01 October 2007

Smart foods – foods that make you feel better, look better, live longer.

As consumers around the world become increasingly preoccupied with enhancing their health and wellbeing and countering the effects of stress, lack of exercise and a hurried diet, the quest to develop functional foods that offer additional nutritional benefits is taking off. And nowhere more so than in New Zealand, where a burgeoning functional food industry is leveraging off the country’s expertise as a major international producer of healthy, safe, high-quality food.

Internationally renowned research institutions and companies are undertaking cutting-edge research into the functionality of foods to produce products and ingredients that help prevent and treat disease and promote good health.

Adrian Bosher, Investment Manager, Food & Beverage at Investment New Zealand says the commercialisation of this research has the potential to deliver returns to investors and shareholders worth tens of millions of dollars; from both established food and beverage categories and the introduction of new categories of nutrition.

Not surprisingly, New Zealand’s global dairy industry has been quick to develop food products with added health benefits, like Fonterra’s Anmum range of milk powders for pregnant and breastfeeding women, formulated with essential nutrients that are scientifically shown to play a role in a child’s brain development.

Healtheries of New Zealand is another sophisticated national and international marketer of branded consumer health foods, mainly into Australia and Asia. Its extensive product range covers dietary supplements, herbal fruit and functional teas, wheat- and gluten-free products and children’s healthy snacks. To succeed in competitive consumer export markets, Healtheries has developed products that can lead within specialist niche health categories that are linked with global consumer health trends.

New Zealand has a track record for delivering innovative and commercially successful nutritional products, such as Miada® ChocoLite®, the world's first chocolate to contain Gaio® Tagatose, a natural sugar which, unlike other sugars, does not promote tooth decay and has minimal impact on insulin and blood glucose levels. It’s also good for intestinal health and has significantly fewer calories than standard chocolate.

Crown Research Institute (CRI) HortResearch believes fruit will become the next generation of functional foods, challenging dairy and whole grains for dominance in the lucrative market. The CRI is developing new fruit and fruit-based foods and beverages that have positive effects on gastrointestinal wellbeing and immune defences to cater for consumers seeking an easy way to feel good.

New Zealand has a well established record of success in identifying and exploiting the medicinal uses of food products. World-leading research has enabled companies to harness the unique antibacterial properties of New Zealand’s manuka honey, now packaged and marketed around the globe by companies such as Comvita, an international natural health and wellness company that is aiming to grow annual sales from NZ$39.4 million in 2006 to NZ$100m in 2010. A patented advanced wound care dressing by Comvita recently became the first honey-based product for wounds and burns management to receive marketing clearance from the United States Food and Drug Administration.

Collaboration between science and business is also resulting in success stories such as the micro-encapsulation technology that allows the health-enhancing and highly sought after omega-3 in fish oil to be incorporated in foods at high levels without the smell and taste of fish. Business incubator the Bio Commerce Centre and food producer Speirs Foods have joined Massey University’s Riddett Centre in a joint venture to make and sell the omega-3, which is now on its way to international markets for use in products ranging from bread to ice cream.

And earlier this year Australasian venture capital firm BioPacific Ventures (whose largest investor is Nestlé, the world’s biggest food company) invested NZ$6.3 million into EnCoate, the biopolymer company owned 50/50 by CRI AgResearch and Ballance Agri-Nutrients. The money will be used to finance the development of a revolutionary line of probiotic formulations for the global market that will enhance food products. Probiotics are live micro-organisms, usually bacteria, that are beneficial to the body.

The functional food market is one of the fastest-growing segments of the global food market. New Zealand’s pristine growing environment, coupled with its natural biodiversity, innovation and processing expertise, makes it an ideal place to develop and manufacture these new smart foods and ingredients to take to the world. Excellent demographics and a culture of early adoption of new technologies also make it an ideal market to test and commercialise new products.

For more information, please contact:

adrian.bosher@investmentnz.govt.nz

+64 9 354 9037