Report: Functional Foods - US

Scopes and Themes
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations
Executive Summary
Market at a glance
Continued growth hinges on expanding uses and increasing frequency
Functional foods compete for attention on a vast playing field
Debate over diet has helped to shape the functional food market
A broader market for functional foods
Supermarkets dominate, but other channels chip away
Diet including functional foods may reduce risk of deadly diseases
Government-approved claims support market growth
Aging population portends growth for the market
Regulatory pressures can change the direction of the market
General Mills leads a long list of competitors
New product activity heats up across segments
Heavy advertising drives category
Claimed use is on the rise, but frequency still low
Market Size and Forecast
Key points
Continued growth hinges on expanding uses and increasing frequency
- Figure 1: Total FDMx sales and forecast of functional foods at current prices, 2004-14
- Figure 2: Total FDMx sales and forecast of functional foods at inflation-adjusted prices, 2004-14
Competitive Context
Key points
Functional foods compete for attention on a vast playing field
Functional drinks and supplements both competitive and complementary
Debate over diet has helped to shape the functional food market
A broader market for functional foods
Segment Performance
Key points
Big competition exists within segments
- Figure 3: FDMx sales and forecast of functional foods, at current prices, by segment, 2004-14
- Figure 4: FDMx sales of functional foods, segmented by type, 2007 and 2009
Segment Performance--Dairy and Margarine
Key points
Probiotic yogurt has made the dairy case a prime functional destination
Sales and forecast of functional dairy and margarine
- Figure 5: FDMx sales and forecast of functional dairy and margarine, 2004-14
Segment Performance--Functional Cereal
Key points
Functional cereals face obstacles to growth
Success in cereal means building share, not building the category
Sales and forecast of functional cereal
- Figure 6: FDMx sales and forecast of functional cereal, 2004-14
Segment Performance--Bars and Snacks
Key points
An ideal form for on-the-go functional nutrition
Heavy and varied new product activity
Line extensions from big, focused brands drive the market
Sales and forecast of functional bars and snacks
- Figure 7: FDMx sales and forecast of functional bars and snacks, 2004-14
Segment Performance--Functional Bakery
Key points
General health perception of "wholegrain" provides significant competition
Sales and forecast of functional bakery products
- Figure 8: FDMx sales and forecast of functional bakery products, 2004-14
Retail Channels
Key points
Other channels likely to continue chipping away at supermarkets
- Figure 9: FDMx sales of functional foods, by retail channel, 2006 and 2008
Choice of retail channels to purchase functional foods
- Figure 10: Choice of retail channels to purchase functional foods, by age, June 2009
Retail Channels--Food Stores
Key points
Supermarkets well positioned for functional foods sales
- Figure 11: U.S sales of functional foods at food stores, 2004-08
Market Drivers
Key points
Diet may reduce risk of most deadly diseases
- Figure 12: Leading causes of death and death rates, 2006
Government-approved claims support market growth
- Figure 13: Selected FDA approved health claims, April 2008
Consumers are trying to make a difference by watching their diets
- Figure 14: Attitude towards health, by agree, 2004 and 2009
- Figure 15: Reasons for watching/controlling diet, 2004 and 2009
American diets lacking important nutrients
- Figure 16: Recommended vs. actual consumption of selected foods
Aging population portends growth for the market
- Figure 17: Population aged 18 or older, 2004-14
Regulatory pressures can change the direction of the market
Leading Companies
Key points
General Mills
Groupe Danone
Kellogg
- Figure 18: FDMx functional food sales of leading companies, 2008 and 2009
Brand Share--Dairy and Margarine
Key points
All yogurts considered functional
Specialized yogurt brands enjoy market share gains
Spreads gain on omega-3s
- Figure 19: FDMx brand sales of functional dairy and margarine in the U.S., 2008 and 2009
Brand Share--Cereal
Key points
Functional cereals struggle to stand out from other cereal
Special K wins by focusing narrowly on weight loss
Fiber One gains share on taste
- Figure 20: FDMx brand sales of functional cereal in the U.S., 2008 and 2009
Brand Share--Bars and Snacks
Key points
Fiber One' s continued success underscores importance of taste
FiberPlus from Kellogg expands benefits of bars, promises better taste
- Figure 21: FDMx brand sales of functional bars and snacks in the U.S., 2008 and 2009
Brand Share--Bakery
Key points
- Figure 22: FDMx brand sales of functional bakery in the U.S., 2008 and 2009
Brand Qualities
Narrow strategic focus and broad product lines keys to brand success
Fiber One
Special K
Smart Balance
Private label poised to grow
Innovation and Innovators
Key points
New product activity heats up across segments
- Figure 23: Number of new product launches in functional foods, 2004-09*
Digestive claims proliferate but bone health claim could provide growth opportunity
- Figure 24: Number of new product launches in functional foods, 2004-08
Digestive claims thrive in dairy
- Figure 25: Number of digestive claims in new products, by segment, 2008
Cardiovascular claims proliferate
- Figure 26: Number of cardiovascular claims in new products, by segment, 2008
Immunity boost
- Figure 27: Number of immunity claims in new products, by segment, 2008
Brain and nervous system
- Figure 28: Number of brain and nervous system claims in new products, by segment, 2008
Weight control
- Figure 29: Number of weight control claims in new products, by segment, 2008
Advertising and Promotion
Overview
- Figure 30: Measured advertising spending for select functional food brands, 2007 and 2008
A functional claim pioneer, Cheerios continues to appeal to emotions
- Figure 31: Cheerios, television ad, 2009
Fiber One makes fiber tasty
- Figure 32: Fiber One Honey Clusters, television ad, 2009
Activia plays the role of educator
- Figure 33: Activia, television ad, 2009
Yo-Plus provides a shortcut to digestive health
- Figure 34: Yoplait Yo-Plus, television ad, 2009
SuperShots promises easy cholesterol reduction
- Figure 35: Promise Supershots, television ad, 2009
Glucerna makes specific appeal to diabetics
- Figure 36: Glucerna, television ad, 2009
Functional Food Purchases
Key points
Purchase incidence of functional foods continues to expand
- Figure 37: Purchase incidence of functional foods, 2006-09
- Figure 38: Purchase incidence of functional foods, by gender, May 2009
Younger adults more likely to buy functional foods
- Figure 39: Purchase incidence of functional foods, by age, May 2009
Types of functional foods purchased
- Figure 40: Types of functional foods purchased in past three months, 2006, 2008, 2009
- Figure 41: Types of functional foods purchased in past three months, by gender, May 2009
Younger respondents gravitate to convenient product forms
- Figure 42: Types of functional foods purchased in past three months, by age, May 2009
Frequency of Functional Food Consumption
Key point
Light frequency an issue and opportunity for marketers
- Figure 43: Frequency of functional food consumption in the past month, by age, May 2009
Changes in Functional Food Use
Key points
More functional food users increasing consumption than cutting back
- Figure 44: Incidence of using more or less functional foods/beverages compared to a year ago, by age, June 2009
Reasons for using more functional food compared to a year ago
- Figure 45: Reasons for using more functional food than a year ago, by age, June 2009
Cost tops reasons for consuming less functional food
- Figure 46: Reasons for using less functional food than a year ago, by gender, June 2009
Attitudes Towards Diet, Health and Lifestyle
Key points
Americans hold the best intentions for healthy eating...
- Figure 47: Attitudes towards diet and health, by age, May 2006-June 2007
... but actual behaviors and results tell a different story and define the opportunity for functional foods
- Figure 48: Attitudes towards healthy lifestyle, by gender, May 2009
Responses by age suggest lifestage opportunities
- Figure 49: Attitudes towards healthy lifestyle, by age, May 2009
Reasons for Eating Functional Foods
Key points
Motivations as varied as the market
- Figure 50: Reasons for eating functional foods, by gender, May 2009
Motivations differ by age
- Figure 51: Reasons for eating functional foods, by age, May 2009
Functional Foods Opinions and Interest
Key points
Government involvement welcomed, likely to increase, impact uncertain
Recession appears to be curtailing category growth
- Figure 52: Opinions towards functional foods, by gender, May 2009
- Figure 53: Opinions towards functional foods, by age, May 2009
Consumer understanding extends only to a handful of ingredients
- Figure 54: Role of functional ingredients in functional beverage purchase decisions, May 2009
The list of desired functional benefits is long
- Figure 55: Desired benefits in functional foods, by gender, May 2009
- Figure 56: Desired benefits in functional foods, by age, May 2009
Race and Hispanic Origin
Higher use among blacks and Hispanics may correlate to age
- Figure 57: Purchase incidence of functional foods, by race/Hispanic origin, May 2009
Product types used driven by both form preferences and health issues
- Figure 58: Types of functional foods purchased in past three months, by race/Hispanic origin, May 2009
Blacks slightly more likely to cite specific reasons for functional food use
- Figure 59: Reasons for eating functional foods, by race/Hispanic origin, May 2009
Appendix: Trade Associations

Functional Foods - US - August 2009