Functional foods turn from `less bad' to `good'

Eurofood, Feb 3, 2000

Those who keep a close eye on product development and labelling in the food sector will have noticed a shift away from `lesser evil' foods -- with lower fat, less cholesterol or reduced salt -- towards `good' foods, that is, those which actively enhance health. Reduced-fat foods may be `less-bad', but they do not promote health in the way that functional foods can lower cholesterol or provide added vitamins, and a new report by industry analysts Euromonitor suggests that these positively promoted `actively good' foods have taken over from the `less bad' products.

Functional foods are perceived to be one answer to unhealthy, stressful lifestyles, the report comments. While a growing number of consumers understand the importance of good nutrition, few find it easy to factor this into their busy lifestyles. Growing time pressures and the `snacking culture' have contributed to less attention being paid to regular meals. For instance, one in three Australians now regularly skips breakfast and almost 80% of Europeans associate some difficulty with trying to eat a healthy diet. For consumers unable to follow dietary guidelines, functional food products may represent a `quick-fix -- an attractive halfway house between healthy eating and an unhealthy lifestyle.

SALES DOUBLED IN FIVE YEARS

Euromonitor estimates that the world market for functional foods was worth US$27.854bn (??27.043bn) in 1998. Sales are predicted to have grown by 13.7% to reach US$31.661bn in 1999, with a substantial increase of 53.5% in the world market registered over the period 1995-1999. Euromonitor forecasts that without interference from restrictive legislation, the global market for functional foods will reach US$51.3bn in value by 2004. However, barriers to growth include regulation, confusion over the meaning of the term `functional,' over-complex health messages, product failures and the negative reception to GM foods.

The trend illustrates an apparent paradox in the food sector. Alongside a return to good old-fashioned food, as demonstrated by the organic boom, consumers are also seeking out high-tech added-value functional foods.

Functional food - sales of leading sector, 1995-99 (US$m)

Country       Leading sector by sales       1995       1999

Japan(1)      Probiotic dairy               22.1      823.3
Canada        Bakery products(2)           501.7      561.2
US            Bakery products(2)        6 552.10   9 754.50
Australia     Ready-to-eat cereals         386.8      331.1
Austria       Functional dairy               7.3       47.4
Belgium       Functional dairy              21.1       19.4
Denmark       Dairy                         22.4       52.3
Finland       Probiotic dairy              332.6        274
France        Dairy products               520.1        524
Germany       Functional drinks            229.6        240
Norway        Dairy                          3.6       15.7
Netherlands   Dairy                         87.6      165.1
Sweden        Dairy                           47       78.7
Switzerland   Pro-biotic dairy               6.8       43.1
UK            Ready-to-eat cereals         598.9        726

Source: Euromonitor Notes: Estimated data for 1999 based on half-year results (1) Figures for Japan cover FOSHU category only (FOSHU = Food for Specified Health Use - a legal term classifying certain foods which make health claims) (2) Bakery products include ready-to-eat cereals.

"Functional Foods: A Worm Survey" Contact: Philip Woodward, Euromonitor. Phone: 44 171251 1105 Fax: 44 171 252 8024 E-mail: philip.woodward@euromonitor.com