The rise of nutraceuticals: how the ‘placebo-driven’ industry has got us hooked

| 23rd March 2012
Dietary supplements in pill form
Consumer addiction to dietary supplements and functional foods drives the nutraceuticals industry
Big companies, from PepsiCo to Kellogg’s, are cashing in on our interest in health food ‘quick fixes’ while continuing to sell us high fat, sugary foods

Each time you visit the supermarket you’re likely to notice a new product promising good health and renewal. Water is enhanced, and conveniently sold in bottles. Fibre is tucked into yogurts and cereals. And antioxidants are injected into just about everything. We’re told on a daily basis that such products are essential for our wellbeing. Plain old whole fruits and vegetables appear archaic in a supermarket stuffed to the brim with nutraceuticals promising to make us fitter, faster and younger. And on top of the ‘functional foods’ we consume, we continue to swallow daily doses of dietary supplements, a market worth £674.6 million in the UK in 2009, with multivitamins and fish oils topping the list, according to the NHS.

But the companies behind such nutraceuticals may surprise you. From PepsiCo to Kellogg’s to Monsanto, big businesses appear to be scrambling to get in on the health food craze and capitalise on our insecurities. Many of these companies market sugar-laden products to us as kids and promise to reverse the damage done with nutraceuticals when we’re older. We down Mountain Dew as teens and wash it away with SoBe V-Water 20 years later, or chow down Coco Pops as tots, and opt for Special K as adults, hoping to curb our sugar addictions. 

And the products promising a rush of nutrients may not be providing any benefit at all, claim some commentators. A leading expert says the industry is largely placebo-driven. This may in part be due to a reluctance to invest in clinical research; additionally, the consumer base doesn’t demand such efforts. Because even without scientific proof of their effectiveness, we continue to buy these bars, drinks, supplements and cereals, hoping they will eventually slim, fortify and de-age us. As a result, the nutraceuticals market is expected to reach $207 billion worldwide by 2016, according to a report by Companies & Markets

The start of something big

The word nutraceutical, a combination of ‘nutrition’ and ‘pharmaceutical,’ was coined by Dr. Stephen DeFelice in 1989. ‘It is a food or part of a food that has a health and medical benefit, including the prevention and treatment of disease,’ he told the Ecologist. Probiotics, antioxidants, vitamins, fiber, fish oil and lycopene all fall into the category, but so do energy bars, fortified cereals and enriched yogurts.

DeFelice recognised a need for a word that encompassed everything from dietary supplements to pharma foods to herbal remedies. A single term would not only make it easier for governments to eventually regulate such products, but also bring some order to the ‘chaos’ he says rules the industry.


A staunch advocate for clinical research, DeFelice established The Foundation for Innovation in Medicine in 1976, ‘a nonprofit foundation whose primary purpose is to accelerate medical discovery by creating a more productive clinical research community.’ In 1989, and again in 2002, DeFelice lobbied to bring clinical research into the nutraceuticals industry by proposing his Nutraceutical Research and Education Act (NREA) to the U.S. Congress. ‘It became apparent to me, that unlike the pharmaceutical industry, which is a proprietary high-profit margin industry driven by clinical research, the [functional] food and dietary supplement industry is a commodity business with low profits and very little clinical research to prove that their products work,’ he says. 

DeFelice saw an opportunity for companies to not only conduct studies to support the claims they make, but to also make money, something he thought would be appealing to the major players in the industry. ‘If you want to do a study on your cereal to show that it lowers cholesterol, you can make a claim on that cereal and nobody else can,’ he says, adding that this is a big marketing advantage. But DeFelice was dismayed to find little, if any, support for his bill. ‘It’s a marketing driven industry, not a research driven industry.’ 

Julie Carrier, professor of biological and agricultural engineering at the University of Arkansas, says testing in the industry is getting much better, but a lack of funding will always be a hindrance. ‘The pharmaceutical companies are not interested in funding this type of research because the molecules are not patentable, so there’s no money to be made,’ she says. ‘So there are very few studies going on, at least in the U.S., that are looking for correlation and understanding of biological activity compared to the whole big scheme of pharma.’ For example, she says, a bottle of milk thistle may cost $8 or $9, which is nothing compared to the profits derived from pharmaceuticals. ‘So the profit share in the nutraceuticals industry approaches much more that of the food industry, which is pennies compared to the pharma profits.’

But DeFelice believes a great opportunity was bypassed, and though he doesn’t look negatively upon the industry, he says it isn’t living up to its potential. ‘The dietary supplement and the functional food industry is primarily a placebo-driven industry,’ he says. ‘I say that’s good because the risk is not great and the benefit is very, very good. On that alone, I would say ‘Bravo,’ but it’s a shame. It could do so much more.’

Big brands invest

The abundance of choice in Western culture can be a detriment to health, Carrier says.  ‘In other cultures they don’t have the luxury of deciding whether it’s going to be lentils or Doritos,’ she says. But U.S. consumers are constantly choosing between “good” and “bad” foods. ‘We’re all trying to find a way that we can consume these high fat, sugary foods and still be OK,’ she says. ‘What the multinationals are doing is they’re recognising this and trying to give us guilt-free bad choices.’ In the past few years, big food and beverage brands have taken notice of the growing popularity of nutraceuticals, forming partnerships aimed at developing such products.

In 2010 cereal giant Kellogg’s teamed up with Ajinomoto, a Japanese company that specialises in the production of nutraceuticals. A large producer of aspartame, Ajinomoto is also known for the controversial monosodium glutamate (MSG), developed by the company in 1909. Together, Kellogg's and Ajinomoto ‘plan to focus on developing products that deliver benefits in the areas of weight management, sugar reduction, and sodium reduction,’ using ingredients such as the fat-burning capsiate1 and sweetener monatin2, according to a 2010 press release by Ajinomoto. 

Known for cereals like Special K and Optivita, which are marketed as slimming, Kellogg’s also produces sugary breakfast favourites like Pop-Tarts and Coco Pops. The company was recently slammed for denying a link between sugar and obesity on the website for its chocolaty cereal. Following a ruling by the ASA, Kellogg’s is revising the recipe for Coco Pops to ensure that none ‘will have more than around 10 per cent of your GDA for sugar per 30g bowl.’ Even so, the company continues to shun criticism stating on its website: ‘Sugar has been an important part of our diet for years as it is an important form of carbohydrate and a good source of energy, especially for the brain.’ Kellogg’s did not provide responses to the Ecologist's enquiries.

Also in 2010, food conglomerate PepsiCo acquired 66 per cent of Russia’s leading food and beverage company Wimm-Bill-Dann in a 3.8 billion dollar deal. ‘Our acquisition of WBD and its market-leading Russian dairy business gives us substantial, exportable capacity in a segment providing key benefits, such as calcium and protein, which provide functional benefits like improved bone health,’ Marina Kagan, of PepsiCo Europe, told the Ecologist. 

Known for its colas and crisps, PepsiCo also owns Naked Juice, Gatorade, SoBe and Tazo, all of which are marketed as being beneficial. ‘We think health and wellness will be a $30 billion global business for PepsiCo by 2020,’ Kagan says. ‘As our consumer research shows, healthy food and drink categories are among the fastest-growing, worldwide - and there’s a continuing trend toward healthier foods as the world’s population ages.’ 

And it’s not just food companies cashing in. Just last month pharmaceutical giant Pfizer purchased Alacer Corp., maker of Emergen-C dietary supplement. And in 2010 agro-biotech giant Monsanto partnered with global soy ingredient company Solae to develop Soymega, the first omega-3 oil derived from soybeans. Unlike conventional soybean oil, Soymega contains stearidonic acid, which ‘is more efficiently converted to heart-healthy EPA (eicosapentaenoic acid) compared to ALA (alpha-linolenic acid),’ according to the company.

Other companies invested in the industry include Kraft, Coca Cola, Unilever, General Mills and Mars. 

The future of food

But have our preoccupations with food fads may have made us forget the basic principles of a good diet? In the end, nutrition still boils down to common sense and a balanced meal, say experts.

‘No single food contains all the essential nutrients the body needs to be healthy and function efficiently,’ says Aine O’Connor, of the British Nutrition Foundation. ‘A healthy and varied diet can help to maintain a healthy body weight, enhance general wellbeing and reduce the risk of a number of diseases including heart disease, stroke, cancer, diabetes and osteoporosis.’ 

For DeFelice, this principle is at the core of the industry he helped bring to life.

‘The greatest nutraceutical in the world is a meal,’ DeFelice says. ‘No matter where you are, no matter what you eat, you live. Food keeps you alive.’ But natural substances don’t work alone, they work in combination, he says, and this is where the nutraceuticals industry went wrong, ‘There was a burst of time where they were doing clinical studies and they came out a little negative and everyone backed off,’ he says. Substances, such as vitamin E, were tested alone – as they would be in a pharmaceutical setting – rather than in combinations as they should be, DeFelice says. These ‘flawed’ studies were never refuted by the nutraceuticals industry, and they went back to basing claims on theoretical evidence. ‘The dietary supplement, functional food industry is stuck,’ he says. ‘It’s exactly where it’s been when it started with a little bit more sophistication.’ 

But there are companies taking steps to ‘pioneer a new industry between food and pharma’ and Nestle says it’s leading the way. Known for Kit Kat, Nesquick and Smarties, Nestle also oversees Nestle Health Science, which ‘offers nutritional solutions for people with specific dietary needs related to illnesses, disease states or the special challenges of different life stages, used under healthcare professional supervision,’ Hilary Green, of Nestle SA, told the Ecologist. The company calls its research centre in Switzerland the ‘world’s largest private nutrition research institution, specialising in food, nutrition, safety, quality and life sciences.’

But Green emphasised that, though Nestle is the brand behind Boost, Nutren Junior, PowerBar, Gerber Organic and Jenny Craig in the UK, the company ‘is not in the business of nutraceuticals, nor so called “functional foods,”’ which she calls problematic. ‘Foods are not single molecule compounds that act in a pharmaceutical–like manner,’ she says. ‘Functional foods, and the diet they are part of, are complex mixtures of many molecules that affect many different biological mechanisms in complex ways.’

In 2011, Nestle Health Science acquired CM&D Pharma Ltd., which ‘specialises in the research and development, marketing and sale of FSMPs products - food for special medical purposes tailored for patients with kidney disease, inflammatory bowel disease, and colon cancer,’ according to Green. One such “food” is Fostrap, a chewing gum for kidney patients suffering from hyperphosphataemia, elevated levels of phosphate in the blood. 

Dr. Danilo Massari, founder and president of CM&D, says his company aims to take substances that are commonly used in nutrition and develop them as you would a pharmaceutical product. Such substances are extracted from foods like flax seeds, artichokes, shellfish, eggs and peanuts, purified, and tested for effectiveness and safety. ‘Basically we use evidence-based medicine to prove the efficacy of our products,’ he told the Ecologist. ‘In a certain way we are in between the foods, or nutraceuticals, and drugs.’ More in the realm of medical foods than full-fledged pharmaceutical drugs, the products are still treated as such when prescribed. ‘In other words we need a patient, we need a disease and we need an M.D. recommending this product for use in that specific disease.’

DeFelice says Massari is one of the few who succeeded in making clinical testing an integral part of the development of “alternative” products. But Massari says his company isn’t alone, naming a number of others.  But he does agree that many of the products lining supermarket and drugstore shelves have not been properly tested. ‘There are a number of products there that are indirectly making claims that are totally unsubstantiated,’ he says. 

Conventional wisdom should not be dismissed; it should be tested, says Massari, who will be speaking at Vitafoods Europe, a nutraceuticals conference held in Geneva in May. And doctors need to be more receptive to patients who are interested in such alternative remedies.

‘One wonders whether people are using certain products without medical recommendation due to the fact that they don’t trust their doctors anymore,’ says Massari. ‘Doctors have also to be available to explore alternatives to the classical mainstream of big pharma. Big pharma has an impact with doctors that our segment doesn’t have. We plan to go with plain science, and bring evidence and hopefully convince them that this is a new way to go.’

But DeFelice, who will be the keynote speaker at Vitafoods, says nutraceuticals remain largely untested and placebo-driven, merely giving us hope for our health. ‘I’m all for that,’ he says. ‘But you stay as a commodity, low-profit marketing operation and you don’t elevate yourself into showing that your product works and helps people for real.’ 

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