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November 2014 Issue
Last Updated Tuesday, November 25 2014
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Business Insights: The Future of Functional Foods Is Near



As more consumers demand foods and beverages with added health benefits, packaged goods marketers will have many opportunities to differentiate themselves.



By Gregory Stephens



Published November 1, 2009
Today more than ever, health and wellness is taking a more prominent position in consumers’ lives. As more information emerges about the connection between diet, lifestyle and health, consumers are taking note and making behavioral changes to incorporate healthier practices into their daily regimens, including the use of functional foods.

Historically, food has been thought of as fuel for the body. By consuming balanced meals, consumers received the nutrition and energy their body needed to function properly. However, as emerging research substantiates the physiological benefits not only of traditional nutrients but also of novel nutritional “bioactives” that may be incorporated into the diet, consumers are taking a new look at foods and the added value of functional ingredients.

As a result, the growth of functional foods and beverages is predicted to outpace that of conventional foods, as consumers say they will increasingly seek out functional or fortified foods. They are driven by the need to increase consumption of certain nutrients, manage health conditions, enhance performance, delay the onset of aging and simply promote overall health and well-being.

An Upward Trend



The use of fortified and functional foods has continued to show an upward trend for the past 10 years. The consumption of functional food seems to be heightened by both the current economy and the self-care movement. While the downturn in the economy has suppressed food sales overall, consumers continue to show high interest in foods and beverages with added benefits as they try to stretch every food dollar and avoid medical costs. According to NMI’s Health and Wellness Trends Survey, nearly one-quarter of the U.S. population agrees that functional foods and beverages can be used in place of some medicines. Many consumers who are concerned about preventing health issues such as obesity, diabetes and high cholesterol levels, indicate they increasingly believe in, and are willing to use, foods and beverages to prevent or treat these ailments. Advances in science are paving the way.

Driven by sound clinical research, nutrients such as omega 3 fatty acids (with their anti-inflammatory properties) and plant sterols (recognized for cholesterol reduction) have helped propel the emerging industry of food functionality and fortification—sometimes creating a blur between supplements and foods. Of course, there are many more examples of bioactive ingredients affording health benefits.

Branding Strategies



CPG companies are becoming savvier with their branding strategies. One example of a branded functional food is Smart Balance. Original Smart Balance contains a “blend of vegetable oils” that has been shown to improve the cholesterol ratio…raising serum HDL. Smart Balance doesn’t, however, promote the plant sterols; rather, it makes its claim on the cardiovascular benefit, “balancing cholesterol.” This approach offers branded line extensions to those who have already bought into the Smart Balance spread. Health conscious shoppers will gravitate to these products without having to know the intricacies of what is in the product; they simply assume it is the healthier choice. This suggests a difference in consumer behavior as successful products move from the natural foods channel to mainstream distribution.

In order to increase trial of functional foods/beverages, it’s necessary not only to understand the interrelationship of their importance, but also the barriers to use, including the believability of health claims. While nearly a fourth of consumers report using functional foods as a means to maintaining a healthy, balanced lifestyle, almost a third feel overwhelmed by all the nutritional aspects of the foods/beverages they consume. It’s just getting too complex for many mainstream consumers. Clinical substantiation of health benefits goes a long way to helping consumers believe in the validity of product claims. Consumers realize nutritional claims on foods/beverages are controlled by FDA and thus consumer education and communication will put control in their hands, allowing them to make a more informed decision as to the value of the foods and beverages they choose.

In sum, in spite of some highly publicized, albeit isolated examples, functionality will be a big part of our food in the future. For the health conscious consumer, it will no longer just be nice to have access to differentiated products; rather, such benefits will be increasingly essential in order to reach this segment of the population. Consumers are clearly exhibiting a higher demand for foods and beverages that provide inherent health benefits in naturally occurring forms, as well as those that offer health benefits from value-added ingredients. This emerging demand will present many opportunities for packaged goods marketers to differentiate themselves, expand current categories and/or to create new ones.


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