Functional Foods - US - May 2008

Table of Contents

• Scopes and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Abbreviations
• Executive Summary
• Product proliferation, innovation drive market
• New products, innovation also account for General Mills' leadership
• Shoppers will pay more for Activia; Benecol, not so much
• Not all companies equally committed
• Websites an extension of product packaging
• More consumers are purchasing functional foods of every type
• Functional foods are eaten to supplement the diet, not to prevent disease!
• Presence of products for immunity, brain function will increase
• Market Size and Forecast
• Key points
• Growth in functional market continues to be strong
  • Figure 1: Total U.S. sales and forecast of functional foods at current prices, 2002-12
  • Figure 2: Total U.S. sales and forecast of functional foods at inflation adjusted prices, 2002-12
• Major increases in product introductions propel market
  • Figure 3: New products with "functional" claims, 2001-07
• Competitive Context
• Key points
• Beverages, dietary supplements, whole foods also offer functional benefits
• The impact of natural channels
• Raw foods
  • Figure 4: Natural product supermarket retail sales raw food energy bars, 2005-07
• Raw energy bars compared to total energy bar sales
  • Figure 5: Natural product supermarket retail sales of energy bars, by raw and non-raw, 2005 and 2007
• Emerging segments will grow the market
• "Stealth" functional foods capture a share of sales
• Segment Performance
• Sales are volatile, but shares show little shift
  • Figure 6: U.S. sales of functional foods, segmented by type, 2005 and 2007
• Segment Performance--Dairy and Margarine
• Key points
• The most innovative segment
• Price premiums affect some brands more than others
• More respondents buy functional dairy
• Sales and forecast of functional dairy and margarine
  • Figure 7: U.S. sales and forecast of functional dairy and margarine, 2002-12
• Segment Performance--Cereal
• Key points
• Cereals can make health claims, so further investment in functional products unnecessary
• Sales and forecast of functional cereal
  • Figure 8: U.S. sales and forecast of functional cereal, 2002-12
• Segment Performance--Bars and Snacks
• Key points
• An exemplary delivery system?
• Sales and forecast of functional bars and snacks
  • Figure 9: U.S. sales and forecast of functional bars and snacks, 2002-12
• Segment Performance--Bakery
• Key points
• Sales figures may underestimate functional "intention" in the segment
• Value-added will give the competitive advantage needed in commodity business
• Sales and forecast of functional bakery products
  • Figure 10: U.S. sales and forecast of functional bakery products, 2002-12
• Retail Channels
• Key points
• Food stores dominate; functional foods inappropriate for other channels
  • Figure 11: U.S. sales of functional foods, by retail channel, 2005 and 2007
• Retail Channels--Food Stores
• Key points
• Grocery stores the best channel for many functional foods
  • Figure 12: U.S. sales of functional foods at food stores, 2002-07
• Market Drivers
• Key points
• Diet may reduce risk of most deadly diseases
  • Figure 13: U.S. causes of death, 2004
  • Figure 14: Selected FDA approved health claims, April 2008
• American diets lacking important nutrients
  • Figure 15: Recommended vs. actual consumption of selected foods
• Aging trends favor the market
  • Figure 16: Population aged 18 or older, 2002-12
• In self-care trend, kitchen cabinet becomes medicine cabinet
• Leading Companies
• Key points
• Yoplait innovations drive General Mills' leadership
• Dannon committed to functional yogurts
• Kellogg invests in food research, innovation
• New owners push distribution, awareness for Smart Balance
• PepsiCo' s functional activity is in beverages
  • Figure 17: Functional food sales of leading companies, 2005 and 2007
• Brand Share--Dairy and Margarine
• Key points
• Yoplait profits from novelty
• Activia propels Dannon forward
• Can Eggland' s Best sustain its leadership as value-added private label makes strides?
• Smart Balance spread benefits from mainstream pricing, but Unilever battles for Take Control
  • Figure 18: FDMx brand sales of functional dairy and margarine in the U.S., 2005 and 2007
• Brand Share--Cereal
• Key points
• General Mills resting on its whole-grain laurels?
• Kellogg emphasizes heart health
• Quaker oatmeal grows cold
  • Figure 19: FDMx brand sales of functional cereal in the U.S., 2005 and 2007
• Brand Share--Bars and Snacks
• Key points
• Fiber One extension pays off
• Luna loses share, but gains sales
  • Figure 20: FDMx brand sales of functional bars and snacks in the U.S., 2005 and 2007
• Brand Share--Bakery
• Key points
  • Figure 21: FDMx brand sales of functional bakery in the U.S., 2005 and 2007
• Brand Qualities
• Designated functional brands are novel, trailblazing
• Innovation and Innovators
• Key points
• Functional foods are novel by their very nature
• Yogurt makers the top innovators with next-generation probiotics
• Companies begin to address cognitive function...
• ...and immunity
• Cardiovascular claims dominate
  • Figure 22: Functional claims in new food product launches, 2002-07
• Advertising and Promotion
• Overview
• Websites promote and inform
• Women more likely to buy certain foods
• Easy to understand and to use
• Consumers are invited to take part in challenges
• Finding balance
• Brand-specific advertising and promotions
• Yoplait Yo-Plus
  • Figure 23: Yoplait Yo-Plus television ad, 2007
• Eggland' s Best
  • Figure 24: Eggland' s Best television ad, 2007
• Total cereal
  • Figure 25: Total cereal television ad, 2007
• Smart Balance
  • Figure 26: Smart Balance television ad, 2007
• Fiber One
  • Figure 27: Fiber One television ad, 2007
• Kellogg' s All-Bran
  • Figure 28: All Bran television ad, 2007
• Functional Food Purchases
• Key points
• Shoppers buying more across all food categories
  • Figure 29: Functional foods purchased in past three months, 2006 and 2008
• Purchase incidence strong among youngest respondents
  • Figure 30: Purchase incidence of functional foods, by age, April 2008
• Age is a key determinant of inclination to purchase
  • Figure 31: Functional foods purchased in past three months, by age, April 2008
• Importance of women in the market
  • Figure 32: Functional foods purchased in past three months, by type of food, by gender, April 2008
• Frequency of Functional Food Consumption
• Key points
• Likelihood of daily consumption increases with age
  • Figure 33: Frequency of functional food consumption in the past month, by age, April 2008
• Attitudes towards Diet and Health
• Key points
• Interest and investment in personal health low among youngest demographic
  • Figure 34: Attitudes towards diet and health, by age, May 2006-June 2007
• Reasons for Eating Functional Foods
• Key points
• Functional foods are eaten for general, not specific reasons
• Health issues and weight loss key to women
  • Figure 35: Reasons for eating functional foods, by gender, April 2008
• Diet-disease motivations peak in 55-64 group
  • Figure 36: Reasons for eating functional foods, by age, April 2008
• Functional Foods Opinions and Interest
• Key points
• Governmental regulation wanted, communication of benefits needed
  • Figure 37: Opinions towards functional foods, by gender, April 2008
  • Figure 38: Opinions towards functional foods, by age, April 2008
• Blood pressure, blood sugar and weight management offer future growth potential
• Figure 39: Functional benefits would like to see in foods, by gender, April 2008
  • Figure 40: Functional benefits would like to see in foods, by age, April 2008
• Reasons for Not Eating Functional Foods
• Key points
• Other supplements, price and disbelief keep functional purchases down
  • Figure 41: Reasons for not eating functional foods, by age, April 2008
• Race and Ethnicity
• Functional food purchases
  • Figure 42: Functional food purchase incidence and foods purchased, by race/ethnicity, April 2008
• Interest in functional foods
  • Figure 43: Functional benefits would like to see in foods, by race/ethnicity, April 2008
• Reasons for not eating functional foods
  • Figure 44: Reasons for not eating functional foods, by race/ethnicity, April 2008
• Simmons Cohort Analysis
  • Figure 45: Attitudes towards diet and health, by single cohorts, May 2006-June 2007
  • Figure 46: Attitudes towards diet and health, by married cohorts, May 2006-June 2007
• Appendix: Other Useful Consumer Tables
• Functional food purchases
  • Figure 60: Purchase incidence of functional foods, by gender, April 2008
  • Figure 61: Functional food purchase incidence and foods purchased, by household income, April 2008
• Frequency of consumption
  • Figure 62: Frequency of functional food consumption in the past month, by gender, April 2008
  • Figure 63: Frequency of functional food consumption in the past month, by household income, April 2008
• Reasons for eating functional foods
  • Figure 64: Reasons for eating functional foods, by household income, April 2008
• Functional foods opinions and interests
  • Figure 65: Opinions towards functional foods, by household income, April 2008
• Reasons for not eating functional foods
  • Figure 66: Reasons for not eating functional foods, by gender, April 2008
  • Figure 67: Reasons for not eating functional foods, by household income, April 2008
• Appendix: Trade Associations