As you wander through any large grocery store or specialty market, or even browse online food product sites, you’ll likely encounter a wide variety of protein powders, energy drinks, power bars, probiotics, vitamin water, and beverages fortified with calcium to support bone health. These products are often enhanced with nutrients, phytochemicals, botanicals, or dietary supplements, and are commonly referred to in the industry as functional foods. Functional foods are understood to offer potential health benefits beyond basic nutrition, aiming to do more than just fulfill daily nutrient needs; they can also contribute to disease risk reduction and overall well-being.
Despite the U.S. Food and Drug Administration’s (FDA) responsibility for regulating functional foods, an official definition has yet to be established. According to the FDA, terms like “functional foods” and “nutraceuticals” are prevalent in the marketplace and are regulated under the Federal Food, Drug, and Cosmetic Act, even without a specific legal definition. Nevertheless, the demand for these foods is on the rise, with experts indicating that functional foods will experience significant growth in the near future. As American consumers become increasingly health-conscious, they seek out natural ingredients and nutrient-rich foods and beverages. In response to this trend, companies are consistently launching new products in the functional foods sector.
Kara Nielsen, a food and beverage trends expert, noted in a recent report from Packaged Facts that the growing consumer awareness and interest in medicinal foods are driving demand in the natural food and beverage sector for functional ingredients that originate from nature rather than laboratories. A report by Technavio projects that the global functional foods and beverages market will grow at a steady rate, anticipating a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021, with a forecasted CAGR of 6.53% for the U.S. market during the same period. This trend is fueled by an aging population concerned about health maintenance, escalating medical expenses, and heightened consumer interest in the link between healthier eating and overall well-being.
Functional foods have moved beyond being a niche market, attracting some of the largest food companies. For instance, Campbell’s CEO Denise Morrison highlighted the company’s plans to venture into faster-growing segments such as organic and functional foods following its acquisition of Pacific Foods for $700 million earlier this year. PepsiCo also made headlines by acquiring probiotic beverage producer KeVita last fall and launching its Tropicana Essentials Probiotics line, which was positioned as the first brand to introduce probiotics to the mainstream juice aisle. Moreover, the venture capital arm of General Mills 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.
Major players in the functional foods space are expected to introduce new products as research and development advance. They are actively seeking potential acquisitions to enhance profits and share prices, with recent partnerships and purchases indicating a trend toward collaboration with smaller, agile entrepreneurial startups for innovative developments. The Japanese and Russians are recognized for their pioneering efforts in the development and application of functional foods to improve digestion and enhance performance. The first notable application of a functional food in the U.S. may date back to 1924, when the Morton Salt Company began adding iodine to its products at the government’s request to combat iodine deficiency in the Great Lakes region, known then as the “goiter belt.” This initiative, inspired by a Swiss practice, effectively addressed the regional health issue.
Oatmeal has played a crucial role in raising public awareness about the potential benefits of functional foods, according to Carol Culhane, president of International Food Focus Ltd. in Toronto. Oats contain beta-glucan, a soluble fiber known to lower low-density lipoprotein (LDL) cholesterol, often referred to as “bad” cholesterol. As this information became public, interest in the research and discussions surrounding functional foods surged. “It took many clinical trials to prove the data,” she stated. “In 1997, the FDA approved the claim that beta-glucan could reduce serum cholesterol, marking the beginning of this trend.”
While some functional food products initially launched successfully, not all have thrived in the marketplace. A notable example occurred in the late 1990s when Kellogg introduced its Ensemble line of cholesterol-lowering products featuring “natural soluble fiber” from psyllium wheat husk, but discontinued it within a year due to poor sales attributed to generic packaging and merchandising issues. Nevertheless, as marketing, packaging, and distribution of functional foods improved, successful launches became more common. General Mills introduced Fiber One cereal in 1985, and Danone launched its popular Activia probiotic yogurt in France in 1987, later introducing it to the U.S. in 2006. Both products continue to perform well, with Fiber One capitalizing on the high-fiber food trend and Activia overcoming initial consumer skepticism about “friendly bacteria,” a concept that was more readily accepted in Europe.
Since then, a diverse range of functional foods has entered the U.S. market, with some manufacturers navigating the fine line of health and wellness label claims to remain compliant with the Federal Trade Commission (FTC). The FTC mandates that any health claims be scientifically substantiated, and functional food products cannot legally position themselves as disease cures. Additionally, health claims on food or beverage labels must endure regulatory scrutiny from the FDA, a process that can be lengthy and costly. Companies must also conduct research and safety evaluations of functional food substances and petition the FDA to obtain GRAS (Generally Recognized as Safe) status for their intended use.
Consumer acceptance is a critical factor for the functional foods market, and Culhane emphasized that long-term success hinges on personal experiences that motivate lifestyle changes. While she noted that lycopene—an antioxidant found in tomatoes, watermelon, and other foods—”can definitely reduce prostate tumors,” it would not yield immediate results for someone experiencing prostate issues in their 50s. “They would have to start in their 20s,” she explained, highlighting the challenge of encouraging young adults to consider how their dietary choices can enhance health.
Culhane also cautioned that not all functional foods deliver maximum benefits based on typical consumption, as serving sizes can significantly influence efficacy. “Often, the serving size and daily dosage are not practical,” she stated. “One needs to consume the equivalent of 1 quart of soy milk daily to achieve the cholesterol-reducing benefit of the active ingredient, soy protein. Approximately 3 cups of oatmeal must be consumed each day to realize the cholesterol-lowering effects of beta-glucan.”
Today, consumers can find buttery spreads—like Lipton’s Take Control and Raisio Group’s Benecol—containing plant stanol and sterol esters designed to mitigate heart disease risk, alongside high-fiber breads and baked goods—such as Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies—that aim to lower cholesterol. Plant stanols and sterols, naturally occurring compounds found in vegetable oils and cereals, inhibit the absorption of dietary cholesterol, thereby reducing total and LDL cholesterol levels in the bloodstream. These compounds are increasingly integrated into functional foods. For example, Minute Maid Premium Heartwise orange juice incorporates Cargill’s trademarked CoroWise plant sterols, while Joseph’s Bakery offers flatbreads featuring ADM’s CardioAid plant sterols.
Research is underway to develop additional functional food products, with scientists extracting beta-glucan from mushrooms to enhance immune function, producing fiber-rich inulin flour from chicory root, and exploring beneficial nutrients from algae. While algal-derived food products hold promise for health benefits, researchers acknowledge the challenges that remain in quantifying these benefits and understanding how harvesting, storage, and processing techniques affect the nutritional value of algae. 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 nutrition professor and registered dietitian at the University of Alabama, remarked on the future direction of functional foods: “I think we’re moving more towards the chemistry and truly understanding the composition of native or raw foods. We have a good 20 compounds that are well incorporated, but that’s not the end of the line. There are many others worth exploring. It’s a very exciting time to be in this field.” In this evolving landscape, products like petite calcium with vitamin D are gaining traction, as they combine essential nutrients for bone health with the functional benefits consumers are increasingly seeking.