Functional Foods - US

Published by: Mintel International Group Ltd.

Published: May. 1, 2008 - 97 Pages

Table of Contents

Scopes and Themes

What you need to know

Definition

Data sources

Sales data

Consumer survey data

Abbreviations

Executive Summary

Product proliferation, innovation drive market

New products, innovation also account for General Mills’ leadership

Shoppers will pay more for Activia; Benecol, not so much

Not all companies equally committed

Websites an extension of product packaging

More consumers are purchasing functional foods of every type

Functional foods are eaten to supplement the diet, not to prevent disease!

Presence of products for immunity, brain function will increase

Market Size and Forecast

Key points

Growth in functional market continues to be strong

Figure 1: Total U.S. sales and forecast of functional foods at current prices, 2002-12

Figure 2: Total U.S. sales and forecast of functional foods at inflation adjusted prices, 2002-12

Major increases in product introductions propel market

Figure 3: New products with “functional” claims, 2001-07

Competitive Context

Key points

Beverages, dietary supplements, whole foods also offer functional benefits

The impact of natural channels

Raw foods

Figure 4: Natural product supermarket retail sales raw food energy bars, 2005-07

Raw energy bars compared to total energy bar sales

Figure 5: Natural product supermarket retail sales of energy bars, by raw and non-raw, 2005 and 2007

Emerging segments will grow the market

“Stealth” functional foods capture a share of sales

Segment Performance

Sales are volatile, but shares show little shift

Figure 6: U.S. sales of functional foods, segmented by type, 2005 and 2007

Segment Performance—Dairy and Margarine

Key points

The most innovative segment

Price premiums affect some brands more than others

More respondents buy functional dairy

Sales and forecast of functional dairy and margarine

Figure 7: U.S. sales and forecast of functional dairy and margarine, 2002-12

Segment Performance—Cereal

Key points

Cereals can make health claims, so further investment in functional products unnecessary

Sales and forecast of functional cereal

Figure 8: U.S. sales and forecast of functional cereal, 2002-12

Segment Performance—Bars and Snacks

Key points

An exemplary delivery system?

Sales and forecast of functional bars and snacks

Figure 9: U.S. sales and forecast of functional bars and snacks, 2002-12

Segment Performance—Bakery

Key points

Sales figures may underestimate functional “intention” in the segment

Value-added will give the competitive advantage needed in commodity business

Sales and forecast of functional bakery products

Figure 10: U.S. sales and forecast of functional bakery products, 2002-12

Retail Channels

Key points

Food stores dominate; functional foods inappropriate for other channels

Figure 11: U.S. sales of functional foods, by retail channel, 2005 and 2007

Retail Channels—Food Stores

Key points

Grocery stores the best channel for many functional foods

Figure 12: U.S. sales of functional foods at food stores, 2002-07

Market Drivers

Key points

Diet may reduce risk of most deadly diseases

Figure 13: U.S. causes of death, 2004

Figure 14: Selected FDA approved health claims, April 2008

American diets lacking important nutrients

Figure 15: Recommended vs. actual consumption of selected foods

Aging trends favor the market

Figure 16: Population aged 18 or older, 2002-12

In self-care trend, kitchen cabinet becomes medicine cabinet

Leading Companies

Key points

Yoplait innovations drive General Mills’ leadership

Dannon committed to functional yogurts

Kellogg invests in food research, innovation

New owners push distribution, awareness for Smart Balance

PepsiCo’s functional activity is in beverages

Figure 17: Functional food sales of leading companies, 2005 and 2007

Brand Share—Dairy and Margarine

Key points

Yoplait profits from novelty

Activia propels Dannon forward

Can Eggland’s Best sustain its leadership as value-added private label makes strides?

Smart Balance spread benefits from mainstream pricing, but Unilever battles for Take Control

Figure 18: FDMx brand sales of functional dairy and margarine in the U.S., 2005 and 2007

Brand Share—Cereal

Key points

General Mills resting on its whole-grain laurels?

Kellogg emphasizes heart health

Quaker oatmeal grows cold

Figure 19: FDMx brand sales of functional cereal in the U.S., 2005 and 2007

Brand Share—Bars and Snacks

Key points

Fiber One extension pays off

Luna loses share, but gains sales

Figure 20: FDMx brand sales of functional bars and snacks in the U.S., 2005 and 2007

Brand Share—Bakery

Key points

Figure 21: FDMx brand sales of functional bakery in the U.S., 2005 and 2007

Brand Qualities

Designated functional brands are novel, trailblazing

Innovation and Innovators

Key points

Functional foods are novel by their very nature

Yogurt makers the top innovators with next-generation probiotics

Companies begin to address cognitive function...

...and immunity

Cardiovascular claims dominate

Figure 22: Functional claims in new food product launches, 2002-07

Advertising and Promotion

Overview

Websites promote and inform

Women more likely to buy certain foods

Easy to understand and to use

Consumers are invited to take part in challenges

Finding balance

Brand-specific advertising and promotions

Yoplait Yo-Plus

Figure 23: Yoplait Yo-Plus television ad, 2007

Eggland’s Best

Figure 24: Eggland’s Best television ad, 2007

Total cereal

Figure 25: Total cereal television ad, 2007

Smart Balance

Figure 26: Smart Balance television ad, 2007

Fiber One

Figure 27: Fiber One television ad, 2007

Kellogg’s All-Bran

Figure 28: All Bran television ad, 2007

Functional Food Purchases

Key points

Shoppers buying more across all food categories

Figure 29: Functional foods purchased in past three months, 2006 and 2008

Purchase incidence strong among youngest respondents

Figure 30: Purchase incidence of functional foods, by age, April 2008

Age is a key determinant of inclination to purchase

Figure 31: Functional foods purchased in past three months, by age, April 2008

Importance of women in the market

Figure 32: Functional foods purchased in past three months, by type of food, by gender, April 2008

Frequency of Functional Food Consumption

Key points

Likelihood of daily consumption increases with age

Figure 33: Frequency of functional food consumption in the past month, by age, April 2008

Attitudes towards Diet and Health

Key points

Interest and investment in personal health low among youngest demographic

Figure 34: Attitudes towards diet and health, by age, May 2006-June 2007

Reasons for Eating Functional Foods

Key points

Functional foods are eaten for general, not specific reasons

Health issues and weight loss key to women

Figure 35: Reasons for eating functional foods, by gender, April 2008

Diet-disease motivations peak in 55-64 group

Figure 36: Reasons for eating functional foods, by age, April 2008

Functional Foods Opinions and Interest

Key points

Governmental regulation wanted, communication of benefits needed

Figure 37: Opinions towards functional foods, by gender, April 2008

Figure 38: Opinions towards functional foods, by age, April 2008

Blood pressure, blood sugar and weight management offer future growth potential

Figure 39: Functional benefits would like to see in foods, by gender, April 2008

Figure 40: Functional benefits would like to see in foods, by age, April 2008

Reasons for Not Eating Functional Foods

Key points

Other supplements, price and disbelief keep functional purchases down

Figure 41: Reasons for not eating functional foods, by age, April 2008

Race and Ethnicity

Functional food purchases

Figure 42: Functional food purchase incidence and foods purchased, by race/ethnicity, April 2008

Interest in functional foods

Figure 43: Functional benefits would like to see in foods, by race/ethnicity, April 2008

Reasons for not eating functional foods

Figure 44: Reasons for not eating functional foods, by race/ethnicity, April 2008

Simmons Cohort Analysis

Figure 45: Attitudes towards diet and health, by single cohorts, May 2006-June 2007

Figure 46: Attitudes towards diet and health, by married cohorts, May 2006-June 2007

Appendix: Other Useful Consumer Tables

Functional food purchases

Figure 60: Purchase incidence of functional foods, by gender, April 2008

Figure 61: Functional food purchase incidence and foods purchased, by household income, April 2008

Frequency of consumption

Figure 62: Frequency of functional food consumption in the past month, by gender, April 2008

Figure 63: Frequency of functional food consumption in the past month, by household income, April 2008

Reasons for eating functional foods

Figure 64: Reasons for eating functional foods, by household income, April 2008

Functional foods opinions and interests

Figure 65: Opinions towards functional foods, by household income, April 2008

Reasons for not eating functional foods

Figure 66: Reasons for not eating functional foods, by gender, April 2008

Figure 67: Reasons for not eating functional foods, by household income, April 2008

Appendix: Trade Associations

Abstract

This report focuses on four major segments within the functional foods market: dairy and margarine, cereal bars and snacks, and bakery. In addition to presenting sales data on a segment-by-segment basis, the report considers a range of topics and trends, including the following:

• Category developments contributing to the healthy competition in this market.
• The segments in which innovation is, and is not, taking place; and where Mintel sees the greatest prospect for future innovation.
• How marketers are conveying their USPs without running foul of regulations.
• Shifts in marketing messages across the board, and why some producers of functional foods don't market them as such.
• Who buys functional foods (age is a key determinant, but it's not what you think!), the surprising reasons consumers give for buying functional foods, and who is buying what.
• Which health claims are most prevalent, and which ones are poised to proliferate.
• The ubiquitous ingredient that is under-utilized and under-promoted.

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