A taste for health in the butter market

For proof of how dramatically the healthy eating trend is shaping the butters and spreads market, one need look no further than the three biggest BSM launches of 2012.

Arla’s launch of Lurpak Lightest, Unilever’s reformulation of its Flora Original and Light products and, most recently, Dairy Crest’s introduction of the UK’s first seeded spread all have their origins in the insight that consumers are seeking more healthy products to spread on their bread and smother on their vegetables.

The secret to success in BSM therefore seems simple - develop a healthy product, and you’ll have a blockbuster on your hands.

Yet the reality is more complex. Yes, there is a desire among consumers to purchase healthier products. But there is little hard evidence to suggest shoppers are actually shifting their purchasing towards products overtly positioned as “better for you”.

In fact, the market for low-fat spreads has suffered a 4.2% fall in volume sales in the past 12 months, alongside an inflation-driven 2.8% increase in value sales, to £202.3m [Kantar 52 w/e 10 June 2012]. With total yellow fats sales growing by 10.6% in value, to £1.4bn, and falling by just 0.6% in volume during the same period, that means low-fat spreads were outperformed by both dairy and margarine spreads [Kantar].

These statistics highlight the paradox facing suppliers - consumers want to choose healthier products, but in doing so, are refusing to compromise on taste. “The market is not necessarily moving towards healthier products per se,” says Stuart Ibberson, senior director of BSM and shopper marketing at Arla Foods. “What it is moving towards are products that deliver against both taste and health, so if you can deliver against the two you’ve got a really powerful product.”

Arla’s bid to develop this resulted in the launch of Lurpak Lightest in January - billed as Lurpak’s biggest launch in a decade, and which Arla says has already delivered sales of £6m. The 40% fat content in Lightest, which compares with 60% fat in Lurpak Lighter, puts Lightest on a par with low-fat category stalwart Flora Light, and because Lurpak Lightest contains real butter “it delivers on the taste side as well as the health side,” claims Ibberson.

The response to date from both the trade and consumers has been encouraging. Sainsbury’s butters and spreads buyer Louise Dolan singles out Lightest as the strongest piece of branded innovation in healthy butters and spreads in the past year, and Ibberson claims to have seen a migration from pretty much all of Lurpak’s competitors into Lightest.

Rival Flora has also put health at the top of its agenda, albeit by way of product evolution rather than revolution. In January, Unilever relaunched Flora Original and Flora Light with a new formulation that preserves the natural goodness of the canola, linseed and sunflower oil used in Flora spread. “There’s a constant need for [products] to be healthier and a reluctance to compromise,” explains Flora brand manager Ally McKerrow. “The conception of this project was really about how we deliver a product that’s both healthier and tastier for the consumer.”

“Horrible, horrible, horrible”

“I’m starting to look for some other brand” Flora Facebook posters

Flora has undeniably delivered on the first front, with the new Flora Original and Flora Light containing, on average, 80% and 87% less saturated fat than butter. But the jury is still out on whether the new products have lived up to consumers’ demanding taste expectations. The Grocer’s message boards, as well as Flora’s own Facebook page, were awash with negative feedback as the newly reformulated products began rolling out to stores in the spring. “Horrible! Horrible! Horrible!” was one poster’s reaction. “I’m starting to look for some other brand,” said another.

McKerrow admits initial feedback in some quarters “has not always been encouraging”, but points out a resistance to change is normal. “When things change, sometimes they change for the better and at first we don’t all recognize it and then we get used to it and grow to like it,” he says.

Unilever recently commissioned some research into consumer responses to the new blends, which McKerrow says allayed fears that people would change their future purchasing habits. “There are a great deal of people out there that are really preferring the new product and noticing that it tastes better,” he says. And he stresses that Unilever remains 100% committed to the new formulation.

Still, the tribulations of Flora provide a cautionary lesson for brands looking to improve their health profile. Balance is everything, and if you get it wrong, or move too fast too quickly, the product runs the risk of being rejected by some consumers.

Own-label competition

Branded suppliers also face competition from increasingly sophisticated own-label lines, which can put a quick end to new launches. Last August, Kerry Foods launched a copycat Flora brand, Smart Health, into Tesco with the intention of capitalising on interest in health, but the range was axed in May and replaced with own-label spreads - Tesco Enriched Sunflower and Light Spread.

Kerry says the decision to withdraw Smart Health was taken because Tesco wanted to concentrate on its own-label lines, and this focus on own label is clear to see across the market: whereas the total BSM market has shrunk by 0.6% in volume terms over the past year, own-label volume sales are up by 1.5% [Kantar].

But the strong performance of own label and negative growth in the low-fat market has not dissuaded other brands from developing healthier products. In May, Weight Watchers re-entered the market after an eight-year absence with Dairy Spread and Half Fat Butter Block products. Manufactured under licence by Glanbia Consumer Foods, the products are aimed at complementing WeightWatchers’ sliced bread and sandwich alternative products, offering opportunities for cross-category promotion.

“Our objective is to deliver incremental volume and value to the very large butters and spreads category,” says William Wake, UK manager for Glanbia Foods. “Consumers want great tasting low-calorie alternatives from a brand they trust.”

More than just low-fat

Low-fat products, of course, represent just one part of the healthy spreads market, and elsewhere there is evidence to suggest consumers are increasingly prepared to pay a premium for products that actively improve their health. Sales of Unilever’s functional spreads brand Flora Pro-activ grew by 5.8% in volume in the past year [SymphonyIRI 52w/e 14 April 2012], and Adrian Adams, Unilever UK senior category manager for chilled foods, believes the functional sub-category has significant potential for future development. “A quarter of the UK population has got some sort of intolerance or allergy, so there is certainly headroom for growth,” he says.

Fellow functional spreads brand Benecol also believes the active health market is insulated from the march of own label because consumers are purchasing trusted brands to help them lower their cholesterol. “Within the cholesterol-lowering market, private-label butters and spreads have little or no impact on sales of Benecol spreads,” says a spokesman.

The continued success of functional spreads shows new product development in healthy spreads need not be all about a reduction in fat. Spreads with olive oil have gained traction in recent years as an alternative to low-fat products, and brands are putting in a strong performance - Bertolli has increased volume sales by 18.2% since the start of the year, with value up 13.3% [Symphony IRI 52 w/e 9 June 2012].

Olive oil-infused BSM products are doing well because they deliver against taste and offer a natural proposition that appeals to consumers, adds Ibberson at Arla, which launched an olive oil Lurpak variant last July.

The next wave of healthy spreads innovation looks set to focus on adding “good for you” ingredients rather than simply taking away fat.

Dairy Crest’s Clover Seedburst - a spread containing seven wholegrains and seeds - is particularly noteworthy, containing about 70% less saturated fat than butter. The company used to market a similar seeded spread under its French St Hubert brand (recently sold to private equity-backed company Brassica Acquisition), and Louise Pike, head of marketing for BSM at Dairy Crest, believes the product “perfectly aligns with the growing health and wellbeing trends”.

As Pike points ou, the butters and spreads category is a high penetration, non-expandable category and “only by giving the consumers new and exciting reasons to trade up, increase usage or add another BSM product to their repertoire can we grow this category.”

The launch of Clover Seedburst could be a pivotal moment for future butters and spreads innovation - simply removing fat may no longer be sufficient to win over an increasingly demanding consumer.

Indeed, could it be that future innovation will finally seek to add a whole new flavour dimension to spreads, mirroring the flavoured butters so popular among celebrity chefs?