Functional Food Market Size & Growth| Industry Forecast 2028

The functional foods market was valued at US$ 233,620.18 million in 2021 and is projected to reach US$ 418,439.42 million by 2028. It is expected to grow at a CAGR of 8.7% from 2021 to 2028.

Functional foods are whole, fortified, enriched, or improved foods that give health benefits and essential nutrients (e.g., vitamins and minerals) when consumed in adequate amounts as part of a varied diet regularly. Functional foods have unique health benefits beyond the typical daily intake of nutrients, such as increased bone health, cholesterol management, and improved heart health. Further, functional foods market expansion is expected to be driven by the rising demand for nutritious and fortifying food additives. Food manufacturers are fortifying their products with healthy additions such as omega-3 fatty acids, fiber, vitamins, and minerals. The goal of adding the additives mentioned above into the food industry is to raise the nutritional value of food items.

Asia Pacific held the largest share of the global functional foods market in 2020 and Asia Pacific is expected to grow significantly over the forecast period. An increase in consumer interest and a better understanding of the immunity-boosting properties of appropriate diet and dietary habits are among the primary drivers fueling the expansion of functional foods in the region. Further, fast food intake is causing harmful changes in health conditions and increasing the incidence of chronic diseases such as diabetes and obesity. Consumers are spending more money on nutritional foods to boost their general health as they become more aware of these health issues, increasing the region's functional foods market growth.

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Functional Foods Market: Strategic Insights

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Impact of COVID-19 Pandemic on Functional Foods Market

The COVID-19 pandemic affected many industries due to nationwide lockdowns, business shutdowns, and supply chain disruptions. There was a mixed impact of the pandemic on the functional foods market. Initially, due to lockdowns and business shutdowns, manufacturers suffered from a shortage of raw materials and labor, which affected their production and supply. However, as people became more health-conscious, they preferred health-boosting products. Functional foods experienced significant demand as they help improve bone health, manage cholesterol levels, and heart health. Moreover, the demand for functional or fortified foods has expanded throughout many regions due to positive and intense marketing by corporations and recommendations from health specialists such as doctors, nutritionists, and others. For instance, according to the Functional Food & Beverage 2020 Report from the Hartman Group, based on April research, 31% of consumers are taking more supplements, and 29% are consuming more functional foods/beverages due to the pandemic. Furthermore, many nations are vaccinated, and governments have relaxed the restrictions imposed on manufacturing and trade. Thus, the COVID-19 pandemic significantly impacted the functional foods market.

 

Market Insights

Rising Demand for Healthy Snacking 

Due to recent changes in consumer behavior, the worldwide snacks market is shifting away from oily-spicy snacks and toward healthier, sugar-free, nutrient-rich, and low-oil variants packaged in small quantities. This is boosting the growth of the functional foods market as these foods are typically high in important nutrients, including vitamins, minerals, healthy fats, and fiber. New-age consumers seek nutritious, on-the-go, and affordable snacking options that suit their daily nutritional demands while appealing to their taste buds. For instance, according to a recent Mondelez survey, over 59% of adults worldwide prefer to consume multiple small meals throughout the day rather than a few larger ones. Consumers are increasingly interested in functional snacks for energy, focus, and relaxation, particularly in the form of bars and meal replacement foods. Furthermore, incorporating a personalized nutrient premix into a snack food is an effective strategy to incorporate beneficial nutrients such as omega-3 fatty acids, vitamins, and minerals. Functional snacks not only fill the stomach but also provide a longer-lasting cure to hunger. These ingredients supply the building blocks that the body requires while eating nutrient-dense foods. As a result, people will not be as hungry throughout the day. This factor is expected to provide several key trends that will impact the global functional foods market over the coming years.

Category Insights

Based on category, the functional foods market is segmented into organic and conventional. The conventional segment held a larger market share. The organic segment is projected to grow at a faster CAGR during the forecast period. The increasing demand of consumers for organic functional food has motivated the companies and cultivators to promote organic farming, which is driving the segment. Manufacturers are developing organic functional food to cater to the increasing demand from consumers. For instance, Nature's Path Foods, a US manufacturer of packaged certified organic breakfast cereal, reported stellar growth for its Organic Optimum Power Breakfast Cereal. Thus, increased demand for organic foods due to the rise in health awareness, as well as awareness about the harmful effects of pesticides, is driving the organic functional food segment.

Product Type Insights

Based on product type, the functional foods market is segmented into bakery and confectionery, dairy and frozen desserts, sweet and savory snacks, breakfast cereals, and others. The dairy and frozen desserts segment is expected to hold the largest market share in the global functional foods market over the forecast period. Fermented dairy products provide health benefits and are widening the range of functional dairy products. Along with this, the nutritional benefits provided by milk play a significant role in controlling chronic diseases. Fortified milk contains various nutrients, and it is a good source of vitamin A and D and helps prevent iron deficiency anemia in children. It also helps improve bone health as fortified milk is a good source of calcium, phosphorous, and vitamin D. Frozen dessert is basically a dessert made by freezing liquids, semi-solids, and sometimes solids. Functional frozen desserts are providing health benefits to the consumers as they include various functional ingredients such as prebiotics and probiotics. Thus, the health benefits offered by functional frozen desserts are fueling the segment’s growth in the global functional foods market.

Distribution Channel Insights

Based on distribution channel, the functional foods market is segmented into supermarkets and hypermarkets, convenience stores, online retail, and others. The supermarkets and hypermarkets segment accounted for the largest market share in the functional foods market in 2020, while the online retail segment is expected to be the fastest-growing segment during the forecast period. The e-commerce boom has effectively supplied significant opportunities to online retail sales of functional food products. Following the commencement of the pandemic, leading manufacturers are more actively accessing popular e-commerce platforms with a mix of tempting prices, robust sales and support, and an upgraded shopping experience for consumers. This aspect is expected to help online platforms become one of the fastest-growing distribution channels globally. These factors are driving the online retail channel segment of the functional foods market.

The key players operating in the functional foods market include Unilever; Clif Bar & Company.; Laird Superfood; Abbott; Danone S.A.; GENERAL MILLS, INC.; HILDUR; Nestlé;  Kellogg Company; and Good Source Foods, LLC. These players are engaged in developing innovative products to meet the emerging consumer trends. Moreover, they are involved in mergers & acquisitions, business expansion, and partnerships to expand their market share globally.

Functional Food Market Report Scope

Functional Foods Market Regional Insights

The regional trends and factors influencing the Functional Foods Market throughout the forecast period have been thoroughly explained by the analysts at Insight Partners. This section also discusses Functional Foods Market segments and geography across North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America.

Functional Foods Market Market Report Scope

Market Players Density: Understanding Its Impact on Business Dynamics

The Functional Foods Market market is growing rapidly, driven by increasing end-user demand due to factors such as evolving consumer preferences, technological advancements, and greater awareness of the product's benefits. As demand rises, businesses are expanding their offerings, innovating to meet consumer needs, and capitalizing on emerging trends, which further fuels market growth.

Market players density refers to the distribution of firms or companies operating within a particular market or industry. It indicates how many competitors (market players) are present in a given market space relative to its size or total market value.

Major Companies operating in the Functional Foods Market are:

1. ABBOTT LABORATORIES
2. CLIF BAR AND COMPANY
3. DANONE S.A.
4. GENERAL MILLS, INC
5. GOOD SOURCE FOODS, LLC

Disclaimer: The companies listed above are not ranked in any particular order.

 

Report Spotlights

• Progressive industry trends in the functional foods market to help players develop effective long-term strategies
• Business growth strategies adopted by developed and developing markets
• Quantitative analysis of the functional foods market from 2019 to 2028
• Estimation of global demand for functional foods
• Porter's five forces analysis to illustrate the efficacy of buyers and suppliers operating in the industry
• Recent developments to understand the competitive market scenario
• Market trends and outlook, as well as factors driving and restraining the growth of the functional foods market
• Assistance in the decision-making process by highlighting market strategies that underpin commercial interest, leading to the market growth
• The size of the functional foods market size at various nodes
• Detailed overview and segmentation of the market, as well as the functional foods industry dynamics
• Size of the functional foods market in various regions with promising growth opportunities