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Functional Foods - UK - September 2010

The functional foods market has been enjoying healthy sales growth with value sales increasing by 3.7% between 2008 and 2009 to reach £719 million. Consumers are making greater efforts to be healthy and have greater access to information about the key foods they should be eating to stay healthy. However, the economic downturn could dampen sales of functional foods as they are largely a discretionary purchase, and consumers are looking for ways to cut down on their shopping budgets.

  • Retailers should make better use of cross-branding opportunities between functional foods; 14m consumers claim to have bought five or more functional food items in the last year.
  • Consumer scepticism is one the biggest obstacles holding back sales growth in the functional food category. Just under half of all consumers (49%) claim they would buy functional foods more if they were convinced of their health benefits
  • Functional food manufacturers should make more use of word-of-mouth marketing to promote their product ranges, using viral marketing to increase brand awareness. Just under a fifth of consumers have bought functional foods recommended by friends/family.
  • Medical practitioners should be better engaged to promote the benefits of functional foods as just over a quarter of consumers would only buy them if recommended by their doctor.
  • Functional fruit juices are bought by two fifths of consumers; consumption is heavily skewed towards 16-24 year olds, however given their forecasted growth in the next 5 years, the over-55s represent a significant opportunity to manufacturers of functional fruit juices, and other functional drinks.
  • Manufacturers should look to capitalise on the fifth of consumers (22%) who hope to improve the health of their skin by changing their diet, exercising more or taking medication with products more clearly targeted at skin health.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definition
          • Consumer research
            • Abbreviations
            • Future Opportunities

                • Adapting functionality to fit a younger mindset
                  • Persuading an instinctively sceptical audience
                  • Market in Brief

                    • Steady growth in value sales
                      • Consumers paying attention to their health
                        • Innovations in the category
                          • Consumer attitudes towards functional foods
                          • Internal Market Environment

                            • Key points
                              • Purchasing food and drink with health benefits
                                • Figure 1: Purchase of food and drink with added health benefits (eg probiotic, omega-3 or cholesterol lowering), 2007-09
                              • The health of the nation
                                • Figure 2: Complaints suffered from in the last 12 months, 2008-10
                              • Taking care of personal health
                                • Figure 3: Action taken for complaints suffered, 2008-10
                              • Attitudes towards health
                                • Figure 4: Agreement with selected lifestyle statements, 2005-09
                              • Dietary discipline
                                • Figure 5: Eating habit trends, June 2009-June 2010
                            • Broader Market Environment

                              • Key points
                                • Demographic changes benefit the market
                                  • Figure 6: Percentage change in the UK population, by age group, 2010-15
                                • Making health claims
                                  • Getting manufacturers more involved
                                  • Competitive Context

                                    • Key points
                                      • Supplementing health
                                        • Figure 7: UK value sales of vitamins and supplements, 2005-10
                                      • A weighty issue
                                        • Figure 8: UK value sales of weight control foods, 2005-10
                                      • Superfoods rise to the occasion
                                        • Prescribing health
                                        • Strengths and Weaknesses

                                          • Strengths
                                            • Weaknesses
                                            • Who’s Innovating?

                                              • Key points
                                                • A constant rate of innovation
                                                  • Figure 9: New product launches in the UK with a functional claim, 2007-10
                                                • Weight control product launches
                                                  • Figure 10: New product launches, by top positioning claim in the UK, 2007-10*
                                                • Caring for digestive health
                                                  • Functional product launches around the world
                                                    • Figure 11: New products launches with functional benefit claims – top countries, 2008-10
                                                  • Edible beauty
                                                  • Market Value and Forecast

                                                    • Key points
                                                      • Steady growth in functional food sales
                                                        • Figure 12: UK retail sales functional food and drinks, 2005-10
                                                      • Challenges in the functional foods category
                                                        • Potential in the market
                                                          • Future growth in the functional foods market
                                                            • Figure 13: Forecast sales of functional foods, by value, 2005-15
                                                          • Factors used in the forecast
                                                          • Segment Performance

                                                            • Key points
                                                              • Figure 14: UK retail sales of functional food and drink products, by sector and value, 2007-09
                                                            • Better communication of yogurt drink claims
                                                              • Spreading the benefits
                                                                • Steady growth for enriched eggs
                                                                  • Functional water benefits bottled water sales
                                                                  • Companies and Products

                                                                    • Manufacturers and brands
                                                                      • Figure 15: Leading companies in the functional foods category, 2010
                                                                    • Danone
                                                                        • Figure 16: Examples of new products launched by Danone UK in the functional foods market, 2008-10*
                                                                      • McNeil Nutritionals
                                                                          • Figure 17: New products launched by McNeil Nutritionals UK in the functional foods market, 2008-10*
                                                                        • Unilever
                                                                            • Figure 18: New products launched by Unilever UK in the functional foods market, 2008-10*
                                                                          • Müller Dairy (UK) Ltd
                                                                              • Figure 19: Example of new products launched by Müller Dairy UK in the functional foods market, 2008-10*
                                                                            • Yakult UK
                                                                              • Smaller manufacturers
                                                                                • Provexis Plc
                                                                                • Brand Communication and Promotion

                                                                                  • Key points
                                                                                    • Yogurt products lead above-the-line spend
                                                                                      • Figure 20: Main monitored advertising spend on the main functional food brands, 2007-10*
                                                                                    • Marketing the benefits of spreads
                                                                                      • Focus on promotional activity
                                                                                      • Channels to Market

                                                                                        • Key points
                                                                                          • Grocery multiples lead sales of functional foods
                                                                                            • Figure 21: Estimated retail sales of functional food and drinks, by distribution channel, 2005-09
                                                                                        • The Consumer – Attitudes towards Health

                                                                                          • Key points
                                                                                            • Staying healthy
                                                                                              • Figure 22: Attitudes towards health and healthy lifestyles, June 2010
                                                                                            • Healthy eating advice
                                                                                              • Weight loss a top priority
                                                                                                • Figure 23: Health outcomes consumers have tried to achieve in the last 12 months, June 2010
                                                                                              • Seeking beauty benefits
                                                                                              • The Consumer – Functional Foods Bought

                                                                                                • Key points
                                                                                                    • Figure 24: Functional food products bought in the last 12 months, June 2010
                                                                                                  • Breakfast cereals a firm breakfast favourite
                                                                                                    • Broadening yogurt consumption occasions
                                                                                                      • A broad repertoire for a third of consumers
                                                                                                        • Figure 25: Repertoire of functional food products bought in the last 12 months, June 2010
                                                                                                        • Figure 26: Repertoire of functional foods bought, by type in the last 12 months, June 2010
                                                                                                    • The Consumer – Attitudes towards Functional Foods

                                                                                                      • Key points
                                                                                                          • Figure 27: Attitudes towards functional foods, June 2010
                                                                                                        • Seeing through the hype
                                                                                                          • The proof is in the functional food
                                                                                                            • Alternative sources of health benefits
                                                                                                            • Targeting Opportunities for Functional Foods

                                                                                                              • Key points
                                                                                                                  • Figure 28: Consumer clusters for functional foods, June 2010
                                                                                                                • Positive Functionals (21%)
                                                                                                                  • Who are they more likely to be?
                                                                                                                    • Attitudes towards health
                                                                                                                      • Attitudes towards functional foods
                                                                                                                        • Functional Benefits (31%)
                                                                                                                          • Who are they more likely to be?
                                                                                                                            • Attitudes towards health
                                                                                                                              • Attitudes towards functional foods
                                                                                                                                • Unfunctionals (27%)
                                                                                                                                  • Who are they more likely to be?
                                                                                                                                    • Attitudes towards health
                                                                                                                                      • Attitudes towards functional foods
                                                                                                                                        • Health Alternatives (21%)
                                                                                                                                          • Who are they more likely to be?
                                                                                                                                            • Attitudes towards health
                                                                                                                                              • Attitudes towards functional foods
                                                                                                                                              • Appendix

                                                                                                                                                • Advertising data
                                                                                                                                                • Appendix – Internal Market Environment

                                                                                                                                                    • Figure 29: Trends in obesity, by gender, 2007-10
                                                                                                                                                    • Figure 30: Agreement with selected lifestyle statements about healthy foods, 2005-09
                                                                                                                                                    • Figure 31: Agreement with selected lifestyle statements, by demographics, 2009
                                                                                                                                                    • Figure 32: Agreement with selected lifestyle statements, by demographics, 2009
                                                                                                                                                    • Figure 33: Adults who are trying to lose weight, by demographics, 2009
                                                                                                                                                • Appendix – Competitive Context

                                                                                                                                                    • Figure 34: Prescription cost analysis, by NHS, 2008 and 2009
                                                                                                                                                    • Figure 35: Adults who are trying to lose weight, 2005-09
                                                                                                                                                    • Figure 36: New product launches, by positioning claim, 2008-10
                                                                                                                                                • Appendix – Who’s Innovating?

                                                                                                                                                    • Figure 37: New product launches in weight control foods, by sub-category, 2007-10*
                                                                                                                                                    • Figure 38: New product launches with a functional claim, Japan, 2008-10*
                                                                                                                                                    • Figure 39: New product launches with a functional claim, UK, 2008-10*
                                                                                                                                                    • Figure 40: New product launches with a functional claim, Japan, 2008-10*
                                                                                                                                                    • Figure 41: Median age and percentage of population over 65 in selected countries, 2010
                                                                                                                                                • Appendix – Market Value and Forecast

                                                                                                                                                    • Figure 42: Issues that are concerning consumers, June 2009 and June 2010
                                                                                                                                                • Appendix – Segment Performance

                                                                                                                                                    • Figure 43: New product activity in yogurt, of launches, by sub-category, 2008-10
                                                                                                                                                • Appendix – Brand Communication and Promotion

                                                                                                                                                    • Figure 44: Attitudes towards bargains and special offers, June 2009, Dec 2009 and June 2010
                                                                                                                                                • Appendix – The Consumer – Attitudes towards Health

                                                                                                                                                    • Figure 45: Attitudes towards health and healthy lifestyles, by demographics, June 2010
                                                                                                                                                    • Figure 46: Health outcomes consumers have tried to achieve in the last 12 months, by demographics, June 2010
                                                                                                                                                    • Figure 47: Health outcomes consumers have tried to achieve in the last 12 months, by demographics, June 2010
                                                                                                                                                    • Figure 48: Adults who are trying to lose weight, 2005-09
                                                                                                                                                    • Figure 49: Agreement with ‘I buy food/drink products that promise added health benefits’, by most popular health control activities undertaken in the last 12 months, June 2010
                                                                                                                                                    • Figure 50: Agreement with ‘I buy food/drink products that promise added health benefits’, by next most popular health control activities undertaken in the last 12 months, June 2010
                                                                                                                                                    • Figure 51: Agreement with ‘I'm prepared to pay more for foods with added health benefits’, by most popular health control activities undertaken in the last 12 months, June 2010
                                                                                                                                                    • Figure 52: Agreement with ‘I'm prepared to pay more for foods with added health benefits’, by next most popular health control activities undertaken in the last 12 months, June 2010
                                                                                                                                                • Appendix – The Consumer – Functional Foods Bought

                                                                                                                                                    • Figure 53: Functional food products bought in the last 12 months, by demographics, June 2010
                                                                                                                                                    • Figure 54: Functional food products bought in the last 12 months, by demographics, June 2010
                                                                                                                                                    • Figure 55: Health control activities undertaken in the last 12 months, by repertoire of functional food products bought, June 2010
                                                                                                                                                    • Figure 56: Functional food products bought in the last 12 months, by repertoire of functional food products bought, June 2010
                                                                                                                                                    • Figure 57: Repertoire of functional food products bought in the last 12 months, by demographics, June 2010
                                                                                                                                                • Appendix – The Consumer – Attitudes towards Functional Foods

                                                                                                                                                    • Figure 58: Agreement with attitudes towards functional foods, by demographics, June 2010
                                                                                                                                                    • Figure 59: Agreement with attitudes towards functional foods, by demographics, June 2010
                                                                                                                                                    • Figure 60: Disagreement with attitudes towards functional foods, by demographics, June 2010
                                                                                                                                                    • Figure 61: Disagreement with attitudes towards functional foods, by demographics, June 2010
                                                                                                                                                • Appendix – Targeting Opportunities for Functional Foods

                                                                                                                                                    • Figure 62: Health control activities undertaken in the last 12 months, by target groups, June 2010
                                                                                                                                                    • Figure 63: Statements on health and food eaten, by target groups, June 2010
                                                                                                                                                    • Figure 64: Functional food products bought in the last 12 months, by target groups, June 2010
                                                                                                                                                    • Figure 65: Attitudes towards functional foods, by target groups, June 2010
                                                                                                                                                    • Figure 66: Target groups for functional foods, by demographics, June 2010

                                                                                                                                                Companies Covered

                                                                                                                                                • Advertising Association (The)
                                                                                                                                                • Advertising Standards Authority
                                                                                                                                                • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                • Allied Bakeries Ltd
                                                                                                                                                • Asda Group Ltd
                                                                                                                                                • Birds Eye Foods
                                                                                                                                                • British Egg Industry Council
                                                                                                                                                • British Egg Information Service
                                                                                                                                                • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                                • Co-operative Group
                                                                                                                                                • Coca-Cola GB
                                                                                                                                                • Costcutter Supermarkets Group
                                                                                                                                                • Danone UK Ltd
                                                                                                                                                • Department of Health
                                                                                                                                                • DSM Nutritional Products [Roche Vitamins]
                                                                                                                                                • Enterprise Ventures Limited
                                                                                                                                                • European Food Safety Authority
                                                                                                                                                • European Food Standards Agency
                                                                                                                                                • Facebook, Inc.
                                                                                                                                                • Freeview
                                                                                                                                                • Government Actuary's Department (GAD)
                                                                                                                                                • Groupe Danone
                                                                                                                                                • HJ Heinz Company UK
                                                                                                                                                • J. Sainsbury
                                                                                                                                                • Johnson & Johnson Ltd
                                                                                                                                                • Kantar Media
                                                                                                                                                • Kellogg Company of GB Limited
                                                                                                                                                • Lidl (UK)
                                                                                                                                                • Londis (Holdings) Ltd - retail sales
                                                                                                                                                • Marks & Spencer
                                                                                                                                                • McNeil Consumer Nutritionals UK Ltd
                                                                                                                                                • McNeil Healthcare (UK) Limited
                                                                                                                                                • mmO2 plc
                                                                                                                                                • Netto Foodstores Ltd
                                                                                                                                                • Nintendo UK Entertainment Ltd
                                                                                                                                                • Nutrinnovator Holdings PLC
                                                                                                                                                • Onken Dairy
                                                                                                                                                • Orange plc (UK)
                                                                                                                                                • Pepsi-Cola UK
                                                                                                                                                • Provexis PLC
                                                                                                                                                • Quaker
                                                                                                                                                • Rachel's Organic Dairy
                                                                                                                                                • Red Bull UK
                                                                                                                                                • T-Mobile (UK) Ltd
                                                                                                                                                • Tesco Plc
                                                                                                                                                • Unilever Bestfoods UK Ltd
                                                                                                                                                • Virgin Media Ltd
                                                                                                                                                • Virgin Mobile
                                                                                                                                                • Vodafone Group Plc (UK)
                                                                                                                                                • Waitrose
                                                                                                                                                • Weetabix Ltd.
                                                                                                                                                • Weight Watchers Ltd. (UK)
                                                                                                                                                • Wm Morrison Supermarkets
                                                                                                                                                • Yakult UK Ltd

                                                                                                                                                Functional Foods - UK - September 2010

                                                                                                                                                £1,995.00 (Excl.Tax)