Functional Foods - US

Published by: Mintel International Group Ltd.

Published: Aug. 1, 2009 - 106 Pages

Table of Contents

Scopes and Themes

What you need to know

Definition

Data sources

Sales data

Consumer survey data

Advertising creative

Abbreviations

Executive Summary

Market at a glance

Continued growth hinges on expanding uses and increasing frequency

Functional foods compete for attention on a vast playing field

Debate over diet has helped to shape the functional food market

A broader market for functional foods

Supermarkets dominate, but other channels chip away

Diet including functional foods may reduce risk of deadly diseases

Government-approved claims support market growth

Aging population portends growth for the market

Regulatory pressures can change the direction of the market

General Mills leads a long list of competitors

New product activity heats up across segments

Heavy advertising drives category

Claimed use is on the rise, but frequency still low

Market Size and Forecast

Key points

Continued growth hinges on expanding uses and increasing frequency

Figure 1: Total FDMx sales and forecast of functional foods at current prices, 2004-14

Figure 2: Total FDMx sales and forecast of functional foods at inflation-adjusted prices, 2004-14

Competitive Context

Key points

Functional foods compete for attention on a vast playing field

Functional drinks and supplements both competitive and complementary

Debate over diet has helped to shape the functional food market

A broader market for functional foods

Segment Performance

Key points

Big competition exists within segments

Figure 3: FDMx sales and forecast of functional foods, at current prices, by segment, 2004-14

Figure 4: FDMx sales of functional foods, segmented by type, 2007 and 2009

Segment Performance—Dairy and Margarine

Key points

Probiotic yogurt has made the dairy case a prime functional destination

Sales and forecast of functional dairy and margarine

Figure 5: FDMx sales and forecast of functional dairy and margarine, 2004-14

Segment Performance—Functional Cereal

Key points

Functional cereals face obstacles to growth

Success in cereal means building share, not building the category

Sales and forecast of functional cereal

Figure 6: FDMx sales and forecast of functional cereal, 2004-14

Segment Performance—Bars and Snacks

Key points

An ideal form for on-the-go functional nutrition

Heavy and varied new product activity

Line extensions from big, focused brands drive the market

Sales and forecast of functional bars and snacks

Figure 7: FDMx sales and forecast of functional bars and snacks, 2004-14

Segment Performance—Functional Bakery

Key points

General health perception of “wholegrain” provides significant competition

Sales and forecast of functional bakery products

Figure 8: FDMx sales and forecast of functional bakery products, 2004-14

Retail Channels

Key points

Other channels likely to continue chipping away at supermarkets

Figure 9: FDMx sales of functional foods, by retail channel, 2006 and 2008

Choice of retail channels to purchase functional foods

Figure 10: Choice of retail channels to purchase functional foods, by age, June 2009

Retail Channels—Food Stores

Key points

Supermarkets well positioned for functional foods sales

Figure 11: U.S sales of functional foods at food stores, 2004-08

Market Drivers

Key points

Diet may reduce risk of most deadly diseases

Figure 12: Leading causes of death and death rates, 2006

Government-approved claims support market growth

Figure 13: Selected FDA approved health claims, April 2008

Consumers are trying to make a difference by watching their diets

Figure 14: Attitude towards health, by agree, 2004 and 2009

Figure 15: Reasons for watching/controlling diet, 2004 and 2009

American diets lacking important nutrients

Figure 16: Recommended vs. actual consumption of selected foods

Aging population portends growth for the market

Figure 17: Population aged 18 or older, 2004-14

Regulatory pressures can change the direction of the market

Leading Companies

Key points

General Mills

Groupe Danone

Kellogg

Figure 18: FDMx functional food sales of leading companies, 2008 and 2009

Brand Share—Dairy and Margarine

Key points

All yogurts considered functional

Specialized yogurt brands enjoy market share gains

Spreads gain on omega-3s

Figure 19: FDMx brand sales of functional dairy and margarine in the U.S., 2008 and 2009

Brand Share—Cereal

Key points

Functional cereals struggle to stand out from other cereal

Special K wins by focusing narrowly on weight loss

Fiber One gains share on taste

Figure 20: FDMx brand sales of functional cereal in the U.S., 2008 and 2009

Brand Share—Bars and Snacks

Key points

Fiber One’s continued success underscores importance of taste

FiberPlus from Kellogg expands benefits of bars, promises better taste

Figure 21: FDMx brand sales of functional bars and snacks in the U.S., 2008 and 2009

Brand Share—Bakery

Key points

Figure 22: FDMx brand sales of functional bakery in the U.S., 2008 and 2009

Brand Qualities

Narrow strategic focus and broad product lines keys to brand success

Fiber One

Special K

Smart Balance

Private label poised to grow

Innovation and Innovators

Key points

New product activity heats up across segments

Figure 23: Number of new product launches in functional foods, 2004-09*

Digestive claims proliferate but bone health claim could provide growth opportunity

Figure 24: Number of new product launches in functional foods, 2004-08

Digestive claims thrive in dairy

Figure 25: Number of digestive claims in new products, by segment, 2008

Cardiovascular claims proliferate

Figure 26: Number of cardiovascular claims in new products, by segment, 2008

Immunity boost

Figure 27: Number of immunity claims in new products, by segment, 2008

Brain and nervous system

Figure 28: Number of brain and nervous system claims in new products, by segment, 2008

Weight control

Figure 29: Number of weight control claims in new products, by segment, 2008

Advertising and Promotion

Overview

Figure 30: Measured advertising spending for select functional food brands, 2007 and 2008

A functional claim pioneer, Cheerios continues to appeal to emotions

Figure 31: Cheerios, television ad, 2009

Fiber One makes fiber tasty

Figure 32: Fiber One Honey Clusters, television ad, 2009

Activia plays the role of educator

Figure 33: Activia, television ad, 2009

Yo-Plus provides a shortcut to digestive health

Figure 34: Yoplait Yo-Plus, television ad, 2009

SuperShots promises easy cholesterol reduction

Figure 35: Promise Supershots, television ad, 2009

Glucerna makes specific appeal to diabetics

Figure 36: Glucerna, television ad, 2009

Functional Food Purchases

Key points

Purchase incidence of functional foods continues to expand

Figure 37: Purchase incidence of functional foods, 2006-09

Figure 38: Purchase incidence of functional foods, by gender, May 2009

Younger adults more likely to buy functional foods

Figure 39: Purchase incidence of functional foods, by age, May 2009

Types of functional foods purchased

Figure 40: Types of functional foods purchased in past three months, 2006, 2008, 2009

Figure 41: Types of functional foods purchased in past three months, by gender, May 2009

Younger respondents gravitate to convenient product forms

Figure 42: Types of functional foods purchased in past three months, by age, May 2009

Frequency of Functional Food Consumption

Key point

Light frequency an issue and opportunity for marketers

Figure 43: Frequency of functional food consumption in the past month, by age, May 2009

Changes in Functional Food Use

Key points

More functional food users increasing consumption than cutting back

Figure 44: Incidence of using more or less functional foods/beverages compared to a year ago, by age, June 2009

Reasons for using more functional food compared to a year ago

Figure 45: Reasons for using more functional food than a year ago, by age, June 2009

Cost tops reasons for consuming less functional food

Figure 46: Reasons for using less functional food than a year ago, by gender, June 2009

Attitudes Towards Diet, Health and Lifestyle

Key points

Americans hold the best intentions for healthy eating…

Figure 47: Attitudes towards diet and health, by age, May 2006-June 2007

… but actual behaviors and results tell a different story and define the opportunity for functional foods

Figure 48: Attitudes towards healthy lifestyle, by gender, May 2009

Responses by age suggest lifestage opportunities

Figure 49: Attitudes towards healthy lifestyle, by age, May 2009

Reasons for Eating Functional Foods

Key points

Motivations as varied as the market

Figure 50: Reasons for eating functional foods, by gender, May 2009

Motivations differ by age

Figure 51: Reasons for eating functional foods, by age, May 2009

Functional Foods Opinions and Interest

Key points

Government involvement welcomed, likely to increase, impact uncertain

Recession appears to be curtailing category growth

Figure 52: Opinions towards functional foods, by gender, May 2009

Figure 53: Opinions towards functional foods, by age, May 2009

Consumer understanding extends only to a handful of ingredients

Figure 54: Role of functional ingredients in functional beverage purchase decisions, May 2009

The list of desired functional benefits is long

Figure 55: Desired benefits in functional foods, by gender, May 2009

Figure 56: Desired benefits in functional foods, by age, May 2009

Race and Hispanic Origin

Higher use among blacks and Hispanics may correlate to age

Figure 57: Purchase incidence of functional foods, by race/Hispanic origin, May 2009

Product types used driven by both form preferences and health issues

Figure 58: Types of functional foods purchased in past three months, by race/Hispanic origin, May 2009

Blacks slightly more likely to cite specific reasons for functional food use

Figure 59: Reasons for eating functional foods, by race/Hispanic origin, May 2009

Appendix: Research Methodology

Abstract

While this report examines functional foods as a single category, the reality at most supermarkets and other stores is that the various components of the functional foods category are dispersed throughout the store, appearing in many instances only as small parts of much larger categories and departments. Shoppers looking for functional and better-for-you foods must sort through all the healthy and not-so-healthy alternatives to locate products that offer the benefits they desire.

Retailers have taken steps to make it easier to shop for healthy foods. Hannaford, a New England supermarket chain owned by the Belgium-based Delhaize Group, was the first, in 2006, to institute a storewide health rating system. Hannaford’s Guiding Stars system rates and labels foods via shelf-tags on the presence of vitamins, minerals, dietary fiber, and whole grains, and the absence of trans fat, saturated fat, cholesterol, added sugars and added sodium. Other retailers have unveiled their own similar systems.

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