Title: The Rising Trend of Functional Foods: Health Benefits, Market Growth, and Consumer Demand
Take a walk through any large grocery store or specialty shop, or browse online food product websites, and you’ll likely encounter a wide selection of protein powders, energy drinks, power bars, probiotics, vitamin waters, and calcium-fortified beverages designed to support bone health. These items are enriched with nutrients, phytochemicals, botanicals, or dietary supplements, collectively referred to in the industry as functional foods. Functional foods are characterized by their potential positive impact on health beyond basic nutrition; they are intended to do more than merely fulfill daily nutrient needs, as they can also help mitigate disease risk and enhance overall wellness. Although the U.S. Food and Drug Administration (FDA) oversees the regulation of functional foods, it has yet to establish an official definition. The FDA acknowledges that terms like “functional foods” and “nutraceuticals” are commonly used in the marketplace, and while these foods fall under the regulation of the Federal Food, Drug, and Cosmetic Act, they lack specific legal definitions.
Nevertheless, the market demand for these products is on the rise, with many experts predicting that functional foods will be among the fastest-growing segments in the near future. As American consumers become increasingly health-conscious, they seek out natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods market are responding to this trend by consistently launching new offerings. According to Kara Nielsen, an expert in food and beverage trends, the rising consumer awareness and interest in medicinal foods are propelling them into the natural food and beverage sector, where functional ingredients sourced from nature (rather than laboratories) are in high demand.
A Technavio report forecasts steady growth for the global functional foods and beverages market, projecting a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021, with an anticipated CAGR of 6.53% for the U.S. market during the same period. This trend is fueled by an aging population focused on health maintenance, escalating medical expenses, and an increasing consumer interest in the link between healthier eating and overall well-being. Functional foods are no longer a niche market; some of the largest food companies are making their move. For instance, Campbell’s CEO Denise Morrison has expressed the company’s intent to expand into quicker-growing areas like organic and functional foods, highlighted by their acquisition of Pacific Foods for $700 million earlier this year. PepsiCo recently purchased probiotic beverage maker KeVita and introduced its Tropicana Essentials Probiotics line, claiming it to be the first brand to integrate probiotics into mainstream juice offerings. Additionally, General Mills’ venture capital unit led a $6.5 million Series D investment round in March to support Farmhouse Culture, a startup focused on fermented and probiotic foods and beverages.
As research and development progresses, we can expect major players in the industry to unveil new functional food products. They are actively seeking out potential acquisitions to enhance profits and increase share prices, often focusing on smaller, more agile startups for innovative ideas. The Japanese and Russians are recognized as pioneers in the development and application of functional foods aimed at aiding digestion and enhancing performance. The first commercial introduction of a functional food in the U.S. may have occurred in 1924 when Morton Salt Company added iodine to its products following a government request to combat the goiter epidemic in the Great Lakes region, known at the time as the “goiter belt.”
Oatmeal also significantly raised public awareness about the value of functional foods, according to Carol Culhane, president of International Food Focus Ltd. in Toronto. Oats contain beta-glucan, a soluble fiber known to reduce low-density lipoprotein (LDL) cholesterol, often referred to as “bad” cholesterol. The revelation of these benefits prompted greater public interest in functional foods. “It took many clinical trials to validate the data,” she noted. “In 1997, the FDA approved the claim that beta-glucan could lower serum cholesterol, marking the beginning of this movement.”
While some early functional food products were successful, not all launches achieved market success. A notable example occurred in the late 1990s when Kellogg’s introduced its Ensemble line of cholesterol-lowering products featuring “natural soluble fiber” from psyllium wheat husk, which the company discontinued within a year due to poor sales attributed to generic packaging and merchandising flaws. Nevertheless, as marketing, packaging, and distribution of functional foods improved, successes increased. General Mills launched its Fiber One cereal in 1985, and in 1987, Danone introduced its popular Activia probiotic yogurt in France, later bringing it to the U.S. in 2006. Both products have continued to thrive due to their timely alignment with health trends and effective marketing strategies.
Today, consumers can purchase buttery spreads, like Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanol and sterol esters that help reduce heart disease risk, alongside high-fiber breads and baked goods aimed at lowering cholesterol levels. These plant-based compounds, found naturally in vegetable oils and cereals, work to inhibit the absorption of dietary cholesterol, thereby lowering overall and LDL cholesterol levels in the bloodstream. Other functional food products are being developed as scientists work to extract beta-glucan from mushrooms to enhance immune function and create fiber-rich inulin flour from chicory root.
The exploration of algae-derived food products holds promise for health benefits, although challenges remain in quantifying these benefits and understanding how harvesting, storage, and processing methods affect their nutritional value. Kristi Crowe-White, Ph.D., an associate nutrition professor at the University of Alabama, emphasizes the need for deeper understanding of the native or raw food composition as the field of functional foods evolves. “We have identified around 20 compounds that are well studied, but there’s much more to discover,” she shared.
As the market continues to grow, the inclusion of calcium citrate for teeth in functional foods may gain more attention, especially as consumers look to enhance their dental health through diet. This ingredient, known for its benefits in calcium absorption, could play a vital role in the development of future functional food products. Ultimately, the success of functional foods hinges on customer acceptance, and Culhane highlights that long-term success is often influenced by personal experiences that encourage lifestyle changes.
