This fully updated fourth-edition Packaged Facts report examines the U.S. market for functional foods and beverages from all angles while providing insight into key international markets, identifying global trends in new product introductions by geographic region and company and exploring developing markets poised for growth. For the U.S. market, it presents retail sales breakouts of food and beverage categories with a strong functional tilt, from yogurt to food/snack bars to cranberry juice; examines market drivers and trends; and maps out the overall competitive situation. Trends in new product introductions are examined in depth, based on data from Datamonitor’s Product Launch Analytics, as are trends in functional ingredients and condition-specific product thrusts. The report also profiles major marketers, including Groupe Danone, Kellogg Co., Kraft Foods, Nestlé SA, PepsiCo and Nature’s Path Organic.

An exclusive feature of Functional, Fortified and Inherently Healthy Foods and Beverages in the U.S., 4th Edition is custom survey data from Packaged Facts’ February 2009 online poll of 2,600 U.S. adults, which was conducted to measure purchasing patterns, attitudes and demographics specific to functional foods and beverages. Drilling down to the marketer and brand level, the analysis also relies on consumer survey data from Experian Simmons’ Fall 2008 National Consumer Study, and on Information Resources, Inc. InfoScan Review data charting product sales in mass-market channels.

About the Author

Marigny Research Group, Inc. (MRG) is a producer of customized private-label market research reports, offering services including title development, research, market analysis, writing, editing, proofreading, desktop production, and marketing support, with a network of market research professionals that extends across the United States. Since 1986 MRG has authored more than 200 reports published under the Packaged Facts imprint, covering consumer packaged goods, demographic, retail, and financial markets. Within these and other areas, MRG has developed complete report lines, most recently focusing on the burgeoning market for pet products and services.

Chapter 1: Executive Summary

Scope and Methodology

Scope of Report

Exclusions

Report Methodology

Introduction

Nutraceuticals and Functional Foods

Governmental Regulation of Health Claims

Types of Health Claims

FDA Warns Marketers of Drug Claims

Global Market Context

Health Concerns on a Global Scale

Key Global Players

Global New Product Introduction Trends

Market and Marketer Overview

Total U.S. Sales Reach $30.7 Billion

Figure 1-1: U.S. Retail Sales of Functional Foods and Beverages, 2006-2008 (in billions of dollars)

Functional Foods Less Vulnerable to Economic Downturn

Growing Health Concerns and an Aging Population

Aging Boomers and Chronic Conditions

Market Projections: Sales to Hit $43 Billion by 2013

Competing in Functional Foods and Beverages

New Product Development

“High Vitamins,” “Upscale” Gain as Functional Product Tags

Fiber and Whole Grains Galore

Probiotics and Prebiotics: Focus on Digestive Health

Half of Consumers Have Purchased High-Antioxidant Products

Omega-3 Fatty Acids Going Strong

Soy Products Proliferate

Superfruits: Juices and More

Beyond the Fruit: Chocolate, Tea and More

Organic Introductions

Products Targeting Women

Products Targeting Children

The Consumer

High Levels of Receptivity to Functional Foods

Figure 1-2: Distribution of Consumers by Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits,” February 2009 (percent)

Purchasing Rates by Product Characteristics

Demographic Trends

Chapter 2: Introduction

Market Definition

Defining “Functional”

Exclusions

Nutraceuticals and Functional Foods

Governmental Regulation of Health Claims

Types of Health Claims

Health Claims That Meet Significant Scientific Agreement (SSA)

Qualified Health Claims

Structure/Function Claims

Nutrient Content Claims

FDA Warns Marketers of Drug Claims

Medical Organization Logos

Marketers Identify Functional Products

Key Nutrients and Ingredients

Vitamins

Minerals

Dietary Fiber

Probiotics and Prebiotics

Soy Protein and Soy Isoflavones

Omega-3 Fatty Acids Going Strong

Herbal and Botanical Ingredients

Table 2-1: U.S. Functional Food Market: Key Nutrients and Ingredients, 2009

Chapter 3: Global Market Context

Health Concerns on a Global Scale

Figure 3-1: Key External Drivers in the Global Food and Beverage Industry (percent)

Nutrition and Obesity

Key Global Players

Table 3-1: New Functional Product Introductions from Leading Global Marketers, 2004-2008 (number of product introduction events)

Global New Product Introduction Trends

Table 3-2: New Functional Product Introductions: By Global Region, 2004-2008 (number of product introduction events)

Figure 3-2: Share of New Functional Product Introductions: By Global Region, 2008 (percent)

Regional Trends

Table 3-3: Top Functional Product Categories: Asia/Pacific, 2004-2008 (number)

Table 3-4: Top Functional Product Categories: Europe, 2004-2008 (number)

Table 3-5: Top Functional Product Categories: Latin America, 2004-2008 (number)

Table 3-6: Top Functional Product Categories: Canada, 2004-2008 (number)

Opportunities in International Functional Food Markets

Latin America

Asia

Russia and Eastern Europe

Looking Ahead: Health Concerns Will Shape Marketing Strategies

Chapter 4: Market and Marketer Overview

Retail Sales and Market Share Trends

Total U.S. Sales Reach $30.7 Billion

Figure 4-1: U.S. Retail Sales of Functional Foods and Beverages, 2006-2008 (in billions of dollars)

Supermarkets at 39% of Sales

Figure 4-2: Share of U.S. Functional Food and Beverage Sales by Retail Channel, 2008 (percent)

IRI-Tracked Sales of Key Functional Categories at $10 Billion

Table 4-1: Mass-Market Sales in Key Functional Food and Beverage Categories, 2003-2008 (in millions of dollars)

Table 4-2: IRI-Tracked Sales of Key Functional Food and Beverage Product Categories, 2007 vs. 2008 (in millions of dollars)

Foods Account for 59% of IRI-Tracked Functional Product Sales

Table 4-3: IRI-Tracked Sales of Key Functional Food and Beverage Categories by Classification, 2003-2008 (in millions of dollars)

Figure 4-3: Share of IRI-Tracked Sales of Key Functional Food and Beverage Categories: By Classification, 2003-2008 (percent)

Market Outlook

Introduction: Food Spending in Times of Economic Crisis

Table 4-4: Quarterly Personal Consumption Expenditures on Food vs. Overall Goods & Services, 2006-2008 (in billions of dollars)

Table 4-5: Consumer Price Increases for Food, Food at Home and Food Away From Home: May 2008 through February 2009 (percent increase)

Figure 4-4: Consumer Distribution Based on Change in Financial Situation, 2008 (percent of U.S. adults)

Table 4-6: Attitudes Toward Healthier Foods and New Nutritional Products in Relation to Personal Financial Situation, 2008 (percent and index)

Functional Foods Less Vulnerable to Economic Downturn

Changes in Spending Habits

Rising Food Costs

Figure 4-5: Consumer Price Index for Selected Food and Beverage Categories: 1999-2008

Table 4-7: U.S. Functional Food and Beverage Market: Percentage Change in Dollar vs. Volume Sales by Product Category, 2007 vs. 2008 (in millions of dollars)

Growing Health Concerns and an Aging Population

Obesity and Health

Consumers Seeking “Wellness”

Aging Boomers and Chronic Conditions

Table 4-8: Projected U.S. Population by Age Bracket: 2007, 2010 and 2015 (in thousands)

IFIC Study on Diet and Health Connections

Packaged Facts Survey Confirms High Consumer Interest in Functional Foods

Table 4-9: Percent of U.S. Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Special Nutritional Benefits, 2009

Table 4-10: Percent of U.S. Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content, 2009

Table 4-11: Percent of U.S. Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns, 2009

Table 4-12: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits,” February 2009 (percent of U.S. adults)

Figure 4-6: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits,” February 2009 (percent of U.S. adults)

Ramping Up Research & Development

The Role of Convenience

Lessons from Organic Market

Table 4-13: Consumer Attitudes About Buying Organic Foods and Beverages, 2009 (percent of U.S. adults)

Traditional Supplements Still Going Strong

Figure 4-7: U.S. Retail Sales of Nutritional Supplements: 2003, 2007 and 2012 (in millions of dollars)

Competition from Restaurants and Take-Out

Market Projections: Sales to Hit $43 Billion by 2013

Table 4-14: Projected U.S. Retail Sales of Functional Foods and Beverages: 2008-2013 (in millions of dollars)

Marketer Overview

Competing in Functional Foods and Beverages

Highlighting Naturally Health-Beneficial Ingredients in Existing Product Portfolios

Extending Existing Brands with Fortified Products

Acquiring Smaller Marketers Active in Functional Products

Launching New Functionally Oriented Brands

The Competitors

Table 4-15: Selected U.S. Functional Food and Beverage Marketers, Brands and Products, 2009

Chapter 5: New Product Development

Trends in New Product Introductions

Added Nutrients Fuel IRI New Product Pacesetters

“High Vitamins,” “Upscale” Gain as Functional Product Tags

Table 5-1: Number of U.S. Functional Food and Beverage New Product Introductions: By Package Tag/Claim, 2006-2008

Table 5-2: Number of U.S. Functional Food and Beverage New Product Introductions: By Package Tag/Claims for Selected Product Classification, 2008

Functional Drinks Category Leads in Product Introductions

Table 5-3: Number of U.S. Functional Food and Beverage New Product Introductions: By Product Category, 2003-2008

Functional Ingredient Trends

Fiber and Whole Grains Galore

Probiotics and Prebiotics: Focus on Digestive Health

Good Bacteria Growing in Popularity

Probiotic Claims Require Careful Handling

Prebiotics Encourage Friendly Flora

Half of Consumers Have Purchased High-Antioxidant Products

Superfruits: Juices and More

Table 5-4: New Product Introductions with Select Superfruits, 2004-2008 (number)

Table 5-5: Purchasing of Selected “Superfruit” Beverage Types Within The Past 12 Months, 2009 (percent of U.S. adults)

Beyond the Fruit: Chocolate, Tea and More

Omega-3 Fatty Acids

Flax Seed as Source of Omega-3

Omega-3 Market Growth in Question

Despite Questions, Omega-3 Maintains Mainstream Appeal

Soy Products Proliferate

Organic Introductions

Figure 5-1: Levels of Agreement with Statement, “I Am Usually Willing to Pay More for Organic Foods, 2009 (percent of U.S. adults)

Targeted Functional Product Types

Condition-Specific Products Aimed at Boomer Market

Heart Disease and Cholesterol

Beauty Foods Fight Signs of Aging

Figure 5-2: Levels of Agreement with Statement, “I Like the Idea of Foods and Beverages That Provide Beauty Benefits,” 2009 (percent of U.S. adults)

Digestive Health and Immunity

Performance-Enhancing Products—Not Just for Athletes

Energy: Drinks and More

Brain Health and Memory

Products Targeting Women

Products Targeting Children

Chapter 6: Competitor Profiles

Groupe Danone

Company Overview

Company Tightening its Focus on Health, Core Brands

Table 6-1: Selected U.S. Adult Demographics for Use of Dannon Yogurt, 2008 (index)

Functional Products: Activia and Beyond

Table 6-2: Selected U.S. Adult Demographics for Use of Stonyfield Farm Yogurt, 2008 (index)

Table 6-3: U.S. Mass-Market Sales of Select Dannon Products, 2007-2008 (in millions of dollars)

Company Banks on Information, Innovation

International Expansion Also Health-Focused

Kellogg Co.

Company Overview

An Emphasis on Innovation

International Presence

Kashi: Extending the Brand

Table 6-4: Mass-Market Sales of Selected Kellogg Functional RTE Cereals, 2007-2008 (in millions of dollars)

Table 6-5: Selected U.S. Adult Demographics for Use of Kashi GoLean Cold Cereal, 2008 (index)

Table 6-6: Selected U.S. Adult Demographics for Use of Kashi Bars, 2008 (index)

Functional Snacks and Beverages

Kraft Foods, Inc

Company Overview

Health and Wellness Are Core Strategies

Table 6-7: Selected U.S. Adult Demographics for Use of Kraft South Beach Frozen Pizza, 2008 (index)

Table 6-8: Selected U.S. Adult Demographics for Use of Balance Bar, 2008 (index)

Breaking New Ground in Healthy Foods

Nestlé SA

Company Overview

Health/Wellness—And Indulgence

Nutrition in Developing Nations

Bars, Dinners and Beverages

Table 6-9: Selected U.S. Adult Demographics for Use of Original PowerBar, 2008 (index)

Table 6-10: Selected U.S. Adult Demographics for Use of Boost, 2008 (index)

PepsiCo, Inc.

Company Overview

Not Just a Soda Company

SoBe

Table 6-11: Selected U.S. Adult Demographics for Use of SoBe Functional Drinks, 2008 (index)

Naked Juice

Table 6-12: Mass-Market Sales of Naked Juice Functional Beverages, 2007-2008 (in millions of dollars)

Tropicana Stumbles Due to Packaging Debacle

Propel Fitness Water

Quaker Oats Touting Functional Value Foods

Table 6-13: Selected U.S. Adult Demographics for Use of Quaker Oats Oatmeal, 2008 (index)

Nature’s Path Organic

Company Overview

Function and Taste

Superfoods: Focus on Hemp

Gluten-Free: A Serendipitous Development

Environmental Responsibility and Cause Marketing

Eat Well, Do Good

Table 6-14: Mass-Market Sales of Selected Nature’s Path Categories/Brands, 2007-2008 (in millions of dollars)

Chapter 7: The Consumer

High Levels of Receptivity to Functional Foods

Figure 7-1: Distribution of Consumers by Level of Agreement with Statement, “Rather Than Vitamin/ Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits,” February 2009 (percent)

Figure 7-2: Distribution of Consumers by Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits,” February 2009 (percent)

Demographics to Functional Food Receptivity

Table 7-1: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Gender, 2009 (percent)

Table 7-2: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Gender, 2009 (percent)

Table 7-3: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Age Bracket, 2009 (percent)

Table 7-4: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Age Bracket, 2009 (percent)

Table 7-5: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Household Composition, 2009 (percent)

Table 7-6: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Household Composition, 2009 (percent)

Table 7-7: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Highest Level of Educational Attainment, 2009 (percent)

Table 7-8: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Highest Level of Educational Attainment, 2009 (percent)

Table 7-9: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Household Income Bracket, 2009 (percent)

Table 7-10: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Household Income Bracket, 2009 (percent)

Table 7-11: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Race/Ethnicity, 2009 (percent)

Table 7-12: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Race/Ethnicity, 2009 (percent)

Table 7-13: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Locale of Residence, 2009 (percent)

Table 7-14: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Locale of Residence, 2009 (percent)

Table 7-15: Level of Agreement with Statement, “Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits”: By Region of Residence, 2009 (percent)

Table 7-16: Level of Agreement with Statement, “I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits”: By Region of Residence, 2009 (percent)

Purchasing Rates by Product Characteristics

Table 7-17: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns, 2009

Table 7-18: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content, 2009

Table 7-19: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits, 2009

Women Are the Prime Consumers

Table 7-20: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Gender, 2009

Table 7-21: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Gender, 2009

Table 7-22: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Gender, 2009

Varied Patterns by Age

Table 7-23: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Age Bracket, 2009

Table 7-24: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Age Bracket, 2009

Table 7-25: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Age Bracket, 2009

Patterns by Household Composition

Table 7-26: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Household Composition, 2009

Table 7-27: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Household Composition, 2009

Table 7-28: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Household Composition, 2009

Strong Correlation with Higher Education and Income

Table 7-29: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Highest Level of Educational Attainment, 2009

Table 7-30: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Highest Level of Educational Attainment, 2009

Table 7-31: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Highest Level of Educational Attainment, 2009

Table 7-32: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Household Income Bracket, 2009

Table 7-33: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Household Income Bracket, 2009

Table 7-34: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Household Income Bracket, 2009

African-Americans and Asian-Americans as Prime Consumers

Table 7-35: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: White Non-Hispanics, 2009

Table 7-36: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Race/Ethnicity, 2009

Table 7-37: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Race/Ethnicity, 2009

Urban/Suburban and Coastal Skews

Table 7-38: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Locale of Residence, 2009

Table 7-39: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Locale of Residence, 2009

Table 7-40: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Locale of Residence, 2009

Table 7-41: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Region of Residence, 2009

Table 7-42: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Region of Residence, 2009

Table 7-43: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Region of Residence, 2009