Functional Foods Market Size Worth US$ 4,18,439.42Mn, Globally, by 2028 at 8.7% CAGR - Exclusive Report by The Insight Partners

NEW YORK, April 7, 2022 /PRNewswire/ -- The Insight Partners published latest research study on Functional Foods Market to Forecast 2028 – COVID-19 Impact and Global Analysis – by Product Type, Category, Distribution Channel, and Geography," the functional foods market was valued at US$ 233,620.18 million in 2021 and is projected to reach US$ 418,439.42 million by 2028. It is expected to grow at a CAGR of 8.7% from 2021 to 2028. The rising incidence of chronic diseases is driving the functional foods market. 

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Functional Foods Market: Competition Landscape and Key Developments

The leading players in the functional foods market include Unilever; Clif Bar & Company.; Laird Superfood; Abbott, Danone S.A.; GENERAL MILLS, INC.; HILDUR; Nestlé; Kellogg Company; and Good Source Foods, LLC. These players are focusing on developing innovative products to meet the changing requirements of consumers.

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Asia Pacific is projected to grow at the fastest CAGR in the global functional foods market over the forecast period. The growth of the functional foods market across Asia Pacific is attributed to the burgeoning population, coupled with rising disposable income. Further, rapidly rising processed food consumption and increased health and fitness awareness in developing economies are major driving drivers for the regional market. Consumers' concerns about food safety are growing in the region, influencing consumer behavior and, as a result, boosting growth. Food fortification is projected to be the government's primary emphasis on addressing rising malnutrition and poverty concerns. This, in turn, is predicted to contribute significantly to functional foods market growth.

Surging Demand for Nutrient Enriched Food Is Driving The Functional Foods Market

The rising demand for nutrient-enriched food, owing to hectic lifestyles and the rise in consumer awareness of the health benefits of these food items, is expected to fuel the market expansion. In addition, the functional food demand is being driven by the aging population concerned about maintaining health, ever-rising medical costs, and greater consumer interest in the connection between healthier eating and well-being. Further, there is an increasing need for on-the-go snacks containing additional nutrients and immediate nutrition. The rise in consumer interest in nutrition and health has boosted the demand for functional foods. Additionally, consumers choose functional ingredients in meals to minimize the risk of certain health disorders such as obesity, weight control, diabetes, and cardiovascular diseases. This, in turn, is fueling the functional foods market growth.

The increased demand for nutrient-rich foods as well as the increased prevalence of chronic diseases across the world is driving the growth of the functional foods market. Along with this, the COVID-19 pandemic has had a significant impact on consumer buying behavior and eating habits. There has been an increase in health concerns and the growing awareness regarding the consumption of natural and functional food post-pandemic which is also driving the growth of the functional foods market. Along with this, the rising trend of healthy snacking across the world is also increasing the demand for functional foods.

In 2020, the dairy & frozen dessert segment accounted for the largest functional foods market share, based on product type. Consumers are increasingly consuming dairy products as it is important for building healthy bones and for maintaining a healthy weight. Yogurt is the most popular functional dairy product and is an excellent source of protein, calcium, and potassium. Also, there is a growing trend of fortification of dairy products which further drives the growth of the segment.

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Functional Foods Market: Segmental Overview

Based on product type, the functional foods market is segmented into bakery and confectionery, dairy and frozen desserts, sweet and savory snacks, breakfast cereals, and others. The dairy and frozen desserts segment held the largest market share in 2020, and the sweet and savory snacks segment is projected to grow at the fastest CAGR over the forecast period. Consumers have been increasingly taking a proactive approach to health and wellness, leading to a rise in demand for sweet and savory snacks. According to Survey Sampling International (SSI) consumer survey in 2017, consumers who would not purchase snacks previously would consume them if the savory snack products are fortified with probiotics. Manufacturers are incorporating probiotics into traditional snacks like hummus, trail mix, or crackers. Functional sweets have an adequate amount of nutrients; they contain no palm oil, no preservatives, and no GMOs; and they are mostly gluten-free. Manufacturers are developing functional sweet and savory snacks for supporting immune health for consumers of all ages, from children to older adults. High protein snacks are also being increasingly demanded as they convey the health benefits of having protein throughout the day.

Based on category, the functional foods market is segmented into organic and conventional. The conventional segment is expected to account for a larger share of the functional food market. Conventional functional foods are unmodified or whole foods that includes bioactive compounds which helps in providing various health and nutrient benefits to the consumers. These compounds often work additively and/or synergistically to exert their effects. Conventional functional food is produced through the conventional farming method, which includes the use of synthetic chemical fertilizers, pesticides, herbicides, and other continual inputs. Some of the conventional functional foods are whole fruits, vegetables, grains, seeds, legumes, and meat, among others. 

Based on distribution channel, the functional foods market is segmented into supermarkets and hypermarkets, convenience stores, online retail, and others. The supermarkets and hypermarkets segment accounted for the largest share in the functional foods market. However, the online retail segment is projected to grow at the highest CAGR over the forecast period. Supermarkets/hypermarkets are self-service shops that offer various categories of products and are considered an effective distribution channel for the sales of functional food. Supermarkets/hypermarkets provide products of different brands in one place with affordable prices compared to other distribution channels. Additionally, products of different brands are placed in a single place for buyers to help select suitable products in less time. Besides, factors such as hassle-free transactions, bulk purchasing, better services, and pleasant customer experience encourage buyers to shop from supermarkets or hypermarkets. The sales of functional food in supermarkets and hypermarkets are increasing, owing to the increasing footfall at these places, especially from health-conscious buyers.

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Impact of COVID-19 Pandemic on Functional Foods Market

The COVID-19 pandemic led to unprecedented challenges across many sectors, such as food & beverages and nutraceuticals. Lockdowns, border restrictions, travel restrictions, manufacturing units' shutdowns, and other safety protocols imposed by governments negatively impacted the operations of manufacturing companies. Due to the raw material shortage, many functional foods manufacturers suffered losses. There was a shortfall in the product supply due to supply chain disruptions and labor shortages. All these factors negatively impacted the functional foods market. However, as the concerns related to health and fitness increased due to the outbreak, the demand for functional foods increased dramatically as functional foods offer specific health benefits, such as improved bone health, cholesterol management, improved heart health, and other benefits associated with eye health and vision, that are beyond the regular daily intake of nutrients. Further, the manufacturers are increasing their production due to ease in the restrictions imposed by the government, thereby boosting the functional foods market growth.

The market for the organic segment is expected to grow at a faster pace during the forecast period due to the increased concern regarding personal health, the environment, and animal welfare. The growing environmental concerns over the use of harmful chemicals in agriculture and farming and its harmful effects on consumer's health have led to an increased demand for organic functional foods.

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