Functional Foods & Beverages Market Research Reports & Industry Analysis

Functional food and beverages are first and foremost healthy foods, but it’s differentiated from your average fare by claims of specific health-promoting or disease-preventing properties.

A functional food has to do more than the basic function of supplying nutrients. The basic category of functional foods includes processed food or foods fortified with additives, like "vitamin-enriched" products. Fermented foods with live cultures are considered functional foods with probiotic benefits.

Health-conscious consumers have supplied the demand to make functional foods an emerging field in food science. Yet, as consumers seek healthy choices, they are often skeptical about the benefits claimed by the companies developing new functional foods and beverages. The fact is the benefits are simply difficult to detect.

The industry suggests the establishment of a health claim regulating agency, which may increase consumer confidence. However, strict examination of some of the functional food claims may discourage some companies from launching their products.

The burgeoning industry was also impacted by poor global economic outlook. Many companies were forced to reposition themselves in response to the global economic downturn by lowering prices, eliminating divisions and rebranding products. Others grew by targeting products that consumers believe make an impact on their health. Product functionality is the most important consumer decision factor, generally outweighing cost sensitivity.

Consumer surveys on a wide range of functional food areas -- such as heart, digestive, immunity, cognitive, joint and bone health -- find that shoppers have high levels of interest, but much lower levels of actual purchase behavior.

Cognitive-health products are one example, as more than two-thirds of Americans say they are interested in products that increase concentration, but less than one in five actually buy such products. Narrowing this gap is crucial for the industry to turn functional foods and drinks from a novelty into a steady growing business in the long term.