Wander through any major grocery store or specialty market, or browse online food product websites, and you’ll likely encounter a diverse selection of protein powders, energy drinks, power bars, probiotics, vitamin-infused waters, and calcium-enriched beverages designed to support bone health. These products are fortified with nutrients, phytochemicals, botanicals, or dietary supplements and are referred to in the industry as functional foods. Functional foods are characterized by their potential positive impact on health beyond basic nutrition, aiming to do more than just satisfy daily nutrient needs; they may also contribute to disease risk reduction and overall well-being.
Although the U.S. Food and Drug Administration (FDA) oversees the regulation of functional foods, it has yet to provide an official definition. The agency notes, “Terms like ‘functional foods’ or ‘nutraceuticals’ are prevalent 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.” Despite this, 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 natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods market are responding to this trend by consistently launching new products.
Kara Nielsen, a food and beverage trends expert, mentioned in a recent Packaged Facts report that growing consumer awareness and interest in medicinal foods are driving their popularity within the natural food and beverage sector, where functional ingredients sourced from nature (as opposed to synthetic origins) are in high demand. According to a report by Technavio, the global market for functional foods and beverages is expected to experience steady growth, with a projected compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021. In the U.S. market, analysts predict a CAGR of 6.53% during the same period. This trend is fueled by an aging population keen on maintaining their health, rising medical costs, and an increasing consumer interest in the relationship between healthier eating and overall well-being.
Functional foods have evolved from a niche market, attracting some of the largest food companies. For instance, Campbell’s CEO Denise Morrison highlighted the company’s intent to expand into growing segments like organic and functional foods with its $700 million acquisition of Pacific Foods earlier this year. Similarly, PepsiCo acquired probiotic beverage company KeVita last fall and launched its Tropicana Essentials Probiotics line, positioning itself as the first brand to introduce probiotics into the mainstream juice aisle. Additionally, General Mills’ venture capital arm 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 major players in the industry continue to develop new functional food products, they are actively seeking acquisitions to enhance profits and share prices, often looking to smaller, agile startups for innovative ideas. Japan and Russia are recognized for their pioneering efforts in creating functional foods that support digestion and enhance performance. The U.S. first commercially applied a functional food in 1924 when Morton Salt Company added iodine to its products in response to government requests aimed at addressing iodine deficiency in the Great Lakes region, then referred to as the “goiter belt.” This iodization practice, adapted from Switzerland, effectively helped mitigate the problem.
According to Carol Culhane, president of International Food Focus Ltd. in Toronto, oatmeal significantly raised public awareness about the potential benefits of functional foods. Oats contain beta-glucan, an active ingredient in soluble fiber that has been proven to lower low-density lipoprotein (LDL) cholesterol, often referred to as “bad” cholesterol. As this information spread, public interest in related discussions and research surged. “It took many clinical trials to validate the data,” she remarked. “In 1997, the FDA approved the claim that beta-glucan could reduce serum cholesterol. That marked the beginning of this movement.”
While some initial functional food products found success, others did not fare as well in the marketplace. A case in point is Kellogg’s Ensemble line of cholesterol-lowering foods introduced in the late 1990s, which was discontinued within a year due to poor sales attributed to generic packaging and marketing issues. However, successes began to emerge as marketing, packaging, and distribution improved. In 1985, General Mills launched its Fiber One cereal, followed by Danone’s Activia probiotic yogurt in France in 1987, which was brought to the U.S. in 2006. Both products remain popular today, with Fiber One capitalizing on the growing trend toward high-fiber foods and Activia overcoming initial consumer skepticism regarding “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 carefully navigating label claims about health and wellness to comply with Federal Trade Commission (FTC) regulations. The FTC mandates that any health claims must be scientifically substantiated, and functional food products cannot legally advertise themselves as disease cures. Moreover, health claims on food or beverage labels are subject to scrutiny by the FDA, a process that can be rigorous and costly. Companies must conduct research and safety assessments of functional food substances and petition the FDA for Generally Recognized as Safe (GRAS) status for their intended uses.
Consumer acceptance of functional foods remains crucial for market success. Culhane emphasizes that long-term success hinges on personal experiences that motivate lifestyle changes. For instance, while lycopene—a powerful antioxidant found in tomatoes, watermelon, and other foods—can indeed reduce prostate tumor growth, its effects are not immediate for someone experiencing prostate issues in their 50s. “They would need to start in their 20s,” she advised. “The real challenge is encouraging young adults to consider how their dietary choices can enhance their health.”
Culhane also warns that not all functional foods deliver maximum benefits in their typical consumption forms, and serving sizes can significantly impact their efficacy. “Often, the serving size and daily dosage are impractical,” she noted in an email. “To achieve the cholesterol-lowering benefits of soy protein, one would need to consume the equivalent of one quart of soy milk daily. Similarly, about three cups of oatmeal per day are required for the benefits of beta-glucan.”
Today, consumers can find buttery spreads, like Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanol and sterol esters aimed at reducing heart disease risk, along with high-fiber breads and baked goods, such as Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies, which also target cholesterol reduction. These plant-based compounds, found in vegetable oils and cereals, help inhibit dietary cholesterol absorption, thereby lowering total and LDL cholesterol levels in the blood. Functional foods increasingly incorporate these compounds, with Minute Maid Premium Heartwise orange juice featuring Cargill’s trademarked CoroWise plant sterols, and Joseph’s Bakery flatbreads containing ADM’s CardioAid plant sterols.
Furthermore, scientists are developing more functional food products by extracting beta-glucan from mushrooms to enhance immune function, producing fiber-rich inulin flour from chicory root, and investigating various beneficial nutrients from algae. While algal-derived food products have the potential to benefit human health, researchers face challenges in quantifying their benefits and understanding how harvesting, storage, and food processing techniques affect their nutritional value. The emerging field of phycology— the scientific study of algae—offers opportunities for those interested in experimenting and collaborating on the development of new functional food ingredients.
Kristi Crowe-White, Ph.D., an associate nutrition professor and registered dietitian at the University of Alabama, remarked, “I believe the future of functional foods is leaning towards a deeper understanding of the chemistry and composition of native or raw foods. We currently have about 20 compounds well-integrated into our diets, but that’s just the beginning. There are many more to explore. It’s an exciting time to be involved in this field.” Notably, products like Citracal Calcium Citrate with Vitamin D Slow Release exemplify the growing interest in functional foods that not only meet nutritional needs but also support overall health.