Take a walk through any large grocery store or specialty shop—or visit an online food product site—and you’re likely to encounter a variety of protein powders, energy drinks, power bars, probiotics, vitamin waters, and calcium-fortified beverages designed to support bone health. These items are fortified with nutrients, phytochemicals, botanicals, or dietary supplements, collectively referred to in the industry as functional foods. Functional foods are characterized by their potential positive impact on health that goes beyond basic nutrition; they aim to do more than merely fulfill daily nutrient needs—they also contribute to disease risk reduction and overall well-being.
Despite the U.S. Food and Drug Administration (FDA) being responsible for regulating functional foods, it has yet to provide an official definition. The agency notes, “Terms such as ‘functional foods’ or ‘nutraceuticals’ are commonly used in the marketplace. These foods are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act, even though they lack a specific legal definition.” Nevertheless, the demand for functional foods is on the rise, with many experts predicting significant growth in this sector in the near future. 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 consistently launching innovative products.
With a growing awareness and interest in health-promoting foods, functional ingredients that have real-world origins (rather than lab-derived) are becoming more sought after, according to Kara Nielsen, a food and beverage trends expert, in a recent Packaged Facts report on wellness innovations. A report from Technavio forecasts that the global functional foods and beverages market will expand steadily, with a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021, while the U.S. market is projected to grow at a CAGR of 6.53% during the same period. This trend is largely driven by an aging population concerned about maintaining health, escalating medical costs, and a heightened consumer interest in the link between healthier eating and overall well-being.
Functional foods have transitioned from a niche market to a mainstream one, attracting the attention of major food companies. For instance, Campbell’s CEO Denise Morrison highlighted the company’s intention to explore more rapidly growing sectors, such as organic and functional foods, evidenced by its acquisition of Pacific Foods for $700 million earlier this year. Similarly, PepsiCo purchased probiotic beverage company KeVita last fall and introduced its Tropicana Essentials Probiotics line, positioning it as the first brand to bring probiotics into the mainstream juice market. General Mills’ venture capital arm also led a $6.5 million Series D investment round in March to support Farmhouse Culture, a startup focused on fermented and probiotic foods and beverages.
As research and development evolve, we can expect major players in the functional food sector to launch new products. They are actively looking for potential acquisitions to enhance profitability and share prices, often considering smaller, agile startups for the next breakthrough innovation. Both Japan and Russia are recognized for pioneering the development and application of functional foods aimed at improving digestion and enhancing performance. The first notable application of a functional food in the U.S. may have occurred in 1924 when the Morton Salt Company began adding iodine to its products at the government’s behest, addressing a regional iodine deficiency associated with goiter.
Oatmeal played a crucial role in raising public awareness of the potential benefits of functional foods, according to Carol Culhane, president of International Food Focus Ltd. in Toronto. Oats contain beta glucan, the active component of soluble fiber known to lower low-density lipoprotein (LDL) cholesterol, often labeled as “bad” cholesterol. Once this information circulated, public interest in functional foods surged. “It took many clinical trials to verify the data,” Culhane explained. In 1997, the FDA approved the claim that beta glucan could reduce serum cholesterol, marking a significant milestone in the functional food landscape.
While some initial functional food products were successful, others struggled to gain traction. For example, Kellogg’s Ensemble line, which launched in the late 1990s to reduce cholesterol with “natural soluble fiber” sourced from psyllium husk, was discontinued within a year due to poor sales attributed to packaging and merchandising issues. However, successes became more common as marketing, packaging, and distribution strategies improved. General Mills introduced its Fiber One cereal in 1985, and Danone launched Activia probiotic yogurt in France in 1987, subsequently entering the U.S. market in 2006. Both products remain popular today, with Fiber One capturing the high-fiber food trend and Activia effectively marketing the concept of “friendly bacteria,” which was initially met with skepticism in the U.S.
Since then, an extensive array of functional foods has emerged in the U.S. market, with some manufacturers carefully navigating label claims related to health and wellness to comply with Federal Trade Commission (FTC) regulations. The FTC mandates that health claims be scientifically substantiated, and functional food products cannot legally claim to cure diseases. Any health claims on food or beverage labels must also undergo rigorous FDA review, a process that can be both lengthy and costly. Companies must conduct research and safety evaluations of functional food substances and petition the FDA for Generally Recognized as Safe (GRAS) status for intended uses.
Consumer acceptance remains a critical factor for the success of functional foods, and Culhane emphasizes that long-term success is dependent on personal experiences that motivate lifestyle changes. While lycopene, a potent antioxidant found in tomatoes and watermelon, can potentially reduce prostate tumors, she notes that it may not provide immediate benefits for someone with prostate issues in their 50s. “They would have to start in their 20s,” she said, highlighting the challenge of encouraging younger consumers to adopt health-enhancing eating habits.
Culhane also cautioned that not all functional foods deliver maximum benefits in their usual consumption forms, emphasizing that serving sizes can significantly affect efficacy. “Often, the serving size and daily dosage are impractical,” she noted. For instance, one must consume approximately one quart of soy milk daily to achieve the cholesterol-lowering advantage of soy protein or about three cups of oatmeal to benefit from beta-glucan.
Today, consumers can find buttery spreads like Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanols and sterol esters to help lower heart disease risk, alongside high-fiber breads and baked goods like Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies to aid in cholesterol reduction. Stanols and sterols are naturally occurring compounds found in vegetable oils and cereals that inhibit cholesterol absorption, effectively lowering total and LDL cholesterol levels. These compounds are increasingly being integrated into functional foods, as seen in Minute Maid Premium Heartwise orange juice, which features Cargill’s trademarked CoroWise plant sterols, and Joseph’s Bakery flatbreads, which include ADM’s trademarked CardioAid plant sterols.
Other functional food innovations are on the horizon, as scientists explore extracting beta-glucan from mushrooms to enhance immune function, developing inulin-rich flour from chicory root, and investigating various beneficial nutrients from algae. While algal-based food products can offer health benefits, researchers acknowledge that challenges remain in quantifying these advantages and understanding how harvesting, storage, and processing methods affect the nutritional value of algae. The emerging discipline of phycology, the scientific study of algae, offers exciting opportunities for those interested in collaborating on new functional food ingredients.
“I believe [the future of functional foods is] leaning more towards understanding the chemistry and composition of native or raw foods,” said Kristi Crowe-White, Ph.D., an associate nutrition professor and registered dietitian at the University of Alabama. “We have a solid foundation of around 20 well-established compounds, but there is much more to explore. It’s a very thrilling time to be involved in this field.” In this evolving landscape, products like Twinlab Calcium Citrate with Magnesium are also gaining traction, underscoring the importance of functional foods in meeting consumer health needs.