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    Features

    Ripe Opportunities for the Global Functional Foods Market

    An aging population and growing demand for naturally functional products continue to drive a healthy industry.

    Ripe Opportunities for the  Global Functional Foods Market
    Ripe Opportunities for the  Global Functional Foods Market
    Ripe Opportunities for the  Global Functional Foods Market
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    Maria Mascaraque, Associate, Health & Wellness Research, Euromonitor International11.01.16
    Fortified/functional (FF) packaged food is valued at $159 billion globally in 2016, making it the largest category within the health and wellness industry (H&W). With a rising aging population, increasing concerns about meeting nutritional requirements and a growing desire for naturally functional products, there is strong demand for H&W food items that are aligned to a specific health positioning and offer added value to consumers compared to regular options.

    Global business intelligence provider Euromonitor International considers the key functional food trends in the health and wellness industry.

    Protein Fortification
    An increasing number of products are fortified with vitamins, minerals or fiber, but the real winner is still protein. High-protein foods started out being popular among fitness enthusiasts due to the role they play in muscle repair, but they are now also widely used for their anti-aging, cardiovascular health and mainly weight loss benefits. It is thought that proteins induce satiety and that high-protein diets keep people full for longer; therefore, foods fortified with proteins mainly have a weight management positioning, valued at $93.5 billion globally in 2016, making it the second biggest category in FF packaged food, just behind general well-being-positioned foods.

    Dairy is the natural home of protein; Greek yogurt, which is high in protein (around 10 grams per 100 grams), has greatly benefited from this trend. Greek yogurt maker Chobani is now the third largest FF dairy-based yogurt brand globally, accounting for 7% of overall value sales in 2016, just behind Yakult and Danone.

    Dairy will remain the key product for protein fortification. Popular brand Weetabix has launched a range of protein-enhanced dairy-based drinks in the U.K. Weetabix on-the-go Protein, which comprises Vanilla, Strawberry/Raspberry and Blueberry/Blackberry flavors, has been available in retail outlets since June 2015. More recently, in September 2016, Nestlé launched Nesquick Protein Plus in the U.S., containing 23 grams of protein per bottle (14 oz.). New high-protein dairy-based products are expected to be launched in the coming years.

    However, dairy is not the only focus. Savory snacks as well as bread and pasta ranges are increasingly being fortified with protein. Meat-based snacks are also becoming more popular, as they are naturally high in protein. While yogurts and dairy-based products are more targeted toward the female population, meat snacks tend to target male consumers. These products have been available for decades, but they are growing in popularity. In an attempt to tap into demand for high-protein, on-the-go food, confectionery giant Hershey acquired beef jerky producer Krave in 2015. Vermont Smoke & Cure also recently launched individually wrapped meat snacks in May 2016.

    Snack bars fortified with protein have also seen new launches this year. New Special K Protein Trail Mix bars were launched in May 2016 in the U.S. Made using a blend of trail mixes, they come in two flavors (Chocolate Peanut Pecan and Fruit & Nut) and each bar contains 8 grams of protein.

    Naturally Functional
    Euromonitor International’s 2015 Global Consumer Trends Survey, “What is important to consumers purchasing food and beverage products,” revealed that natural is the most sought after attribute among consumers, with 44% of participants choosing it.

    Products that are naturally functional therefore have great potential. Naturally healthy (NH) food is valued at $101 billion globally in 2016, making it the second largest category in health and wellness, behind fortified/functional food, but growing at a faster rate than the latter, with a predicted 18% increase in value by 2021.

    This increasing demand for natural products is very much related to the clean label foods trend, which is valued at $130 billion globally in 2016, with $28 billion of this coming from all-natural labeled foods alone.

    More consumers like the idea of plant-based foods with intrinsic protein, vitamin, or mineral content and no need to artificially fortify them. Manufacturers are responding by developing such products. For instance, ancient grain-based foods like bread loaf, breakfast cereals and snacks are becoming very popular, and quinoa-based ones are advertised for their natural high protein content, as well as omega-3 and 6, fiber, minerals and vitamin E. The new Ancient Legends range, launched by Kellogg’s in the U.K., in January 2016, is a good example of an ancient grains-based product in the breakfast cereals category, containing spelt, rye and/or quinoa.

    Vegetable-based savory snacks are also following this trend. New offerings are becoming increasingly trendy, mainly among Millennials. Mondelez International, for example, in an attempt to renew consumer interest in savory biscuits, launched a new brand called Good Thins in March 2016, its first new snack brand in many years. This new offering incorporates many prominent snacking trends at the moment, including novel ingredients like sweet potatoes and chickpeas, but also no artificial colors or flavors, gourmet flavors, free-from gluten and a thin profile.

    Moreover, plant-based milk alternatives, such as almond, cashew and/or coconut milks, are also enjoying success. HW milk alternatives grew by 27% in value between 2011 and 2016 and are predicted to record another 23% rise by 2021 to reach sales worth $13 billion.

    Generally speaking, plant-based milk alternatives do not have the same nutritional profile as cow’s milk. They contain less protein, as well as fewer vitamins and minerals. However, they also offer good nutritional value and are popular among those adopting lactose-free and vegan diets. In 2010, other milk alternatives overtook soy milk, in terms of value sales, with almond milk the main on-trend alternative to cow’s milk, containing vitamin E and riboflavin.

    Coconut milk is also growing in popularity and is advertised for its nutritional properties, as coconut is rich in fiber, as well as vitamins (C, E, B1, B3, B5 and B6) and minerals (iron, selenium and calcium). More recently, manufacturers have seen opportunities in milk produced from other legumes and nuts like cashew milk, and some companies are also producing milk from pistachio, peas and pulses, but this trend is still very niche. 

    Infants & Elderly
    Baby food, and mainly milk formula, has always been fortified by default. Manufacturers rely heavily on nutritional science as a driver of innovation and fortification, with probiotics, prebiotics and omega-3 DHA, ALA and omega-6 becoming the industry standard in many markets.

    Euromonitor International’s new key functional ingredients data show that omega is the main ingredient advertised on milk formula labels, valued at $25 billion globally in 2016, followed by probiotics (valued at almost $5 billion). Generally speaking, this is in line with the fact that fats are the main source of energy for infants and, at the same time, they are very important for children’s growth and development. However, targeting brain and memory health through fortification with minerals as well as choline, lutein and nucleotides also has its place.

    However, the focus is not just on infants; the elderly are also an important consumer demographic to many product developers. The global over 65-year-old population is expected to increase by 20% to total 723 million by 2020. By then, they will represent 9% of the total global population, which is a great concern, but also creates opportunities for food and beverage companies. The aging population is increasingly focused on prevention and is looking for healthy functional products to prevent the onset of diseases.

    There are many opportunities for manufacturers to develop HW-positioned food items. Cardiovascular health is one of the main positionings targeted toward the elderly. Within that segment, FF reduced-fat milk is expected to grow by 9% in value between 2016-2021, recovering from its decline in the review period, while FF powder milk is predicted to grow by 6% over the same period.

    Leading manufacturer Nestlé has already tapped into this trend with its Nestlé Omega Plus powder milk in Malaysia. Seeing the opportunities in this area, the company launched a new version of the product in May 2016, which includes oats. It contains two naturally-derived, cholesterol-lowering ingredients: Acticol, which is derived from plant sterols, and beta-glucan, made from oats that work simultaneously with plant sterols and bind with cholesterol in the gut to eliminate it from the body.

    Bone and joint health is another major positioning mainly targeted at the elderly, with foods like FF chocolate confectionery showing the greatest potential within this positioning. The category still has rather modest sales, but it is expected to grow by 27% over 2016-2021. Carmit Candy Industries Ltd, a leading private label manufacturer of confectionery and bakery products, has already recognized the opportunities in bone and joint health and recently developed chocolate coins with calcium, vitamin D and vitamin K to target bone health.


    Maria Mascaraque contributes to the content and quality of Euromonitor International’s Health and Wellness research. She is involved in analyzing current and future global market trends and related business opportunities. She holds a PhD in Nutrition from Complutense University, Spain. For more information, visit  www.euromonitor.com.
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