The functional foods market, while predicted to grow substantially over coming years, has seen many expensive failures over recent years. In fact, failure is far more common than success and most products sell on a niche basis with very few ever graduating into the mass market, according to a new report.

The report, Failures in Functional Foods and What They Reveal About Success, noted that approximately 80 per cent of functional food launches fail within 18 months and suggested “seven golden rules” for functional success:

1. Successful brands are expert brands2. Offer a relevant benefit and be a credible brand

3. Aim for a benefit the consumer can feel

4. Remember that an ingredient is not a point of difference

5. A future of niches – focus on value, not volume

6. Differentiate using packaging design

7. Open new categories and segments – don’t be a me-too

Number four was considered one of the most vital tips given acceptance of unknown ingredients requires time.

“Many of the failures involve a company choosing an ingredient that is new to consumers and overlooking the fact that consumers buy products only for the benefit to them personally, not because of the ingredient used,” the report advised. “In fact, consumer acceptance of new and unfamiliar ingredients is usually a very slow process.”

One of the biggest success stories of the functional food environment was the launch of Omega-3 enriched bread by the Tip-Top brand here in Australia. The claim of over 10 per cent of the market highlighted the potential of functional foods – which is yet to be fully grasped by most in the food industry.

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