Executive Summary

The functional foods market principally involves the fibre/mineral/ vitamin-fortified breakfast cereals, probiotic yoghurts and yoghurt drinks containing 'friendly' bacteria, and cholesterol-lowering margarines containing plant stanols or sterols sectors. However, the functional market has been expanding over the years to also include variants within the bread, ready meals, fruit juices and bottled water sectors. A further category of significant and rapid growth recently has been soya milk. The main target of these products is to address the problems associated with skeletal, heart and digestive health that become more prevalent with increased age.

The market grew by 10.8% in value terms for the 12-month period ending October 2003, after a substantial 24.7% growth in the previous year to October 2002. Breakfast cereals, yoghurts and yoghurt drinks, and margarines and spreads accounted for around 87% of the market's value over the period. A high proportion of individual functional foods are sold through the major grocery multiples, while the major manufacturers tend to be international companies that can afford the substantial research and development costs involved. Examples of manufacturers are Unilever Bestfoods, Johnson & Johnson, Kellogg, NestlŽ, Danone, Mźller, PepsiCo and AB Foods, although some smaller companies are also important in the market.

Advertising expenditure fell significantly in 2002, after peaking in 2001, but stabilised in the 12 months ending June 2003. A feature, however, is the high proportion of advertising expenditure in support of the functional variants of margarines and spreads, and to a lesser extent yoghurts, in comparison with the total expenditure within these segments.

Although growth in the functional foods market declined considerably for the year to October 2003, it was still well above that of equivalent traditional products. Growth is predicted to continue in the medium term at a higher level than that of traditional products, owing to continued consumer interest in, and government support for, healthy eating and living; an ageing population profile which will benefit from such foods; and the recognised evolution towards functionality in foods.

However, in the longer term, market growth is predicted to decline to around 5% by 2008, the end of the 5-year forecast period, assuming that few new functional products of major success in sales terms will be launched. Growth may, nonetheless, return to its current higher level if further substantial products do appear within the period to 2008.

Price:	£ 799.00 GBP ex VAT (£ 938.83 GBP inc VAT )
Publication date:	31 Mar 2004
Licence period:	365 days

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