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Functional foods to grow 8%/year

4 Apr 2016

A market research study recently published by Technavio presents a detailed segmentation of the global functional food and nutraceutical market and says that the global functional food and nutraceuticals market will grow at a steady CAGR of nearly 8%.

A market research study recently published by Technavio presents a detailed segmentation of the global functional food and nutraceutical market by product (dietary supplement and functional food and beverage), and by geography (APAC, Europe, North America, and ROW). The key vendors identified in the market are BASF, Coca-Cola, Kellogg, Nestlé, and PepsiCo. Extensive research carried out by the analysts at Technavio has shown that the global functional food and nutraceuticals market will grow at a steady CAGR of nearly 8% during the forecast period. A sharp rise in medical expenses is one of the key factors driving the growth of the functional food and nutraceuticals market over the forecast period. Medical costs have been increasing significantly due to the rising prices of medical services, use of new technologies and treatments without considering effectiveness, and overuse of procedures and tests. For instance, in 2014, the US healthcare spending reached $3 trillion. This increase was primarily due to coverage expansions under the Affordable Care Act, especially for Medicaid and private health insurance. The rising healthcare costs have prompted customers to turn to alternative and preventive healthcare practices to minimize the spending on treatments and medications. With an increasing number of people consuming functional food and nutraceuticals, this market is expected to have a positive outlook until the end of 2020.

In this industry report, the analysts have estimated factors like the growing popularity of multi-herb supplements as one the key trends driving the growth of this market. Multi-herb supplements are a combination of beneficial herbs that benefit different aspects of health including heart and cardiovascular health, libido, digestion, energy, sleep, and immune function. For instance, CandiGONE by Renew Life is a blend of many natural ingredients that have been traditionally used to help maintain a healthy balance of intestinal flora. Similarly, NOW Sleep by NOW Foods is a combination of herbs that help the consumer sleep better. It comprises standardized extracts of valerian and hops traditionally used to relax the nervous system. Due to multiple advantages provided by multi-herb supplements, its demand is expected to increase, which, in turn, will translate into the demand for functional food and nutraceuticals in the coming years.

According to this market research report, analysts estimate that the functional food and beverage segment dominated the market and accounted for more than 67% of the market share in 2015. Therefore, to maintain good health and reduce the risk of illnesses, people are increasingly looking to adopt healthy lifestyles and diets. This has increased the demand for functional food and beverages such as breakfast cereals and energy drinks. Moreover, there is a growing demand for plant-based functional foods such as oats, flax seeds, tomatoes, broccoli, citrus fruits, and cranberries as they are perceived to reduce the risk of chronic diseases like cancer. This recent shift in consumer preferences toward healthier food with high fiber will have a positive impact on this market segment over the forecast period.

The global functional food and nutraceuticals market is extremely fragmented due to the presence of various large and small vendors that deal with niche segments, Technavio claims. The providers in this market compete in terms of price, quality, product differentiation, distribution, and promotion to gain maximum market prominence during the forecast period. The competitive environment is likely to intensify with an increase in product or service extensions, product innovations, and M&A.