Understanding the functional foods market
currently worth more than $11 billion (€12.33bn) but trying to
establish the size of markets for health-enhancing foods can be a
gamble, claims a new report from UK research company New Nutrition
Business.
The United States market for functional foods and beverages is currently worth more than $11 billion (€12.33bn) but trying to establish the size of markets for health-enhancing foods can be a gamble, claims a new report from UK research company New Nutrition Business.
The report, Strategies in Functional Foods & Beverages 2002: The Hottest Topics, says that estimates by market analysts of the size of the market for functional foods and beverages can vary by more than a factor of 10. For example, different market analyst reports have recently estimated the U.S. market as anything from $1.4 billion (€1.5bn) to $16 billion (€17.9bn) over the same period reviewed.
"Defining the market for functional foods has proven problematic for market analysts since it is highly fragmented and covers a multitude of products with proven and unproven health benefits," says report co-author Julian Mellentin. "As a result, market researchers are often vague about what products or product ranges are used to build up their market numbers for functional foods".
In deriving figures for the U.S. the new report makes estimates based on activity in specific food and beverage categories - giving a market for foods of $5.74 billion (€6.43bn), the vast majority from breakfast cereals, and $5.48 billion (€6.14bn) for beverages, led by orange juices and sports drinks.
The report warns that much functional food and beverage market activity is not new growth, but the conversion, re-positioning or new marketing of existing product ranges on the back of their health-enhancing properties.
Report co-author Michael Heasman comments: "We are seeing many food categories, for example, cereals and juice drinks, effectively being converted from 'regular' to 'functional' foods and beverages.
However, these changes, while important, also obscure real new growth. For example, in Europe, some new functional dairy products have grown from zero to more than $300 million (€336m) in five years. In the UK the new cholesterol-lowering spreads market, driven by McNeil's Benecol and Unilever's Pro.activ brands, has become a $100 million (€112m) product range in just two years".
The report stresses that individual brands must be studied in order to fully understand exactly which functional foods and beverages are growing.
