The setbacks for the heavily hyped brands underscore the inability of even top marketers to crack the code for functional foods -- a category that was expected to skyrocket but has instead sputtered.
McNeil's Johnson & Johnson arm, which introduced the Benecol brand as a spread in May 1999, has abandoned the Benecol Snack Bars it launched in October. McNeil and Unilever also have eliminated the single-serve forms of Benecol and Take Control, respectively, citing slow sales. Both marketers eliminated salad dressings from their lineups earlier this year for similar reasons.
Benecol and Take Control spreads are still available in tubs. But even those products have shown disappointing results so far. Benecol's spread had sales of $30 million for the 52 weeks ended June 18, while Take Control's regular and light margarines together totaled $31 million, according to Information Resources Inc.
"The spreads are selling maybe five or six cases a week and that's nothing. We should probably throw them out," said one Midwest retail executive. She said that even though she has high cholesterol, she would not pay the $5 price tag for Benecol: "I see Benecol going out the door unless they do something drastic to promote it."
Unilever still backs Take Control with consumer advertising from McCann-Erickson Worldwide, New York. But McNeil pulled an ambitious TV campaign for Benecol, created by Saatchi & Saatchi Healthcare, in November. Its focus shifted to ads aimed at doctors and patients, work handled by medical agency NCI Advertising.
DRUG SALES SPURT
While the functional foods sputter, sales for cholesterol-lowering, or statin, drugs are booming. Led by Pfizer's Lipitor, Merck & Co.'s Zocor and Bristol-Myers Squibb Co.'s Pravachol, all of which are heavily advertised to consumers, the category had sales of $701 million in May alone, up 28% from the same month in 1999, according to IMS Health.
"Consumers would rather medicate their way to health than eat their way to health," said Salomon Smith Barney analyst Jaine Mehring. "Why eat seven spoons of something when you can pop a little pill?"
McNeil is trying to capitalize on the growth of the cholesterol-lowering drugs, showing through a study published this month in The American Journal of Cardiology that Benecol spread used in conjunction with statin drugs can further reduce cholesterol. The single-serve Benecol portions taken off retail shelves are now being marketed to hospitals for cardiac patients under a program called "Healthy Hospitals."
McNeil has reached more than 30,000 physicians who recommend it to their patients, said a company spokeswoman. But, she ceded, building mass-market appeal for the brand has been slower than expected. "It's a challenge to educate people on the difference between Benecol and a low-fat margarine," she said.
To do so, McNeil and Unilever together spent $31 million in measured media on their functional spreads.
MORE OFFERINGS PLANNED
Despite the bleak outlook for Benecol and Take Control in addition to the failure last year of Kellogg Co.'s cross-category cholesterol-lowering Ensemble, most major food and pharmaceutical marketers are readying functional food entries.
Kellogg still has a Natural & Functional Foods division. ConAgra late last year formed a Wellness Group and H.J. Heinz Co. also has a dedicated unit. Pharmacia Corp. this year hired FCB Worldwide, New York, to handle its estimated $30 million functional foods account.
Novartis Consumer Health and Quaker Oats Co. recently formed a joint venture, Altus Food Co., to develop and market offerings in functional foods, and Novartis is preparing its own product launch. Although the pharmaceutical marketer has launched a line of functional products under the Aviva brand outside the U.S. that carry heart, bone or digestive benefits claims, it has not committed to bringing Aviva to the U.S. A Novartis spokeswoman said the barriers to entry in the U.S., including taste demands, are higher.
In a recent survey of 144 industry executives in the U.S., Japan and parts of Europe, Datamonitor found the market for functional foods has shifted toward drinks as the vehicle to pass on healthy ingredients.
"Benecol has not been the wonder product everyone thought it was going to be because you need to consume a lot of it to accrue its benefits," said Datamonitor analyst Neil Broome. "People want more of these magic-bullet solutions, such as energy drinks that offer general well-being benefits without having to consume them religiously multiple times a day."
FDA URGED TO HALT SALES
But even those products, which have indeed been selling well in the U.S., came under fire last week from consumer group Center for Science in the Public Interest. The group urged the Food & Drug Administration to halt the sale of dozens of functional foods it says contain unsafe ingredients and mislead consumers about their health benefits.
Still, analysts -- like marketers -- remain hopeful the nascent segment's problems can be fixed.
"While I'm skeptical short term, I'm optimistic that functional foods are going to benefit the industry long term," said Prudential Securities analyst John McMillan.
Salomon Smith Barney's Ms. Mehring said: "It will be three to five years before functional foods really have a meaningful impact on growth rates for companies in the U.S."
Contributing: David Goetzl