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Functional Food and Drink - UK - September 2011

The Food Standards Agency (FSA) defines functional foods as “one claiming to have additional benefits other than nutritional value, for example a margarine that contains a cholesterol-lowering ingredient”.

Mintel defines functional food and drinks as products which claim to have added health benefits beyond their nutritional value. They claim to have a positive, beneficial effect on the body in general, or on a particular function of the body. In addition to key ingredients, the product must also claim to have a beneficial effect on the body or body function such as: lowering cholesterol, improving the heart, aiding digestion or beauty benefits. The product also needs to be specifically scientifically formulated, fortified or enriched with the ingredients to provide the health benefits – for example, salmon that is naturally rich in omegas and claims to aid the heart is not a functional product, since the omegas were not added to the product.

For the purposes of this report, products that previously carried a health claim which has since been withdrawn in relation to the recent change in European regulations on health claims are still included in the market size and the wider discussion.

Functional food and drink products focus on particular health areas, such as:

Cardiovascular – linked to heart, blood pressure, cholesterol levels or cardiovascular system.

Bone health or prevent/treat osteoporosis (low bone mass/tissue disorder).

Digestive health – attention is given to products made with probiotics and prebiotics.

Although the functional ingredients (eg bacteria) may be naturally occurring, a certain level of scientific engineering and modification to the food takes place in order to achieve the correct levels and concentration required to deliver the optimum benefit to the consumer.

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Table of contents

  1. Introduction

      • Definition
        • Functional food and drink products focus on particular health areas, such as:
          • Excluded
            • Vitamin and mineral fortification
              • Superfoods
                • Exclusions to the excluded
                  • Others
                    • Abbreviations
                    • Executive Summary

                        • The market
                          • Health claims crackdown
                            • Forecast
                              • Figure 1: Value sales for total functional food and drink, 2006-16
                            • Market factors
                              • Consumers take a proactive approach to health
                                • Expanding population of over-65s set to support demand for functional foods
                                  • Higher dairy prices boost market value
                                    • The consumer
                                      • Women more health-conscious than men
                                        • Breakfast cereals and yogurt pots are the most frequently bought functional food
                                          • Figure 2: Types of Functional foods purchased, June 2011
                                        • Scepticism hinders growth of functional foods
                                          • Figure 3: Attitudes to functional foods, June 2011
                                          • Figure 4: agreement with the statement ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, June 2011
                                        • High prices remain a barrier to purchase
                                          • Figure 5: agreement with the statement ‘Functional foods are over-priced,’ June 2011
                                        • Younger consumers to drive future growth?
                                          • Figure 6: agreement with the statement ‘I buy more functional foods now compared to a year ago’, by age group, June 2011
                                        • What we think
                                        • Issues in the Market

                                            • How can manufacturers combat consumer scepticism toward functional foods?
                                              • How will EFSA’s stricter requirements for functional food and drinks affect the operators in the functional market?
                                                • How can manufacturers better engage the growing ageing population?
                                                  • What opportunities does the 16-24-year old demographic offer the functional food market?
                                                  • Future Opportunities

                                                      • Trend: Guiding Choice
                                                        • Trend: Men Shopping Badly
                                                        • Internal Market Environment

                                                          • Key points
                                                            • Usage of functional foods dips
                                                              • Figure 7: Trends in purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), 2007-10
                                                              • Figure 8: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by gender, 2010
                                                            • Over-65s are the most likely to be regular users
                                                              • Figure 9: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by age, 2010
                                                            • EFSA tightens the regulations on health claims
                                                              • The challenges for manufacturers
                                                                • Danone reacts
                                                                  • Consumers take health matters into their own hands
                                                                    • Figure 10: Trends in agreement with the statements ‘I have to be really ill to go to the doctor,’ and ‘I should do a lot more about my health,’ 2006-10
                                                                  • Nestlé leads the charge for acquiring functional food specialists
                                                                    • Other companies on the acquisition trail
                                                                    • Broader Market Environment

                                                                      • Key points
                                                                        • Back and neck pain are the most common medical complaints
                                                                          • Figure 11: Agreement with statement ‘I suffer from/have had…’, December 2010
                                                                          • Figure 12: Trends in prevalence of diabetes suffered from in the last 12 months, 2008-10
                                                                        • Older population is set to grow
                                                                          • Figure 13: Projected trends in the age structure of the UK population, 2011-16
                                                                        • Milk hikes hit functional dairy companies
                                                                          • Figure 14: UK monthly farmgate milk prices, June 2009-June 2011*
                                                                        • Consumer confidence
                                                                          • Figure 15: Consumer Confidence Index, January 2007-July 2011
                                                                      • Competitive Context

                                                                        • Key points
                                                                          • Vitamins and supplements
                                                                            • Figure 16: Trends in frequency of using vitamins and other supplements in the last 12 months, 2006-10
                                                                            • Figure 17: Value sales of vitamins and supplements, 2006-11
                                                                          • Superfoods still niche
                                                                            • Figure 18: Type of food eaten, December 2010
                                                                        • Strengths and Weaknesses

                                                                          • Strengths
                                                                            • Weaknesses
                                                                            • Who’s Innovating?

                                                                              • Key points
                                                                                • Definition
                                                                                  • Prepared meals account for bulk of NPD
                                                                                    • Figure 19: New product launches in the UK functional food market, by subcategory, 2006-10
                                                                                    • Figure 20: New product developments in the UK functional food market, by private label vs branded, 2006-10
                                                                                  • Digestive claims account for bulk of functional products
                                                                                    • Figure 21: New product developments in the UK functional food market, by functional claim, 2006-10
                                                                                  • Tesco ramps up NPD
                                                                                    • Figure 22: New product development in the UK functional food market, by top ten companies, 2009 and 2010
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • Steady growth in functional
                                                                                      • Figure 23: Value sales for total functional food and drink, 2006-16
                                                                                    • Consumption levels stagnate
                                                                                      • Non-core sectors help drive overall growth
                                                                                        • The future of the market
                                                                                          • Functional food and drink market forecast
                                                                                            • Figure 24: Value sales for total functional food and drink, 2006-16
                                                                                          • Forecast methodology
                                                                                          • Segment Performance

                                                                                            • Key points
                                                                                              • Yogurt drinks and pots dominate...
                                                                                                • Figure 25: UK retail value sales of functional food and drink products, by sector, 2009-11
                                                                                              • …yogurt pots take share from yogurt drinks
                                                                                                • Milk alternatives continue to grow
                                                                                                  • Functional drink sales driven by soft drink giants
                                                                                                  • Companies and Products

                                                                                                      • Danone
                                                                                                        • Kellogg’s
                                                                                                          • McNeil Nutritionals
                                                                                                            • Müller Dairy (UK)
                                                                                                              • Provexis Plc
                                                                                                                • Unilever UK
                                                                                                                  • Yakult
                                                                                                                  • Brand Communication and Promotion

                                                                                                                    • Key points
                                                                                                                      • Adspend stays steady
                                                                                                                        • Figure 26: Advertisement expenditure in the functional food market, 2006-10
                                                                                                                      • Danone dominates adspend
                                                                                                                        • Figure 27: Advertising spend on functional food, by main brands, 2010
                                                                                                                    • Channels to Market

                                                                                                                      • Key point
                                                                                                                        • Multiples dominate sales of functional foods
                                                                                                                          • Figure 28: UK retail value sales of functional foods, by outlet type, 2008-10
                                                                                                                      • Consumer – Health Habits

                                                                                                                        • Key points
                                                                                                                          • Weight loss is top health target
                                                                                                                              • Figure 29: Consumer health targets, June 2011
                                                                                                                            • Women are more health-conscious
                                                                                                                              • Figure 30: Consumer health targets, by gender, June 2011
                                                                                                                            • Younger consumers seek skin health
                                                                                                                              • Figure 31: Agreement with the statement ‘I have tried to improve the health of my skin/complexion in the past 12 months’, by age, June 2011
                                                                                                                          • Consumer – Functional Foods Bought

                                                                                                                            • Key points
                                                                                                                              • Breakfast cereals are the most frequently purchased functional product
                                                                                                                                  • Figure 32: Types of functional foods and drinks purchased, June 2011
                                                                                                                                • Yogurt pots more popular than yogurt drinks...
                                                                                                                                  • Figure 33: Functional yogurt pots and drinks purchasing habits, by gender and age, June 2011
                                                                                                                                • …and usage rises among families with babies and toddlers
                                                                                                                                  • Figure 34: Functional yogurt pots and drinks purchasing habits, by presence of children, June 2011
                                                                                                                                • Only one in four over-65s drink functional fruit juice...
                                                                                                                                  • Figure 35: Functional fruit juice purchasing habits, by age, June 2011
                                                                                                                                • …but eggs appeal to the older age group
                                                                                                                                  • Figure 36: Functional eggs purchasing habits, by age, June 2011
                                                                                                                              • Consumer – Attitudes Towards Health in Functional Foods

                                                                                                                                • Key points
                                                                                                                                  • Consumers distrust functional foods compared to natural foods
                                                                                                                                      • Figure 37: Attitudes towards health in functional foods, June 2011
                                                                                                                                      • Figure 38: Agreement with the statement ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, June 2011
                                                                                                                                      • Figure 39: Agreement with the statement ‘I avoid buying foods with additives as much as possible,’ June 2011
                                                                                                                                      • Figure 40: Agreement with the statement ‘I don’t really need them as I already eat a healthy diet’, June 2011
                                                                                                                                    • Functional foods are blighted by consumer cynicism
                                                                                                                                      • Figure 41: Agreement with the statement ‘Functional benefits are just an excuse for companies to charge a higher price ’, June 2011
                                                                                                                                      • Figure 42: Agreement with the statement ‘I would buy them more if I was convinced of their health benefits’, June 2011
                                                                                                                                    • Younger consumers most likely to feel the benefits
                                                                                                                                      • Figure 43: Agreement with the statement ‘Have noticed an improvement in my health since I started using them’, by age, June 2011
                                                                                                                                    • Lack of understanding could be holding the market back
                                                                                                                                      • Figure 44: Agreement with the statement ‘I don’t really understand what the health claims mean’, by age, June 2011
                                                                                                                                  • Consumer – Attitudes towards Functional Foods

                                                                                                                                    • Key points
                                                                                                                                      • High prices are a deterrent
                                                                                                                                          • Figure 45: Attitudes towards functional foods, June 2011
                                                                                                                                          • Figure 46: Agreement with the statement ‘Functional foods are overpriced’, June 2011
                                                                                                                                        • Exaggerated claims
                                                                                                                                          • Younger consumers buying more than a year ago
                                                                                                                                            • Figure 47: Agreement with the statement ‘I buy more functional foods now compared to a year ago’, by age, June 2011
                                                                                                                                          • Parents are doubtful about giving functional products to children
                                                                                                                                            • Figure 48: Agreement with the statement ‘I am happy to give my child functional food and drinks’, June 2011
                                                                                                                                          • Own-label’s healthy reputation
                                                                                                                                              • Figure 49: Agreement with the statement ‘Branded functional food and drinks are better than own-label equivalents’, by age, June 2011
                                                                                                                                            • Capsule competitors
                                                                                                                                              • Figure 50: Agreement with the statement ‘I prefer to take vitamins/supplements rather than functional foods’, by age, June 2011
                                                                                                                                          • Target Groups

                                                                                                                                            • Key points
                                                                                                                                              • Four target groups
                                                                                                                                                • Figure 51: Target groups based on attitudes towards functional food and drink, June 2011
                                                                                                                                              • Impassives (13%)
                                                                                                                                                • Sprightly Cynics (24%)
                                                                                                                                                  • Undecideds (43%)
                                                                                                                                                    • Health Buffs (20%)
                                                                                                                                                    • Appendix – Internal Market Environment

                                                                                                                                                        • Figure 52: Trends in purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), 2007-10
                                                                                                                                                        • Figure 53: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), by demographics, 2010
                                                                                                                                                        • Figure 54: Agreement with selected lifestyle statements, by demographics, 2010
                                                                                                                                                        • Figure 55: Agreement with selected lifestyle statements, by demographics, 2010
                                                                                                                                                    • Appendix – Broader Market Environment

                                                                                                                                                        • Figure 56: Personal and family health history, December 2010
                                                                                                                                                        • Figure 57: Trends in the age structure of the UK population, 2006-16
                                                                                                                                                        • Figure 58: UK monthly farmgate milk prices, July 2011*
                                                                                                                                                    • Appendix – Competitive Context

                                                                                                                                                        • Figure 59: Consumption of superfoods, by demographics, December 2010
                                                                                                                                                    • Appendix – Who’s Innovating?

                                                                                                                                                        • Figure 60: New product developments in the functional food market, private label vs branded, 2006-10
                                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                                        • Figure 61: Value sales for total functional food and drink, 2006-16
                                                                                                                                                        • Figure 62: Value sales for total functional food and drink, 2006-16
                                                                                                                                                        • Figure 63: Best- and worst-case forecasts for functional food and drink, 2011-16
                                                                                                                                                    • Appendix – Brand Communication and Promotion

                                                                                                                                                        • Figure 64: Advertisement expenditure in the functional food market, by company, January 2006-June 2011
                                                                                                                                                    • Appendix – Consumer – Health Targets

                                                                                                                                                        • Figure 65: Most popular consumer health targets, by demographics, June 2011
                                                                                                                                                        • Figure 66: Next most popular consumer health habits, by demographics, June 2011
                                                                                                                                                        • Figure 67: Repertoire of consumer health habits, by demographics, June 2011
                                                                                                                                                    • Appendix – Consumer – Functional Food Purchasing Habits

                                                                                                                                                        • Figure 68: Most popular functional foods purchased, by demographics, June 2011
                                                                                                                                                        • Figure 69: Next most popular functional foods purchased, by demographics, June 2011
                                                                                                                                                        • Figure 70: Other functional foods purchased, by demographics, June 2011
                                                                                                                                                        • Figure 71: Repertoire of functional foods purchased, by demographics, June 2011
                                                                                                                                                    • Appendix – Consumer – Attitudes towards Health in Functional Foods

                                                                                                                                                        • Figure 72: Agreement with the statements ‘Have noticed an improvement in my health since I started using them’ and ‘I don’t really need them as I already eat a healthy diet’, by demographics, June 2011
                                                                                                                                                        • Figure 73: Agreement with the statements ‘I don’t really understand what the health claims mean’ and ‘I trust the health-promoting benefits of natural foods, like fruit and vegetables, more than functional foods’, by demographics, June 2011
                                                                                                                                                        • Figure 74: Agreement with the statements ‘I look out for food/drink products that promise added health benefits’ and ‘I would buy them more if I was convinced of their health benefits’, by demographics, June 2011
                                                                                                                                                        • Figure 75: Agreement with the statement ‘Functional benefits are just an excuse for companies to charge a higher price’, by demographics, June 2011
                                                                                                                                                    • Appendix – Consumer – Attitudes towards Functional Foods

                                                                                                                                                        • Figure 76: Agreement with the statements ‘Functional foods are overpriced’ and ‘Some of the claims are exaggerated, eg cereals are good for the heart’, by demographics, June 2011
                                                                                                                                                        • Figure 77: Agreement with the statements ‘I avoid buying foods with additives as much as possible’ and ‘I do not mind paying more for foods with added benefits’, by demographics, June 2011
                                                                                                                                                        • Figure 78: Agreement with the statements ‘I buy more functional foods now compared to a year ago’ and ‘Product labelling on functional foods is often unclear’, by demographics, June 2011
                                                                                                                                                        • Figure 79: Agreement with the statements ‘Branded functional food and drinks are better than own-label equivalents’ and ‘I prefer to take vitamins/supplements rather than functional foods’, by demographics, June 2011
                                                                                                                                                        • Figure 80: Agreement with the statements ‘I am happy to give my child functional food and drinks’ and ‘I have bought more of them as I get older’, by demographics, June 2011
                                                                                                                                                        • Figure 81: Agreement with the statements ‘The choice of functional foods in supermarkets is too limited’, by demographics, June 2011
                                                                                                                                                    • Appendix – Target Groups

                                                                                                                                                        • Figure 82: Target groups, by demographics, June 2011
                                                                                                                                                        • Figure 83: Attitudes towards functional foods, by target groups, June 2011
                                                                                                                                                        • Figure 84: Attitudes towards functional foods, by target groups, June 2011

                                                                                                                                                    Companies Covered

                                                                                                                                                    • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                    • Asda Group Ltd
                                                                                                                                                    • Danone UK Ltd
                                                                                                                                                    • GlaxosmithKline
                                                                                                                                                    • HJ Heinz Company UK
                                                                                                                                                    • J. Sainsbury
                                                                                                                                                    • Johnson & Johnson
                                                                                                                                                    • Kellogg Company of GB Limited
                                                                                                                                                    • Maximuscle Ltd
                                                                                                                                                    • McNeil Consumer Nutritionals UK Ltd
                                                                                                                                                    • Molkerei Alois Müller GmbH & Co
                                                                                                                                                    • Nestlé UK Ltd
                                                                                                                                                    • Oatly
                                                                                                                                                    • PepsiCo Inc
                                                                                                                                                    • Provexis PLC
                                                                                                                                                    • Tesco Plc
                                                                                                                                                    • Tropicana UK
                                                                                                                                                    • Unilever Bestfoods UK Ltd
                                                                                                                                                    • Victoria Foods
                                                                                                                                                    • Wm Morrison Supermarkets
                                                                                                                                                    • Yakult UK Ltd

                                                                                                                                                    Functional Food and Drink - UK - September 2011

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