Health consciousness is one of the dominant drivers of consumer markets in the 21st century. In food markets there are virtually no products that can be marketed without addressing health concerns, and even basic foods must address issues of calorific content, additives, pesticides, organics, salt and sugar volumes.
One of the most successful health food categories is functional foods, which according to Euromonitor International’s research grew by 13.4% between 2004-2005 to reach nearly US$40 billion globally in 2005. The functional foods phenomenon has even extended to products such as confectionery whose raison d’être is pleasure rather than nutrition.
Hierarchy of needs progression to functional foods
A natural hierarchy of needs progression benefits certain consumer markets, as average per capita incomes improve and more consumers acquire the purchasing power to make choices about the products they consume. After subsistence and the satisfaction of the basic material requirements of nutrition comes greater lifestyle consciousness and the luxury of spending money on image and health enhancing products. Education is another trend which has major implications for healthy foods and Government campaigns against obesity, smoking, sugar, salt and fat consumption all create marketing opportunities for consumer products.
Where countries have a long tradition of consumer product consumption, greater health and lifestyle consciousness brings a shift in the sophistication of the products on offer. This may mean a product with additional benefits, or functional products, such as conditioners in shampoos, whitening agents in toothpastes, lower salt, or cholesterol reducing agents in margarine.
Dairy products are perhaps the most recognised functional products. They dominate the cholesterol-lowering foods category in Europe, with over 120 cholesterol-lowering dairy products introduced in Europe since 1998. Europe has also been more adventurous in venturing out of dairy and into different foods, with cholesterol-lowering fruit and vegetable, processed fish, meat and egg, side dish and snack product launches. In the US, there were cholesterol lowering product launches in beverages, breakfast cereals and sauces and seasonings. Plant sterols and stanols (and sterol and stanol esters) have also proved to be popular, with dairy products such as margarine, yoghurt and milk the main carriers.
Even chocolate is going functional, with Mars launching a brand of healthy chocolate, CocoaVia, across the US in March 2006. The dark chocolate product has been manufactured to be high in flavanols, an antioxidant found in cocoa beans and thought to have a blood thinning effect which may lower blood pressure. The product has also been enriched with vitamins and phytosterols to lower cholesterol. Although the benefits of flavanols have not yet been officially proven and some nutritionists object to the idea of eating chocolate as a recipe for health, diversifying into health foods and functional foods appears to be a smart move for major confectionery companies in the present climate.
Consumer convenience and health awareness
Convenience is a key reason why consumers choose functional foods: it is much easier to persuade a consumer to replace something they already eat regularly, such as margarine, with a healthier alternative, than to ask them to break a habit altogether or form a new one.
The pattern of launches also corresponds with an intensification of advice from health care practitioners that it is far better to lower cholesterol through dietary means than to resort to pharmaceutical drugs like statins, which could have potentially serious side effects.
According to the American Heart Association, 37.7 million American adults have high cholesterol of 240mg/dL or above. In Europe, the percentage of the population with high blood pressure varies by country, from 45% in Sweden to 19% in parts of Poland.
Key functional markets
Japan is the largest market in the world for functional foods, largely due to the Japanese government’s support of research into the field. Many nutrition products, which are fairly new to most of the world, such as probiotics and isotonic drinks, have a long history in Japan and are now accepted as mainstream products.
Functional foods account for around 3% of total food sales in the US, according to Euromonitor International, a share which is on the rise and is expected to double within the forecast period, taking functional foods into the mainstream of the food industry. US consumers have proved to be accepting of the concept of functional food, and have a more positive attitude towards it than many European countries.
The UK is the largest market for functional food in Western Europe. Health-conscious consumers – the key demographic for functional foods – are currently attracted by “natural” foods such as organics, however, and are becoming increasingly suspicious of those which involve ‘chemicals’.
German consumers tend to have a strong interest in issues of fitness, health and wellbeing, and are increasingly taking responsibility for their own health. Functional foods are expected to remain a small market in France due to the conservative attitude towards food among many French people.
In developing countries, sales of functional food are limited, with only the wealthy demographic able and inclined to buy them.
The outlook for functional foods on a global level is positive, with Euromonitor International forecasting the market to grow at an average rate of 5.7% per year between 2005-2010. This is largely the result of growing consumer acceptance of functional products and also, growing awareness of health issues that functional products are designed to benefit.
Euromonitor International expects that a key growth area for functional foods will be new applications for plant sterols, which is of particular interest in the US, where claims on plant sterols are approved, and where it is common for consumers to be aware of their cholesterol levels. Growth is also expected in probiotics, which are starting to be used in a wider range of products, including meat products and juices.
The ageing of the population also presents opportunities for growth as it is recommended that the elderly consume functional products that benefit bone health, vitamin deficiencies and diabetes. Fast food companies are even expected to capitalise on the success of functional foods by producing ranges of products which are marketed as snacks with a health benefit rather than as ‘health foods’.