Joanna Cosgrove05.01.08
Functional Foods: At a Crossroads
A new report interprets the global trends and offers suggestions for a more profitable future.
By
Joanna Cosgrove
Online Editor
The London, U.K.-based independent market analyst interviewed more than 5400 consumers from France, Germany, Italy, Netherlands, Spain, Sweden, the U.K. and the US in 2006. According to Michael Hughes, associate analyst, 65% of European and U.S. consumers had taken active steps to eat more healthily, compared to the previous 12 months.
“Greater media coverage on health issues such as obesity, high levels of blood pressure, etc., has forced consumers to take greater self responsibility for their levels of health,” explained Mr. Hughes. “As a result of this, consumers have adopted the concept of ‘total health management’—focusing on long-term health as well as boosting short-term vitality. Functional food and drinks are seen as a quick and convenient way to boost health both long term (i.e. heart health) and short term (i.e. lack of energy), as they contain components that provide health and well-being benefits beyond basic nutrition.”
As consumers adopt the concept of “total health management” they are taking greater steps to read nutritional labels and self-educate themselves about the nutritional value of food. As they become more educated, they also tend to become more skeptical of health claims made by food and drink manufacturers, believing health claims to be exaggerated to justify a premium price point or just plain false, said Mr. Hughes. “As well as being more educated about food content, consumers have also witnessed a number of ‘fad’ diets in recent years (i.e., Atkins diet) that have promised much in the way of health maintenance but have actually delivered very little,” he added. “This has also had an impact on the level of trust in health claims made by food and drink manufacturers.”
The segment’s exponential growth, coupled with the level of skepticism it continues to arouse presents an unusual dichotomy. “It has to be remembered that consumer behaviors differ based on social demographics—and that different market segments have different attitudes (basically a polarization of views across society),” pointed out Mr. Hughes. “It also has to be remembered that manufacturers can overcome the trust obstacle by making health claims credible and honest. This can be helped through such techniques as third party endorsement.”
Core Consumers & Skeptics
Functional foods and drinks primarily appeal to specific consumer groups:
• Younger consumers who are concerned about day-to-day health problems.
• A growing proportion of consumers who are reporting sleep and stress related problems.
• Baby Boomers who are keen to maintain their health and work beyond retirement—buying functional foods that help reduce illnesses such as high blood and cholesterol levels.
• In Asia, rapid economic growth has resulted in an increase in the number of “lifestyle” diseases being reported (i.e. hypertension), resulting in an increase in the sales of functional foods and drinks throughout the region.
Conversely, there is also a core group that is likely to be most skeptical of functional foods and beverages:
• Consumers aged 65+ who prefer conventional medicine rather than functional foods.
• Consumers from countries with a strong culture based around healthy eating. For example, expenditure per head on functional food and drinks in Italy and Spain is relatively low - two countries strongly associated with a traditional, healthy Mediterranean diet.
• More consumers are also starting to believe that supermarkets are exaggerating the health credentials associated with functional food and drinks in order to command a premium price.
Regions of Activity
The Datamonitor report forecasted Asia to be a more fertile region for growth in comparison to Europe and the U.S., which should come as no surprise considering the concept of functional food and drinks originated in Japan and the market is already well established. “Furthermore, the Japanese Department of Health also has rating system called FOSHU (Foods for Specific Health Use), which awards products its functional status when it is felt that enough scientific evidence can support health claims made,” added Mr. Hughes.
Economic development throughout Asia is also leading to an increase in the sales of functional foods and drinks. “In China, for instance, economic development has led to a more affluent society who are willing to pay a premium price for higher quality food and drinks that have specific health benefits,” he said. “It also has to be remembered that the economic growth in the region will also be partially responsible for an increase in the number of short-term health problems reported (i.e. lack of energy, fatigue, etc.).”
In comparison, the European functional food and drink market remains relatively untapped. Mr. Hughes attributed this to a variety of factors. “For example, Mediterranean countries already have a strong ideology of what constitutes a healthy diet, while in Sweden, a dedication to work/ life balance means that consumers have time to sit and eat a traditional diet, as opposed to looking to functional foods for quick fix solutions,” he said.
In the U.S., Europe and Asia-Pacific, the soft drink segment is the top performing functional food segment, with the confectionery market also expected to grow in popularity over the next few years.Mr. Hughes attributed the popularity of the two segments to the products’ innate ability to combine health benefits with sensory appeal like great taste, and convenience. They are also more applicable to a wide audience.
In closing, Mr. Hughes offered some advice to functional food and drink manufacturers and marketers vested in this segment regarding how they can make the most of this ripe industry while cultivating a strong consumer following. In addition to challenging manufacturers to formulate great tasting products, his biggest suggestion pertained to health claims—specifically, not over exaggerating them. “Make health claims on packaging simple and to the point so consumers are not confused by scientific claims, however, provide additional information on company websites so that consumers can learn more about nutrients, health benefits and illnesses if they want to,” he said.