Higher Prices and Better Applications Will Boost the EU Digestive Health Ingredients Market, Says Frost & Sullivan

LONDON, December 9 - Growing consumer awareness of functional foods fuels demand and boosts
product availability for digestive health ingredients in the EU. In 2008,
digestive health was the largest product segment of the total EU approved
functional food market, accounting for 68.0 per cent of sales. Rising product
prices, coupled with the extension of application areas, will continue to
enhance market prospects.

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Recent analysis from Frost & Sullivan (www.food.frost.com) EU
Digestive Health Ingredients Market, finds that the market earned revenues of
US$245.0 million in 2008 and estimates to reach US$536.5 million in 2015. The
following market segments are covered in the research: prebiotics, probiotics
and digestive enzymes.

"The European market for digestive health ingredients is at the growth
stage and new product launches are frequent and numerous," notes Frost &
Sullivan Industry Analyst Sridhar Gajendran. "Products for digestive health
are available in both the functional foods and the dietary supplement
segments, with the former having a relatively larger share in terms of both
volume and value in 2008."

Currently, functional foods for digestive health are available as dairy
products, fortified beverages, baked foods, cereals and convenience foods.
This category is poised for healthy growth in the coming years, primarily due
to its significant potential to penetrate different application sectors.

"Increased prices have positively impacted market revenues," says
Gajendran. "The extension of applications to meat and fish categories has
further stimulated growth."

For instance, the global leader of inulin and oligofructose,
Beneo-Orafti, recently increased prices for its range of BENEO products.
Hikes of 6 per cent in the price of liquid products and 8 per cent in the
price of powdered products were introduced in late 2007, with a subsequent 25
per cent increase following suit in November 2008. The company engaged in
co-branding in meat products for the first time with its prebiotic
ingredients in September 2008. In addition to its existing line of
ingredients for meat-based products, it introduced new products, including
canned fish in Germany and turkey steak in Spain, which both featuring
Beneo-Orafti's ingredient branding for the first time.

Probiotic products are frequently priced higher than other nutraceutical
products. The relatively high cost of probiotics may prove to be prohibitive,
especially as EU consumers tighten their belts in response to the current
economic meltdown.

"Nevertheless, the growing trend for digestive health and consumers'
keenness to offset rising healthcare costs will likely counterbalance the
negative effects of the economic recession," remarks Sridhar Gajendran.
"Moreover, as demand and production volumes for probiotic products grow,
manufacturing costs will decrease."

These cost savings can be passed onto the processors and eventually to
consumers. Hence, high price is likely to act as a low-impact restraint,
gradually having even less of an impact over the long term.

Another challenge relates to the high cost of clinical trials. As a
result, only limited research has been conducted to date.

"Drawing attention toward informative marketing tactics to educate a wide
range of consumers about the benefits of digestive health products will
effectively boost consumption," advises Sridhar Gajendran. "At the same time,
all available opportunities should be assessed to make more expansive claims
when marketing products with strong digestive health credentials."

In the future, the digestive health ingredients market will likely be
driven by the prebiotics segment, which continues to grow steadily. Dairy,
bakery and cereals remain the most successful sectors.

Dairy accounts for 50 per cent of prebiotic products currently in the
market. In addition, a growing number of breakfast cereal manufacturers use
prebiotics as a way of promoting the 'feel good factor' to the consumer or to
add extra fibre to biscuits and breakfast products.

If you are interested in more information about this study, then send an
e-mail to Monika Kwiecinska, Corporate Communications, at
monika.kwiecinska@frost.com, with your full name, company name, title,
telephone number, company e-mail address, company website, city, state and
country.

EU Digestive Health Ingredients Market is part of the Food & Beverage
Ingredients Growth Partnership Service programme, which also includes
research in the following markets: U.S. Digestive Health Ingredients Market,
EU Food and Feed Antioxidants Market, U.S. Bone and Joint Health Ingredients
Market and, European Heart Health Ingredients Market. All research services
included in subscriptions provide detailed market opportunities and industry
trends that have been evaluated following extensive interviews with market
participants.

About Frost & Sullivan

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    Contact:
    Monika Kwiecinska
    Corporate Communications - Europe
    P: +48-22-390-4127
    F: +48-22-390-4160
    E: monika.kwiecinska@frost.com

www.frost.com

Monika Kwiecinska, Corporate Communications - Europe, Frost & Sullivan, +48-22-390-4127, fax, +48-22-390-4160, monika.kwiecinska at frost.com