Functional/Nutraceutical/Wellness Foods and Beverages

Published - Mar 2000| Analyst - Dorothy Kroll| Code - FOD023A
Market Research Report Single User License: $2750 Member Price: FREE

Report Highlights

  • BCC forecasts that sales of functional foods and beverages marketed in the U.S. will increase from $6 billion in 1999 to 9.2 billion in 2004, at the rate of 8.9% per year on average. Coupled with future products expected in 2004, the total market will increase from just over $6 billion in 1999 to nearly $11 billion in 2004, at an AAGR of 12.8%.
  • BCC estimates that the larger share (78%) of sales will be for functional beverages, increasing from $4.6 billion in 1999 to $6.9 billion in 2004, at the rate of 8.1% per year on average. However, BCC projects faster growth for functional foods at an AAGR of 25% per year, with total sales for functional snacks and meal items increasing from $1.3 billion in 1999 to $4 billion in 2004.
  • Of the functional foods, growth is expected to come from new product introductions, and from more marketers participating in categories where current participation is low. BCC further projects that the larger share of sales and faster growth will be for snacks, because snacking and on-the-go consumption have become a way to incorporate meals into the daily schedule of many consumers.



The increasing consumer demand for healthful foods and beverages, coupled with scientific discoveries of specific ingredients that can produce specific functions, has led to the development of functional foods and beverages. These products move beyond conventional, fortified, or enriched items, or products marketed as healthy because they are low in fat or sugar.

Instead, functional foods and beverages contain specific ingredients that strive to enhance a specific physical or mental function. Functions of these foods and beverages can be as broadly defined as boosting energy, or as narrowly defined as lowering cholesterol. However, in many cases, the products are multifunctional.

Furthermore, functional foods and beverages are sold like their conventional counterparts as over-the-counter (OTC), processed, and packaged products that are sold as shelf-stable or refrigerated. The products are marketed as niche products in health food stores, or are available from mass-merchandise outlets, including e-tailers.

The functional food and beverage industry is just beginning to develop in the U.S., and some product categories have only one marketer while others have several. Some of these marketers have other functional products that they market only in overseas markets, where either consumer tastes or regulations are conducive to such marketing.

While food scientists say that any type of food or beverage could be developed as a functional product, this report discusses only those currently marketed as such. Functional foods include snacks and meal items. Snacks include chewing gum, confections/candy-like products, bars, frozen desserts, chips, cheese snacks, and sports nutrition chewables. Meal items include yogurt, margarine, salad dressings, pasta sauces, cereals, eggs, and soup.

Functional beverages include bottled water, soft drinks/sodas, juices, fruit drinks, milk/dairy-based beverages, herbal drinks, mental enhancement drinks, sports/energy drinks, and teas (sports/energy drinks and teas are not always promoted as functional products, but they are included because they contain some of the same ingredients and perform some of the same functions as those beverages promoted as functional products).

The functions of products currently marketed have been identified by their listing on product labels and/or in product literature. Among the actual listings are: mental enhancement, boost energy, dental care, increase bone health, soothe mouth/throat, help achieve weight control goals, increase nutritional value, meal replacements/ snacks, help achieve aid for sports/fitness goals, help achieve diabetic goals, lower cholesterol, boost immunity, protects against major disorders such as heart disease/cancer, cell growth/brain development, and help with digestion/digestive problems.

The goal of this report is to understand how food and beverage marketers can develop functional products and market them within the current regulatory and technical environments, so that consumer demand for products with specific functions can be satisfied.


The report was designed to achieve the following objectives:

  • Describe the various types of functional foods and beverages currently marketed and their specific functions as defined by marketers either on product labels or in their promotional materials.
  • Identify potential functional foods and beverages, either because a marketer is successfully using an ingredient in one product that could be used in a line of other products, or because U.S. or foreign marketers market the product overseas.
  • Provide insight into the various consumer needs, tastes, preferences, and interests that influence the acceptance or rejection of functional products, in order to suggest how marketers can deliver products that consumers will accept and want.
  • Examine how social, economic, regulatory, and technical advances promote or hamper marketers in the development and marketing of functional products as they strive to maintain the fun/pleasure image with which most of their products are perceived.  
  • Analyze the structure of the functional food and beverage industry in terms of the most active marketers in the current market, and examine the industry environment that will foster or hinder growth of the functional segment of a slow-growing food and beverage industry.


BCC sought to provide insight into one key question: how and with what types of functional foods and beverages can marketers use specific ingredients meant to perform specific functions, given the current regulatory environment? The report describes currently marketed functional foods and beverages in terms of their ingredients, categorized for example as herb fortified or vitamin fortified, and then describes their specific functions, such as boosting energy or functioning as meal replacements/snacks. The report examines the various market influences exerted on consumers and their subsequent buying decisions. These influences include consumers' interest in self-care and self-treatment, as well as consumer age and gender, which influence tastes and preferences for certain foods and beverages.

The report analyzes various driving forces that will foster or hinder growth of the functional product industry, such as the current regulatory environment; government, organization, and industry support; and the development of new types of ingredients that perform functions. The report discusses the most active marketers of the currently marketed functional products and the potential marketers that are marketing functional products in overseas markets.


BCC has confined this report to examining functional foods and beverages that are promoted as such on product labels or literature, with the labels/literature citing functions that the product is intended to perform. There must be mentioned a specific ingredient and a specific function for which it is intended. This excludes such products marketed with such descriptors as fortified, enriched, or enhanced.


One section of the report covers functional foods and another section covers functional beverages. Within each section, there are sales estimates and projections for each type of functional product from 1999 to 2004, and estimates and projections for each type of product according to "presumed primary function." For currently marketed products, sales estimates and projections were developed from the various consumer, social, market, economic, regulatory, and technical factors influencing consumers and marketers.


BCC first conducted an extensive review of the secondary literature (print, online), with materials gathered from trade journals and magazines, trade and professional associations, government and industry sources, company materials, and web sites. This review was then followed up with approximately 100 telephone interviews with personnel in sales, marketing, technology, research and development (R&D), and consumer affairs.

Table of Contents & Pricing

All reports provided in PDF format. For shared licensing options (5+ Users), please call a representative at (+1) 781-489-7301 or contact us at
Note: Reports are discounted or included with certain Memberships. See Membership Options.

Need a custom data table, graph or complete report? Tell us more.

Contact Us
Share This Report