Future profits rest with functional foods

Functional drinks were given the biggest vote of confidence by food industry executives in a poll by Reuters Business Insight. But while the low-carb trend remains one of the biggest profit hotspots, low fat/low calorie diets have been and will continue to be popular, and profitable sources of innovation.

"Despite the high level of interest in new diet concepts such as Atkins, nearly 60 per cent of UK consumers surveyed had tried a low fat/low calorie diet. Other branded low-carbohydrate diets did not fare so well, with only two and four consumers trying the Zone or South Beach diets respectively, although low-carbohydrate diets in general were popular - a combined 57 per cent of consumers had tried one in some form,"​ reveals the new report, 'New Profit Opportunities in Health and Nutrition to 2009'.

By 2009, low-carb will have dropped from the number one profitability hotspot to number six, with cholesterol-lowering foods taking pole position, followed by 'diabetes friendly' foods (33 per cent of the 1,250 senior food and drinks executives surveyed expect this to be 'highly profitable' in 2009).

Low-glycaemic foods are also expected to increase in profitability by 18 per cent between now and 2009.

But functional foods are expected to be the most successful healthy food product of the future, with key products including probiotics, energy-boosting foods and vitamin and mineral supplements.

"Fortified bottled water is the category with the most 'not successful' votes, however, this is still low and a significant 64 per cent of executives regard it as having a 'very successful' or 'successful' future,"​ according to the report.

It adds that lessons can be learned from Asia Pacific, particularly Japan, which is the most advanced market in terms of consumer acceptance and purchase of functional food and drinks.

For example, Glico Dairy products in Japan has introduced a new yoghurt that meets the demands of consumers seeking both healthy and indulgent foods - the probiotic yoghurt contains whole blueberries, a source of antioxidants, five fruit juices and is finished off with white rum.

The report spotlights other companies likely to cash in on healthy innovations, including Australia's soy food company So Natural Foods, investing heavily in its Thorpedo line, which includes a 'low-glycaemic' fortified water.

Germany's Schwartauer Werke has introduced fruit spreads with high levels of vitamin C and fibre and will benefit from the established reputation of these ingredients unlike those companies that need to educate consumers about the benefits of more novel functional foods.

Indeed, the report concludes that while making health claims can be "a legal minefield"​, highlighting products that contain specific ingredients "will be helpful to consumers who are already increasingly building the knowledge of which ingredients are linked to which concerns".​

Reuters also identifies areas that have not yet been exploited with a health label, including premium canned food. This market could have potential with consideration of ingredients and added value such by adding vitamins, it notes.

Food makers should also take note of the skincare market. Long recognizing the commercial potential of an ageing population, the German market for anti-ageing skincare alone was worth more than $2 billion in 2004.

Supplements and foods rich in certain nutrients can also help slow down the ageing process and the statistics offer strong evidence for the need to target the growing numbers of elderly people : one out of every 10 people is now 60 years or above; by 2050, one out of five will be 60 years or older; and by 2150, one out of three people will be 60 years or older.

Children will also remain a priority for the food industry. "The ultimate new product for kids would be healthy, loved by both parents and children and eaten as much as a chocolate bar or packet of crisps,"​ according to the report.

For more information on this report, released next month, see here​.