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Opportunities and Differentiation in the Protein Marketplace: An Overview

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Protein Protein

The protein section of our local supermarkets and health stores has become a frustrating dichotomy: an area dedicated to physical health that is taxing on shoppers’ mental well-being. If walls (or, in this case, shelves) could talk, they’d tell the story of a sector where the pace of progress and breadth of products have significantly outdistanced consumer savviness.

Strolling through the protein section, you’re likely to overhear any number of phrases clueing you into the surrounding, well, cluelessness.

“Do you think this one is any good?”

“I bet this one is chalky, what do you think?”

“Too many carbs for the amount of protein.”

“This one has way too many calories!”

“Finally, a vegan one!”

“Whey, soy, pea—does it really matter?”

“Why are the prices so different for the same stuff?”

And, of course, “Why are there so many choices?”

Indeed, for newcomers to this supermarket section, choosing a protein product can be overwhelming due to the endless options. Most people initially venture into the protein aisle after a recent commitment to self-improvement: they’ve decided to lose weight, eat healthier, feel better. The last thing they need is another difficult decision on top of their already disruptive new routines.

On the other side of the spectrum are bodybuilders and workout enthusiasts. These are the gym patrons with their gallon jugs of water who proudly pull their jars of protein powder from their duffel bags for all to witness. If you’re ingesting health food in an odiferous locker room, that’s a pretty strong sign you’re dedicated to fitness.

These examples show how difficult it can be for manufacturers to both market and micro-target their products within the protein landscape and highlight the need for effective product differentiation to satisfy consumer demand.

State of the Market

In 2018, the global protein market was valued at $14 billion and is expected to increase through 2025 continually. A more health-conscious consumer base drives this outlook among Millennials and the rise of innovative products in different formats. Protein powders make up the largest segment at just under 65 percent, followed by ready-to-drink (RTD) formulations at around 18 percent. Bars placed third by volume.1

Below is a list of the average amount of protein needed per day— according to WebMD:2

These numbers can shift with activity levels, such as sports participation and exercise, but can be considered general targets. Due to their high level of concentration, powders continue to be the simplest way to deliver as much protein into the body as possible. Still, standard whey products have been joined on shelves and online by soy, pea, casein, hemp, egg white and rice-based products; this breadth of choice leaves consumers struggling to find the right brands, types, flavors and consistencies to fit their needs best.

A popular, clutter-breaking nutritional industry strategy is to supply trending marketed products with an abundance of information on the labels. Numerous products have wording or symbols about non-GMO (genetically modified organism), vegetarian, vegan, dairy- and gluten free. Protein powders have followed the shift to this sort of “clean label” listing to support certain dietary and lifestyle choices.

Of course, what exactly constitutes a “clean label” is debatable. According to gocleanlabel.com, clean label is “a consumer-driven movement demanding a return to real food and transparency through authenticity. Food products containing natural, familiar, simple ingredients that are easy to recognize, understand and pronounce. No artificial ingredients or synthetic chemicals.”

Trends/Key Players in the Protein Industry

RTD mixes continue to grow, as consumers appreciate the convenience these products offer. Stick pack options also provide ease of use, since they can be poured directly into water bottles or other beverages. Companies like Dr. Axe and Vital Proteins have mixed proteins in with their collagen lines to add extra benefits, in the process broadening their RTD (ready-to-drink) product target markets.

The protein bar segment also continues to grow, with big-name players introducing new products. Some of these players include Gatorade, which entered this arena in 2014, one-year shy of their fiftieth anniversary.3 It’s telling when a legacy drink company sees complementary non-liquid products as a strong path for growth.

Gatorade’s research on a segment of its customer base—serious fitness enthusiasts and athletes—revealed an unmet need for a post-workout recovery option. Its resulting Recover Whey Protein Bar was introduced to accommodate this consumer demand. The introduction also added more value back into its drinks, as Gatorade grew with an overall portfolio of products. Their sales rose, and the competition stopped gaining ground.4

Kellogg’s made a splash into the bar industry in 2017 when it acquired RXBar for $600 million. RXBar started in 2012 with a targeted marketing approach to CrossFit gyms around the owners’ Chicago, IL metro area, subsequently branching out to other Midwest cities. The labels are straightforward, listing the main ingredients plus a “No B.S.” pledge on their final line. The company’s proved to be an appealing approach to consumers since the shelves are full of convoluted messaging. Net revenues in 2018 hit $130 million, with 105 million bars sold.5

Nash Nutrition takes a similar approach to RXBar’s “simple sells” strategy. Its clean, partially transparent packaging gives consumers a nothing-to-hide view of the product, evoking transparency and trust. The image complements Nash’s tagline, “Our philosophy is simple, nourish the body with quality nutrition for better health and better performance,” which details the brand’s mission to make an impact in the market.

Capsules are another option for proteins, as they are a preferred dosage form in the dietary supplement industry. These provide accurate dosing, are easy to handle, and offer a modern look. Often, capsules serve a necessary function of taste masking. If the same protein powder formulations are suitable to place in large jugs and capsules, this could provide consumers an alternative option while adding synergies to the manufacturing process. Powders that some consumers might not find appetizing can, in turn, have a capsule choice where the taste is masked. The vegetarian capsules are typically GMO-free, which can be another attractive selling point to consumers.

The downside with protein powders in capsules is the amount of product they contain compared to other dosage forms. Two milligrams per capsule is typical, constituting much less than bulk powders and other options.6 These capsules would not be suitable as a meal replacement like alternatives for proteins but may function as a nutritional enhancement. With innovations and competition in the space, a high-protein capsule would provide new marketing potential and product differentiation.

What Consumers Seek

Taste and Consistency: In addition to clean and healthy products, consumers value good flavor and consistency. Whether this is a powder, bar, or RTD, if a product is not appealing, there is always another option. During a recent stop at a convenience store, a fellow shopper grabbed a ONE Maple Glazed Donut bar and said, “This actually tastes like what it says.” Thus, a simple yet sometimes overlooked value is added to the product.

On-The-Go Products: Common on-the-go breakfasts seem to be a protein bar with a banana, a shake or a smoothie. The trend for the green smoothies and other types to incorporate fruits into the diet has increased in the past few years. These are also popular avenues to add in a scoop or two of protein powder. Juice bars like Pulp have also increased their presence and even made it out of the larger, more health-conscious cities to smaller towns. These also have many options for smoothies and the additions of protein powders. Snack options like protein chips and protein cookies continue to increase. These can give consumers the appeal that indulging on something salty or sweet doesn’t hinder their diets as much as more common items.

Kids Menu: In the last few years, options for protein bars for children have increased. With the increasing number of sports activities and parents seeking a more active lifestyle for their children, the need for healthier snacks incorporating protein is necessary. Many kid-friendly bars exist that contain protein levels suitable for their consumption.

To grow and develop opportunities in a crowded market, manufacturers seeking to differentiate their products must consider many factors, including:

• What makes someone choose my product?

• How can I get people to shift away from my competitor?

• Will this novel, new way to deliver the product work and be accepted by consumers?

• Will this trend remain for a long-term business?

Essentially, finding out what consumers want now, and how long these various trends will last is tough in any business. Take the new options that continue to pop up for sparkling flavored water (and alcohol infused), organic and non-dairy yogurt options, and dietary supplements. All strive for GMO-free and clean label claims, whenever possible. Maybe these were risky choices at the time of development, but will they pay off in the end? The good news is, the protein segment continues to grow. So … what’s next? NIE

References:

1 Grand View Research. Protein Supplements Market Size, Share & Trend Analysis Report by Product (Powder, Ready to Drink), by Application, by Raw Material, by Source, by Distribution Channel, by Region, and Segment Forecasts, 2019-2025. www.grandviewresearch.com.

2 WebMD Medical Reference, Protein: Are You Getting Enough? Reviewed by Zelman, K. www.webmd.com/food-recipes/protein, November 12, 2018.

3 Harry, C. A 50-year Timeline of Gatorade’s History. September 30, 2015. https://floridagators.com/news/2015/9/30/2091.aspx?path=football.

4 Robertson, D. How Gatorade Invented New Products by Revisiting Old Ones. Harvard Business Review. August 17, 2017.

5 Bronner, Stephen J. “The Founders of RXBar, Acquired by Kellogg for $600 Million, Built the Company by Having a Bias Toward Action.” www.entrepreneur.com/article/308136.

6 Josh. The Best Protein Pills—How to Use These Tablets Effectively. March 3, 2019. https://crazybulk.com/blog/best-protein-pills/.

Justin Kalafat is a scientific business development manager for ACG, which offers end-to-end capsule and tablet manufacturing solutions for the pharmaceutical industry. The company’s range of capsules, films and foils, engineering, and inspection systems comprise comprehensive solutions for efficient capsule and tablet production. www.ACG-world.com.

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