Functional foods growth led by snack and cereal bars
are on the rise in the US market, with bakery and cereals set to
remain at the heart of this trend for at least the next four years,
reports Chris Mercer.
By 2008, Americans will spend almost $40 billion, up 38 percent from 2003, on functional food, drinks and supplements designed to give short-term benefits in their appearance, as well as provide energy and added nutrition, according to a report by consumer market analysts Datamonitor.
And functional bakery, snacks and cereals are forecast to make up one of the strongest areas of the so-called functional health products industry, accounting for 13.2 percent of sales by 2008, up from 11.7 percent in 1998.
Much of this sector has been driven by functional snack and cereal bars, including energy bars, protein bars and nutrition bars, and their dominance is expected to continue over the next five years. A number of big players already have a stake in these products, including Nestlé's Powerbar brand and Kraft Foods' Balance Bar.
"Many ingredients companies interviewed note that much of the interest from manufacturers for new functional health product formulation centres on adding nutrients to functional food bars," says the report.
Fortified cereals are another established part of the bakery category which continues to show potential. Earlier this year, food giant Kellogg launched a version of its Smart Start cereal fortified with soy protein.
Soy protein is thought to help protect against heart disease, alleviate menopausal symptoms, improve bone health and provide a good alternative to meat for vegetarians.
A number of cereals currently in the functional health sector have focused specifically on more senior women, such as PepsiCo's Quaker Oatmeal Nutrition for Women and General Mills' Harmony brand, but Brenna Tinkel, market analyst at Datamonitor and the report's author, believes manufacturers can gain from targeting a wider audience, especially the young.
"The younger Generation X and Generation Y consumers are just as interested in functional health products with a beauty bent as [so-called] Baby Boomers," she said.
Functional bread is a little way behind its other baked goods in terms of moving into this new sector, mainly because high temperatures involved in baking can destabilise functional ingredients. But the report states there may be new potential for growth over the next four years.
For example, Canadian ingredients company Nova Scotia has created a heat-stable and tasteless powdered version of the omega-3 fatty acid, which could be used in baking recipes to allow new developments in functional bread.
Omega-3 and Omega-6 fatty acids come from sources such as marine oil, flax oil and algae oil which have a long history in therapeutic use. The two acids are thought to contain health benefits unmatched by any other ingredient and scientific evidence of their ability to prevent heart disease, cancer and other diseases is growing.
The Datamonitor report echoes a similar study just published by Reuters Business Insight which says that globally, functional foods are expected to be the most successful health food products of the future, with key products including probiotics, energy-boosting foods and vitamin and mineral supplements.
And the RBI report says that this trend will only grow as consumers learn more about the ingredients appearing on products' nutrition labels, emphasising that this has already started with some ingredients such as fibre and vitamin C.
While making health claims can be "a legal minefield", highlighting products that contain specific ingredients "will be helpful to consumers who are already increasingly building the knowledge of which ingredients are linked to which concerns", the report claims.
Other sectors tipped by Datamonitor for success in the functional health products trend are confectionery and beverages. US consumer spending on functional beverages nearly doubled between 1998 and 2003 and is forecast to grow by another 46 percent, $7.4 billion, by 2008.
Skincare may be a lucrative market for these two sectors. Coca-Cola's Japanese branch recently launched Coca-Cola Biyo containing biotin, rose hip extract and hyaluronic acid to improve skin health. US natural and organic cosmetics producer, Ecco Bella, also recently introduced its Health By Chocolate range, a line of chocolate bars and drinks aimed at improving skin health.
