Functional food demand on the rise

Posted by Editorial on 15th December 2009

Growing consumer awareness of functional foods is spurring demand and boosting product availability for digestive health ingredients, according to a market research report from the EU.

Functional foods have been high on the agenda of a number of food manufacturers due to the growing demand for healthy food. However, the market is still firmly in the growth stage as it takes time to confirm the image of healthfulness in the mind of the consumer.

In 2008, digestive health was the largest product segment of the total EU approved functional food market, accounting for 68.0 per cent of sales. Rising product prices, coupled with the extension of application areas, will continue to enhance market prospects, according to analysis from Frost & Sullivan.

Indeed, such is the interest that the market is expected to more than double by 2015 (on 2008 figures).

“The European market for digestive health ingredients is at the growth stage and new product launches are frequent and numerous,” notes Frost & Sullivan Industry Analyst Sridhar Gajendran. “Products for digestive health are available in both the functional foods and the dietary supplement segments, with the former having a relatively larger share in terms of both volume and value in 2008.”

Currently, functional foods for digestive health are available as dairy products, fortified beverages, baked foods, cereals and convenience foods. This category is poised for healthy growth in the coming years, primarily due to its significant potential to penetrate different application sectors.

“Increased prices have positively impacted market revenues,” Gajendran added. “The extension of applications to meat and fish categories has further stimulated growth.”

For instance, the global leader of inulin and oligofructose, Beneo-Orafti, recently increased prices for its range of BENEO products. Hikes of 6 per cent in the price of liquid products and 8 per cent in the price of powdered products were introduced in late 2007, with a subsequent 25 per cent increase following suit in November 2008. The company engaged in co-branding in meat products for the first time with its prebiotic ingredients in September 2008. In addition to its existing line of ingredients for meat-based products, it introduced new products, including canned fish in Germany and turkey steak in Spain, which both featuring Beneo-Orafti’s ingredient branding for the first time.

Probiotic products are frequently priced higher than other nutraceutical products. The relatively high cost of probiotics may prove to be prohibitive, however, especially as consumers tighten their belts in response to the economic crisis.

“Nevertheless, the growing trend for digestive health and consumers’ keenness to offset rising healthcare costs will likely counterbalance the negative effects of the economic recession,” Gajendran reported. “Moreover, as demand and production volumes for probiotic products grow, manufacturing costs will decrease.”

These cost savings can be passed onto the processors and eventually to consumers. Hence, high price is likely to act as a low-impact restraint, gradually having even less of an impact over the long term.

Another challenge relates to the high cost of clinical trials. As a result, only limited research has been conducted to date.

“Drawing attention toward informative marketing tactics to educate a wide range of consumers about the benefits of digestive health products will effectively boost consumption,” the researcher added. “At the same time, all available opportunities should be assessed to make more expansive claims when marketing products with strong digestive health credentials.”

In the future, the digestive health ingredients market will likely be driven by the prebiotics segment, which continues to grow steadily. Dairy, bakery and cereals remain the most successful sectors.

Dairy accounts for 50 per cent of prebiotic products currently in the market. In addition, a growing number of breakfast cereal manufacturers use prebiotics as a way of promoting the ‘feel good factor’ to the consumer or to add extra fibre to biscuits and breakfast products.