Table of Contents
Introduction
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- Definition
- Functional food and drink products focus on particular health areas, such as:
- Excluded
- Vitamin and mineral fortification
- Superfoods
- Exclusions to the excluded
- Others
- Abbreviations
Executive Summary
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- The market
- Health claims crackdown
- Forecast
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- Figure 1: Value sales for total functional food and drink, 2006-16
- Market factors
- Consumers take a proactive approach to health
- Expanding population of over-65s set to support demand for functional foods
- Higher dairy prices boost market value
- The consumer
- Women more health-conscious than men
- Breakfast cereals and yogurt pots are the most frequently bought functional food
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- Figure 2: Types of Functional foods purchased, June 2011
- Scepticism hinders growth of functional foods
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- Figure 3: Attitudes to functional foods, June 2011
- Figure 4: agreement with the statement ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, June 2011
- High prices remain a barrier to purchase
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- Figure 5: agreement with the statement ‘Functional foods are over-priced,’ June 2011
- Younger consumers to drive future growth?
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- Figure 6: agreement with the statement ‘I buy more functional foods now compared to a year ago’, by age group, June 2011
- What we think
Issues in the Market
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- How can manufacturers combat consumer scepticism toward functional foods?
- How will EFSA’s stricter requirements for functional food and drinks affect the operators in the functional market?
- How can manufacturers better engage the growing ageing population?
- What opportunities does the 16-24-year old demographic offer the functional food market?
Future Opportunities
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- Trend: Guiding Choice
- Trend: Men Shopping Badly
Internal Market Environment
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- Key points
- Usage of functional foods dips
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- Figure 7: Trends in purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), 2007-10
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- Figure 8: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by gender, 2010
- Over-65s are the most likely to be regular users
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- Figure 9: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by age, 2010
- EFSA tightens the regulations on health claims
- The challenges for manufacturers
- Danone reacts
- Consumers take health matters into their own hands
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- Figure 10: Trends in agreement with the statements ‘I have to be really ill to go to the doctor,’ and ‘I should do a lot more about my health,’ 2006-10
- Nestlé leads the charge for acquiring functional food specialists
- Other companies on the acquisition trail
Broader Market Environment
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- Key points
- Back and neck pain are the most common medical complaints
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- Figure 11: Agreement with statement ‘I suffer from/have had…’, December 2010
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- Figure 12: Trends in prevalence of diabetes suffered from in the last 12 months, 2008-10
- Older population is set to grow
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- Figure 13: Projected trends in the age structure of the UK population, 2011-16
- Milk hikes hit functional dairy companies
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- Figure 14: UK monthly farmgate milk prices, June 2009-June 2011*
- Consumer confidence
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- Figure 15: Consumer Confidence Index, January 2007-July 2011
Competitive Context
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- Key points
- Vitamins and supplements
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- Figure 16: Trends in frequency of using vitamins and other supplements in the last 12 months, 2006-10
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- Figure 17: Value sales of vitamins and supplements, 2006-11
- Superfoods still niche
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- Figure 18: Type of food eaten, December 2010
Strengths and Weaknesses
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- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- Definition
- Prepared meals account for bulk of NPD
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- Figure 19: New product launches in the UK functional food market, by subcategory, 2006-10
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- Figure 20: New product developments in the UK functional food market, by private label vs branded, 2006-10
- Digestive claims account for bulk of functional products
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- Figure 21: New product developments in the UK functional food market, by functional claim, 2006-10
- Tesco ramps up NPD
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- Figure 22: New product development in the UK functional food market, by top ten companies, 2009 and 2010
Market Size and Forecast
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- Key points
- Steady growth in functional
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- Figure 23: Value sales for total functional food and drink, 2006-16
- Consumption levels stagnate
- Non-core sectors help drive overall growth
- The future of the market
- Functional food and drink market forecast
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- Figure 24: Value sales for total functional food and drink, 2006-16
- Forecast methodology
Segment Performance
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- Key points
- Yogurt drinks and pots dominate...
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- Figure 25: UK retail value sales of functional food and drink products, by sector, 2009-11
- …yogurt pots take share from yogurt drinks
- Milk alternatives continue to grow
- Functional drink sales driven by soft drink giants
Companies and Products
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- Danone
- Kellogg’s
- McNeil Nutritionals
- Müller Dairy (UK)
- Provexis Plc
- Unilever UK
- Yakult
Brand Communication and Promotion
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- Key points
- Adspend stays steady
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- Figure 26: Advertisement expenditure in the functional food market, 2006-10
- Danone dominates adspend
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- Figure 27: Advertising spend on functional food, by main brands, 2010
Channels to Market
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- Key point
- Multiples dominate sales of functional foods
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- Figure 28: UK retail value sales of functional foods, by outlet type, 2008-10
Consumer – Health Habits
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- Key points
- Weight loss is top health target
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- Figure 29: Consumer health targets, June 2011
- Women are more health-conscious
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- Figure 30: Consumer health targets, by gender, June 2011
- Younger consumers seek skin health
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- Figure 31: Agreement with the statement ‘I have tried to improve the health of my skin/complexion in the past 12 months’, by age, June 2011
Consumer – Functional Foods Bought
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- Key points
- Breakfast cereals are the most frequently purchased functional product
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- Figure 32: Types of functional foods and drinks purchased, June 2011
- Yogurt pots more popular than yogurt drinks...
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- Figure 33: Functional yogurt pots and drinks purchasing habits, by gender and age, June 2011
- …and usage rises among families with babies and toddlers
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- Figure 34: Functional yogurt pots and drinks purchasing habits, by presence of children, June 2011
- Only one in four over-65s drink functional fruit juice...
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- Figure 35: Functional fruit juice purchasing habits, by age, June 2011
- …but eggs appeal to the older age group
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- Figure 36: Functional eggs purchasing habits, by age, June 2011
Consumer – Attitudes Towards Health in Functional Foods
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- Key points
- Consumers distrust functional foods compared to natural foods
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- Figure 37: Attitudes towards health in functional foods, June 2011
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- Figure 38: Agreement with the statement ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, June 2011
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- Figure 39: Agreement with the statement ‘I avoid buying foods with additives as much as possible,’ June 2011
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- Figure 40: Agreement with the statement ‘I don’t really need them as I already eat a healthy diet’, June 2011
- Functional foods are blighted by consumer cynicism
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- Figure 41: Agreement with the statement ‘Functional benefits are just an excuse for companies to charge a higher price ’, June 2011
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- Figure 42: Agreement with the statement ‘I would buy them more if I was convinced of their health benefits’, June 2011
- Younger consumers most likely to feel the benefits
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- Figure 43: Agreement with the statement ‘Have noticed an improvement in my health since I started using them’, by age, June 2011
- Lack of understanding could be holding the market back
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- Figure 44: Agreement with the statement ‘I don’t really understand what the health claims mean’, by age, June 2011
Consumer – Attitudes towards Functional Foods
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- Key points
- High prices are a deterrent
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- Figure 45: Attitudes towards functional foods, June 2011
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- Figure 46: Agreement with the statement ‘Functional foods are overpriced’, June 2011
- Exaggerated claims
- Younger consumers buying more than a year ago
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- Figure 47: Agreement with the statement ‘I buy more functional foods now compared to a year ago’, by age, June 2011
- Parents are doubtful about giving functional products to children
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- Figure 48: Agreement with the statement ‘I am happy to give my child functional food and drinks’, June 2011
- Own-label’s healthy reputation
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- Figure 49: Agreement with the statement ‘Branded functional food and drinks are better than own-label equivalents’, by age, June 2011
- Capsule competitors
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- Figure 50: Agreement with the statement ‘I prefer to take vitamins/supplements rather than functional foods’, by age, June 2011
Target Groups
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- Key points
- Four target groups
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- Figure 51: Target groups based on attitudes towards functional food and drink, June 2011
- Impassives (13%)
- Sprightly Cynics (24%)
- Undecideds (43%)
- Health Buffs (20%)
Appendix – Internal Market Environment
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- Figure 52: Trends in purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), 2007-10
- Figure 53: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by demographics, 2010
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- Figure 54: Agreement with selected lifestyle statements, by demographics, 2010
- Figure 55: Agreement with selected lifestyle statements, by demographics, 2010
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Appendix – Broader Market Environment
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- Figure 56: Personal and family health history, December 2010
- Figure 57: Trends in the age structure of the UK population, 2006-16
- Figure 58: UK monthly farmgate milk prices, July 2011*
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Appendix – Competitive Context
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- Figure 59: Consumption of superfoods, by demographics, December 2010
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Appendix – Who’s Innovating?
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- Figure 60: New product developments in the functional food market, private label vs branded, 2006-10
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Appendix – Market Size and Forecast
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- Figure 61: Value sales for total functional food and drink, 2006-16
- Figure 62: Value sales for total functional food and drink, 2006-16
- Figure 63: Best- and worst-case forecasts for functional food and drink, 2011-16
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Appendix – Brand Communication and Promotion
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- Figure 64: Advertisement expenditure in the functional food market, by company, January 2006-June 2011
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Appendix – Consumer – Health Targets
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- Figure 65: Most popular consumer health targets, by demographics, June 2011
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- Figure 66: Next most popular consumer health habits, by demographics, June 2011
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- Figure 67: Repertoire of consumer health habits, by demographics, June 2011
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Appendix – Consumer – Functional Food Purchasing Habits
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- Figure 68: Most popular functional foods purchased, by demographics, June 2011
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- Figure 69: Next most popular functional foods purchased, by demographics, June 2011
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- Figure 70: Other functional foods purchased, by demographics, June 2011
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- Figure 71: Repertoire of functional foods purchased, by demographics, June 2011
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Appendix – Consumer – Attitudes towards Health in Functional Foods
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- Figure 72: Agreement with the statements ‘Have noticed an improvement in my health since I started using them’ and ‘I don’t really need them as I already eat a healthy diet’, by demographics, June 2011
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- Figure 73: Agreement with the statements ‘I don’t really understand what the health claims mean’ and ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, by demographics, June 2011
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- Figure 74: Agreement with the statements ‘I look out for food/drink products that promise added health benefits’ and ‘I would buy them more if I was convinced of their health benefits’, by demographics, June 2011
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- Figure 75: Agreement with the statement ‘Functional benefits are just an excuse for companies to charge a higher price’, by demographics, June 2011
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Appendix – Consumer – Attitudes towards Functional Foods
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- Figure 76: Agreement with the statements ‘Functional foods are overpriced’ and ‘Some of the claims are exaggerated, eg cereals are good for the heart’, by demographics, June 2011
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- Figure 77: Agreement with the statements ‘I avoid buying foods with additives as much as possible’ and ‘I do not mind paying more for foods with added benefits’, by demographics, June 2011
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- Figure 78: Agreement with the statements ‘I buy more functional foods now compared to a year ago’ and ‘Product labelling on functional foods is often unclear’, by demographics, June 2011
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- Figure 79: Agreement with the statements ‘Branded functional food and drinks are better than own-label equivalents’ and ‘I prefer to take vitamins/supplements rather than functional foods’, by demographics, June 2011
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- Figure 80: Agreement with the statements ‘I am happy to give my child functional food and drinks’ and ‘I have bought more of them as I get older’, by demographics, June 2011
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- Figure 81: Agreement with the statements ‘The choice of functional foods in supermarkets is too limited’, by demographics, June 2011
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Appendix – Target Groups
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- Figure 82: Target groups, by demographics, June 2011
- Figure 83: Attitudes towards functional foods, by target groups, June 2011
- Figure 84: Attitudes towards functional foods, by target groups, June 2011
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