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
States.
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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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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
States - Enhanced role of nutrition in the lives of
the elderly - Branded products will drive product
acceptance - 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
are:
- Absence of a range of products that address
multiple needs - Psychological factors can limit potential
purchase - 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
products - Unfocused research efforts can stymie
category growth - Poor organoleptic properties limit market
size - External factors such as an economic
slowdown could dampen the category growth
The U.S. Disease Specific Foods
Market
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
are:
- Enhanced role of nutrition for preventive
maintenance - 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
are:
- 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
decisions - 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
base - Increasing preference for mothers milk
reduces market for infant foods - Declining user base reduces total available
market - 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
Conclusions
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
