According to the Nutrition Business Journal, the United States leads the world in terms of market size, with sales valued at $43.9 billion in 2012. Japan comes in second with sales of about $22 billion, followed by the UK ($8 billion) and Germany ($6.4 billion).
Analyst Euromonitor International developed an equation last year - a magic number of sorts - that quantified the readiness of consumers in specific regions to buy functional products by correlating per capita spend on food and drink with per capita spend on FF food and drink.
With a correlation coefficient – the degree to which the two variables’ movements are associated – of 0.84, there is a clear relationship present, it found.
It found North America, Australasia and Western Europe have a higher spend on FF food and drink products which offer preventative health measures, especially anti-aging measures.
Data from the Datamonitor Consumer 2013 consumer survey showed that 52% of American consumers say that the prospect of a ‘product that is naturally high in nutrients’ is ‘very appealing’, said Tom Vierhile, Innovation Insights Director for the market researcher. This contrasts with just 5% that say it is ‘not at all appealing’.
“Another stat from the same survey is that 53% of American consumers either ‘tend to agree’ or ‘strongly agree’ that ‘food or drinks can provide the same or better health benefits as non-prescription medications can’,” Vierhile told us.
“That is a pretty strong endorsement for functional foods,” he said.
According to MSI, the most-consumed functional foods in the US are yogurt for digestive health and cereal for heart health. These are followed by cholesterol-lowering butter/margarine, cholesterol-lowering orange juice, shakes/bars to reduce hunger, orange juice for joint health, and immune-boosting dairy beverages.
Success and failure...
The growth in category worldwide has remained impressive, even during the global economic recession. Curiously, the category also boasts a remarkably high 80% failure rate for new products.
Taking a bigger view, beverages are largest US functional product sector, with sales growing by almost 10% year-on-year from 2011 to 2012 to hit $27.8 billion, according to the Nutrition Business Journal. The most growth is coming in snack foods, with 11.7% growth, although sales are smaller at $3.5 billion. Function dairy sales are growing at a rate of about 7% with sales of about $22 billion.
Functional foods and beverages now account for 5% of the overall food market.
Convergence of nutrition, convenience and taste
So what’s driving all of this growth? Peter Leighton, founder and director of Abunda, has identified seven consumer platforms as “significant” drivers behind the market.
Many functional foods and beverages feed into bigger, macro trends, which in turn “affect consumer attitudes and behaviors,” he told NutraIngredients-USA. He compiled the findings in a report titled How to Succeed in Functional Foods: 7 Consumer Platforms.
“Consumers don't think in terms of ‘functional foods’; but more in terms of, ‘I like that product,’ or ‘That's a better choice than x’,” he said.
And those decisions are influenced by a set of common factors, which include taste, price, validation, experiential nature of a product and simplicity of the concept.
The seven functional foods platforms driving success in this growing market include:
Lifestyle antidote: Many consumers are looking to foods as a health solution for managing chronic conditions, such as diabetes, CVD or obesity—examples include pomegranate juice or beverages or bars fortified with vitamins and added fiber. But when it comes to these foods, taste is key, Leighton noted. “If a functional food tastes as good as a non-functional alternative, and it's not priced too high, adoption will likely pursue intent,” he said.
Healthier snacking: Consumers refuse to give up snacking—evidenced by the projected value of the global snack foods market in 2015 of $334.7 billion—but they do want to feel better about the snacks they eat, according to the report. Indeed, 74% of consumers surveyed believe “natural” means “healthier”. When it comes to snacking, guilt reduction is key.
Boosting reality: Nutraceuticals that pack an “experimental punch”, such as energy or mood alteration always get a strong consumer response; the challenge comes through the inherent paradox that the more experiential the product, the more likely it will face regulatory hurdles.
Better breakfasts: Roughly 31 million Americans don’t eat breakfast, according to the report. Consumers are looking for convenient, fast breakfast options that provide the right combination of nutrition and taste.
Nutricosmetics (or cosmeceuticals): With a growing penchant for self-directed health care (think WebMD), consumers are seeking new functional ingredients for topical use and supplements that provide anti-aging and other solutions. In 2011, skin and hair care nutricosmetics in the US accounted for $4.7 billion and $3 billion, respectively.
Trend monger: From esoteric kimchi brands to forbidden rice, foods that provide a unique ethical or cultural story can become something of a statement or even a “badge of sophistication” for consumers—if they’re fair trade, heirloom, identity-preserved, all the better.
Eco warrior: One step beyond the trend monger, a growing spate of consumers use food choices as a means of activism. Thoughtful ingredient sourcing (with small carbon footprints), manufacturing practices and packaging all factor into products that help drive social change.
Functional foods will continue to influence mainstream products in the near term, as consumers seek more and better options to meet their needs, Leighton said. “Generally I see the category influencing mainstream products in a positive way; overall products are becoming 'healthier' to deliver what consumers are seeking.”