Take a walk through any large grocery store or specialty retailer—whether in-person or online—and you are likely to encounter a diverse selection of protein powders, energy drinks, power bars, probiotics, vitamin-infused waters, and calcium-fortified beverages designed to support bone health. These items are often enhanced with nutrients, phytochemicals, botanicals, or dietary supplements and are collectively referred to as functional foods within the industry. Functional foods are characterized by their potential to positively impact health beyond basic nutritional needs, offering benefits that extend beyond merely fulfilling daily dietary requirements. They can also contribute to disease risk reduction and overall well-being. While the U.S. Food and Drug Administration (FDA) is responsible for regulating functional foods, it has yet to establish a formal definition.
The agency states, “Terms such as ‘functional foods’ or ‘nutraceuticals’ are commonly used in the marketplace. These products are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act, even if they are not explicitly defined by law.” Despite this lack of formal definition, the demand for functional foods is on the rise, with many experts predicting significant growth in this sector. As American consumers become increasingly health-conscious, they seek out natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods market are responding to this trend by frequently launching innovative products.
According to Kara Nielsen, a food and beverage trend expert, “Due to the growing consumer awareness and interest in medicinal foods, these products are gaining traction in the natural food and beverage sector, where functional ingredients derived from real-world sources (rather than laboratories) are increasingly sought after.” A report from Technavio indicates that the global functional foods and beverage market is projected to grow steadily, with a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021. Analysts also foresee a CAGR of 6.53% for the U.S. market during this period. Factors driving this trend include an aging population focused on health maintenance, escalating medical costs, and increased consumer interest in the link between healthier eating and overall well-being.
Functional foods have transitioned from a niche market to a mainstream phenomenon, with major food companies becoming involved. For instance, Campbell’s CEO Denise Morrison expressed the company’s aim to expand into faster-growing segments like organic and functional foods, as evidenced by their $700 million acquisition of Pacific Foods earlier this year. PepsiCo also entered the space by purchasing probiotic beverage maker KeVita last fall and launching its Tropicana Essentials Probiotics line earlier this year, making it the first brand to introduce probiotics to the mainstream juice aisle. Additionally, General Mills’ venture capital division spearheaded a $6.5 million Series D investment round in March for Farmhouse Culture, a startup specializing in fermented and probiotic foods and beverages.
As research and development advance, leading players in the functional food industry are anticipated to unveil new product offerings. They are continuously scouting for potential acquisitions to enhance profits and stock value, as shown by recent partnerships and purchases, particularly among smaller, agile entrepreneurial startups.
Japan and Russia are recognized for being pioneers in the development and application of functional foods aimed at improving digestion and enhancing performance. The first commercial application of functional food in the U.S. is believed to have occurred in 1924 when the Morton Salt Company started adding iodine to its products in response to a government request. Officials were concerned about the prevalence of goiter in the Great Lakes region, then referred to as the “goiter belt,” and sought to combat a widespread iodine deficiency. The practice of iodizing salt, adopted from Switzerland, helped alleviate this issue.
Oatmeal significantly raised public awareness about the value of functional foods. According to Carol Culhane, president of International Food Focus Ltd. in Toronto, oats contain beta-glucan, a soluble fiber component that has been shown to reduce low-density lipoprotein, commonly known as “bad” cholesterol. As awareness grew, so did interest in the research surrounding it. “Numerous clinical trials were necessary to validate the data,” she noted. In 1997, the FDA approved the claim that beta-glucan could lower serum cholesterol, marking a pivotal moment in the evolution of functional foods.
While some initial product launches were successful, not every attempt in the functional food space met with success. For example, in the late 1990s, Kellogg introduced its Ensemble line of cholesterol-lowering products containing “natural soluble fiber” from psyllium wheat husk, which was discontinued within a year due to poor sales attributed to generic packaging and merchandising challenges. However, as marketing, packaging, and distribution improved, successful product launches became more common. In 1985, General Mills launched Fiber One cereal, and in 1987, Danone introduced Activia probiotic yogurt in France, which made its way to the U.S. in 2006. Both products remain popular, with Fiber One capitalizing on the rising demand for high-fiber foods and Activia effectively overcoming initial consumer skepticism about “friendly bacteria,” a concept more readily accepted in Europe.
Since then, a vast array of functional foods has entered the U.S. market, with some manufacturers navigating the fine line of health claims to avoid conflicts with the Federal Trade Commission (FTC). The FTC mandates that any health claims must be substantiated by scientific evidence, and functional food products cannot legally promote themselves as cures for diseases. Health claims on food or beverage labels must also undergo regulatory scrutiny from the FDA, a process that can be both time-consuming and expensive. Companies are required to conduct research and safety evaluations of functional food substances and petition the FDA for GRAS (generally recognized as safe) status for their intended use.
Consumer acceptance is the cornerstone of the functional food market, and Culhane emphasizes that long-term success relies on personal experiences that motivate lifestyle changes. While she acknowledges that lycopene—a powerful antioxidant found in tomatoes, watermelon, and other foods—can indeed reduce prostate tumors, she cautions that it may not yield immediate benefits for someone facing prostate issues in their 50s. “They would need to start in their 20s,” she explained, highlighting the challenge of encouraging young adults to adopt healthier eating habits for long-term health benefits.
Culhane also warns that not all functional foods provide maximum benefits when consumed as typically recommended, and serving sizes can significantly influence effectiveness. “Often, the serving size and daily dosage are impractical,” she noted in an email. “To achieve the cholesterol-reducing benefits of soy protein, one would need to consume the equivalent of 1 quart of soy milk daily. Similarly, approximately 3 cups of oatmeal would be necessary to realize the cholesterol-lowering effects of beta-glucan.”
Today, consumers can find buttery spreads, such as Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanol and sterol esters aimed at reducing heart disease risk, alongside high-fiber breads and other baked goods like Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies to help lower cholesterol. Stanols and sterols are plant-derived compounds naturally present in vegetable oils and cereals that aid in preventing dietary cholesterol absorption, consequently lowering total and LDL cholesterol levels in the bloodstream. These compounds are increasingly incorporated into functional foods, such as Minute Maid Premium Heartwise orange juice, which includes Cargill’s trademarked CoroWise plant sterols, and Joseph’s Bakery flatbreads containing ADM’s trademarked CardioAid plant sterols.
Other functional food developments are underway as researchers explore extracting beta-glucan from mushrooms to enhance immunity, producing fiber-rich inulin flour from chicory root, and investigating beneficial nutrients from algae. Although algal-derived food products can promote human health, researchers face challenges in quantifying benefits and understanding how harvesting, storage, and food processing techniques affect algae’s nutritional value. The emerging field of phycology—the scientific study of algae—offers exciting opportunities for those interested in experimenting and collaborating on new functional food ingredients.
Kristi Crowe-White, Ph.D., an associate professor of nutrition and registered dietitian at the University of Alabama, remarked, “I believe the future of functional foods is moving towards a deeper understanding of the chemistry and composition of native or raw foods. We have around 20 well-integrated compounds, but that’s just the beginning. There are many others we should be exploring. It’s a very exciting time to be involved in this field.”
As the market continues to evolve, the emergence of specialized products like those containing calcium citrate brand names is expected to contribute to the growing interest in functional foods, reflecting consumers’ desires for health-promoting options.