Functional foods manufacturers must target mainstream consumers if growth is to continue at 20th century rates, says a new report on the world market from Euromonitor.
The data analyst highlights three crucial areas that need to be addressed if a product is to succeed in an increasingly competitive marketplace characterised by the growing presence of mainstream food players such as PepsiCo, Coca-Cola, Danone, Nestl?, Cadbury Schweppes and Unilever. They are:
- Health benefits have to appeal to a mass market and address general well-being issues.
- Health benefits must be well communicated, either through understandable health claims, or through using an active ingredient that is readily understood, such as calcium.
- Products must be competitive on all platforms, and not rely solely on health benefits. They must be tasty, convenient and appropriately priced. Functionality may allow for higher margins, but by itself does not guarantee success.
Global functional foods sales increased by almost 60 per cent between 1998 and 2003, according to the report, and are set to rise by a further 40 per cent through to 2008. Probiotic yoghurts, plant sterol spreads, energy bars, functional waters and functional juices were the most dynamic categories.
The next big thing
Key growth areas include cholesterol-lowering products, gut health and bone health products, according to Euromonitor. Gut health products are particularly important in Japan, but relatively underdeveloped in the US, where fortification with calcium and vitamins, and energy-giving products are more pronounced.
Functional foods are also under pressure from ?better-for-you? foods, such as those with reduced fat or sugar content, and from organic foods. Indeed, controversy over the food chain following a number of food scares has catalysed increased demand for ?pure? organic foods and could potentially damage sales of functional foods, which in some cases are viewed as ?adulterated?. This view is exacerbated by bad publicity regarding GM foods, which are sometimes confused with even the more basic functional foods.
Another report on the European market from market analyst Datamonitor highlights the need for functional foods manufacturers to base their marketing around lifestyle benefits, rather than medical issues, if the market is to maintain the seven per cent growth rate it has achieved over the past five years.
Datamonitor puts the western European functional foods market at $3.45 billion in 2002, with the UK ($193 billion) and Germany ($217 billion) spending the most per capita and Italy, the Netherlands and Sweden spending the least. France had the fastest growing market.