Functional Foods, Beverages Set To Grow

Adults become more health conscious and parents are increasingly concerned about the health of children, fueling the growth of functional products.

Technavio research analysts are forecasting that the global functional foods and beverages market will grow at a CAGR of close to 8% from 2017-2021.

The Technavio report segments the market into two broad categories consisting of functional foods and functional beverages. These foods and beverages are formulated with special ingredients to provide improved health.

“The growing demand for functional foods coupled with the introduction of innovative products and ingredients is driving the market,” said Manjunath Reddy, a lead analyst at Technavio for non-alcoholic beverages research. “Other factors that will fuel market growth include an increase in the demand for functional foods from older people, increase in the number of health-conscious adults and increased concern about the health of children.”

Technavio food and beverage analysts highlight the following three drivers that are contributing to the growth of the global functional foods and beverages market:

Product innovations

Health benefits associated with functional foods and beverages

Emergence of non-traditional fitness activities

Product innovations
Manufacturers of functional foods and beverages are introducing new flavors in the market to match the changing consumer preferences. For example, UK-based Lucozade Ribena Suntory replaced its reduced-sugar lemonade (launched in 2014) with a new variant called Tropical Fusion in August 2015. This drink, which was introduced to meet the growing consumer preference for tropical flavors, is a blend of pineapple and kiwifruit. The manufacturers of these foods and ingredients are laying special emphasis on balancing functional benefits and flavor.

Brands are also focusing on sugar-free and low-calorie formulations as these are in high demand. Advances in technology have enabled the development of products that mask the unpleasant taste of some functional ingredients. For example, effective microencapsulation allows manufacturers to hide the bitter taste of amino acids and other ingredients.

“Innovations are also happening on the packaging, designing, and labeling front. Production processes have become faster, enabling faster delivery of products to retailers. Better packaging materials help manufacturers increase the shelf life of their products,” said Manjunath.

Health benefits associated with functional foods and beverages
Functional foods and beverages are being marketed as products that provide a range of health benefits such as improved mental strength, enhanced immune system, improved heart rate, hydration and electrolyte replenishing benefits, improved digestive health and better intestinal flora and gut function.

The health benefits associated with functional foods and drinks appeal to consumers as consumer focus on disease prevention has increased due to rising healthcare costs. Marketers of functional foods and beverages are focusing on effective labeling and aligning each formula to a specific health benefit and application to attract consumer attention. Functional foods are also being marketed as products containing active components that help in reducing the risk of various diseases and in improving overall health.

Emergence of non-traditional fitness activities
Consumers are looking beyond traditional gyms to improve their fitness. More women are now taking part in fitness activities such as yoga and aerobics. Half and full marathons are some of the emerging activity trends among consumers. Companies are trying to leverage these trends and are actively marketing their products during these marathons. For instance, Gatorade, PepsiCo’s sports drink range, is one of the chief sponsors of the Boston Marathon.

The increasing prominence of non-traditional fitness activities such as yoga is having a direct impact on consumer spending on products related to these activities. It is estimated that nearly USD $27 billion is spent annually on yoga products in the U.S., and the spending on yoga products in the country has increased by more than 85% over the last five years.




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