Functional Foods and Beverages

Published - Oct 2003| Analyst - Joy Anderson LePree| Code - FOD023B
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Report Highlights

  • The market for functional/nutraceutical/wellness foods was valued at $20 billion in 2002. Rising at an average annual growth rate (AAGR) of 13.3%, this market is expected to reach $37.7 billion by 2007.
  • In 2002, functional beverages and teas were valued at more than $8.7 billion and will grow to almost $11.5 billion by 2007, rising at an AAGR of only 5.7%.
  • Likewise, fortified cereals, breads, and grains will see only mild growth at a 5.4% average each year through 2007.
  • The most impressive growth areas are the soyfoods and functional snack segments. Soyfoods, in 2002 a $2.1 billion industry, will grow to more than $7.3 billion by 2007, at an AAGR of 28.7%.
  • Functional snacks and candies will grow to $11.5 billion by 2007 at a 24.2% AAGR.


Functional foods are defined as any food or food component that can provide health benefits beyond basic nutrition. These types of foods go beyond meeting the minimum daily nutritional requirements of an individual, as they may reduce the risk of disease or promote good health. Functional foods offer health-promoting ingredients or natural components that have been found to have potential benefits in the body.

Consumers are increasingly concerned about debilitating illnesses such as cancer, high cholesterol, heart disease and osteoporosis. At the same time, many consumers are reluctant to only rely on prescription medications to treat or prevent these illnesses, so they are increasingly examining the link between diet and health. In response, scientists in the food industry are busily conducting research to uncover the health benefits of certain food ingredients like calcium, soy, antioxidants, plant sterols and herbs. As their research demonstrates links between these ingredients and better health, food companies are petitioning the Food and Drug Administration (FDA) to permit health claims on the labels of foods that contain these beneficial, functional ingredients.

This comprehensive BCC industry analysis provides an overview of the major trends within the overall food and functional food industries, as well as market analyses and trends for each individual segment of the functional food industry. Historical data along with five-year forecasts to 2007 are provided to demonstrate market size and growth. This report also will discuss major food manufacturers’ involvement as well as acquisitions related to the functional food market.

The study will examine why some products and functional food manufacturing companies have failed where others have succeeded. It also will examine functional food opportunities of the future, as well as research that currently is being conducted on functional ingredients. That information is essential to anyone in the functional food industry who is interested in launching new products through 2007.


The report contains coverage of:

  • Five major areas of functional foods, including
        - functional beverages and teas
        - fortified cereals and breads
        - soyfoods
        - functional snacks and candies
        - miscellaneous foods such as cholesterollowering spreads, functional dairy and yogurt products
           and functional processed foods
  • Government regulations
  • Food manufacturers leading the industry.


The material gathered for and presented in this report is based on information gathered from a number of sources, including personal contacts with Food & Drug Administration personnel, individuals involved in the food industry and the functional food industry, manufacturers of functional food products, industry consultants and experts, and food scientists.

Additional data was obtained from extensive review of secondary sources, such as trade publications, trade-associated company literature, government documents and regulations, and on-line sources of data and information. This was done in an effort to supplement the application, market, and trend data gathered from primary source. All dollar projections presented in this report are U.S. 2002 constant dollars. All dollar and market value projections presented in this report are for the U.S. market, unless otherwise noted.


Joy LePree is an experienced freelance writer, editor, researcher and author. Through extensive research in the areas of health and nutrition, Joy has become knowledgeable about the functional food industry and related markets.

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Published - Mar-2000| Analyst - Dorothy Kroll| Code - FOD023A

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.


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