Food, health, functional foods and Australia’s rural industries A report prepared for the Rural Industries Research and Development Corporation by Dr Michael Heasman January 2004 © All rights reserved. ISBN 0 642 58706 X ISSN 1440-6845 “Food, Health, Functional Foods and Australia’s Rural Industries” Publication No. 03/140 Project No. MKH-1A The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Communications Manager on phone 02 6272 3186. Researcher Contact Details Dr. Michael Heaseman MKH Research Pengerkatu 25B 37 HELSINKI, FINLAND 0050 Phone: +358 9 825 2184 Email: [email protected] In submitting this report, the researcher has agreed to RIRDC publishing this material in its edited form. RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4819 Fax: 02 6272 5877 Email: [email protected] Website: http://www.rirdc.gov.au Printed in January 2004 by Union Offset Printing Pty Ltd, Canberra ii Foreword Consumer interest in food, diet, and health continues to fuel food and drink industry strategies based around nutrition. In particular the past dozen years or so have seen the world’s processed foods industry embrace a nutrition concept known as ‘functional foods and nutraceuticals’. The simple idea behind the functional foods concept is that foods and beverages can be developed with health-enhancing food ingredients and/or properties that go beyond basic nutrition and deliver a scientifically supported health benefit, usually in relation to a specific disease condition such as heart health. This position paper argues that Australia’s rural industries can play a more proactive and innovative role in delivering ‘health’ benefits, including added value produce. This would not be confined to the narrow field of functional foods alone, but would involve adapting and applying the lessons of functional foods for rural industries looking to develop health opportunities and to further business development. The premise of the functional foods/nutrition science revolution that started in the 1990s is based on observations of the health benefits of consuming more fruit, vegetables and ‘whole’ foods. Fresh produce and products based on them, often miss out on this newly created, nutrition science based, food supply opportunity. In other words there are strong trends for rural industries to tap into and to innovate and compete more effectively in the market for ‘health enhancing’ foods through developing their own differentiated market niches. In the context of broader market dynamics of global food supply, it is argued that an ecologically integrated approach to food and health, embracing both environmental and human health considerations, is an underexploited route for developing innovative businesses and marketing practices related to rural industries. This is in contrast to the more ‘medicalised’ or ‘technical fix’ approach that often characterizes much of functional food/nutraceutical business thinking. The report recommends that Australia’s rural industries develop a food and health industry ‘vision’ and from this develop a nutrition strategy framework to facilitate business development that combines environmental and health goals with consumer-led products, marketing, and innovation. This project was funded from RIRDC Core Funds, which are provided by the Federal Government. This report is an addition to RIRDC’s diverse range of over 1000 research publications and forms part of our Resilient Agricultural Systems R&D program, which aims to enable agricultural production systems that have sufficient diversity, flexibility and robustness to be resilient and respond to challenges and opportunities. Most of our publications are available for viewing, downloading or purchasing online through our website: • downloads at www.rirdc.gov.au/fullreports/Index.htm • purchases at www.rirdc.gov.au/eshop Simon Hearn Managing Director Rural Industries Research and Development Corporation iii About the author Michael Heasman PhD Michael Heasman has more than 15 years experience of working at the cutting edge of the social science of food, including being an early pioneer in researching the impact of nutrition policy on food and beverage manufacturers. He obtained his Ph.D. in the Food Policy Research Unit, School of Biomedical Sciences, University of Bradford, UK, in 1988. He is a Visiting Research Fellow at the Department of Health Management and Food Policy at City University, London and Affiliate Faculty member of the Functional Foods for Health Program at the University of Illinois. Michael is currently working as an independent writer, researcher and opinion leader on the global food industry. As an international expert on food, nutrition and health - from business strategy to nutrition policy - he has a track record as a globally focused, interdisciplinary, thinker beyond the ‘box’. He is working on a portfolio of projects including food policy, food innovation, functional foods, health and wellness, and food ethics and corporate responsibility. An UK national, he is now based just outside Helsinki, Finland. He is co-author of two recent books: Food Wars: the Global Battle for Minds, Mouths and Markets (in press) and The Functional Foods Revolution: Healthy People, Healthy Profits? (2001), as well as Consumption in the Age of Affluence: the World of Food (1996). He is currently working on a new book on the nutrition industries. Michael is Editorial Director of Innova, a new publication launched January 2003 from CNS Media in the Netherlands, reporting on global new product development and food innovation trends. He is also the publisher and editor of FoodforGood.com, the only publication devoted exclusively to providing news, business analysis, ‘thought-leadership’, and case studies about, and for, the growing number of food and beverage companies around the world being run on ethical and socially responsible principles. Michael has held a number of academic research posts in the UK, most recently at the Centre for Food Policy, London (1995-1999), but also at the Universities of Reading, London, and Bradford. He has worked on a wide range of projects including investigating the costs and benefits of compliance with food regulation, the competitiveness and business development of small and medium-sized food companies, restructuring of the global food economy, the impact of nutrition policy on food and drink manufacturers, in addition to the global market for functional foods/nutraceuticals. He was joint editor of the international newsletters New Nutrition Business (1995 to July 2003) and Financial Times Food Business (1999-2001, published by FT Business Ltd). He was co-founder of New Nutrition Business, the leading international newsletter reporting on functional foods, nutraceuticals, and healthy eating business trends published by the Centre for Food & Health Studies Ltd a London- based ‘think tank’ specializing in functional foods, where he was Director of Studies (1998-2002). Contact details: [email protected] iv Contents Foreword ................................................................................................................................................................ iii About the author...................................................................................................................................................... iv Executive Summary................................................................................................................................................. vi 1. Introduction: Towards a nutrition strategy for Australia’s rural industries.................................... 1 2. The Scope of the Project and Consultation Sponsored by RIRDC..................................................... 4 3. The Australian market for functional foods and nutraceuticals......................................................... 6 The global and Australian context................................................................................................................ 6 4. A framework to understand food and health choices in the 21st century...................................... 8 Introducing Three Paradigms for Food and Health................................................................................ 8 5. Global business developments in functional foods - why the Functional Foods Counter-Revolution is now dominant........................................................................................................19 6. A nutrition and health strategy for RIRDC ...............................................................................................27 Key insights from the consultation.............................................................................................................27 7. A strategic framework for RIRDC.................................................................................................................32 Understanding the new competitive landscape for rural industries in relations to