“I don’t think there are big surprises, which is actually good news for the omega-3 industry. Things have been going well and they continue to do so,” David Sprinkle, publisher of Packaged Facts, told NutraIngredients-USA. The compound annual growth rate for the dollar amount of retail sales for omega-3 products is projected to be 6.4% for the period, the report said.
The big trend, Sprinkle said, is a change where those dollars will be spent.
“The shift that is happening is that the North American market has to a degree started to plateau. Even though currently it accounts for about 43% of the dollar share of the overall market, by 2016 North America and Asia will be neck-and-neck for the top market position,” he said.
Confluence of factors drives Asia Pacific growth
This shift, he said, has roots in demographics; millions of households across the Asia Pacific region are working up into the middle class and are starting to raise families. But it’s also driven by dietary choices rooted in religion, namely the vegetarian bent of hundreds of millions of observant Hindus in India.
“It’s due to population growth and in part because infant formula is a key segment. But also because in countries like India (it’s due) to the fact that algal sources for omega-3 are becoming more important and that opens up vegetarian markets and other types of new markets compared to the traditional fish oil,” Sprinkle said.
And to some degree, it’s driven by purely cultural taste preferences, he said. In general consumers in Asia find fishy tastes less off-putting than their North American counterparts, he said, opening up more (and easier) opportunities for fish oils in functional foods there.
These figures, based on research commissioned by the Global Organization for EPA and DHA Omega-3 (GOED) and presented at the GOED Exchange 2012 conference in Boston, cover six categories of packaged consumer products: infant formula; fortified foods and beverages; nutritional supplements; pharmaceuticals; clinical nutrition products; and pet food, treats and supplements.
The report breaks down its predictions for the top categories this way:
- Infant formula, making up about 40% of the retail dollars spent. “That’s because I think about 95% of infant formula has omega-3, and it’s a highly regulated market in terms of nutritional content,” Sprinkle said.
- Fortified foods and beverages, estimated at about 31% of the market.
- Omega-3 supplements at about 13% of the market. “Even though nutritional supplements are in third, it is a huge market for the suppliers, because most of that retail dollar value is the omega-3 ingredients as opposed to a packaged food or beverage, where the omega-3 content would be a relatively small part,” he said.
Symptom of success
The maturation of the North American market is to some degree a symptom of the success that omega-3 marketers have had, Sprinkle said. Consumers are more informed both about the health benefits of omega-3s and about appropriate dosages, and as a result, are showing signs of becoming pickier.
“Another trend you’ll see especially in the supplements market is you’ll start seeing double strength and triple strength products. Consumers will really start to look for the quantity of omega per serving 3 in products,” Sprinkle said.
Within North America, he said, beverages will be the clear winners among functional food categories.
“Beverages are one are that recently boomed in terms of new product introductions,” he said. “One of the biggest products is organic milk with DHA. When you have chilled beverages, that makes things that much easier in terms of ensuring the quality of the ingredient. That gives you lots of room for fortification for omega-3,” Sprinkle said.
The coming generic opportunity
The pharmaceutical market is still a relatively small part of the pie, Sprinkle said, coming in currently at about $1.9 billion sales. But he said volume growth is expected with the advent of generics coming on the market with one of patents on the Lovaza drug set to expire in 2013. Because of the lower retail price of the generics, that won’t have as much of an effect in terms of retail sales dollars as the volume would indicate for purposes of this report, Sprinkle said, but it will be very good news for fish oil suppliers. In addition, he said, an omega-3 drug was recently approved in Argentina, pointing to further global growth in this category.
Another growth area foreseen by the report is the increasing move toward high quality pet foods fortified with omega-3s and the small but growing trend toward direct omega-3 supplementation for pets.