According to a new report from Global Industry Analysts (“Functional Foods and Drinks: A Global Strategic Business Report), despite the growing popularity of functional foods and drinks over conventional products, the market has not been entirely immune to the vagaries of the worldwide economic hardships. Though the functional foods market continued a positive growth trajectory in 2009 and 2010, the pace slowed down, particularly in developed regions, with Europe and North America bearing the maximum brunt of the negative sentiments. However, the functional foods and drinks market is expected to bounce back quickly once the market recovers from the recession. Going forward, the developing regions are expected to be the prime growth engines, with the Middle East, Asia-Pacific, Latin America and Eastern Europe anticipated to take away market share from the U.S. and other developed markets.

 

Increasing health and wellness concerns have moved functional foods and drinks from a niche segment to the mainstream. The U.S., Europe and Japan represent the major markets worldwide, as stated by the new market research report on Functional Foods and Drinks. Heart health is one of the most desired and highly demanded health benefits from functional foods. An increase in consumer knowledge together with an array of new product launches has bolstered consumer interest in anti-cholesterol products. With contribution from such factors, worldwide market for heart health foods is estimated to grow rapidly in the coming years. In addition, the snacks and confectionery segment is finding favor across all consumer categories. Several snack and candy companies in Southeast Asia, North America and Europe have initiated the addition of energy boosters and antioxidants in low levels, which offer moderate levels of nutrition. Moreover, success of organic foods and emerging trend for functional foods has incited food makers to develop a combination product—Organic Functional Foods, to strike the growing demand for healthy foods. As a result, several food companies are playing an active role in developing such products. Flavor and functional benefits continue to be the crucial factors determining consumption decisions.

 

Functional Drinks comprises one of the fastest growing sectors in the overall beverage industry. Consumers prefer drinks that are rich in vitamins and nutrients, besides providing hydration and flavor. There is considerable scope for developing such new beverages, as health-conscious consumers tend to avoid caffeine and sugar-based drinks. “Super greens’ such as spirulina, wheatgrass and chlorella, with several health claims, are also increasing their presence in the market. Energy drinks, though smallest, is the fastest growing category in the global functional drinks market. Currently, manufacturers are seeking to distinctively differentiate their products, either through flavors, formulations, brand name, or packaging. With a noticeable rise in the rate of obesity in children, companies are prompted to develop products on healthier parameters to encourage this consumer group to prefer functional beverages. Functional beverages that offer beauty enhancement are also gaining in importance. Functional organic drinks also comprise a new promising market with smaller players introducing several new products.

 

Asia-Pacific is one of the rapidly emerging markets for functional foods and drinks with enormous potential for astounding growth. While functional foods have already forayed into the markets of Australia, China, Korea, and Taiwan, neighboring India, Singapore, Philippines, and Malaysia also look promising. The market is projected to post a CAGR of more than 6% over the analysis period. Dairy drinks are among the most demanded functional drink varieties. Also, demand for such drinks fortified with probiotics is very high. Probiotic yogurts constitute almost half of the functional dairy products market, followed by cheese.