This document discusses trends, opportunities, and challenges for functional foods. It provides examples of popular functional food products around the world and in Australia. Key drivers for the functional food market include aging populations, rising obesity rates, and increasing consumer awareness of the links between diet and health. However, the industry faces challenges such as developing products that meet regulatory standards for health claims and ensuring functional ingredients are stable during processing and storage.

1. TRENDS, OPPORTUNITIES AND
CHALLENGES FOR FUNCTIONAL FOODS
Ranjan Sharma PhD MBA
Nutraceuticals and Functional Foods Symposium
Queensland, Australia,18 June 2010

2. FUNCTIONAL FOODS – A DEFINITION
 No universally accepted definition
 Foods and beverages that contain either naturally or
via processing or fortification, sufficient amounts of
physiologically-functional components and have
potential health benefits

3. FUNCTIONAL FOODS & NUTRACEUTICALS

4. FUNCTIONAL FOOD EXAMPLES - OMEGA-3
Chocolate bars – 2006
Mini meal - Orange Juice -2007
2006
Butter 2007
Milk drink - 2006

5. FUNCTIONAL FOOD EXAMPLES - OMEGA -3 -
AUSTRALIA

6. FUNCTIONAL FOOD EXAMPLES - PROBIOTICS

7. FUNCTIONAL FOOD EXAMPLES - PROBIOTICS
- AUSTRALIA

8. FUNCTIONAL FOOD EXAMPLES - HIGH
FIBRE AND WHOLE/MULTIGRAIN

9. FUNCTIONAL FOOD EXAMPLES - HIGH FIBRE -
AUSTRALIA

10. FUNCTIONAL FOOD EXAMPLES -
FUNCTIONAL WATERS

11. FUNCTIONAL FOOD EXAMPLES - CALORIE
BURNING
With EGCG
Enviga – calorie burning
drink with tea catechins
(Coca Cola) Celsius - guarana seed, green
(US launch Nov 2006) tea leaf and ginger root

12. FUNCTIONAL FOOD EXAMPLES - SUPERFRUITS,
SUPERFOODS, ANTIOXIDANTS

13. FUNCTIONAL FOOD EXAMPLES -
CHOLESTEROL ABSORPTION

14. FUNCTIONAL FOOD EXAMPLES - BEAUTY FOODS -
COSMECEUTICALS

15. FUNCTIONAL FOOD EXAMPLES - ENERGY
DRINKS

16. CONCENTRATED FUNCTIONAL FOODS
(ENERGY SHOTS)

17. GLOBAL HEALTH & WELLNESS MARKET, 2008
 Global health and wellness market
 US$ 570 billion
 Global functional foods market
 US$ 152 billion
 Australian functional foods market
 A$ 2.7 billion
Euromonitor, 2009

18. US FUNCTIONAL FOODS AND DRINKS
US Functional foods & drinks
10000
9000
8000
7000
Million $
6000
5000
2004
4000
2009
3000
2000
1000
0
Bone Heart Gut Energy Other
health health health
http://www.foodprocessing.com/articles/2006/250.html

19. FUNCTIONAL FOODS IN JAPAN
Functional Foods in Japan, 2007 - $16.4 b
Teeth health
15%
Weight
management
14%
Digestive
health
Blood 59%
sugar
4%
Cholesterol
4%
Blood
pressure Bone health
2% 2%
Source: Market NZ

20. FUNCTIONAL FOODS - AUSTRALIA
Functional Foods Sales - Australia
3
2.5
2
Sales ($)
1.5
1
0.5
0
2003 2004 2005 2006 2007
Euromonitor, 2009

21. FUNCTIONAL FOODS - AUSTRALIA
Functional Foods - Australia, 2007 – $ 2.7 b
Digestive
health
6%
Digestive health
Others
37%
General health
and wellbeing
General
health and Others
wellbeing
57%
Euromonitor, 2009

22. DIGESTIVE HEALTH - AUSTRALIA
Source: Datamonitor, 2009

23. OPPORTUNITIES AND CHALLENGES
Opportunities
and Drivers Challenges

24. OPPORTUNITIES AND CHALLENGES
Opportunities
and Drivers Challenges

25. OPPORTUNITIES AND DRIVERS FOR FUNCTIONAL FOOD
DEVELOPMENT
 Population demographics
 Rising obesity - the health condition/disease of the
millennium
 Increased incidences of non-communicable, chronic
diseases
 Growing proportion of unhealthy kids
 Consumer awareness of food-health relationships

26. POPULATION TRENDS - AUSTRALIA
Australia - population by age groups (2005)
14000000
12000000
10000000 0-9 years
8000000 10-19 years
6000000 20-64 years 2005
4000000 65+ years
2000000
0
Australia - population by age groups (2050)
14000000 Ageing population
12000000
10000000 0-9 years
8000000 10-19 years 2050
6000000 20-64 years
4000000 65+ years
2000000
0
US Census Bureau

27. DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT
 Population demographics
 Rising obesity - the health condition/disease of the millennium
 Increased incidences of non-communicable, chronic diseases
 Unhealthy kids
 Consumer awareness of food-health relationships

28. ADULT OVERWEIGHT PROJECTION
Country 2005 (%) 2015 (%)
Australia Females 62.7 70
Males 72.1 79
Canada Females 57.1 61.9
Males 65.1 68.6
New Zealand Females 68.2 79.2
Males 68.7 78.5
United
Kingdom Females 61.9 65.7
Males 65.7 69.8
United States Females 72.6 80.2
Males 75.6 84.5
WHO 2007

29. ADULT OBESE PROJECTION
Country 2005 (%) 2015 (%)
Australia Females 24.9 33.5
Males 23.8 33.3
Canada Females 23.2 28.2
Males 23.7 27.4
New Zealand Females 31.5 48.1
Males 23 35.2
United
Kingdom Females 24.2 28.3
Males 21.6 25.8
United States Females 41.8 54.3
Males 36.5 51.7
WHO 2007

30. OBESITY A MAJOR FACTOR IN LIFESTYLE DISEASES
 Diabetes
 80%
 Cancer
 40% of uterine cancer
Obesity 

25% of kidney cancer
10% of breast
 10% of colon cancer
 Heart health
 21% of heart diseases

31. COST OF OVERWEIGHT AND OBESITY IN AUSTRALIA
Total cost - 2005 - $21billion
16
14
12
10
Cost, $
8
6
4
2
0
Overwight Obese
 Analysis of 5-year follow-up data from the Australian Diabetes, Obesity
and Lifestyle study, collected in 2004–2005; 6140 participants ≥ 25 years
Colagiuri et al (2010) MJA ; 192 (5): 260-264

32. DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT
 Population demographics
 Rising obesity - the health condition/disease of the
millennium
 Increased incidences of non-communicable, chronic
diseases
 Unhealthy kids
 Consumer awareness of food-health relationships

33. DISEASES CAUSING GLOBAL DEATHS
global deaths by cause (millions)
Diabetes
Chronic respiratory diseases
Cancer
Cardio vascular diseases
Malaria
Tuberculosis
HIV/AIDS
0 2 4 6 8 10 12 14 16 18 20
Deaths (millions) WHO 2005
Total deaths – 58 million

34. DISEASES CAUSING GLOBAL DEATHS
global deaths by cause, 2005 (millions)
Chronic
Diabetes
diseases
Chronic respiratory diseases
Cancer
Cardio vascular diseases
Malaria
Tuberculosis
HIV/AIDS
0 2 4 6 8 10 12 14 16 18 20
Deaths (millions) WHO 2005
Total deaths – 58 million

35. Foregone income to deaths
by chronic diseases
Foregone income due to diseases (2005-15)
600
500
US$ (billion)
400
300
200
100
0
Brazil Canada China India Russia UK
WHO 2005
US$558 billion
The estimated amount China alone will
forego in national income between 2005-15 as
a result of premature deaths caused by heart
disease, stroke and diabetes

36. DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT
 Population demographics
 Rising obesity - the health condition/disease of the
millennium
 Increased incidences of non-communicable, chronic
diseases
 Growing population of unhealthy kids
 Consumer awareness of food-health relationships

37. UNHEALTHY KIDS
 US data
 High blood pressure – 3 fold increase in last 10 years
 Cholesterol – 10% of children with 200 mg/dL
 Metabolic syndrome – 1 million kids
 Overweight – 30% kids
 AHA recommendations –
 Begin monitoring blood pressure at age 3
 Begin monitoring cholesterol at age 8 if there is a family
history
Sloan, 2006 (FT April 2006)

38. DRIVERS FOR CONSUMER FOOD PRODUCT DEVELOPMENT
 Population demographics
 Rising obesity - the health condition/disease of the
millennium
 Increased incidences of non-communicable, chronic
diseases
 Unhealthy kids
 Consumer awareness of food-health relationships

39. Consumer research – consumer would use
food to prevent disease/health condition
Disease/health condition %
Obesity 76
High cholesterol 67
Blood sugar imbalance 67
Heart disease 66
Diabetes 64
Lack of energy 58
Osteoporosis 48
Vision problems 38
Arthritis 35
FFN Jan 2006

40. OPPORTUNITIES AND CHALLENGES
Opportunities
and Drivers Challenges

41. CHALLENGES – REGULATORY AND LABELLING
 Health claims – regulatory/labelling challenges
 Confusion about health claims – regulators, manufacturers,
consumers are all unsure
 Australia – Over 8 years for P293 – still not finalised
 What do the consumers understand of health claims? Will
they be misled? What if the product did not consistently
perform and the claimed health benefits were not achieved ?
 Will the misleading claims or claims with inconsistent
benefits lead to litigations?
 Can small companies afford such litigations?

42. DANONE/DANNON CASE – SEP 2009
 Jan 2008 - case filed on exaggerated health benefits
of certain yoghurt products in their advertising
 Sep 2009 - Dannon announced US$35 million (A$40m)
settlement of a class action lawsuit for its Activia and
DanActive (US name for Actimel)products.
 Dannon had to make changes to the labelling and
marketing of Activia and DanActive

43. DANONE/DANNON CASE – SEP 2009
 Jan 2008 - case filed on exaggerated health
benefits of certain yoghurt products in their
advertising
 Sep 2009 - Dannon announced US$35 million
(A$40m) settlement of a class action lawsuit
for its Activia and DanActive products.
 Dannon made changes to the labelling and
marketing of Activia and DanActive

44. DANNON DANACTIVE - US
Before After

45. DANNON DANACTIVE - US
Before After

46. DANONE ACTIMEL - EUROPE
Before After

47. GENERAL MILLS WARNED FOR “CHOLESTEROL
LOWERING CLAIMS” – MAY 2009
 May 2009 - FDA warns General Mills that
cholesterol-lowering, cancer-fighting
benefits of its Cheerios brand cereal were
“inappropriate,” as claims advertised by
General Mills implicitly mislead the public by
failing to clarify exactly how the cereal
figures into an overall healthy diet designed
to lower bad cholesterol levels

48. KELLOGG TO DROP IMMUNITY HEALTH CLAIMS ON RICE
KRISPIES – JUNE 2010
 Packaging which stated that Rice Krispies
“now helps support your child’s immunity”
to “been improved to include antioxidants
and nutrients that your family needs to
help them stay healthy.”
 Kellogg now barred by FTC from making
“claims about any health benefit of any
food unless the claims are backed by
scientific evidence and not misleading”.

49. SUCH CLAIMS CAN BE SEEN IN AUSTRALIA
Label claims: “lowers
cholesterol by up to 15%”
rather than saying “helps to
reduce absorption of LDL
cholesterol”
The National Heart
Foundation of Australia
recommends a daily intake
of 2-3 grams of plant sterols
Each serve of HeartActive™
contains 0.8g of plant
sterols

50. CHALLENGES – FOOD PRODUCT DEVELOPMENT
 Phytosterol
 Insolubility in water and difficulty in incorporating in low or
no-fat beverages
 Isoflavones
 Bitterness, poor solubility in water
 Dietary fibre, prebiotics
 Poor suspension and sedimentation
 Probiotics
 Exposure to heat, oxygen, low pH, moisture and direct light

51. CHALLENGES – FOOD PRODUCT DEVELOPMENT
 Calcium Soluble (chloride)
 heat stability, protein instability
 Insoluble (milk minerals, phosphate, citrate, carbonate)
 sedimentation, grittiness
 Iron, zinc, selenium
 Flavour, colour, heat stability
 Vitamins
 Poor solubility and activity loss due to heating

52. PRODUCT DEVELOPMENT CHALLENGES
 Fish oil (EPA & DHA); Microalgae (EPA & DHA); Flaxseed
oil (ALA)
 Undesirable flavour and taste, rancidity, microencapsulated
products still difficult to incorporate in high heat beverages

53. 1 2 3 4 Market
Success !!
Regulations & Consumers awareness Product performance Market
labelling & acceptance flavour and taste competition

54. REFERENCE: FUNCTIONAL FOODS WEEKLY
Market intelligence, innovations and
trends in functional foods and
nutraceuticals
http://www.functionalfoods.com.au