A new report on the functional foods market by Leatherhead Food Research shows that although the global functional foods market continues to expand in size, growth rates in parts of the world have dipped over the last couple of years, especially compared with the last decade. Much of this has largely been for economic reasons caused by the global downturn, with premium-priced functional products carrying less appeal for price-conscious shoppers. Certain parts of the market also appear to be approaching maturity, while the industry also faces ongoing competition from food and drinks positioned on a more general wellness platform.
In spite of this, levels of corporate and new product activity remain high within the global functional foods industry. Many of the world’s leading food groups have been keen to expand their presence in market sectors such as functional dairy products, soya-based and lactose-free foods and sports and energy drinks. It is also worth noting that health remains a major driver of corporate strategy in most parts of the world, with manufacturers also reformulating their food and drinks to improve their nutritional qualities.
From a supply perspective, the industry is still largely dominated by many of the world’s leading food groups. For many of these companies, functional foods form a small but significant part of their overall product range, having made some of the greatest contributions to recent growth in sales and profits during the last decade, on the back of the global trend towards healthier diets. Partly as a result of this, large-scale mergers and acquisitions continue to take place within the industry, one recent example of which was Nestlé’s $11.85 billion purchase of Pfizer Nutrition.