How the pandemic is reshaping the probiotic cultures landscape

The importance of gut health has never been more important. Not only is the health important for digestion but it has a direct impact on our holistic wellness, and has been linked to mental health, allergies, and chronic illnesses. 

The probiotic strains

The probiotic cultures market is dominated by three species of microorganisms Lactobacilli, Bifidobacterial and Bacilli. These cultures are primarily used to enhance gut health but also have the following health positionings: immunity boosting, mental health, women’s health, adult health, cholesterol control and dental care.

Applications

Probiotic cultures are used predominantly in the chilled dairy sector. They are largely marketed towards gut health. Nestlé, Yakult, DuPont, Danone, Morinaga and Meiji, to name but a few, produce chilled dairy products with gut health claims. However, the market has seen an increase in the diversification of claims. For example, Yakult launched a chilled dairy product for throat health and Meiji launched a chilled dairy product for uric acid regulation.

Other notable sectors with probiotic culture applications include functional foods and beverages, infant nutrition, supplements, pharmaceuticals, clinical nutrition, pet food and other food. All these sectors primarily use probiotic cultures for gut health claims.

Supplements is the fastest growing sector globally, followed by functional foods and beverages and pharmaceuticals. The supplements sector uses probiotic cultures for various health positions, which include gut health, women’s health, immune health, weight management, sports health, infant health, mood health, skin health and blood lipid regulation. In the pharmaceutical sector, probiotics are marketed for gut health as well as infant gut health and women’s health.

Health position-based pricing is becoming more important when developing a pricing strategy. Gut health is the traditional label position, and therefore, is the most cost-effective. Cultures with cholesterol control claims attract a greater premium. The positions of probiotic cultures depend on the strain, claims and end-user perceptions

Scientific evidence

The pandemic has increased health concerns amongst consumers. Research regarding the role of gut health in the onset of COVID-19 is becoming more and more important. Previous research has shown that 20 microorganism strains were able to improve anti-inflammatory interleukins and antibody production against viral diseases. Additionally, viral load was also lowered in Covid patients when probiotic supplements were administered, suspected to be caused by bacteria directly acting on COVID-19 and decreasing secondary infections from prolonged antibiotic usage [1]. According to Kurian, et al., 2021, probiotics could help prevent and treat COVID-19 [2].

Sales of probiotics increased during the pandemic and are expected to show strong growth as we move towards a new normal, due to consumers’ demand for health and holistic wellness. However, pandemic’s impact on the probiotic culture markets is region-specific.

Japan

Japan is the oldest market for probiotic cultures. Probiotic products are widely accepted by consumers and are available in the form of food and nutraceuticals.

Approximately 1/3 of probiotic products carry a gut health claim[3]. Japan has an ageing population, and there is general interest in health and wellbeing, which has increased since the onset of the pandemic. Immunity claims have been a prominent market driver.

The pandemic has also renewed interest for probiotic products that include not only yogurt and fermented beverages, but also traditional fermented products such as natto (soybeans fermented with Bacillus subtilis var. natto), and miso (soybeans fermented with Aspergillus oryzae).

China

Chinese food manufacturers prefer importing probiotic cultures due to their consistency and quality. Published scientific and clinical studies prove health benefits and make them highly attractive. Domestically produced probiotic cultures face inconsistencies in product quality, they do not always meet national and international certification standards, and have unclear product labelling which means there is little scope for export. Imported probiotic cultures face regulatory issues in China due to the high cost of registering strains. This hurdle makes market entry into China difficult.

In China, 90% of probiotic cultures are used in the dairy sector. Approximately, 60% of Chinese consumers are lactose intolerant, which drives demand for lactose-free probiotic products. R&D and new product development is focused on ambient probiotic products, as they are easier to transport, and store in outlying districts and rural areas, which were previously difficult to access[4].

The existing culture of consuming fermented foods makes it easier for people to incorporate probiotic products into their diets. Furthermore, there is growing awareness of preventative medicine amongst young parents, which is also expected to drive demand for probiotic products.

South Korea

In South Korea, probiotic products and their health claims were the key drivers for the sales of functional food growth in 2020. Probiotic cultures are recognised as a functional ingredient, and the increase in demand for probiotic-based functional food has pushed the country to develop more probiotic-based products to meet demand.

North America

In recent years, the supply scenario in North America has been highly dynamic, as companies strengthen their positions in the probiotics market. Amongst others, in 2020, Kerry acquired the Canadian company Bio-K Plus International, which specialises in the production of clinical probiotic fermented beverages and supplements. Chr. Hansen acquired the probiotic manufacturer UAS Laboratories to strengthen its position in the microbial and Human Health business. Novozymes acquired Microbiome Labs in January 2021, which offers proprietary probiotic products and microbiome solutions for immunity, metabolic health, gut health and cognitive health. There has also been growth in innovative research related to probiotics. ADM has identified a fat-reducing probiotic molecule in its Bifidobacterium proprietary strain. Lipoteichoic acid (LTA) has been identified as the compound that has been linked to the efficacy of the company’s probiotic strain. On the other side of the coin, the demand scenario has also been equally dynamic.

For example, new probiotic product launches include refrigerated yogurt bars. In March 2019, Nestlé, Goodbe, and Danone North America, Cultured Snacking Co, were launched. Both products carry a gut health positioning. In July 2020, SOFAR America, the US subsidiary of the Italian company, introduced Innovia KIDS, a probiotic supplement that uses the SOFAR LP-DG strain for balancing gut flora, which is blended with essential vitamins such as D3 for healthy bone development and B vitamins to support nerves and muscles. During the same period, Danone North America launched a children’s yogurt brand, Danimals, made of low-fat yogurt, formulated with L. Casei Immunitas, which carries immune system claims. In September 2020, Kyowa Hakko Bio, launched a novel dietary supplement ingredient to deliver broad-range immune support to US consumers. Immuse is known as a paraprobiotic as it contains a patented strain of Lactococcus lactis plasma which is characterised as heat-killed lactic acid bacterium. Lonza also launched a vegan probiotic strain L. plantarum which was isolated from Taiwanese kimchi and is designed for elite athletes and active individuals for endurance, body composition and energy enhancement. In December 2020, the supplements brand VMLOX launched probiotic products for women that supports weight loss. The formulation contains a combination of pre- and probiotics at 40 bio CFU. In January 2021 IFF launched HOWARU Calm, a probiotic solution that reduces stress. In April 2021, Deerland launched MuniSpore, a probiotic strain of Bacillus clausii, a soil-based microorganism that is able to positively influence microbial populations and has antioxidant effects on the immune system. These are just a few examples of probiotic products shaping the North American market.

Europe

Demand for probiotic-based products has also increased strongly in Europe due to the pandemic. Certain probiotic product manufacturers have recorded 5% sales increases in 2020 compared to 2019[5]. The increase in demand was driven by increased consumer awareness of the health benefits of probiotics.

These factors have positively impacted the price of probiotic cultures since the pandemic, which have also increased approximately 5%, in line with sales.

In interviews with GIRACT, probiotic dairy product manufacturers stated that strong R&D and low-cost operations will be required to sustain the market. In the supplements category, multiple strains were preferred to single probiotic strains as the combination of multiple strains provided more targeted health benefits with documented effectiveness. Additionally in this category, women’s health, obesity, cardiovascular health, stress management and cognitive health were identified as key areas of interest by consumers. In pet food probiotics are still mainly added to support gut health. However, pet owners are increasingly seeking functional pet foods with preventative benefits. For infant formula, ascribing specific health claims to probiotic cultures is not permitted in Europe. Consequently, marketing strength of these products relies heavily on positive consumer health perceptions. This hurdle is likely to temper the demand growth for probiotic cultures in Europe.

Outlook

The pandemic has pushed consumers towards food products and nutraceuticals with health claims, and they are not only marketed towards gut health but increasingly target other health benefits, such as stress prevention, mental health, weight loss and immunity, to name but a few; all health concerns brought to the fore by COVID-19. The industry is responding to the increase in demand for functional foods and beverages with diversified health claims, and the probiotic cultures landscape will continue to evolve as we enter the new normal. Giract has been closely tracking this evolution as part of its new study on probiotic cultures, in which the market in each region is presented in freeze-dried equivalent tons by culture, as well as a strain-level dissection of each market by application and health claim. The findings will be published in September 2021.

Principal Author- Ms. Pritha Prasad, Research Analyst, GIRACT
Contributing Author – Dr. Graham Robinson, Research Executive, GIRACT