Five Strategies To Grow Probiotic Sales

Product differentiation is an important key to gaining market share in the rapidly growing probiotic category – expected to increase 15% to $1.8 billion by 2015, according to Frost & Sullivan senior analyst Christopher Shanahan, who spoke at SupplySide West in Las Vegas Oct. 23.

A "winning strategy" to differentiate probiotic products is to combine them with prebiotics or other popular and complementary ingredients, such as those for weight management, Shanahan said.

He explained combination supplements grew 13% in 2008, and symbiotic products with pro- and prebiotics "are the most popular among combination products."

Shanahan also recommended firms trying to break into or expand in the probiotics market:

• Go beyond general gut health claims. Consumers want "gut health plus" probiotic products that make claims beyond general gut health. If two different probiotic strands make general gut health claims, consumers will buy the least expensive. However, if one product makes additional claims about healthy digestion, transit and nutrient absorption, consumers likely will choose it over the other single-claim product and pay more.

• Base product development on consumer needs. Differentiation for its own sake will not advance a firm's market position. New products must meet a consumer need. Firms should ask customers: "What are the criteria with which they choose a digestive health product, what do they look for first – is it general gut health," condition-specific claims, convenience or something else? Firms also should consider promoting products based on consumer "pain and pleasure" points. Consumers more likely will buy a product that helps them avoid a pain or delivers a gain.

• Carefully consider the delivery platform. Dairy products are the "vehicle of choice for delivering personal care and well-being ingredients," such as probiotics. Sales of dairy probiotics in North America should reach $38.4 million in 2015 – a 13.1% increase from 2009. Dietary supplement probiotics will grow 10.2% to $117.3 million in 2015 and other food and beverage probiotics will grow 12.8% to $400,000 in 2015.

• Remain focused on core ingredients and brands. While product innovation and diversification can help drive sustainable growth with a competitive edge, firms should not veer too far from their core product offering. "Unless you have a good case" for expanding into a new ingredient or product area, do not do it. "You don't want to be a probiotic ingredient manufacturer that is going to go out and try to sell vitamin A if you don’t really have a history" or reason to do so. "The vitamin A guys are going to likely win."

By Elizabeth Crawford