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'Phood' forges a strong future in the US

06-Jan-2005

The functional foods and drinks market in the US is likely to continue its healthy growth curve through 2009 and could be worth $20 billion by 2007, according to a new report by Packaged Facts, writes Jess Halliday.

The market research publisher estimates that 'phood' and 'bepherages' - marketers' consumer-friendly terms for products that combine the health benefits of foods and drinks with those of pharmaceuticals - achieved retail sales of $16.2 billion in 2004. The market is expected to increase its annual 7 percent growth rate to at least 8 percent over the next five years.

The report The New US 'Phood' Market cites increasing awareness of the health and health care cost implications of the nation's obesity epidemic as a main cause for the upsurge of interest in phood.

It cites the results of the Shopping For Health 2004 survey carried out by Food Marketing Institute/Prevention Magazine as evidence that consumers are responding to stark warnings that they must improve their health or suffer the consequence.

Fifty-six percent of survey respondents strongly agreed that healthy eating is a better way to manage illness than taking medications, and 59 percent said they aim to eat healthily in order to avoid health problems in later life. Of the 83 percent who claimed to consult the Nutrition Facts label when choosing a product, 91 percent said they used information as the basis for their purchasing decision.

In order to stay competitive over the next five years, food companies need to develop specially targeted products that address the needs of certain sectors of the population, such as baby boomers, women, children and sufferers of ailments like diabetes and lactose intolerance, Don Montuori, acquisitions editor at Packaged Facts told NutraIngredients-USA.com.

"They should also look at reformulating existing mainstream products to have some health benefit and advertise that fact," he said.

"In mature food and beverage categories - such as breakfast cereal and juice - marketers can use medically beneficial formulations to strengthen brand differentiation, expand market share, draw new users and increase consumption among established users."

Nonetheless, Montuori urged companies to seek a balance between health claims and traditional consumer appeal: "Be careful not to make products seem too medicinal, as that will turn people off."

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