Natural Products Insider

JUL-AUG 2019

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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20 INSIDER July /August 2019 Protein is booming, and powders have played a huge role in delivering efficacious amounts of protein to sports nutrition consumers looking to build and maintain muscle mass. Tubs of ready-to-mix (RTM) protein powders have long been a visual mainstay of many sports nutrition stores, aisles and sections, and powdered ingredients are also used to fill sports supplement capsules and provide muscle-inducing ingredients to bars and beverages. However, the protein powder market is crowded, and the consumer shift to wanting higher protein intake via foods and beverages instead of supplements only adds to the challenges of making a protein powder-based product stand out and be successful. For companies playing in the RTM protein powder space, differentiation requires innovative flavors and ingredient combinations, as well as enhanced bioavailability and responsible sourcing. The protein ready-to-drink (RTD) market is seeing increasing numbers of clear or water beverages with high protein content, in addition to new hot protein RTD products. The food segment has exploded with high-protein offerings as companies have found ways to infuse protein into an array of everyday foods and snacks. In every corner of the protein powder market, new technologies are supporting innovation. Intel about the size and future of the protein supplement market varies depending on the market expert, but Allied Market Research and Marqual IT Solutions Pvt. Ltd (KBV Research) both predicted around 7.5% compound annual growth rate (CAGR) over the next five or six years and a resultant market of US$8.7 billion. Zion Market Research calculated the CAGR at 5.7% and a size of $3.6 billion heading into 2024. Either way, the segment is expected to enjoy solid growth worldwide. On the animal side, whey protein is set to grow 7.6% to $12.5 billion by 2024, according to Statista. On the plant side, the global pea protein market was about $101.7 million (all uses) in 2018 and should grow at a 17.4% CAGR through 2025, Grand View Research reported. Persistence Market Research estimated organic pea protein should grow at an even more robust 7.2% CAGR through 2027. For sports nutrition powder products, proprietary Nutrition Business Journal (NBJ) data shows a consistent annual growth around 7% from 2014 to 2018, with a resulting $5.4 billion in annual sales. For RTD protein drinks, NBJ reported the market grew 16%—more than double the CAGR of protein powder products—from 2013 to 2018. However, the market size for RTD protein drinks, $928 million in annual sales, is far smaller than for protein powders. Despite these growth and size figures, companies operating in or eyeing this space still face challenges to success and profit. Longtime sports nutrition formulator Bruce Kneller, currently a partner with HiQ Financial Holdings Inc., said the protein powder market is saturated and margins have thinned, even for major players with great buying and selling leverage. "Look at Amazon: How many brands are cutting each other's throats to make lower and lower margins?" he asked, noting the new generation of young brand owners looks at sales as quantitative, not qualitative, and is happy to make smaller margins on protein powders. "If you are not one of the sources for protein and/or a contract manufacturer with a house brand to push (or maybe one of the two 'withering' retail giants in the space?), forget it," he quipped, saying protein powder is a price-driven commodity market now. "You can't make any money." Kneller said the new wave of high- protein products is driven by functional foods, not RTM or even RTD. "The better bars with nuts and such are selling well," he reported, adding protein-rich yogurt and ice cream are also good performers. Among product types, high-protein functional foods may be trendy, but there are some consumer-driven trends that cut across all protein product types. Sugar Reduction As many as 86% of consumers are limiting sugar in their diets, according to Mintel. "Sugar reduction is still a top priority for many consumers and therefore, many brands," said Holly McHugh, Imbibe Inc., during her trends presentation in the sports nutrition workshop at SupplySide East trade show in April 2019. "As changes to the nutrition facts panel loom, brands are highlighting 'no added sugars,' in products, which will make it a top claim next year." She explained the main challenge for brands is that consumers still want a sweet flavor but less sugar, and many are avoiding artificial sweeteners and flavors. Stevia has become the leading alternative. "Stevia will dominate the natural, nonnutritive sweetener category since it is approved for use in food and beverage in North American, European and Asian countries and is considered more clean label than artificial sweeteners," McHugh said, although monk fruit and other alternatives are increasingly being used. In 2017, stevia was used in 28% of new products that use high-intensity sweeteners, eclipsing aspartame (25%), according to Mintel. Nielsen data, as publicized by Cargill, showed stevia sales rose about 12%, while Sports Nutrition: Protein Powders | Whey and dairy proteins are practically commodities in mixable and supplement form, with egg protein a glaring exception, but there is growth and opportunity in food and beverages. | Plant protein powders are surging in both supplements and food/beverages, with ample opportunities for plants beyond the popular pea and rice, including a ripe opportunity for hemp. | Technology is helping brands improve taste, texture and mouthfeel, as well as boost the potency and practicality of protein powder manufacturing and formulation. Protein Powder Products: Differentiating in a Crowded Market by Steve Myers INSIDER's Take

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