Table of Contents
Scopes and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Advertising creative
- Abbreviations
Executive Summary
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- Market at a glance
- Continued growth hinges on expanding uses and increasing frequency
- Functional foods compete for attention on a vast playing field
- Debate over diet has helped to shape the functional food market
- A broader market for functional foods
- Supermarkets dominate, but other channels chip away
- Diet including functional foods may reduce risk of deadly diseases
- Government-approved claims support market growth
- Aging population portends growth for the market
- Regulatory pressures can change the direction of the market
- General Mills leads a long list of competitors
- New product activity heats up across segments
- Heavy advertising drives category
- Claimed use is on the rise, but frequency still low
Insights and Opportunities
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- An opportunity to rethink retail
- Lifestage targeting
- Clinical research key to credibility, growth of category
Inspire Insights
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- Functional foods beyond physical benefits: foods to enhance mood
- What’s it about?
- What we have seen
- Implications
- A simple balance for health
- What’s it about?
- What we have seen
- Specifics
- Implications
Market Size and Forecast
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- Key points
- Continued growth hinges on expanding uses and increasing frequency
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- Figure 1: Total FDMx sales and forecast of functional foods at current prices, 2004-14
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- Figure 2: Total FDMx sales and forecast of functional foods at inflation-adjusted prices, 2004-14
Competitive Context
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- Key points
- Functional foods compete for attention on a vast playing field
- Functional drinks and supplements both competitive and complementary
- Debate over diet has helped to shape the functional food market
- A broader market for functional foods
Segment Performance
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- Key points
- Big competition exists within segments
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- Figure 3: FDMx sales and forecast of functional foods, at current prices, by segment, 2004-14
- Figure 4: FDMx sales of functional foods, segmented by type, 2007 and 2009
Segment Performance—Dairy and Margarine
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- Key points
- Probiotic yogurt has made the dairy case a prime functional destination
- Sales and forecast of functional dairy and margarine
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- Figure 5: FDMx sales and forecast of functional dairy and margarine, 2004-14
Segment Performance—Functional Cereal
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- Key points
- Functional cereals face obstacles to growth
- Success in cereal means building share, not building the category
- Sales and forecast of functional cereal
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- Figure 6: FDMx sales and forecast of functional cereal, 2004-14
Segment Performance—Bars and Snacks
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- Key points
- An ideal form for on-the-go functional nutrition
- Heavy and varied new product activity
- Line extensions from big, focused brands drive the market
- Sales and forecast of functional bars and snacks
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- Figure 7: FDMx sales and forecast of functional bars and snacks, 2004-14
Segment Performance—Functional Bakery
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- Key points
- General health perception of “wholegrain” provides significant competition
- Sales and forecast of functional bakery products
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- Figure 8: FDMx sales and forecast of functional bakery products, 2004-14
Retail Channels
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- Key points
- Other channels likely to continue chipping away at supermarkets
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- Figure 9: FDMx sales of functional foods, by retail channel, 2006 and 2008
- Choice of retail channels to purchase functional foods
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- Figure 10: Choice of retail channels to purchase functional foods, by age, June 2009
Retail Channels—Food Stores
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- Key points
- Supermarkets well positioned for functional foods sales
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- Figure 11: U.S sales of functional foods at food stores, 2004-08
Market Drivers
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- Key points
- Diet may reduce risk of most deadly diseases
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- Figure 12: Leading causes of death and death rates, 2006
- Government-approved claims support market growth
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- Figure 13: Selected FDA approved health claims, April 2008
- Consumers are trying to make a difference by watching their diets
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- Figure 14: Attitude towards health, by agree, 2004 and 2009
- Figure 15: Reasons for watching/controlling diet, 2004 and 2009
- American diets lacking important nutrients
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- Figure 16: Recommended vs. actual consumption of selected foods
- Aging population portends growth for the market
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- Figure 17: Population aged 18 or older, 2004-14
- Regulatory pressures can change the direction of the market
Leading Companies
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- Key points
- General Mills
- Groupe Danone
- Kellogg
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- Figure 18: FDMx functional food sales of leading companies, 2008 and 2009
Brand Share—Dairy and Margarine
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- Key points
- All yogurts considered functional
- Specialized yogurt brands enjoy market share gains
- Spreads gain on omega-3s
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- Figure 19: FDMx brand sales of functional dairy and margarine in the U.S., 2008 and 2009
Brand Share—Cereal
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- Key points
- Functional cereals struggle to stand out from other cereal
- Special K wins by focusing narrowly on weight loss
- Fiber One gains share on taste
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- Figure 20: FDMx brand sales of functional cereal in the U.S., 2008 and 2009
Brand Share—Bars and Snacks
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- Key points
- Fiber One’s continued success underscores importance of taste
- FiberPlus from Kellogg expands benefits of bars, promises better taste
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- Figure 21: FDMx brand sales of functional bars and snacks in the U.S., 2008 and 2009
Brand Share—Bakery
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- Key points
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- Figure 22: FDMx brand sales of functional bakery in the U.S., 2008 and 2009
Brand Qualities
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- Narrow strategic focus and broad product lines keys to brand success
- Fiber One
- Special K
- Smart Balance
- Private label poised to grow
Innovation and Innovators
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- Key points
- New product activity heats up across segments
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- Figure 23: Number of new product launches in functional foods, 2004-09*
- Digestive claims proliferate but bone health claim could provide growth opportunity
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- Figure 24: Number of new product launches in functional foods, 2004-08
- Digestive claims thrive in dairy
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- Figure 25: Number of digestive claims in new products, by segment, 2008
- Cardiovascular claims proliferate
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- Figure 26: Number of cardiovascular claims in new products, by segment, 2008
- Immunity boost
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- Figure 27: Number of immunity claims in new products, by segment, 2008
- Brain and nervous system
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- Figure 28: Number of brain and nervous system claims in new products, by segment, 2008
- Weight control
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- Figure 29: Number of weight control claims in new products, by segment, 2008
Advertising and Promotion
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- Overview
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- Figure 30: Measured advertising spending for select functional food brands, 2007 and 2008
- A functional claim pioneer, Cheerios continues to appeal to emotions
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- Figure 31: Cheerios, television ad, 2009
- Fiber One makes fiber tasty
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- Figure 32: Fiber One Honey Clusters, television ad, 2009
- Activia plays the role of educator
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- Figure 33: Activia, television ad, 2009
- Yo-Plus provides a shortcut to digestive health
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- Figure 34: Yoplait Yo-Plus, television ad, 2009
- SuperShots promises easy cholesterol reduction
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- Figure 35: Promise Supershots, television ad, 2009
- Glucerna makes specific appeal to diabetics
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- Figure 36: Glucerna, television ad, 2009
Functional Food Purchases
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- Key points
- Purchase incidence of functional foods continues to expand
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- Figure 37: Purchase incidence of functional foods, 2006-09
- Figure 38: Purchase incidence of functional foods, by gender, May 2009
- Younger adults more likely to buy functional foods
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- Figure 39: Purchase incidence of functional foods, by age, May 2009
- Types of functional foods purchased
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- Figure 40: Types of functional foods purchased in past three months, 2006, 2008, 2009
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- Figure 41: Types of functional foods purchased in past three months, by gender, May 2009
- Younger respondents gravitate to convenient product forms
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- Figure 42: Types of functional foods purchased in past three months, by age, May 2009
Frequency of Functional Food Consumption
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- Key point
- Light frequency an issue and opportunity for marketers
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- Figure 43: Frequency of functional food consumption in the past month, by age, May 2009
Changes in Functional Food Use
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- Key points
- More functional food users increasing consumption than cutting back
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- Figure 44: Incidence of using more or less functional foods/beverages compared to a year ago, by age, June 2009
- Reasons for using more functional food compared to a year ago
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- Figure 45: Reasons for using more functional food than a year ago, by age, June 2009
- Cost tops reasons for consuming less functional food
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- Figure 46: Reasons for using less functional food than a year ago, by gender, June 2009
Attitudes Towards Diet, Health and Lifestyle
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- Key points
- Americans hold the best intentions for healthy eating…
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- Figure 47: Attitudes towards diet and health, by age, May 2006-June 2007
- … but actual behaviors and results tell a different story and define the opportunity for functional foods
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- Figure 48: Attitudes towards healthy lifestyle, by gender, May 2009
- Responses by age suggest lifestage opportunities
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- Figure 49: Attitudes towards healthy lifestyle, by age, May 2009
Reasons for Eating Functional Foods
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- Key points
- Motivations as varied as the market
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- Figure 50: Reasons for eating functional foods, by gender, May 2009
- Motivations differ by age
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- Figure 51: Reasons for eating functional foods, by age, May 2009
Functional Foods Opinions and Interest
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- Key points
- Government involvement welcomed, likely to increase, impact uncertain
- Recession appears to be curtailing category growth
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- Figure 52: Opinions towards functional foods, by gender, May 2009
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- Figure 53: Opinions towards functional foods, by age, May 2009
- Consumer understanding extends only to a handful of ingredients
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- Figure 54: Role of functional ingredients in functional beverage purchase decisions, May 2009
- The list of desired functional benefits is long
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- Figure 55: Desired benefits in functional foods, by gender, May 2009
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- Figure 56: Desired benefits in functional foods, by age, May 2009
Race and Hispanic Origin
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- Higher use among blacks and Hispanics may correlate to age
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- Figure 57: Purchase incidence of functional foods, by race/Hispanic origin, May 2009
- Product types used driven by both form preferences and health issues
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- Figure 58: Types of functional foods purchased in past three months, by race/Hispanic origin, May 2009
- Blacks slightly more likely to cite specific reasons for functional food use
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- Figure 59: Reasons for eating functional foods, by race/Hispanic origin, May 2009
Cluster Analysis
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- The Functified
- Who they are
- Opportunity
- Dysfunctionalists
- Who they are
- Opportunity
- Funcsters
- Who they are
- Opportunity
- Cluster characteristics
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- Figure 60: Functional food and beverages clusters, May 2009
- Figure 61: Frequency of functional food consumption in the past month, by functional food and beverage clusters, May 2009
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- Figure 62: Reasons for eating functional foods, by functional food and beverage clusters, May 2009
- Figure 63: Opinions towards functional foods, by functional food and beverage clusters, May 2009
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- Figure 64: Desired benefits in functional foods and beverages, by functional food and beverage clusters, May 2009
- Cluster demographics
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- Figure 65: Functional food and beverage clusters, by gender, May 2009
- Figure 66: Functional food and beverage clusters, by age group, May 2009
- Figure 67: Functional food and beverage clusters, by income group, May 2009
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- Figure 68: Functional food and beverage clusters, by race, May 2009
- Figure 69: Functional food and beverage clusters, by Hispanic origin, May 2009
- Cluster methodology
Custom Consumer Groups
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- Gender and age
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- Figure 70: Purchase incidence of functional foods, by gender and age, May 2009
- Types of functional foods purchased
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- Figure 71: Types of functional foods purchased in past three months, by gender and age, May 2009
- Reasons for eating functional foods
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- Figure 72: Reasons for eating functional foods, by gender and age, May 2009
- Race/Hispanic origin and age
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- Figure 73: Purchase incidence of functional foods, by race/Hispanic origin and age, May 2009
- Types of functional foods purchased
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- Figure 74: Types of functional foods purchased in past three months, by race/Hispanic origin and age, May 2009
- Reasons for eating functional foods
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- Figure 75: Reasons for eating functional foods, by race/Hispanic origin and age, May 2009
Appendix: Trade Associations
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