The study commissioned by the Finnish Ministry of Agriculture and Forestry was undertaken during 1977 to 1998 as a joint venture between Finland-based Bio Business Consulting and Sparks Companies, Inc., Memphis, U.S. This article is based on a report of the study’s results, first presented by Timo Pullinen of Bio Business Consulting at the 6th International Oat Conference held at Lincoln University, Lincoln, New Zealand, in November 2000.
As part of the study, more than 100 Europe-based and 50 U.S.-based companies in the oat and food industries were interviewed and answered questionnaires.
There is great market potential for oats in food markets, according to results from a global market study commissioned by Finland’s Ministry of Agriculture and Forestry to discover the trends and opportunities in oat consumption, processing and production.
The study, the most recent of its kind, showed that global oat production stands at about 30 million tonnes, or 1.6% of total world grain production. This share has been declining and global oat consumption is predicted to shift away from feed into food consumption as human consumption increases and as other feed grains take market share from oats in feed rations.
The global oat trade is heavily dominated by North America, with the United States as the largest importer and Canada as the largest exporter. Canada is expected to continue to be the primary source of oats for the U.S. as well as to market oats in Asia and Latin America.
In the past, the exportable surplus of oats from the E.U. has ranged between 100,000 and 800,000 tonnes. The U.S. market is expected to absorb only part of the forecasted E.U. oat surplus, therefore new markets need to be developed.
OATS FOOD MARKETS
Human consumption of oats is rather low, with the U.S. at 3.5 kg per capita and the E.U. at 1.5 kg per capita. The top consuming countries are Canada, U.S., Scandinavia, U.K., Ireland and Germany. Prime oat products include porridge, ready-to-eat (RTE) breakfast cereals (müsli, extruded cereals), cookies, baby food, bakery products and snack bars.
In the U.S. growth in consumption of oats has lagged behind that of other grains such as wheat, rice, maize and durum that have benefited from the rising popularity of "ethnic" foods such as pizza, tortillas, pasta, and oriental foods.
However, oats have many positive attributes for the food industry. Oats combine excellent eating quality with convenience and health benefits, such as low fat and high fiber. As the average age and health consciousness of Western Europeans and North Americans grow, the role of food in the well being of aging people will become increasingly important, and oats could find an important market in this sector.
Western consumers are increasingly aware of the importance of fiber in the diet, and consumption of oat bran, one of the best known and accepted fiber sources, should increase. U.S. consumers are advised that 35 grams of fiber is a "healthy" level of intake. But on average Americans eat only 11 grams of fiber, leaving plenty of room for consumption to reach an optimal level. U.S. Food and Drug Administration labeling of oat products is expected to eventually have a positive impact on consumption.
Japan also offers strong potential for the development of oat-based food product markets. Very little oats are currently used, but as diets in Japan and other Asian countries become "westernized," there is an increasing need to add fiber to the diet. Additionally, Japan is a leading player in the development of functional foods.
Because of the large low-income population in regions such as South America, Asia and Africa, there is potential to promote oats as a "complete" food that is both economical and nutritious.
Good marketing and promotion are required to strengthen demand for oats in food. Unlike many other food products, such as beef, milk, orange juice and raisins, oats have not had marketing campaigns aimed at boosting consumption, although there has been some interest among European oat companies in joint marketing and advertising.
The market for organic products in both Europe and North America holds great promise. In Europe north of the Alps, the organic share of markets is 1% to 2% and growing; forecasted market potential ranges between 5% and 10%. The U.S. market for organic products is growing at a rate of 20% per year. Generally speaking, in both the E.U. and U.S., large commercial firms have ignored the organic markets.
Oats is one of the easiest grains for organic production. Premiums for organic oats and oat products strongly affects the market: the higher the premium the smaller the market and vice versa. Millers interviewed for the study advised that for any significant growth to occur in the market, premiums for organic oats should be no more than 25%, and 10% for organic consumer products.
These lower premiums are definitely not the case in the U.S., where price premiums for organic grains are high and have even increased in recent years — prices are about 60% to 70% above normal base prices. At the consumer level, prices are two to three times conventional products.
FOOD AID PROGRAMS
Another growth opportunity for oats could be in Food Aid, which represents about 5% of the food consumption of developing countries. In the past oats and oat flakes were used more frequently in food aid programs, but wheat, rice and maize dominate today.
Oats would be a good fit in the Food Aid programs for many reasons, primarily because oats are nutritious and easy to use either raw or cooked. Wheat flour is 50% cheaper per kilogram than oat flakes, and the report says that neither the nutritional quality nor convenience of oats has been considered or favored. Information about the benefits of oats should be given both to aid givers and recipients, the report suggests.
The study recommends a number of actions to encourage the development of oat food markets, principally:
• Plan and implement a major European marketing and lobbying campaign to increase the knowledge about oats and strengthen the positive image of oats.
• Inform the E.U. commission about the benefits of oats.
• Develop suitable products for developing countries and Food Aid programs and actively sell and promote to these outlets.
• Grow and market organic products.
• Develop global oat convenience health food businesses, supported by oat marketing programs.
• Create partnerships targeting new oat markets (such as South America, Asia).
• Initiate an E.U. research program covering basic health-related aspects of oats as well as the basic food chemistry and processing technology of oats.
• Develop oat-based consumer products with excellent eating quality and health properties.
• Intensify oat-breeding programs.
Finland has already initiated a coordinated program where different groups are partnering to strengthen competitive position and develop new markets and applications for oats.
The formation of an international oat technology and business development program is also recommended. The program should include the development of standards for oat soluble fiber and its functionality, provide verification of B-glucan stability in consumer products during processing and distribution, build a global brand for oat B-glucan based on the above standards, and plan the improvement of oat lipid stability.
A strong interest in oat product development
As part of the study, a comprehensive written survey on food use of oats was conducted. Here’s a review of some of the critical findings.
Health properties of raw materials are the most important R&D topics now.
Natural ingredients and fiber-enriched foods are regarded as the most important nutrition-related consumer interests. Health promoting properties are the most important strength of oats. Other positive aspects are taste and quality.
The image of oats is not strong enough.
Negative aspects of oats were mentioned less frequently than positive aspects in the questionnaires. Many of the negative aspects noted are related to insufficient product knowledge; therefore it is possible to change those beliefs with marketing efforts.
Two-thirds of the respondents will use oats in new products.
New oat products were reported to be launched in the following product groups: health oriented foods, bakery products, biscuits, cookies, snack bars, breakfast cereals, prepared foods and baby foods. Nearly one-third of the respondents do not know enough about oats to give opinion about the future use of oats, reflecting an immediate need for active marketing of oats.
There is interest in traditional oat ingredients (oat flour, flakes and bran).
A major conclusion from the market research is that there is a surprisingly strong interest and willingness to use oats in product development. Of the new novel oat ingredients, the B-glucan enriched fraction, attracted high interest.
The 7th International Oat Conference, the next in the four-yearly series of meetings, will take place in Helsinki, Finland, July 17-22, 2004, with the theme: "Born to be functional." For more information on this event visit www.ioc2004.org.
For more information and to obtain the proceedings of the 6th International Oat Conference, edited by R.J. Cross, New Zealand Institute for Crop & Food Research Limited, Christchurch, New Zealand, contact Georgina Hall at HallG@crop.cri.nz.