Growing functional food and beverage trend is an industry goldmine

While HFSS compliance​ is one of the recent major driving forces behind the brand reformulation, another is the growing consumer demand for functional foods and beverages.

The global functional food and beverage market has been valued at over $281bn and forecast to be worth over half a trillion by 2028, according to Statista. And many believe the global pandemic in 2020​ to be the catalyst for its dominance, as consumers shifted towards products that support health and wellbeing.

“The pandemic heightened awareness around health and nutrition, with many consumers seeking healthier eating options,” a Mintel spokesperson says.

And where consumers lead, industry follows.

“Food and drink manufacturers recognise the important role we can play in providing healthier options for consumers, whether by adapting the recipes of favourite brands or launching new products with fewer calories, sugar or salt or by adding more fibre, fruit and vegetables,” a Food and Drink Federation spokesperson says.

The industry is innovating to create new products to meet consumer demand and increase growth. Leading the pack in the functional foods and beverages category is dairy, followed by bakery products and then cereals, according to Grand View Research. Furthermore, the most sought-after functional ingredients in the food and beverage category are omega-3 fatty acids and probiotics.

“The launch of new products in the market is helping these players to improve their sales and capture a greater share of the functional food market.”

“The majority of the companies in the functional food market are introducing new products to attract and meet consumer needs,” said a spokesperson for Grand View Research. “The launch of new products in the market is helping these players to improve their sales and capture a greater share of the functional food market. For instance, in March 2021, the Coca-Cola Company’s Vitaminwater launched two new variants of soft drinks to its brand.”

And functional beverages are proving especially popular, with consumers.

“From kombucha’s gut health benefits to CBD-infused soft drinks, the functional drinks market is expanding and diversifying,” says Mintel.

However, the demographic for different types of drinks varies, with age and gender playing a role.

“Between men and women, men appear to favour products containing added protein, omega-3 fatty acids, and nootropics. In turn, women appear to consume products containing collagen, added vitamins, and probiotics more commonly than men,” says Mintel

Functional drink choices also vary across age groups, with people aged over 65 generally less likely to consume functional drinks. However, those who do tent to opt for products with added vitamins and electrolytes. Meanwhile, younger groups are trending towards drinks with added fruits and vegetables, as well as added protein. Collagen, which is generally targeted at people in their twenties, thirties, and forties is, as predicted, most dominant in this age group.

Cereal bars are one of the the most popular fortified foods, with sales growing steadily. Image credit: GettyImagesAnd the move to reformulate for functionality is being supported by healthcare professionals and dietitians.

“There’s a lot of reformulation going on,” said Stacey Lockyer, senior nutrition scientist at The British Nutrition Foundation at Future Food-Tech in London. “And the basis for this is the nutrient-health relationships, which we have a large amount of evidence for.”

Though she believes industry can go further, saying, “it would be great to see more.”

Having said that, reformulation to add functional ingredients is a complex and costly process.

“If you are in the food industry, you know how tricky reformulation is,” says Sara de Pelsmaeker, health & wellbeing director at Puratos. “It becomes a more expensive product. You have issues with texture and with taste.”

What are functional foods and beverages?​There is currently no universally accepted definition of functional foods. However, functional foods and beverages are widely accepted to be those enriched with functional nutrients, in addition to the basic nutritional value of the product, to provide multiple health-related benefits. These nutrients include amino acids, vitamins, minerals, proteins, fatty acids, as well as pre- and probiotics.

The fortified food and beverage market, offering benefits such as improved gut health, is gaining popularity. Image credit: GettyImagesWhat is the future of functional foods and beverages?​Manufacturers are focusing a huge amount of attention on developing functional food and beverages. As a result, the industry overall is evolving to concentrate more on healthier product ranges.

“By focusing on healthy products, it does mean that you can have a business strategy that really grows the healthy products in the food sector,” says Lauren Woodley, group nutrition leader at Nomad Foods.

And industry is also working to improve communication with consumers.

“A really important leaver, in this idea of making healthy choices the default, is the lever of advertising and promotions,” says Woodley. “You can make healthy products and you can make products healthier, but if you don’t promote them or advertise them to make them appealing to people, they’re not going to choose them.”

And as part of this, there’s a clear move towards making healthier foods convenient.

“There’s this idea that convenience foods are bad” says Woodley. “Health needs to be convenient otherwise people won’t do it. It’s got to be as easy as possible.”