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Healthy Growth in Functional Food Market Despite Drop in Consumer Trust

Posted on: Wednesday, 27 February 2008, 06:00 CST

The functional food and drink market in the US, Western Europe and Asia Pacific is entering a critical era, with a number of potential threats to the global market's current growth rates. Although consumers are actively seeking out food and drinks with health benefits, they are becoming more skeptical about the health claims made by food and drink manufacturers.

A lack of confidence in food and drink with 'artificial' ingredients means that more consumers are opting for naturally healthy diets in order to boost wellness levels. Analysts believe that the greater emphasis on maintaining health is driving the demand for foods that are rich in nutrients and minerals, and that the functional food market will continue to witness impressive growth rates as a result.

Datamonitor analysis estimates that the combined US, Western European and Asia Pacific functional food and drink market is worth $72.3 billion, and forecasts that this market will grow at a compound annual growth rate (CAGR) of 5.7% between 2007 and 2012. Asia will remain the most prosperous functional food market and is forecast to continue to outperform the US and European markets in the foreseeable future. The buoyant growth throughout the sector is being driven by consumers who are seeking products that offer a solution to both long and short-term health problems.

There are a myriad of health problems driving functional food and beverage sales. An aging society is leading to older shoppers seeking out food and beverages that help fight disease and maintain a sense of physical and emotional vitality. In particular, products are being purchased that help reduce the risk of illnesses such as osteoporosis and hypertension.

Younger consumers are also purchasing functional foods and drinks with greater regularity, often as a quick-fix solution. As consumers continue to work longer hours than the generation before them, they are turning to functional products that provide a quick-fix energy boost in order to optimize performance.

In Asia, economic growth throughout the region is creating a supply and demand scenario, with consumers benefiting from an increase in disposable income, but suffering from increased diagnosis rates of lifestyle ailments, some of which have arisen as a result of longer working hours in the region.

However, despite these impressive growth rates, Datamonitor feels that the market faces the challenge of deteriorating levels of consumer trust and confidence. Consumers are becoming less trusting of health claims made by food and drink manufacturers, often believing functional package claims to be either false or an excuse to command a premium price. As a result, manufacturers will need to ensure that they promote functional foods in a credible and honest manner and continue to educate consumers about the credence of emerging ingredients such as lycopene, prebiotic fiber and plant sterols.

Continuous media coverage on food safety scares and product recalls has also left consumers dubious about the safety of foods containing artificial ingredients. Instead, more shoppers are seeking out naturally healthy options, such as organic and fresh produce.

Source: Datamonitor

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