Once the shining star of the ingredients world (sales were growing about 30 percent prior to the economic downfall of 2009) the functional food category's future is not so certain.
Once the shining star of the ingredients world (sales were growing about 30 percent prior to the economic downfall of 2009) the category's future is not so certain. "[Consumers] are buying less often; the category is not attracting as many new users," Jago told a standing room-only crowd at the show.
But the category's fate is hardly sealed—56 percent of consumers have bought a functional food or beverage in the last three months, according to Mintel. The trick is getting consumers to buy again. "Only one in five consumers report that they 'feel a difference' after consuming a functional product, and only 20 percent say they are effective. This is small," Dornblaser said.
In Europe, where functional ingredients are more heavily regulated by the government, sales are slipping the most. Asia still dominates the market, especially in new product development; this is not surprising considering that's where the category was introduced, according to Jago.
Although new product introductions into the functional space are slowing down, innovation is not. Manufacturers are hitting the market with products that go beyond the usual suspects of digestion, cardio and immunity.
- Relaxation
Beverages and even candy with ingredients that promote relaxation like melatonin and magnolia. - Beauty from within
This category continues to take hold in Europe. In Spain, for example, Kellogg's Special K touts a beauty health claim front-of-package. - Targeting seniors
This is the category with real untapped potential, Jago said. In Poland, DANONE's Actimel 50-plus is enriched with magnesium and marketed to consumers over 50.
As the functional category continues to evolve, time is showing that the best functional products are those that go beyond the claimed health benefit and offer taste and convenience along with tangible benefits, Dornblaser said. She pointed to Dannon's Actvia Parfait Crunch as an example of this. "It's tasty, indulgent, familiar, convenient, and has simple communication," she said.
Functional product growing pains
Functional foods and beverages is still a very young category struggling with growing pains amid evolving regulations, economic challenges and consumers demanding quick results.
According to Mintel, 68 percent of consumers say functional products should be tested by the FDA to ensure the products are doing what they claim, Dornblaser said.
The onus of the category's success is on manufacturers to introduce products with efficacious ingredient levels or risk losing consumer trust of the entire category.
What remains to be seen is what types of products consumers will cotton to for a functional dose of something. Jago questioned if indulgent products like chocolate are the best delivery for something like probiotics. "Consumers don't want food to be medicine," he said.