While functional food grew at a strong and steady pace in the last five years, some products clearly outperformed others. While the functional dairy and bread categories remain promising, certain products of which great things were expected failed altogether to achieve critical mass by 2003.

The dairy sector realised strong gains over the 1998 to 2003 period, clearly outperforming functional bakery products and snacks with twice as strong value growth of 64%. Nevertheless, some products were more successful than others.

The main drivers for growth within dairy are probiotic milks and yoghurts, and plant sterol spreads and oils. Probiotics have proved a particularly successful concept, with the "little bottle" format creating a new category, which thrived in Europe in particular. These products - and probiotic yoghurts, which have since cannibalised sales of milks to some degree - enjoyed success in part because they were marketed on a broad wellness platform, rather than being positioned as addressing a specific health problem. This gave them access to a broader consumer base.

In contrast, plant sterol spreads have been restricted to some degree by their more medical positioning, targeted at consumers with cholesterol problems. This, combined with high prices and a lack of quick, visible results, has hindered growth to some extent, especially in the US. However, as an innovative product tapping into a real health problem, they still succeeded in generating impressive growth over the review period.

Functional cheese on the other hand remained of marginal importance. While global value sales nearly doubled, they remained insignificant at 0.1% of total retail sales of cheese. With the exception of some calcium-enriched varieties and cheese-style spreads with cholesterol-reducing properties - primarily extensions to Unilever's and Raisio's cholesterol-lowering product offerings - functional cheese has so far failed to materialise.

Bakery products and snacks - combining indulgence and health
Bakery products and snacks, comprising functional confectionery as well as bread, biscuits and snack bars, realised considerable sales at sector level. However, some products, in particular fortified bread or biscuits, continue to be more niche positioned than others, most notably functional confectionery.

While medicated confectionery and functional gum enjoyed significant sales, other products in the sector remained very minor. Biscuits suffer from a clash between the concept of health and that of indulgence, which many consumers are unable to reconcile. As such, they are mostly limited to the "compromise" market of "better for you" treats for children which appease both parent and child. Energy bars are principally marketed through health food shops and gyms and are targeted at serious athletes.

Bread in theory shows more potential, as it is generally regarded as a healthy product (Atkins notwithstanding) which is more geared towards the addition of nutrients. However, although the category has shown growth due to considerable innovation, product failures have proved to be rife here, with a series of breads targeted at, for example, menopausal women, and growing children, underperforming expectations in the UK. A weak performance was exacerbated by the fact that marketing efforts to communicate the products' benefits to consumers were only minimal at best.

Thus, while consumers are generally receptive towards health and wellness products, some functional foods have been more easily accepted than others. The trend towards wellness food is an opportunity for manufacturers to launch functional products as a means of differentiating themselves in an otherwise mature packaged food market, but success is by no means guaranteed.