This report describes the U.S. markets for
medical and specialty foods. The report deals with three specific segments:

  • Geriatric Foods
  • Disease Specific Foods
  • Infant Foods

The report deals with the manufacturer
revenues for all of these segments. These are specifically the products that are currently
being consumed in the United States. The proportion of imports are minuscule in these
segments of the food industry, hence the revenues are for foods manufactured in the United

Summary of Major Findings

Market Growth, Opportunities, and
Total Forecast

The total market for Medical and Specialty
foods in the U.S. was estimated at about $5.41 billion in the year 1998. It is expected to
grow to about $9.08 billion by the year 2004. The expected revenues are outlined in Figure
1-1 and Chart 1.1. Some of the key issues that are likely to influence the total market
are discussed below.

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By GlobalData

The major challenges that are faced by the
U.S, market for Medical and Specialty foods are:

  • Pressure on business development since
    institutional sales limits total available market
  • Relative paucity of funding options limits
    the ability to achieve maximal growth
  • Increasing pressure on companies to offer a
    broader product portfolio in a short time
  • Developing viable products that adhere to
    cost containment strategy is a primary concern
  • Consolidation in healthcare industry
    increases buyers clout
  • End users demand a broad set of solutions in
    a single product
  • Expected tightening of regulations likely to
    increase cost of compliance
  • Proliferation of sub standard products
    threatens to stymie category growth
  • Customers need to be educated on the value
    addition from product offerings
  • Failure to comprehensively meet needs of
    diverse ethnicities

Analysis by Market Segment

The U.S. Geriatric Foods Market

The U.S. market for geriatric foods was
valued at $1.3 billion in 1998. The revenues are expected to grow at a CAGR of about 15.4
percent during the forecast period from 1998 to 2005. The total revenues in 2005 are
likely to be $3.57 billion. Some of the key drivers for this segment are:

  • Aging population profile of the United
  • Enhanced role of nutrition in the lives of
    the elderly
  • Branded products will drive product
  • Acceptance of supplements drives consumer
    awareness about designer foods
  • Reformation in the Medicare reimbursement
    drives more seniors to low-cost solutions
  • Healthcare organizations drive awareness
    about the role of nutrition in preventive care
  • Endorsement by healthcare workers drives
    mass acceptance
  • Increasing functionality of geriatric foods
    broadens installed base
  • Convenience and image an important driver
    for the elderly
  • Geriatric foods seen are a low end extension
    to the home-enteral-tube-feeding market

Some of the key restraints for this segment

  • Absence of a range of products that address
    multiple needs
  • Psychological factors can limit potential
  • Lack of products that are able to address
    the ethnic diversity in the U.S. population
  • Risk of improper dosage limits market for
    uneducated consumers
  • Reduced income levels restricts the ability
    to purchase
  • Proliferation of a host of unethical
  • Unfocused research efforts can stymie
    category growth
  • Poor organoleptic properties limit market
  • External factors such as an economic
    slowdown could dampen the category growth

The U.S. Disease Specific Foods

The U.S. market for disease specific foods
was valued at $320 million in 1998. The revenues are expected to grow at a CAGR of about
9.51 percent during the forecast period from 1998 to 2005. The total revenues in 2005 are
likely to be about $604 million.

Some of the key drivers for this segment

  • Enhanced role of nutrition for preventive
  • Ability of products to address specific
    needs of patients
  • Food industry looking for products that
    offer higher returns
  • Attempts to rein in healthcare costs drive
    markets for in-home nutritional solutions
  • Growing demand for multi-therapy products
  • Growth in the use of parenteral solutions
    helps broaden the market size for disease specific foods
  • Convenience of a non intrusive products
    drives market
  • Customer education by patient management
    companies helps drive market growth

Some of the key restraints for this segment

  • High product cost reduces propensity to buy
  • Association with a serious disease limits
    potential purchase of low end products
  • Supplement industry is winning the battle
    for cure to the urban diseases
  • Increasing backlash to cost cutting measures
    by HMOs
  • Institutional sales are a barrier to entry
    to new firms
  • Limited ability to sustain a long term
    R&D efforts limit product offerings
  • Shift towards healthier lifestyles is likely
    to contract total available market
  • Current products not geared towards serving
    the needs of diverse ethnicities
  • Cost containment does not allow for customer
    education and focused marketing programs

The U.S. Infant Foods Market

The U.S. market for infant foods was valued
at $3.78 billion in 1998. The revenues are expected to grow at a CAGR of about 3.69
percent during the forecast period from 1998 to 2005. The total revenues in 2005 are
likely to be $4.87 billion.

Some of the key drivers for this industry
segment are:

  • Branded products form the focus of purchase
  • Availability of products that suit niche
    requirements drives category growth
  • Growth in purchase of infant foods with
    natural and organic ingredients
  • Strong quality control and product
    development efforts maintain category interest
  • Growth in immigrant population extends
    category size
  • Stringent regulatory environment lends
    credibility to category
  • Growth in the number of working mothers
    drives infant food purchases
  • Government and manufacturers committed to
    improve infant health
  • Ability of the products to meet serious and
    chronic conditions
  • Focused marketing prompts consumers to
    consider infant food as a viable alternative to mothers milk

Some of the key restraints to the industry
segment are:

  • Decreasing birthrate reduces target consumer
  • Increasing preference for mothers milk
    reduces market for infant foods
  • Declining user base reduces total available
  • Infant food category is a loss leader and
    offers low profit margins
  • Concern over ingredient interaction limits
    product development
  • Small focused markets for specialty and
    designer infant foods
  • Strong brand loyalty is a barrier to entry
    for private labels
  • Manufacturers need aggressive marketing
    strategy to meet the requirements of the non WIC sector
  • Category has failed to catch the imagination
    of the food companies
  • Technology backed changes in the work place
    could reduce market size


The U.S. market for Medical and Specialty
foods is likely to experience a robust growth over the forecast period. They key
strategies that are likely to be of importance are going to be:

  • Development of a broad product portfolio
  • Development of a modular and a scalable
    approach to product development
  • Development of a recession proof internal
    monitoring systems for the sales and marketing function