SUBSCRIBE

Breaking News on Supplements & Nutrition - North AmericaEU edition

News > Markets

The omega gamble, investing in functional foods

17-Jun-2003

Intensive marketing and increased health preoccupations could both be responsible for the mounting consumer awareness of fatty acids in Australia and New Zealand and the favourable perception of polyunsaturated 'good' fats - such as omega-3 obtained from oily fish, claims a new study.

Market analysts Frost & Sullivan reveal that the fortification of foods such as bread, dairy, eggs, infant formula, spreads/margarines and meats, is set to widen the appeal of the omega-3 sector.

 

Wellbeing promoting qualities, particularly its proven ability to aid brain growth and repair, reduce risk of coronary heart disease, and enhance visual acuity and joint health, have helped omega-3 to gradually penetrate the public consciousness.

 

According to the report, this industry represents a €38 million opportunity for food manufacturers, expected to grow by 10 per cent per year for the next three years before reaching a plateau. Thereafter, growth will be levelling off as the market reaches the optimal number of brands and companies.

 

The trend towards fortification of food - the addition of nutrients such as vitamins, folate, minerals, and herbal extracts - has created a more conducive environment for the increased acceptance and consumption of omega-3-fortified foods, continues the report.

 

While the number of food applications will increase, the market will eventually see the path of growth slowing which, in turn, will help stabilise the market. A number of manufacturers are introducing new omega-3-fortified products as a method of differentiation and to capitalise on the move towards functional foods, but the industry remains far from saturated.

 

Ivan Fernandez, research analyst at Frost & Sullivan, points to the buoyant dietary supplement segment as a significant force behind the omega-3 fatty acid message filtering through to the mass consumer base from the core dietary supplement user-group of informed and discerning and health-conscious consumers.

 

"The market for omega-3-fortified foods in Australia and New Zealand does not have a strong consumer 'pull' factor acting as a demand driver. Instead, it has been the 'push' factor from food manufacturers keen on maximising the value of the functional food trend, which has brought omega-3 into focus,"he said.

 

Companies vying to differentiate themselves and create a unique selling proposition for their functional food products and increase the 'value-added' features of their product portfolio have found an effective tool in omega-3 fortification to cement their presence in the overall market, write the analysts.

 

Their efforts to make omega-3 fortification more palatable to the consumer will continue to bolster market performance. The resulting augmentation of product availability will help enhance consumer awareness of omega-3 and ultimately have a positive knock-on effect on demand.

 

The strong nutrition messages from the National Heart Foundation and the organisation's recommendations of adequate intakes of 'good fats' through the consumption of at least two fish meals a week, will further stimulate growth in the overall marketplace. Going forward, food manufacturers face more rigorous checks on the health claims of their products and new rules about the way they label them.

 

"While several brands do benefit from the use of the Tick programme of the Heart Foundation, the inability to make specific health claims continues to hamper market growth," added Fernandez. "The restriction on permissible levels of the nutrient additive also limits product development. In addition, the absence of a recommended dietary intake (RDI) is a significant restraint to market take-off."

 

So a vibrant, progressive market, but what about entry barriers? According to the report, it comes down to one crucial factor - money. The most prominent obstacle for new entrants is the substantial investment required for R&D and marketing essential to make the brands succeed.

 

The report adds that, as is the case with most emerging functional food concepts, the transition from increased consumer awareness to improved consumer understanding, and finally to increased consumer acceptance of omega-3 fortification is subject to significant restraints.

 

These limitations include consumer misconceptions regarding fats, the price premium on omega-3-fortified foods, the prevailing suspicions regarding 'engineered' foods, regulatory restrictions regarding the making of health claims and the absence of a recommended dietary intake (RDI).

 

Further reports about the developments in the functional food industry can be located in the market reports section of FoodNavigator.com.

 

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Key Industry Events

 

Access all events listing

Our events, Events from partners...