Going With Their Gut

Since the birth of advertising, the idealized qualities of youth and beauty have been used to sell millions of products. But the scatological characteristics associated with bacteria and the digestive system? Not so much.

That is, until now, when the state of our intestines is being dragged out of the bathroom and becoming a subject of interest for beverage makers. And customers are drinking it up.

With the Foundation for Digestive Health and Nutrition of Maryland reporting that a litany of more than 300 digestive diseases are creating misery for more than 65 million Americans, the demand for food and beverages infused with the healthy bacteria known as “probiotics” has spurred an industry, that, in the U.S. alone, is expected to reach $700 million by 2010. According to the market analysis firm BCC Research, that’s a surge of about 50 percent from 2005, when probiotics used in food and beverages totaled $498 million in the U.S.

According to The Foundation for Digestive Health and Nutrition, costs connected to digestive disease continue to rise – now hitting $85 billion annually. And while probiotic beverages may not claim to cure any disease, customers are beginning to turn to them as a preventative measure, especially since digestive problems increase with age. By 2025, the average life expectancy in the U.S. will increase from 77-82.

To meet that demand, a cadre of brands like Dannon, Naked Juice, Yakult and Lifeway are saying “gut health” may be just a sip away, and they and others may have hit upon the golden ticket: a health functionality that has a measurable result for the consumer. While brands are clear in stating that their products make no medicinal claims, they do assert that when consumed regularly, probiotic beverages can have a beneficial effect on digestive and immune health. (While that sounds promising, in the beverage business science, health, taste and function merge, specialty beverage makers are finding that the sell is rooted in educating the customer, many of whom have no idea what a “probiotic” is, let alone its potential effects on their bodies.) Brand positioning, too, becomes a carefully-orchestrated dance in alluding to health benefits but not explicitly spelling out things that are better left between customers and their time alone in the bathroom.

There are additional challenges: from a technical standpoint, maintaining sufficient levels of good bacteria in the product over the course of its shelf life is difficult, as probiotics typically “live” from between four weeks to 45 days from the date of manufacture. The longer the product sits, the greater the number of its bacteria that can die, potentially altering the intended potency of the drink.

“Bacteria produce acid and create an environment in which they cannot survive for a long time,” said J. D. Sethi, co-founder of the probiotic brand Dahlicious. Scientific obstacles aside, some of the companies are either small or are completely unknown in the U.S. , and they find that they have to hook the customer before they can develop a following. And, these companies agree, the overall popularity of these products is mostly based on taste first, benefit second.

So what in the micro-world are probiotics? In short, they are microscopic cultures of living, “good” bacteria that can help the digestive system and fortify the immune system. While people may think that microorganisms cause disease, the truth is that most are harmless, and some are beneficial, such as different strains of probiotics. Studies have shown that consumption of probiotics can help alleviate problems associated with lactose intolerance, constipation and diarrhea. They are said to improve health by increasing the ratio of beneficial bacteria in the digestive tract.

“Think of your digestive tract as a parking lot,” said Rachel Kenney, spokeswoman for Naked Juice, which released its probiotic Tropical Mango smoothie in late 2007. “When you put in more good bacteria there’s no room for the bad bacteria because there’s only so much room for the cars to be able to park there.”In order for probiotics to work, they need some help. This assistance comes in the form of “prebiotics,” a form of fiber that acts as the fuel source for the good microbes.

The bulk of probiotic beverages are delivered through a milk base. While some drinks are described as having a yogurt-y consistency, others may taste like a fruit smoothie, or even a lighter fruit drink. Yakult, Dannon’s DanActive, Lifeway’s kefirs and lassis, and Dahlicious’ products are all dairy-based. Naked Juice offers a 100 percent juice probiotic experience, while Katalyst Kombucha – a small beverage house out of Western Massachusetts – delivers probiotics through a sugar and tea base.

While the consumption of probiotic beverages can be traced back 4,000 years, to Eastern cultures, it represents a trend that has only recently gained traction in the U.S. But in addition to the Naked Juice launch, 2007 was very active domestically: Dannon’s DanActive, Dahlicious’ Lassi and Yakult Original all came out last year. Meanwhile, Illinois-based Lifeway began producing its probiotic beverage Kefir, which has more live cultures than yogurt, in 1986.

In Japan, however, the sensation of RTD gut health beverages is pushing 80 years. In 1930, Dr. Minoru Shirota of Kyoto Imperial University ’s School of Medicine began his research in bacteria beneficial to human health. Ultimately, he discovered a strain called Lactobacillus casei that destroys the bad intestinal bacteria. He leveraged his discovery to create the Yakult beverage.

Today, Yakult is a cultural phenomenon. According to Lauren Weidelman, corporate communications manager for Yakult U.S.A. Inc., speaking on behalf of Teruo Tabuchi, the company’s COO, there are 47,000 women in Japan selling Yakult products. They are akin to American Avon ladies.

“They go door-to-door every single day and deliver fresh bottles of Yakult,” said Weidelman. “It’s like having your mom knock on your door and give you your vitamins.”

As a result, Yakult says one third of its worldwide sales come from Japan. The $2.3 billion company is a powerhouse. Promotional materials for the company say the product is consumed by more than 20 million people every day across the world; 856,000 bottles alone in the European market.

Lack of consumer education in the U.S., however, where a 5-pack sells for $2.99 to $3.99, means that the general market roll-out has been slow and calculated. It’s one thing to say that Yakult Original guarantees 8 billion bacteria in each bottle; it’s another to say that it tastes like an Orange Julius.

As the products grow, the difficulties of educating the customer continue to be the common theme. Companies find that customers are interested in the products but also have a host of questions about them.

“We look for opportunities to educate people face-to-face, teaching them about probiotics. That’s how we go about entering a new market,” said Weidelman. Such opportunities include traditional in-store sampling, as well as attending events where there is a strong chance of interacting with potential future customers.

But probiotic education can be an advantage. For Naked, it’s a way to accumulate more brand loyalty.

“We believe consumers are smarter and more aware of nutrition trends, ingredients and emerging technologies – they’re ahead of the curve,” said Kenney. “And we want them to know we know they’re ahead of the curve.”

However, not every marketer places the probiotic ingredients in the spotlight. Dannon, which produces DanActive, a $1 billion brand globally, focuses on the product’s health advantages, rather than the ingredients’. “Probiotics are the means to which the benefit is delivered,” said Dannon spokesman Michael Neuwirth. “How they work is less interesting than the fact that they do work.”

An extension of how beverage companies educate their customer is how they talk about their products. And given where they work, when it comes to the function of these beverages, companies agree that less is more. While brand Web sites provide scientific information about probiotics, general product promotion steers clear of potentially embarrassing labels.

“We’ve gotten very positive responses from people who have everyday problems,” said Yakult’s Weidelman. Nevertheless, you won’t find specific references to those problems – bloating, irregularity or diarrhea – on any packaging.

Naked Juice’s Tropical Mango probiotic smoothie keeps it positive. Like other probiotic beverages, Naked Juice sought an under-the-radar label that wouldn’t broadcast anyone’s digestive complaints to fellow shoppers. Its labeling makes no reference to any bodily function. “In any of our point of sale materials, in our surveys or going out and sampling, we laddered it up to a much larger benefit,” said Kenney. “It’s a happy digestive system, a happy immune system, a happier you.”

DanActive, which has 10 billion active cultures of Lactobacillus casei per serving, prominently labels one benefit: strengthening immunity.

“We do use the under-wraps of packing and Web sites to provide detailed information to what probiotics are and how they work,” said Dannon’s Neuwirth. “But that’s for a more interested and involved consumer who is interested in the science.”
That science can get pretty complicated. There are multiple strains of probiotics, and not all probiotics do the same thing. Additionally, different studies have been performed on different strains. Blanket marketing on probiotics generically is – in the long term – not going to be useful, cautioned Neuwirth, adding “You’re not going to build brand differentiation.”

From a scientific perspective, “You can’t presume that one particular probiotic has an effect that can be translated to all probiotics,” said Mary Ellen Sanders of Dairy & Food Culture Technologies, who is a consultant on probiotics to the food and supplement industries.That’s why the consumer might see one product boasting billions of good bacteria, while a competitor’s product may “only” have tens of millions. Less bacteria does not necessarily mean the product has a weaker effect because different strains of probiotics are in use.

Sanders, who believes the potential for probiotics hinges on whether they are scientifically validated, said the field is still emerging. “There’s a lot we don’t know,” she said. “It will develop beyond what we understand now.”

Much of the research on the benefits of probiotics has been funded by beverage industry support, said Joanne Lupton, professor of human nutrition at Texas A&M University who spent one year at the Food and Drug Administration to help set up evidence-based review for health claims. And that has a benefit.

“Companies will be doing better and better studies because the better the study, the more likely to be accepted by the FDA and then they can make a claim. It’s in the company’s best interest,” she said.

When asked what she views as the potential customer growth for probiotic beverages, Lupton said she was surprised that people wanted to even talk about bacteria, let alone consume it. Lupton added: “With more people concerned about sodas and added sugar in the sodas, they’re looking around for healthier alternatives.”

While numbers illustrate a startling picture about Americans and digestive health, it is the story of one small probiotic beverage company that may best illustrate the challenges and potential for the field. JD Sethi and his wife, Geetu, are raising awareness about the benefits of probiotics through their Dahlicious Lassi beverages.

A former programmer at Microsoft, Sethi left the corporate world in 2004 to complete an entrepreneurial MBA at Babson College. His dream, he said, was to start his own beverage company that focused on preventative care and health.
“I was a sickly baby growing up,” said Sethi, now 33, who was born in India. “Good health and passion for food brought me to functional food.”

As a result, Sethi, who lives in the Boston area, became a food nut and began making yogurt. He found that as he consumed it, his digestive health improved. Then he began making his own dahi, a traditional Indian yogurt-like product, which is made by introducing five types of bacteria cultures to milk. That’s when he started talking to his wife, a microbiologist, about the science.
“We started having a debate whether this is really good for you from a science perspective. There was an experiential aspect I was experiencing but what about from a science perspective?”

Sethi ignored the advice of colleagues and classmates to steer clear of the beverage business. He and his wife founded Dahlicious in February 2007 and began a product launch in May. Today his lassis – cultured milk drinks – are sold in the North Atlantic and Northeast region of Whole Foods.

But it took a while. First, there was experimentation, during which Sethi learned that there were several disadvantages to using fresh mango in his lassis: a shorter shelf life and the unfortunate side effect that enzymes in the fruit made the product bitter.

“We made a lot of bad batches – 100 gallons of the product and two days later we had to dump,” he said. Refusing to back down from his commitment to using all-natural ingredients, Sethi solved the problem by heating the mango to deactivate the enzymes.

The founders of Dahlicious decided to market the product based on taste, which they found to be the most important selling point for customers, who were subsequently pleased to learn of its health benefits.

While Dahlicious may be the little brother to its big brand-name competitors, this young product, on track to make $150,000 in sales its first year, has big dreams, perhaps indicative of the probiotic beverage industry.
Said Sethi: “I hope to become a household name.” Hopefully, though, one that’s associated with the kitchen, and not the, well, you know.