The functional food and drink market in the US, Western Europe and Asia-Pacific is entering a critical era, with a number of inhibitors threatening to impact on the impressive growth rates that the global health and wellness market is currently experiencing.
Although consumers are actively seeking out food and drinks that optimise performance and reduce the risk of illness, they are becoming more skeptical about the health claims made by food and drink manufacturers, a new report* from independent market analyst Datamonitor reveals.
Furthermore, a lack of confidence in food and drink with ‘artificial’ ingredients means more consumers are opting for naturally healthy diets in order to boost wellness levels.
Michael Hughes, consumer market analyst and author of the study believes that current functional food market conditions will continue to witness growth, but that food manufacturers should be aware of consumers’ concerns and doubts about foods containing functional ingredients.
The combined US, Western European and Asia-Pacific functional food and drink market is worth US$ 72.3 billion, according to Datamonitor.
Datamonitor forecasts the US, Western European and Asia-Pacific functional food and drink market will grow at a compound annual growth rate (CAGR) of 5.7% between 2007 and 2012.
This buoyant growth is being driven by consumers who are seeking products that offer a solution to both long and short-term health problems.
Health problems drive 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.
“Often, functional product consumption has been associated with aging populations aiming to minimize the risk of serious illness. However, lifestyle changes are leading to younger consumers purchasing functional foods with greater regularity, in order to combat day-to-day health issues, such as sleep deprivation, skin blemishes and even nail deficiencies”, says Hughes.
Consumers still dubious about validity and safety of functional foods
Despite these impressive growth rates Datamonitor thinks the market faces the challenge of deteriorating levels of consumer trust and confidence.
Consumers are becoming less trustworthy 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, Hughes believes it is “essential that manufacturers promote functional foods in a credible and honest manner and continue to educate consumers about the credence of emerging ingredients such as lycopene, prebiotic fibre 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.
Asia will remain the most prosperous functional food market, while confectionery and soft drinks continue to grow in popularity.
Asia Pacific will outperform Europe
The Asia-Pacific functional food market will continue to outperform the US and European market in the foreseeable future, Datamonitor forecasts.
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.
Datamonitor’s report, “Functional Food, Drinks & Ingredients: Consumer Attitudes & Trends” analyses the drivers and inhibitors behind the functional food and drink market in three continents and highlights how manufacturers should best respond to changing consumer attitudes.
For further information, contact Dennis Mason (Australasia) or Krishna Rao (Europe)