Combination
products with benefit claims such as Triple Strength + Brain Support, Triple Strength Fish
Oil + Reservatrol, and Triple Strength Fish Oil 1400 + Skin Support are populating the
shelves. Multi-vitamin/mineral formulas are also incorporating and touting the benefits of
EPA and DHA.
Europe is experiencing the slowest growth due to regulatory issues and a sluggish economy.
In emerging economies, the focus is on addressing nutritional deficiencies and fulfilling the
needs of an expanding middle class. Regionally, according to one contact, Latin America is
sluggish due to lack of consumer awareness when it comes to Omega 3s. There is a serious
lack of education on the benefits of Omega 3s there. Whey protein is big, but Omega 3s
haven't caught on. In relation to Latin America, an ingredient supplier noted that In South
America and Central America, we typically have a diet that is high in Omega 3s naturally
because of the amount of fish that we eat; therefore, these supplements are not a strong
market here.
Additional product trend comments from supplement manufacturers and ingredient suppliers
follow:
Nutritional supplements have been the focus of fish oil suppliers because of the
amount of ingredients used in these products. Many of these supplements have
become commodity type items and so the focus is now on differentiating products by
premium formulations. This product group has slowed down significantly over the
last few years; however it continues to grow.
The largest overall trend that we've observed is producers moving from a low-grade
to a high-grade omega-3 concentrate. Part of our business strategy has been to help
develop and encourage this trend. Our profit margin is very low in low-grade omega3s. In fact, the market will be shifting more and more toward South America in the
low-grade concentrates because the crude oil suppliers have been developing
refining capability to produce low-grade concentrate. They are able to market a lowgrade oil at a significantly better cost than any European refinery. In high-grade
concentrates, we are able to make a respectable profit and the technology is not
nearly as accessible to other companies before us in the supply chain. So what we see
is a significant trend in the supplement market away from low-grade Sam's Club or
30
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September 2012
Walmart commodity products towards specialty stores and direct marketing of higher
quality concentrated fish oils.
Marine derived omega-3s are very important to the nutritional supplements
category. If you look on the shelf, you will see product after product of a
concentrated single ingredient, whether it be fish oil or cod liver oil or krill oil.
However, supplements that are multivitamins will also contain an EPA and DHA
omega-3 at some level.
It is by far the hottest ingredient in that market and so you see many multivitamins,
which are the largest single segment, incorporating omega 3s.
September 2012
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31
Over the next five years these prescription products will be introduced to additional national
markets, including Brazil and Argentina, and are expected to be well-received. In addition,
several new competitors will enter the omega-3 drug market over the next few years.
Lovaza
The first product, from Pronova, is commercialized in 57 countries and sold under the brand
names of Lovaza (U.S.); Omacor and Zodin (Europe and Asia); and Eskim, Esapent and
Seacor (Italy). It is the first U.S. and European Union approved omega-3 prescription drug,
and is currently in use by an estimated 1.4 million heart patients around the world. An
estimated 1.2 billion capsules are consumed annually, resulting in end-user sales of $1.4
billion
The drugs success is attributed to its strong efficacy and an extensive network of commercial
partners with world class marketing, sales and distribution capabilities. These include Abbott
Laboratories, Kuhnil, Prospa, Pfizer, Grupo Ferrer, Pierre Fabre, GlaxoSmithKline and
Takeda. Pronova BioPharma exclusively provides the oil for the softgel capsules that are
manufactured in the U.S. by Catalent Pharma Solutions.
32
Packaged Facts
September 2012
Lovaza, also known as omega-3-acid ethyl esters, is a prescription form of fish oil that's
highly concentrated. Each 1-gram capsule contains 463 mg eicosapentaenoic ethyl ester
(EPA) and 375 mg docosahexaenoic ethyl ester (DHA). As a result, it provides the optimal
dose for treating high triglycerides and requires fewer pills than with supplements available
over the counter. As a prescription medication, Lovaza underwent rigorous testing and
clinical study to demonstrate its safety and efficacy before being approved by the Food and
Drug Administration (FDA). This is not the case with omega-3 supplements found at the
health food store. Pronova BioPharmas oils are manufactured at the groups pharmaceutical
plants in Scandinavia, using a unique and complex proprietary process involving the removal
of most other fatty acids, cholesterol and environmental pollutants.
The pharmaceutical drug is approved in the U.S. and many European and Asian markets, as
an adjunct to diet and other lifestyle changes for the treatment of elevated levels of
triglycerides. Triglycerides have been linked to cardiovascular diseases and are included in
the American Heart Association and European and Asian treatment guidelines. The drug has
also been approved in several European and Asian markets for the secondary prevention of
post-myocardial infarction in the period following the initial survival of a heart attack. In
addition, the drug has been shown to be complementary to other lipid-lowering agents, such
as statins. Statins are some of the most commonly used medications for patients with
cardiovascular disease and high triglycerides.
Epadel
The second approved product is produced by Mochida Pharmaceuticals and sold under the
trade name of Epadel. The generic name is ethyl icosapentate. It is approved in Japan and
estimated 2011 sales are $485 million. Epadel was the first drug in the world in which EPA-E
(ethyl icosapentate: one of the poly-unsaturated fatty acids contained in fish oil) was
successfully extracted and purified to a high degree. It is used for treating arteriosclerosis
obliterans and hyperlipidemia.
Category Value by Region
In 2011, North America represented the largest share (53%) of the market at $1.0 billion,
followed by Asia-Pac at $490 million and Europe at approximately $400 million. Rest of
World sales are negligible to date due to lack of product availability. [Table 2-6; Figure 2-9]
September 2012
Packaged Facts
33
Table 2-6
EPA/DHA Pharmaceuticals: Global Category Size and Share by Region, 2011
Region
Dollar Share
Overall
$1,900
100%
North America
1,010
53
Asia-Pacific
490
26
Europe
400
21
Figure 2-9
Share of EPA/DHA Pharmaceutical Sales by Global Region, 2011
2011 Market Value
$1.9 B
<1%
25%
NorthAmerica
Europe
53%
21%
AsiaPac
RestofWorld
Category Perspective
The cardiovascular/metabolic market is the largest pharmaceutical drug segment. Over 270
million people suffer from dyslipidemia in the seven largest markets, of which 100 million
have been diagnosed. Market opportunities are increasing due to westernization of lifestyles,
aging populations, and increased access to healthcare.
During the next 5 years, Pronova has big plans for the Lovaza product. It is on track for
launch in Japan in 2013, Japan being the worlds second largest pharmaceutical market.
Geographical expansion into emerging markets will continue as well. In 2011, the product
received regulatory approval in Brazil, Argentina and Macedonia plus launch in Venezuela.
Regulatory approval is expected by 2012 in India, Hong Kong, South Africa, Malaysia and
other nations.
34
Packaged Facts
September 2012
Overall end user sales (by weight) of Pronova BioPharma oils into major markets increased
7% from 2010 to 2011. Sales in the U.S., the largest market, increased by 4%. The highest
sales growth rates, ranging from 5% to 33%, occurred in European countries.
The success of Lovaza has inspired other companies to develop various types of omega-3
fatty acid pharmaceuticals for disorders affecting large numbers of people. Amarin Corp.
submitted a New Drug Application to the U.S. Food and Drug Administration (FDA) in
September 2011 for the use of its drug Vascepa as an adjunct to diet to reduce triglyceride
(TG) levels in adult patients with very high triglycerides (severe hypertriglyceridemia of
500mg/dL), and announced FDA approval in July 2012. Vascepa is also in Phase III clinical
trials for patients with high triglycerides.
Pharmaceuticals product Epanova had completed enrollment of Phase III clinical trial; and
Catabasis Pharmaceuticals is linking a form of omega-3 fatty acid to salicylate in hopes of
creating a synergistic effect beneficial to treatment of diabetes and other disorders with
inflammation as an underlying cause. [Table 2-7]
Table 2-7
Omega-3 Fatty Acid Pharmaceutical Products in Development
Company
Drug
Acasti Pharma
Capre
High triglycerides
Capre
Mixed Dyslipidemia
Amarin Corp.
Catabasis
Pharmaceuticals
Indication
Stage
Phase II
Pre-clinical
Vascepa
NDA Approved
Vascepa
High triglycerides
Phase III
AMR101
Phase III
AMR101
Phase I
CAT 1002
Inflammatory Diseases
Phase I
CAT 1000
Phase II
CAT 2000
Preclinical
CAT 2003
Severe hypertriglyceridemia
Preclinical
CAT 4000
Psoriasis
Preclinical
CAT 4000
Multiple sclerosis
Preclinical
CAT 5000
Discovery
(cont.)
September 2012
Packaged Facts
35
Drug
Epax AS
AKR 963
Endeavor Therapeutics
Endeav101
Hanmi Pharmaceuticals
HCP1007
Indication
Stage
Phase III
Phase I
Mixed dyslipidemia
Phase I
Mochida
Pharmaceuticals
MND-21
Phase II
Omthera
Pharmaceuticals
Epanova
Phase III
Epanova
Phase III
Epanova
Pronova Biopharma
Resolvyx
Pharmaceuticals
Pre-clinical
PRC-4016
Mixed Dyslipidemia
Phase I
PRC-4016
Atherosclerosis
Pre-clinical
Unknown
Discovery
RX-10045
Phase II
RX-10045
Retinal disease
Phase I
RX-10001
Asthma
Phase I
RX-10001
Phase I
RX-10001
Rheumatoid arthritis
Phase I
RX-10001
Cardiovascular Disease
Phase I
RX-20001
Multiple Indications
Pre-clinical
Resolvin Analogs
Multiple Indications
Pre-clinical
36
Packaged Facts
September 2012
Further diversifying the omega-3 drug market will be the global entry of generic omega-3
drugs. Lovazas patent protection was lost in Europe in August 2009, but no generic products
have entered the EU market yet. In the U.S., the patent is protected until 2017. [Table 2-8]
Table 2-8
Potential Generic Drug Manufacturer Market Entry
Company
Description
Apotex Inc.
Chiesi Farmaceutici
Endo
Pharamceuticals
Institut
Biochemique
Nissui Group
Sandoz (Novartis)
Teva
Pharmaceutical
Industries
Among the top 15 pharmaceutical companies in the world and the leader in
generic pharmaceuticals. Teva operates in 60 countries with ~40,000 employees
worldwide.
Par Pharmaceutical
Generic manufacturers filed a Paragraph IV challenging the listed patent to see if it is valid
and enforceable. However, as reported by Pharma Times on May 31, 2012,
GlaxoSmithKline and partner Pronova BioPharma are celebrating after the latter beat off a
patent challenge to their fish oil heart drug Lovaza from Teva and Par Pharmaceuticals.
Generics are nonetheless in the works, whatever the schedule of market entry.
September 2012
Packaged Facts
37
Even so, one area that has sparked new developments in enteral formulas has been the
addition of omega-3 fatty acids, which have anti-inflammatory properties and are good for
trauma patients and those with chronic wounds. Elemental enteral formulas are prescribed
for patients with impaired digestive and absorptive capacity and feature partially or fully
hydrolyzed proteins. Elemental enteral formulas including EPA/DHA omega-3s include
Abbott Laboratories Optimental, Pivot 1.5 and Vital AG 1.2 Cal. Nestle Nutrition products
include Impact Glutamine, Impact Peptide 1.5 and Peptamen AF.
Abbotts Optimental
formula is used for acute conditions such as trauma, surgery, burns, pancreatitis, and multiple
38
Packaged Facts
September 2012
fractures and for chronic conditions such as irritable bowel syndrome (IBD), Crohns
Disease, radiation enteritis and malnutrition.
Specialized enteral formulas are designed to meet the nutrient needs of patients with specific
illnesses. Specialized enteral formulas that have EPA/DHA omega-3s include Abbott
Laboratories OXEPA and several formulas within Nestls Impact product line. B. Braun and
Fresenius Kabi also offer clinical nutrition products with fish oil.
Nestls Impact is
formulated to help support the bodys immune defense for a faster recovery and is given to
surgical and trauma patients. Although some clinical nutrition products may not be prescribed
solely for the benefits of EPA/DHA omega-3 but for others like arginine, these products are
used extensively.
Smartfish is a Norwegian biotech company developing synergistic omega-3 based pharmaconutrition products. Its patented technology is the basis for the product range of orally applied
liquid emulsions. Smartfish clinical nutrition product NutriFriend 1100 is especially
developed for cancer cachexia patients and NutriFriend 600 for general malnutrition. These
products are partially reimbursed under state health schemes in the Nordic countries.
According to one U.S.-based physician, In Europe, interestingly, they have IV preparations
of Omega 3s, which are very intriguing, and that may be the way that we end up needing to
go.
An ingredient supplier notes that clinical nutrition is an interesting space. Its a small space
right now, but I think its got a lot of potential and certainly a lot of benefits for people who
are recovering from a stroke or who are recovering from a severe concussion.
Category Value by Region
In 2011, North America represented the largest share (35%) of the market at $470 million,
followed by Europe (33%) at $450 million and by Asia-Pacific (27.5%), led by Japan and
Australia, at $450 million.
Rest of World accounted for approximately 4.5% of the global market, or $61 million.
[Table 2-9; Figure 2-10]
September 2012
Packaged Facts
39
Table 2-9
Clinical Nutrition Products with EPA/DHA: Global Category Size and Share by Region, 2011
Region
Dollar Share
Overall
$1,355
100%
North America
470
35
Europe
450
33
Asia-Pacific
370
27.5
Rest of World
61
4.5
Figure 2-10
Share of Sales for Clinical Nutrition Products with EPA/DHA by Global Region, 2011
2011 Market Value
$1.4 B
4.5%
27.5%
NorthAmerica
35%
Europe
AsiaPac
RestofWorld
33%
40
Packaged Facts
September 2012
Figure 2-11
Population Aged 65 or Older by Country: 2010 vs. 2015
China
CAGR 3.4%
India
70,462
60,278
CAGR 3.2%
UnitedStates
46,949
40,534
CAGR 3.0%
33,109
28,707
Japan
19,072
18,297
RussianFederation
CAGR 2.9%
CAGR .8%
Germany
17,506
16,775
CAGR .9%
Brazil
16,495
13,652
CAGR 3.9%
13,312
12,322
Italy
CAGR 1.6%
France
12,010
10,544
CAGR 2.6%
UK
11,499
10,290
CAGR 2.2%
2015
2010
Spain
8,555
7,820
CAGR 1.8%
Mexico
8,445
7,201
CAGR 3.2%
129,928
109,845
Source: United Nations Statistics Division, www.data.un.org, accessed June 2012 and Packaged Facts
Developing regions are showing increased interest in enteral nutrition products, and have
continued to expand as reimbursement policies are enacted and medical professionals are
educated in their applications. While demand for enteral products remains steady in the
United States and Japan, markets in less developed regions of Europe, Asia Pacific and Latin
America are increasing significantly. One factor driving growth is the increased use of enteral
products in home care settings, which is continuing to grow worldwide.
September 2012
Packaged Facts
41
Global retail sales of pet food, treat, and supplement products are estimated at nearly $60
billion in 2011. Packaged Facts estimates that approximately 1.5% of this market, or $0.9
billion, is fortified with EPA/DHA omega-3s. (Fish meal is excluded from this sizing.)
42
Packaged Facts
September 2012
Key products include many puppy and kitten foods; select premium dog and cat food
formulas; and dog treats and dietary supplements marketed as solutions for improving skin
and coat or fur.
Puppy and kitten foods tout the benefits of DHA as an important nutrient for healthy brain
and vision development, and in some instances also reference it as a nutrient also found in
mothers milk.
Adult food formulas associate fish oil fatty acids with enhanced active mobility plus bone/
joint cartilage support.
Supplements come in multiple formats such as softgel capsules, soft chews, chewable tablets
and liquid oil, and usually promote glossy, silky coats. Fish oil supplements represent
approximately 10% of all pet supplement sales.
Category Value by Region
In 2011, North America represented the largest share (58%) of the market at $510 million,
followed by Europe (25.5%) at $230 million and Asia-Pac (12.5%) at $110 million. Rest of
world accounted for another $35 million in EPA/DHA-fortified pet product sales. [Table 210; Figure 2-12]
Table 2-10
EPA/DHA-Fortified Pet Food, Treats, and Supplements: Global Category Size and
Share by Region, 2011
Region
Dollar Share
Overall
$887
100%
North America
510
58
Europe
230
25.5
Asia-Pacific
110
12.5
Rest of World
35
September 2012
Packaged Facts
43
Figure 2-12
Share of Sales for Pet Food, Treats, or Supplements with EPA/DHA by Global Region, 2011
2011 Market Value
$0.9 B
12%
4%
NorthAmerica
Europe
26%
58%
AsiaPac
RestofWorld
44
Packaged Facts
September 2012
A global pet food manufacturer assessed the market as follows, North America is definitely
the biggest market for pet food, followed by Western Europe and Japan. We break out Japan
separately. Japan is the major force driving most of Asia, as Brazil drives most of South
America. Another major pet food manufacturer stated, We're a global company with a
presence in North America, Latin America, Asia and China. We're increasingly seeing
interest from the Middle East in the form of companies and individuals there wanting to be
distributors.
September 2012
Packaged Facts
45
Dollar Share
Overall
$34.72
100.0%
North America
13.04
37.6
Asia-Pacific
12.45
35.9
Europe
7.57
21.9
Rest of World
1.62
4.7
46
Packaged Facts
September 2012
Figure 2-13
EPA/DHA Omega-3 Products: Projected Global Market Share by Region, 2016
35.9%
Europe
AsiaPac
RestofWorld
21.9%
Source: Packaged Facts
Forecast growth over the five-year 2011-2016 period will be highest in the Asia-Pacific
region, due to growing product acceptance in this region, and particularly in China. [Figure
2-14]
Figure 2-14
Projected CAGR for EPA/DHA Omega-3 by Region, 2011-2016
2011-2016 CAGR of 6.4%
14%
13.4%
12%
10%
8%
6%
4%
2%
5.1%
3.8%
2.6%
0%
NorthAmerica
Europe
AsiaPac
RestofWorld
September 2012
Packaged Facts
47
8.8%
4.8%
29.5%
40.7%
3.0%
13.2%
PetFood,Treat&
Supplements
Nutritional
Supplements
InfantFormula
ClinicalNutrition
Pharmaceutical
Packaged Facts projects that the consumer market for DHA-fortified infant formula will
reach $14.1 billion in 2016, reflecting a compound annual growth rate (CAGR) of 6.8% for
the 2011-2016 period, for total dollar gains of nearly $4 billion in the category. Asia-Pacific
will post the highest regional five-year growth rate for infant formula, at 14%, for over $3
billion in dollar gains over the five-year period. [Table 2-12]
Table 2-12
Projected Market for DHA/ARA-Fortified Infant Formula: Overall and by Global Region,
2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$14,117
6.8%
$3,937
North America
3,780
1.8
320
Asia-Pacific
6,470
14.0
3,110
Europe
3,050
2.1
300
817
6.0
207
Rest of World
48
Packaged Facts
September 2012
The market value of EPA/DHA fortified foods and beverages is projected to exceed $10.2
billion in 2016, for a CAGR of 5.4% over the five-year period and dollar gains of nearly $2.4
billion. Asia-Pacific will post by far the highest regional growth rate in this category, at 15%,
for dollar gains of $1.4 billion over the five-year projection period. [Table 2-13]
Table 2-13
Projected Market for EPA/DHA-Fortified Food & Beverages: Overall and by
Global Region, 2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$10,249
5.4%
$2,365
North America
4,660
3.0
640
Asia-Pacific
2,850
15.0
1,430
Europe
2,260
2.0
210
479
4.0
85
Rest of World
The value of the EPA/DHA nutritional supplements market is expected at $4.6 billion in
2016, reflecting a five-year CAGR of 7.3% and dollar gains of nearly $1.4 billion over the
five-year 2011-2016 period. Asia-Pac will post the highest regional growth for nutritional
supplements at 13%, for nearly $1.7 billion in dollar gains over 2011-2016, trailed by North
America with a CAGR of 5.5%. [Table 2-14]
Table 2-14
Projected Market for EPA/DHA Nutritional Supplements: Overall and by
Global Region, 2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$4,581
7.3%
$1,360
North America
1,770
5.5
420
Asia-Pacific
1,660
13.0
760
Europe
960
3.5
150
Rest of World
191
4.0
30
September 2012
Packaged Facts
49
The EPA/ DHA pharmaceuticals market is projected at $3.1 billion in 2016, reflecting a
five-year CAGR of 10%. Anticipated CAGR will be highest in Asia-Pac at 12.5%, followed
by North America at 10%. North America, therefore, will account for over half of the dollar
gains in this category over the 2011-2016 period. [Table 2-15]
Table 2-15
Projected Market for EPA/DHA Pharmaceuticals: Overall and by Global Region,
2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$3,058
10%
$1,158
North America
1,622
10
615
Asia-Pacific
890
12.5
396
Europe
540
6.25
141
Rest of World
The value of the clinical nutrition market for products with EPA/DHA fortification is
projected at $1.7 billion in 2016, reflecting a five-year CAGR of 4.3%, for dollar gains of
$310 million in the global category over the 2011-2016 period. Asia-Pacific should post the
highest regional growth rate at 5%, but will be followed closely rate of gain by the other
global regions. [Table 2-16]
Table 2-16
Projected Market Clinical Nutrition Products with EPA/DHA: Overall and by
Global Region, 2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$1,664
4.3%
$310
North America
580
4.2
110
Europe
550
4.2
100
Asia-Pacific
460
5.0
90
Rest of World
74
4.5
10
50
Packaged Facts
September 2012
Market size for the EPA/DHA fortified pet food, treats and supplements is projected at
$1.1 billion in 2016, reflecting a five-year CAGR of 3.4%, for dollar gains of $160 million
over the five-year period. Rest of World will have the highest regional growth at 8%, due
largely to activity in Brazil. Nonetheless, the U.S. market will continue to account for the
majority of sales and of dollar gains in this category. [Table 2-17]
Table 2-17
Projected Market for EPA/DHA-Fortified Pet Food, Treats, and Supplements:
Overall and by Global Region, 2011-2016
Region
Projected
2016 Sales (Millions)
Projected 2011-2016
CAGR
Projected 2011-2016
Dollar Growth (Millions)
Overall
$1,050
3.4%
$160
North America
630
110
Europe
250
20
Asia-Pacific
120
10
Rest of World
52
20
September 2012
Packaged Facts
51
Increasing demand for fortified infant formula due to population growth and rising
middle class in emerging economies;
Growth in North America will vary widely among the different product categories and
segments.
Packaged Facts projects that the highest growth rates will be seen in the
pharmaceutical market due to large number of Americans with heart diseaseat 27.1 million,
according to the Centers for Disease Control and Prevention. In addition, nutritional
supplements are expected to experience solid growth as the population becomes more aware
of the benefits of EPA/DHA omega-3s and enjoy the convenient format of a pill. Innovations
such as triple strength fish oil, the overwhelming acceptance of krill oil alternatives, inclusion
in multi-vitamin/mineral formulas, and algae-based vegetarian alternatives are driving growth
in this category. Awareness of EPA/DHA omega-3 benefits is carrying over to the pet food
segment as people want to provide premium nutrition for their companion animals.
52
Packaged Facts
September 2012
The
pharmaceutical and clinical nutrition product categories are projected to post solid increases
in this region, although they represent a smaller portion of the overall consumer packaged
goods market. Due to universal health care policies throughout Europe and aging populations,
sales of these medical products should continue to climb. Eastern Europe in particular offers
new areas of opportunity.
Key growth areas in the rest of the world include infant formula, as increasing urbanization
and a burgeoning middle class support further growth. EPA/DHA pharmaceutical sales will
also expand as current and new products in a very active pipeline are introduced into markets
after regulatory approval. Pet food, treats and supplements will be a high growth area as well
with pet superstores entering the Latin American market and with distribution becoming
more prevalent in the Middle East.
September 2012
Packaged Facts
53