Functional Foods and Government

1
Functional Foods and Governments Role in
Information Provision

• Laurian Unnevehr
• Dept of Ag Cons Economics

2
What is a Functional Food?

• Foods or dietary components that may provide a
  health benefit beyond basic nutrition. (IFIC)
• Biologically active components impart health
  benefits or physiological effects.
• Includes both functional attributes of
  conventional foods and new food products
  redesigned w/ new components.

3
Functional Components of Food
Component Food Source Benefit
Lycopene Tomatoes and products Prevent prostate cancer
Inulin Whole grains Improves GI tract health
Flavanols Chocolate, tea Circulatory health
Sulforaphane Broccoli, etc Boosts antioxidant
4
Functional Components of Food
Component Food Source Benefit
Omega 3 fatty acids Salmon, tuna Reduce risk of heart disease
Stanols/ Sterol esters Fortified spreads Reduce risk of heart disease
Isoflavones Soy Bone health menopausal health
Soy Protein Soy Reduce cholesterol
Italics indicates FDA approved health claim
5
Functional Food Products

• Conventional product marketed with new
  information
• Oats soluble fiber claim
• Conventional product with added or enhanced
  ingredient
• Spread w/ added plant sterols
• Chocolate with enhanced flavanols
• New product to deliver functional ingredient
• Beverages functional teas, water
• Removing negative functionality
• Oils with heart-healthy profile

6
Industry Interest in FF

• Exploit niche market demand for particular
  characteristics
• Eg., high markup for spreads w/ sterols
• Add value or market share to existing product or
  product ingredient
• Eg., soy protein branding for addition to
  cereals, beverages
• Create new market for innovative products
• Eg., new beverages
• Added value upstream in supply chain when
  commodity becomes differentiated
• Eg. Soybeans with low linoleic (less trans fats)

7
FF Brands
Cargills 6 ingredient brands Only 2 have FDA
claims
Solae makes Soy Protein for several
food companies
ADM markets Soy7 foods as having 7gm per serving
to meet FDA claim reqts
8
How does industry see the FF Consumer?
Healthy active seniors, or
Good for all ages?
9
Consumer Interest in FF

• Demand for characteristics based on household
  model suggests
• Human capital
• Nutrition knowledge, ability to find and process
  new info
• Health status
• Potential benefits of FF higher when predisposed
  to disease, health risks
• Substitution possibilities
• How well FF fits into current diet, food habits
• Cost
• How much more costly than alternative includes
  hidden cost of lost utility if not as tasty

10
Past Studies of Consumers

• Education clearly important determinant of
  adoption, WTP
• very consistent across multiple studies
• WTP related to health benefits which vary among
  subpopulations
• Eg., older women and soy products
• Substitution ease and FF costs can be important
• Eg., OJ w/ calcium popular among households
  looking for dairy alternative

11
Market Impact of FF

• Estimates of FF mkt vary from 20 and 70
  billion, depends on what is included
• Compare to about 6 bill organics and about 500
  bill total food
• Clear impact in some markets
• Calcium-enhanced OJ is 1/5 of OJ mkt
• Soy beverages rapid growth
• Functional breads and grains 10 of that mkt

12
Market Impact of FF

• Investments by firms in research
• Cranberry juice study by Harvard funded by Ocean
  Spray
• Mars funding research on flavanols in chocolate
• Investments in new brands focus on reliability of
  composition, taste
• Solae soy protein joint venture by Dupont, Bunge
• Investments in new products tailor packages of
  functional components
• Eg., Quaker Oats Nutrition for Women combines
  vitamins, soy, calcium

13
Public Health Interest in FF

• Major U.S. diseases are diet related
• too many calories, too much saturated fat added
  sugar, not enuf fiber or fruits/veggies
• Many FF address these deficiences
• Reduce risk of CHD or cancer
• Increase fiber
• FF that reduce other health risks can also
  improve quality of life reduce health costs at
  margin

14
How is Information Regulated?

• NLEA in 1990 and regulations in 1993
• Nutrition label with basic nutrients
• Amended for trans fats effective 2006
• 7 allowable health claims relating diet to
  disease,
• eg. calcium and osteoporosis
• Petitions reviewed for other claims based on
  Significant Scientific Agreement (12)
• Eg., oat bran in 1997 soy protein in 1999
• Criticized as too restrictive

15
How is Information Regulated?

• FDAMA in 1997 allows claims based on
  authoritative statement from scientific body
  (2)
• Eg. Potassium and high blood pressure
• Qualified Health Claims estbl for food in 2003
  based in weight of scientific evidence (8)
• Eg., Omega 3 fatty acids and CHD

16
FF Health Claims
Using one of original 7 claims from 1993
Using Significant Scientific Agreement claim
approved in 97
Using a Qualified Health Claim new in 2003
Using a FDAMA Approved claim new in 1999
17
Information in the FF Market Supply Side

• FF research funded by industry with specific
  products as focus
• Approved health claims since initial 7 reflect
  industry interest in pursuit of approval
• Off-label information dissemination also
  well-supported by industry
• Public research and information dissemination
  expenditures likely dwarfed by industry effort

18
Information in the FF Market Demand Side

• Consumers look for information from a variety of
  sources (IFIC)
• Label claims may prompt specific product choice,
  but need corroboration
• Teisl et al found option value from label info,
  even if behavior unchanged
• FDA 1998 study of ability to use label Hooker
  experiments with different formats

19
Impact of Past Regulation

• NLEA labels and claims shown to
• Improve diets among those who use them
• Reduced sugar, fat, chol, sodium more fiber
• Diet quality improves MOST for those using health
  claims in addition to label (Nayga et al)
• Spur product innovation and reformulation
• Eg., introduction of low fat products
• Improve some kinds information disclosure
• Eg., fat content of salad dressing
• Stifle some kinds of information disclosure
• Eg., regarding relative merits of different oils

20
Whats ahead?

• Trans fat nutrition label rule likely to have
  happy ending
• Spurs product reformulation and reduction in
  trans fats in food supply
• All consumers benefit whether use label or not
• Clear health evidence combined with relatively
  easy re-engineering leads to this likely happy
  result
• Shows power of regulation to achieve nutrition
  goals in some cases

21
Issues for FF Regulation

• Nutritional paradigm?
• Are functional components like drugs, with
  isolated action and dose/response function?
• When do they need to be consumed within whole
  food where found in nature or in moderation?
• Eg. Too much genistein may promote tumor growth
• How do messages about functional components fit
  with larger messages about a healthy diet and
  calorie limitations?
• Eg Does message to obtain 25gms soy per day, lead
  to more calories or undesirable diet?

22
Issues for FF Regulation

• Quality and quantity of information is it
  optimal?
• Information and research is often product and
  supply-side driven yet no proprietary reward for
  claims
• Claims approved do not seem to follow weight of
  evidence, due to industry led process
• Allowing claims before significant agreement
  not welcomed by some consumer advocates
• Lots of generic information available for
  consumers who seek it, but it is not as
  accessible as commercial information

23
Whats Ahead?

• Future for specific FF health claims less clear
• FF market likely to expand upstream through
  greater customization of commodity inputs
• FF market likely to expand consumer choice for
  some components and for combined components
• Continue to be product driven rather than public
  health driven, but with strong overlap between
  both interests
• Will sometimes conflict w/ and sometimes support
  macro messages about calories, fat, etc.

24
What would improve FF information?

• FDA could move to a public health driven approval
  system for new health claims
• Proactive rather than reactive
• Weigh benefits of claim against risks if wrong
  and costs of inaction
• Weigh benefits of claim against progress toward
  macro diet goals for public health

25
What would improve FF info?

• USDA could consider how FF impacts its programs
• What role for FF in nutrition education programs?
  In food delivery programs (WIC or school lunch)?
• 5-a-day partnership FV school lunch program
• Are there supply chain policies that are
  complementary?
• Voluntary certification through AMS?
• Commodity driven claims (eg., soy, walnuts) to
  overcome incentives problems?

26
What research is needed to support new info
policy?

• Supply side
• What are the incentives for pursuing claims/
  research/ advertising and developing new FF
  products?
• Is there mkt failure in provision of information
  for unbranded foods?
• Demand side
• What kind of information results in product
  choices that lead to improved diet/health result?
  What kind of information do consumers value?
• How do FF claims/adv/info impact diet quality
  beyond specific product choice?