Functional foods market is starting to slow, report claims

A new market report from market intelligence provider Key Note claims the market for functional foods has started to slow.

Functional products have been one of the major drivers in the milk and dairy products market since the end of the 1990s.
According to the report, some industry commentators have identified information overload as a factor in confusing consumers and deterring them from these products. Rising prices and a squeeze on consumer spending has also had a negative effect.
Last year there were indications that the growth in functional foods was diminishing after Muller announced that it would remove the omega-3 ingredient from its Vitality functional yogurt brand. Eight additional ingredients were also removed from Nestle’s Ski brand to offer a simpler recipe.
Scepticism about the claims made by functional foods will soon be addressed by legislation. From 2010, the European Union Health and Nutritional Claims Regulation will control the claims made by products by making suppliers prove them to the European Food Safety Authority.
Companies will not be able to make claims for which they do not gain approval. The economic downturn has also had an impact on the market, putting a greater focus on price, which has led to a number of consumers trading down to cheaper products and reducing volume purchases of more indulgent items.
Because many products in the milk and dairy products market are considered essentials rather than luxuries, consumers will switch spending rather than leave the market. As such, economic recovery will have a positive impact on the market in the medium to long term.
Despite the recent slowdown in the functional foods market, Key Note’s Market Report concludes that the established products and brands, as well as an ageing population, place functional foods in a strong position for an upturn in food spending. With milk and dairy products enjoying a high level of consumer penetration, the longer-term prospects for the sector remain positive.