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September 23, 2007 4:23 pm

Foreign culture makes selling bacteria a strain

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Miguel Freitas has a PhD in cell biology and spends a lot of time talking to medical academics, doctors and other health professionals.

But as medical marketing director of Dannon, the US subsidiary of Groupe Danone, his business is not pharmaceuticals but yoghurt.

Mr Freitas hopes his scientific training will help him win over sceptical US scientists in order to persuade consumers to follow.

The Portuguese national came to the US more than three years ago to market the launch of Dannon’s Activia yoghurt to the medical community.

The probiotic yoghurt carries a patented live bacteria that has been shown in clinical tests to ease what Dannon executives politely call digestive “transit” problems, or constipation. Marketing cures for constipation is never easy, but while Europeans and Japanese have been consuming probiotics in increasing numbers, the idea of “good” bacteria delivering functional health benefits is relatively new to the US, which also consumes less yoghurt overall.

According to figures from Euromonitor International, Americans will consume about $5.4bn (€3.8bn) (£2.7bn) worth of yoghurt this year – only a third of the $17.4bn eaten in western Europe. And while probiotic yoghurts are popular in Europe, with sales of about $3.2bn, that is about four times US consumption.

“For us, the US is a growth market,” says Andreas Ostermayr, chief marketing officer of Dannon, who says that Dannon’s initial consumer tests of marketing bacteria that were supposed to be good for the digestive tract were “not that encouraging”.

But in the first year of its launch, Dannon’s Activia, with its patented Bifidus Regularis culture, delivered retail sales of about $200m. This year, the company is following up with the launch of DanActive, the US version of the yoghurt sold as Actimel in Europe, which it says is “clinically proven to naturally strengthen the body’s defence system”.

Mr Ostermayr says the decision to launch a US version of Activia followed an extensive review of Dannon’s US operations and products.

The company came to the conclusion that broad trends such as an increased focus on health and wellness would support the launch, even if initial consumer tests showed a less than enthusiastic response.

Mr Freitas’s medical work is aimed at winning over the academic and medical establishment, which historically provided the foundations for the probiotic market in Europe and Japan. Over a century ago, Elie Metchnikoff, a renowned Russian scientist, started drinking sour milk every day, having concluded that it could promote longevity. And his work at France’s Pasteur Institute was later developed in
the 1930s by Minoru Shirota, a Japanese microbiologist who developed the bacterium used in the drinkable yoghurt developed by Yakult, the Japanese food company, in the middle of the 20th century.

But the US medical community has not followed suit. When Dannon first attended conventions of US gastroenterologists seven years ago it found a sceptical audience, which Mr Freitas says was “focused on getting a drug inside a person who has gastro-intenstinal problems”.

“I remember the first time we exhibited at a conference, and the reaction was like: ‘You’re going to make me eat bacteria?’”

To promote academic research, Dannon worked with rival Yakult to fund a symposium last year on the health impact of probiotics at Harvard Medical School’s Division of Nutrition. Dannon’s marketing is also placed in specialised medical publications.

At the same time, its consumer marketing is, according to Mr Ostermayr, based on a strong functional message that brings it closer to pharmaceutical marketing.

“If you look at the ads, they’re kind of boring, yet very credible.”

The company is now facing competition, a mark, Dannon hopes, of the US consumer’s changing tastes. General Mills’ Yoplait launched Yoplus, marketed with a “unique Optibalance” mix of special cultures and fibres. Last year, Kashi, a US natural foods company, launched a probiotic cereal, also aimed at “digestive wellness”.

Dannon has responded by promoting its clinical credentials – highlighting the results of research trials proving its two bacteria’s effectiveness – setting the stage for what is likely to become a lively battle over the medical merits of patented individual culture strains.

Mr Ostermayr is confident about the company’s prospects. “The question is not how much but how fast can we grow.”

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