LONDON: Brand owners taking the lead in the health and wellness sector could benefit from a substantial increase in category sales, to over $1tr, in the next five years, a study has suggested.
According to Euromonitor International, the insights provider, the industry's revenues are due to surpass the $1tr benchmark in 2017, measured against a figure approaching $700bn in 2012.
More specifically, the organisation reported that 40 of the top 100 brands in the category logged sales of at least $100m in 2011, a group led by PepsiCo's Gatorade sports drink, which generated $956m.
The sector saw 6.5% expansion in value terms in 2011 at current prices. China and Brazil yielded incremental growth of $15bn in 2011, and should supply $103bn in new sales between 2012 and 2017.
More broadly, beverages carrying a health and wellness positioning are expected to witness a compound annual growth rate of 7.5% until 2016, when they will be worth around $400bn worldwide.
Upon discussing packaged foods, products with equivalent benefits are in line to deliver net revenues of $550bn, the analysis added.
Other growth areas are set to include offerings fortified with vitamins and similar ingredients. "Nutrigenomics", or foods helping treat chronic diseases, has also attracted Nestlé, PepsiCo and Danone, with pharma firms "likely to follow".
Heightened shopper interest in their own wellbeing is one key driver of these trends, as well as a corporate focus on providing affordable and convenient products in "fashionable packaging"
Successful innovation to date has often taken the form of extensions to well-known brands, such as with Coke Zero, which boosted sales by $565m in 2011, compared to Diet Coke, which earned just $405m.
"Innovation and product reformulation are, in fact, the heart of health and wellness, with the challenge being to deliver healthier, and ideally naturally sourced, food and drink formats tasting just like the beloved fully sugarised and full fat non health and wellness 'parents," said Ewa Hudson, of Euromonitor.
One obstacle is the increasingly difficult regulatory climate, as shown by probiotics, which are likely to record a second successive annual sales decline in Western Europe in 2012 after a clampdown on health claims.
By way of comparison, demand rose by 26% in the US during 2011 and is set to improve by another 13% during 2012.
Data sourced from Euromonitor/Nutraingredients; additional content by Warc staff