FUNCTIONAL FOOD MARKET ANALYSIS

The global functional food market size was valued at US$ 191.04 Billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 6.9% owing to the rising awareness of the benefits of consuming healthier foods. The growth of the elderly population globally is another major factor driving the functional foods market growth. In addition, the rise in fatal accidents related to intestinal inflammation is further bolstering the demand for functional foods.  A rise in disposable incomes and a shift in consumer preference toward natural and healthy foods are further propelling the growth of the global functional foods market. The market is also driven by a rise in the incidence of chronic diseases, such as cardiovascular diseases and diabetes, among others.

Global Functional Food Market: Regional Insights

Based on geography, the global functional food market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Regionally, North America is expected to dominate the global functional food market over the forecast period owing to the growing demand for wellness focused diets such as keto and paleo. Also, the region is witnessing Low-cholesterol, high-fiber confectionery and bakery products owing to the growing health and fitness conscious population.

Europe is expected to witness significant growth in the global market over the forecast period owing to the growing popularity of functional food due to rising health awareness. Also, increasing disposable income of consumers coupled with the increasing geriatric population are further anticipated to propel regional market growth.

Figure 1. Global Functional Food Market, By Region 2023

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Global Functional Food Market Drivers:

Growing demand for healthy food products to augment market growth

Almost two-thirds of consumers are interested in purchasing functional foods and beverages, according to recent study. Most buyers are looking for overall health benefits, and more than half want immune support, energy, or mental acuity. The good news is that these dietary supplements can provide added nutrients that are not easily obtained from traditional diets. In some cases, functional foods can even help to reduce the risk of certain diseases.

Growing instances of nutrient deficiency in body to augment market growth

Fortified functional foods are a common part of a well-rounded diet and can help prevent nutrient deficiencies, protect against diseases and promote proper growth and development. For example, while eating wild fish can reduce the risks of cardiovascular disease and cognitive decline. The addition of prebiotics and probiotics in the form of oat beta-glucans, fructans and bacteria from fermented foods may also promote digestive health and enhance immune function. In addition, medicinal mushrooms such as cordyceps and reishi are being used in functional foods to improve immune function.

Global Functional Food Market Opportunities:

Growing health awareness due to growing prevalence of chronic disease with increasing geriatric population is expected to provide significant growth opportunities. Increasing health awareness among customers and rising demand for functional foods are the major factors driving the growth of the global functional food market. Rising disposable incomes in developing economies and increasing customer interest in boosting their immunity with proper nutrition are further fueling the demand for functional foods

Manufacturers are introducing new products with functional ingredients to meet the demand for these healthy foods and beverages. They are also leveraging advanced technologies such as encapsulation technology, vacuum impregnation technology, edible coating technology, and enzymes to develop novel functional foods and beverages. For example, enzymes such as lipases are used to produce certain fatty acids that can be added as flavoring agents and antioxidant esters in functional foods. Similarly, encapsulation in probiotics allows storage at ambient temperature, increases water activity, and minimizes viability loss.

Global Functional Food Market Trends:

Increasing adoption of business growth strategy among key players

Major players in the global functional foods market are adopting a variety of developmental strategies to expand their reach and profitability.  For instance, in December 2019, International Flavors and Fragrances Inc. announced a strategic partnership with DuPont’s nutrition and bioscience division to develop high-value functional ingredients. Other companies are focusing on investing in their manufacturing capabilities to cater to the growing demand for functional foods.

Growing popularity of immunity-boosting food

Immunity-boosting products gained popularity during the COVID-19 pandemic, which drove the demand within the global functional foods market. The customers were increasingly scared and were relying on various food and beverage products that promised to boost their immune system and reduce disease risk.

Global Functional Food Market Restraints:

Easy availability of healthier substitutes to hamper market growth

Growing popularity of healthy food supplements such as wheat flour, oat flour, rice flour and others which are high in proteins, fiber, minerals, vitamins, and carbohydrates over functional food among consumers is expected to hamper the growth of the almond flour market. These supplements are new and innovative concept of fulfilling nutrients deficiencies in human body.

Strict regulations and international quality standards

There are rule and regulations associated with various ingredients used in the food process, health claims, food hygiene labeling & packaging and others. For instance, according to the Food and Drug Administration (FDA), regulations regarding menu labeling insist on offering various information such as nutrition facts, ingredients used, common name of the products, name & address of manufacturers, and others on labels, which are sold in various supermarkets, retail stores, and bakeries. These regulations regarding various ingredients used in the bakery & confectionery products are projected to hamper the market growth.

Figure 2. Global Functional Food Market, By Ingredient 2023

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Global Functional Food Market Segmentation:

The global functional food market report is segmented into Ingredient, Product, Application, and Region

Based on Ingredient, the market is segmented into Probiotics, Minerals, Proteins & Amino Acids, Prebiotics & Dietary Fibers, Vitamins, and Others. Out of which, Probiotics is expected to dominate the global market over the forecast period and this is attributed to the growing concern about gut health and the rising number of people with digestive issues.  Also, the demand for the prebiotics is anticipated to rise due to increasing concerns about aging and declining immunity.

Proteins & Amino Acids segment is also expected to witness significant growth in the near future.  Consuming proteins & amino acids from fortified milk and eggs can help reduce the risk of heart disease and depression.

Based on Product, the market is segmented into Bakery & Cereals, Dairy Products, Meat, Fish & Eggs, Soy Products, Fats & Oils, and Others. Out of which, Dairy Products is expected to dominate the global market over the forecast period and this is attributed to the growing demand for probiotic and prebiotic-rich food items.

Bakery & Cereals segment is also expected to witness significant growth in the near future and this is owing to the changing consumer eating habits and growing adoption western culture.

Based on Application, the market is segmented into Sports Nutrition, Weight Management, Clinical Nutrition, Cardio Health, and Others. Out of which, Cardio Health is expected to dominate the global market over the forecast period and this is attributed to the increase in demand for functional foods that help treat cardiovascular diseases, congestive heart failure, and arterial hardening.

Weight Management segment is also expected to witness significant growth in the near future and this is owing to the growing prevalence of obesity rate with rising instance of lifestyle disorders.

Global Functional Food Market: Key Developments

In November 2018, Hearthside Food Solutions acquired Greencore USA, the US unit of Greencore Group plc. This acquisition added frozen breakfast food, refrigerated snack kits, salad kits, and fresh-made sandwiches and entrees to Heartside’s capabilities.

In August 2019, Nutricia, a global market in specialized nutrition launched its first Karicare Toddler Sheep Milk formulation, representing a significant step for the New Zealand sheep dairy industry. The launch enhances the existing strong market position of Karicare, a leading brand in Australia and New Zealand.

Global Functional Food Market: Key Companies Insights

The global functional food market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global functional food market are DANONE, GLANBIA PLC, HEARTHSIDE FOOD SOLUTIONS LLC, MARS, INCORPORATED, MEIJI CO., LTD., NESTLÉ S.A., RAISIO PLC, ROYAL FRIESLANDCAMPINA N.V., SANITARIUM HEALTH FOOD COMPANY, and THE KRAFT HEINZ COMPANY

*Definition: The term "functional foods" refers to conventional foods to which manufacturers have added a substance that has a purported health benefit. Typically, this is a nutrient or phytochemical (plant compound) that can enhance or modify the function of the body. Some common examples of functional foods include probiotic yogurts, granola bars with pre and probiotics, teas, coffee and spices with antioxidant properties, and fermented foods like miso, soy sauce, sauerkraut and kimchi.