A booming market, a strong track record, tipped for the top - yet functional foods remain shrouded in confusion. What exactly are they? Who's doing what? Which trends will emerge? Jasmin Rashid analyses the overall sector and takes an indepth look at the functional dairy foods market.

Functional food. A term that most, if not all, who work in the food or food-related industries will have heard of. But what exactly is it? Ask two experts for definitions, and the odds are they won't be the same. Even more intriguing - read any articles or research reports, and they all have their own list and description of what they will include under the umbrella term 'functional food.' Technically speaking, all food is functional in that it give consumers energy - but that's not what the term is used to describe. There are as many definitions as there are products, and thus it is hugely difficult to put an exact figures on markets and sizes. However, whatever definition is used, everyone seems to agree on one fact - that the market for functional foods is here to stay, and growing fast.

The table below gives a few of the common definitions and terms used when discussing the market.

Term Definition/Characteristics
Designer food
Processed foods that are supplemented with food ingredients naturally rich in disease preventing substances. This may involve genetic engineering of food.
FOSHU
Foods for Specific Health Use. The Japanese system for approving functional foods. Licences are issued by the Japanese Ministry of Health and Welfare. Licensees can then make certain health claims on pack.
Functional food
Any modified food or food ingredient that may provide a health benefit beyond the traditional nutrients it contains. Stricter definitions also require products to display a claim to health benefits on pack [though some products which meet the above criteria do not carry heath claims for legislative reasons]
Nutraceutical
Any substance that may be considered a food or part of a food and provides medical or health benefits, including the prevention and treatment of disease
Pharmafood Food or nutrient that claims medical or health benefits, including the prevention and treatment of disease.
Phytochemical
"Substances found in edible fruits and vegetables that may be ingested by humans daily in gram quantities and that exhibit a potential for modulating human metabolism in a manner favourable for cancer prevention"
Prebiotics
"Non-digestible food ingredients that beneficially affect the host by selectively stimulating growth and/or activity of one of a limited number of bacteria in the colon, and thus improves the host's health"
Probiotics
Living organisms (bacteria) that have a specific positive influence on the functions of the intestinal tract. They act to stimulate the immune system to 'crowd out' harmful bacteria, as opposed to killing them off. Yoghurts containing the bacteria Lactobacilli are the most widely available form, although a non-dairy variant from Sweden [based on fermented oatmeal and marketed under the ProViva name] has been introduced to the UK in a fruit juice format.
Synbiotics When pre- and probiotics are combined, which combine the effects of new bacteria and the stimulation of the body's own bacteria

Do consumers 'get it'?

If the experts are confused, what about consumers? Do they have any idea what functional food is? After all, they're the people at the buying end of the all too crucial supply and demand chain. If the industry is not pulled together by a cohesive definition, then how can consumers be expected to keep up with developments, let alone understand the often complex terminology? Part of the problem in gaining an insight into consumer recognition of functional foods is precisely that - recognition. Most functional foods aren't labelled 'functional.' Ask the average shopper what a functional food is, and you'll most likely be met with a confused look.


"Consumers want to have their cake, eat a huge slice of it, and feel healthier for it too..."

In certain markets, such as spreads, consumers have long been aware of the benefits products can offer, such as reducing cholesterol. But would consumers know that this is increasingly termed a functional food? Gradually, consumers are becoming aware that a functional food category exists, even if they don't fully appreciate what it encompasses or the benefits on offer.

Getting past consumer ignorance is only the first step. Once people have taken that first step, and purchased a functional food, what they are looking for first and foremost is taste - as they would do with any other product on the shelves competing for their purse. Consumers may like the idea of an ice cream that helps reduce heart disease or lower cholesterol, but they certainly don't want to sacrifice taste to get it. Why not take a supplement instead? Especially when taste is immediate and the benefit of lower cholesterol, say, may take months or even years of regular use. The idea that functional foods are the lazy way to health benefits is annulled by a less than appetising taste. Consumers, it seems, want to have their cake, eat a huge slice of it, and feel healthier for it too!

What function?

Functional foods can offer a wide variety of health benefits, and are essentially derived from existing food sources. As the table below illustrates, many everyday foods contain functional elements.

Food Key Components Potential Health Benefits
Black and green tea Catechins Reduce risk for cancer
Broccoli Sulforaphane Reduce risk for cancer
Fish Omega-3 fatty acids Reduce risk for cancer and heart disease
Fruits and vegetables Many different phytochemicals Reduce risk for cancer and heart disease
Garlic Sulfur compounds Reduce risk for cancer and heart disease
Oats and oat-containing Soluble fiber beta glucan Reduce cholesterol
Purple grape juice Polyphenolic compounds Support normal, healthy cardiovascular function
Soy foods Soy protein Reduce cholesterol
Tomatoes and tomato products Lycopene Reduce risk for cancer
Yogurt and fermented dairy Probiotics Improve gastrointestinal health

Recent articles in the consumer press about the cancer fighting properties of tomatoes go some way towards highlighting the benefits to be derived, but how many consumers want to spend their days eating enough tomatoes to obtain a tangible benefit?

Dairy products - feelin' functional

One of the largest areas of functional development in Europe has been the dairy market. As such it is the prime category for functional foods - accounting for around 65% of all functional food sales in Europe. It has been helped by the fact that dairy consumption, for example yoghurts, is reasonably high in most parts of Europe. The three main areas of functional development, in the dairy market, have been in margarine and spreads; yoghurts; and milks/milk replacements.

The table below outlines the main trends in functional spreads in key functional markets around the world, in 1999-2000.

Country/region Comment
Value(US$m)

Europe

The European functional spreads market can be divided into sales of existing brands repositioned using claims, which can primarily be attributed to one brand, the market-leading Flora polyunsaturated spread in the UK. The market for the new cholesterol-lowering spreads with plant sterols is likely to grow sharply as the pro-activ brand is launched in the EU this year, and the availability of Benecol is extended.
253

US

The functional spreads market was created in spring 1999 with the almost simultaneous launch of Unilever's Lipton Take Control and Raisio/McNeil's Benecol. Benecol has had some promotional difficulties, and has also suffered from the fact that it has a higher price than its main competitor. Both brands have been extended into dressings, and Benecol snack bars have also been launched.
22
Japan
The functional spreads market in Japan is hard to quantify, but there has been considerable product activity in both liquid and solid products, aimed at reducing cholesterol and reducing fat absorption by the body.
n/a

Australia

Australia saw two new cholesterol-lowering spreads in 1999 - Flora pro-activ from Unilever, and also Logicol from the Australian company Goodman Fielder, which is currently available only in Australia and New Zealand.
2

Source: Leatherhead RA, Functional Food Markets, Innovation and Prospects - A global analysis

When it comes to milk, in the UK market the instantly recognisable functional 'milk' product is Yakult - the fermented milk drink. 'Real' chilled milk doesn't seem to have received the full functional treatment in the UK. In other countries, such as the US, there are milks and milk substitutes available which have been formulated with added ingredients so that they can claim functional properties.

Probably the most prominent milk substitute in the UK is So Good - introduced in September 1998, a soy drink, from Sanitarium, which claims a turnover of £200m (US$330m). Though So Good is not technically marketed on a functional food platform, and does not carry any on-pack claims, its functionality in reducing cholesterol remains undiminished - just as the spreads that are now being repositioned as functional.

So Good's success is due partly to the fact that it does not compete against traditional soy drinks, but rather targets milk drinkers - which others would do well to learn from. To gain wider acceptance (and therefore sales), functional foods need to be targeted at the wider consumer groups - not just fitness fanatics and those who already have a health problem. Also, most soy drinks suffer from a strong "beany" taste, which So Good manages to avoid, again highlighting the undeniable influence of taste to consumers - after all, we are talking about food, not medicine.

To give a US example, in July 2000 Parmalat USA introduced three new functional milks. Each claimed to expand the natural benefits of milk, to tackle issues such as good skin, easier digestion, and increase nutrition levels. The company is promoting Milk-E for the beauty properties of its added vitamin E and biotin, which can help promote healthy skin and faster metabolism. Lactose Free Plus is a lactose-free milk containing Inulin, a source of dietary fibre derived from chicory root, and also contains the live cultures lactobacillus acidophilus and bifidus. The company says Lactose Free Plus has a flavour and texture that is more like natural milk than traditional lactose-free milks, bringing home the realisation that consumers crave taste and that this is paramount to promoting functional foods. Parmalat's third introduction, Skim Plus, contains added calcium (405 mg., which is 34% more than whole milk), and protein (11 grams, which is 37% more).

In Italy, Granarolo - the market leader in the fresh milk market, introduced functional properties to the Italian chilled milk market when it added LGG to its Vivi Vivo Milk, in February 1998. In this product, the LGG was added to the milk after pasteurisation, and because the milk is kept refrigerated, the bacteria didn't ferment the milk during the five-day storage. The latest offering from Granarolo has a shelf life of 16 days. Granarolo also launched a Vivi Vivo Yoghurt containing LGG, in November 1999. The majority of LGG-containing products are fermented milks, but pasteurised milks containing LGG are also sold in Finland and Croatia. [LGG is a probiotic lactic acid bacteria strain from Valio Ltd of Finland, currently available in 25 countries around the world.]

Back in the UK, Skane Dairy - which has diversified to include a dedicated functional foods division, has three functional products on sale, one of which is a milk substitute. The products are: Mill Milk, a non-dairy oat drink milk substitute, which contains 1.5% fat. ProViva, a probiotic fruit drink, which contains Lactobacillus probiotic bacteria, to maintain gut bacteria - and is claimed to help restore the body's bacteria after it has been killed off by stress or antibiotics. And Maval yoghurt with Olibra, which works quickly on the body to send out "feel full" signals.

These three products, as well as the other international launches, highlight the areas in which developments are being made. They also indicate the speed with which those involved in the dairy industries are quickly realising the potential of functional sales - and introducing products across the dairy categories. Don't be surprised to see Flora functional yoghurt or Müller fermented milk on a shelf near you soon.

Fresh ideas in dairy: functional eggs - really?

As mentioned at the start of the article, there are three main strands to the functional dairy market. In addition, there is the emerging category of functional eggs. In 1999 Columbus Healthier Eggs, from Dean Farms, were launched, and were the first eggs to be marketed on a functional platform. The eggs are rich in omega-3, an essential fatty acid which is believed to protect against heart circulatory disease, with one large egg providing ¾ of the recommended daily intake of omega-3.

Yes, seems strange - how do manufactures get the extra benefits inside the egg? Well, this precise point may be what gives the functional egg market credibility with consumers. The proposition is simple - the hens are fed a diet rich in omega-3, and their eggs are enriched as a direct result. This simple connection between the functionality of the product and the process may help encourage sales, as consumers can easily grasp the concept. An early indication of this lies in the fact that other manufacturers are following suit.

Freshlay markets its Vita Eggs on a functional platform, which contain extra vitamins as well as omega-3. The production methods are approved by the RSPCA Freedom Foods Scheme, and by the British Egg Industry Council's Lion code of practice. Freshlay also plans to extend the Vita Egg line to include free-range eggs.

While OmegaTech intends launching DHA Gold Circle Farm Eggs in the UK, following their success in Belgium, Germany and Spain - where they were first launched in 1996. The DHA eggs are rich in the essential omega-3 too, but also contain docosahexaenoic acid, which helps to control cholesterol and blood pressure levels, and can also be critical in the development and function of the brain and eyes.

Food for thought - the market will grow, but surely consumer education is key. For this to make a much needed step change forward, labelling regulations need to be worked on and unified - check back at just-food.com for more on this issue.


Relevant reports from the Knowledge Store

Functional Food Markets, Innovation and Prospects - A global analysis

The International Market for Functional Dairy Products

Key Players in the Global Functional Foods Industry

Functional Foods - International Regulatory Trends and Developments

Functional Foods and Nutraceuticals: The US Opportunity, 1997-2007