“The Rise of Functional Foods: Innovations, Market Trends, and Health Impacts”
When you walk through any large grocery store or specialty shop—or browse online food product websites—you’ll likely find a variety of protein powders, energy drinks, power bars, probiotics, vitamin water, and calcium-fortified beverages designed to promote bone health. These items are enhanced with nutrients, phytochemicals, botanicals, or dietary supplements, and are recognized in the industry as functional foods. Functional foods are defined as those that may positively impact health beyond basic nutrition, aiming to do more than just fulfill daily nutrient needs; they can also help reduce disease risk and support overall well-being. Although the U.S. Food and Drug Administration (FDA) is responsible for regulating functional foods, it has yet to provide an official definition.
The FDA acknowledges that terms like “functional foods” and “nutraceuticals” are commonly used in the marketplace. These foods fall under the FDA’s regulatory authority as per the Federal Food, Drug, and Cosmetic Act, even without a specific legal definition. Nonetheless, the demand for functional foods is on the rise, with many experts predicting significant growth in this sector in the near future. As U.S. consumers become increasingly health-conscious, they seek out natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods arena are meeting this trend by continuously launching innovative products.
Kara Nielsen, an expert in food and beverage trends, noted in a recent report by Packaged Facts that the growing consumer awareness and interest in medicinal foods have led to a demand for functional ingredients sourced from the natural world, rather than laboratories. According to a report by Technavio, the global market for functional foods and beverages is expected to grow steadily, with a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021. For the same period, analysts predict a CAGR of 6.53% for the U.S. market. This trend is driven by an aging population focused on health maintenance, rising medical costs, and a heightened consumer interest in the link between nutrition and well-being.
Functional foods are becoming mainstream, with some of the largest food companies making moves in this area. For instance, Campbell’s CEO Denise Morrison pointed out the company’s interest in expanding into growing markets like organic and functional foods following its acquisition of Pacific Foods for $700 million. Additionally, PepsiCo acquired probiotic beverage maker KeVita last fall and launched its Tropicana Essentials Probiotics line earlier this year, marking its entry into the mainstream juice aisle with probiotics. Furthermore, General Mills’ venture capital division led a $6.5 million Series D investment in Farmhouse Culture, a startup specializing in fermented and probiotic foods and beverages.
Major players in the functional food sector are expected to introduce new products as research and development progresses. They are actively seeking acquisitions to boost profits and share prices, looking particularly toward smaller, agile startups for innovative ideas. Japan and Russia are recognized as pioneers in developing functional foods that aid digestion and enhance performance. One of the first commercial applications of functional food in the U.S. occurred in 1924 when Morton Salt Company began adding iodine to its products to combat iodine deficiency in the Great Lakes region, known then as the “goiter belt.”
Oatmeal significantly raised public awareness about functional foods, according to Carol Culhane, president of International Food Focus Ltd. in Toronto. Oats contain beta-glucan, an active soluble fiber that has been shown to lower low-density lipoprotein (LDL) cholesterol. Once this information became public, interest in functional foods surged. “It took many clinical trials to validate the data,” she explained. “In 1997, the FDA approved the claim that beta-glucan could reduce serum cholesterol, marking a pivotal moment.”
While some initial functional food products succeeded, others faltered in the marketplace. For example, in the late 1990s, Kellogg launched its Ensemble line, featuring cholesterol-lowering foods with “natural soluble fiber” from psyllium wheat husk, but discontinued it within a year due to poor sales attributed to generic packaging. Success rates improved as marketing, packaging, and distribution of functional foods enhanced. General Mills introduced its Fiber One cereal in 1985, followed by Danone’s launch of Activia probiotic yogurt in 1987, which made its way to the U.S. in 2006. Both products continue to thrive, capitalizing on trends toward high-fiber foods and overcoming initial consumer hesitance regarding probiotics.
Since then, a vast range of functional foods has entered the U.S. market, with some manufacturers walking a fine line in labeling health claims to avoid issues with the Federal Trade Commission (FTC). The FTC mandates that any health claims must be scientifically substantiated, and functional food products cannot legally claim to cure diseases. Health claims on food labels also undergo rigorous scrutiny from the FDA, a process that can be lengthy and costly. Companies must conduct research and safety reviews for functional food substances and petition the FDA for Generally Recognized as Safe (GRAS) status for their intended uses.
Consumer acceptance remains a critical factor for the functional foods market. Culhane emphasized that long-term success depends on personal experiences that encourage lifestyle changes. For instance, while lycopene—a powerful antioxidant found in tomatoes and watermelon—can indeed reduce prostate tumor risk, it might not be effective for someone experiencing prostate issues in their 50s unless they started consuming it in their 20s. “The challenge is to get young adults to consider how their diet impacts their health,” she added.
Culhane also warned that not all functional foods deliver maximum benefits as typically consumed, and serving sizes could greatly influence efficacy. “Often, the serving size and daily dosage are impractical,” she noted. “To gain the cholesterol-reducing benefits of soy protein, one would need to consume about a quart of soy milk daily, or approximately three cups of oatmeal for the same benefit from beta-glucan.”
Today, consumers can find buttery spreads like Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanol and sterol esters to help lower the risk of heart disease. High-fiber breads and baked goods, such as Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies, are also available to assist in cholesterol reduction. Stanols and sterols, naturally found in vegetable oils and cereals, help prevent cholesterol absorption, thereby lowering total and LDL cholesterol levels in the bloodstream. These compounds are increasingly integrated into functional foods, with products like Minute Maid Premium Heartwise orange juice featuring Cargill’s trademarked CoroWise plant sterols, and Joseph’s Bakery flatbreads containing ADM’s CardioAid plant sterols.
Furthermore, new functional food options are in development as scientists extract beta-glucan from mushrooms to enhance immune function, produce fiber-rich inulin flour from chicory root, and explore various beneficial nutrients derived from algae. While algal-derived food products can promote health, researchers face challenges in quantifying benefits and understanding how harvesting, storage, and food processing affect the nutritional value of algae. The emerging field of phycology—the scientific study of algae—presents exciting opportunities for innovation in functional food ingredients.
“I believe the future of functional foods will increasingly focus on understanding the chemistry and composition of native or raw foods,” said Kristi Crowe-White, Ph.D., an associate nutrition professor and registered dietitian at the University of Alabama. “While we have around 20 well-integrated compounds, that’s just the beginning. There’s so much more to explore, making this a thrilling time to be involved in this field.” Integrating functional foods like magnesium calcium citrate into everyday diets may further enhance health benefits, making them a valuable focus for health-conscious consumers.
