Functional and lesser-evil foods hampered in the U.K. and the U.S.

Functional food launches have slowed in Europe, and Nutrition Business Journal reports anemic U.S. sales in both the functional and lesser-evil food categories in 2009. What's holding back growth? It seems the uncertain regulatory environment seems to be taking as big a toll as the sluggish economy.


A new report from research firm Innova Market Insights shows that functional food launches have slowed in Europe in the first half of 2010, with lesser-evil launches taking up some of that slack. According to Innova, only 1,960 new products with "active health" labeling were rolled out in Europe between January and June 2010, compared to 2,189 products launched in the same period in 2009. Those products labeled with "passive health" or lesser-evil claims rose from 8,747 products tracked in the first half of 2009 to 10,350 in the first half of 2010.

Innova attributed the drop in functional rollouts in part to the recent raft of negative opinions on food ingredient claims handed out by the European Food Safety Authority (EFSA). Popular functional ingredients like probiotics and green tea fell in among the many unlucky health-claim rejects. EFSA will release a new round of opinions in June 2011, leaving many functional food marketers sitting on their hands lest they launch products that will only need relabeling in another six months.

NBJ Bottom Line

A similar phenomenon has taken hold across the pond, where full implementation of GMPs has left many U.S. ingredient suppliers with lopsided budgets and marketers with a dearth of new products. NBJ has heard from several industry executives about an ongoing reallocation of corporate budgets to meet mounting regulatory costs—from increases in quality control and testing, to higher recordkeeping, legal and insurance fees. Let's hazard a guess that research & development budgets will suffer as a consequence, as will the drive to initiate new trends in functional foods. It takes time and money to ward off the regulators.

According to NBJ's 2010 Healthy Foods report, U.S. sales of functional food products grew only 2.7% in 2009, the slowest growth we've seen in 12 years of tracking this category. The lesser-evil market was also anemic in 2009, with total U.S. sales shrinking 0.4% after poor performances in low-fat and low-carb categories as well overproduction and price collapses in dairy, according to NBJ data. Whether the headwinds in U.S. functional food will translate into growth in lesser-evil—as seems to be the case in Europe—remains to be seen, as the two markets seem to be showing similar symptoms of different diseases.

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