Functional Foods

Functional foods, as defined by Key Note, principally comprise fibre-, mineral- or vitamin-fortified breakfast cereals, probiotic yoghurts and yoghurt drinks, and cholesterol-lowering margarines and spreads. In recent years, use of the functional active ingredients in these foods has been extended, with cholesterol-lowering stanols and polysterols, and vitamins, being added to yoghurts, yoghurt drinks, milk and cheese, and omega-3 fatty acids being included in bread, spreads, soya milk and other milks. In addition, soya has become a more widely used ingredient, mainly in functional yoghurts, breads and margarines.

The total functional foods market grew by 8.3% by value in the year ending 8th September 2007, which represents a substantial slowing of growth compared with the 22.1% growth in the year ending 9th September 2006.

This is accounted for by a decrease in sales of yoghurt drinks and almost static sales of cholesterol-lowering margarines. However, strong growth in probiotic yoghurts, in soya milks and in the small fibre-fortified breads sector allowed positive overall growth, which is now much closer to that of traditional foods and drinks. Fortified breakfast cereals, probiotic yoghurts and yoghurt drinks together represented a 76.6% share of the total market by value in the year ending 8th September 2007, with these and some other functional variants having become mainstream products.

All manufacturers of breakfast cereals - notably Kellogg, Nestl, Weetabix, Quaker and Jordan - produce functional breakfast cereals and cereal bars.

The probiotic yoghurts sector is dominated by Danone, Yeo Valley, Onken and Mller. Danone and Mller also head the yoghurt drinks sector, followed by McNeils Benecol and the pioneer, Yakult. Unilevers Flora pro.activ holds the major share within cholesterol-lowering margarines and spreads, and Alpro has a similar position within soya milks. Allied Bakeries leads in the functional bread sector.

Functional foods and drinks are targeted at various health-related conditions associated with old age; the market is, therefore, anticipated to benefit from the ageing population profile in the UK. It will also benefit from the ongoing interest, not only among older persons but also among younger generations, in healthier eating. This interest continues to be supported by the Governments concern over the obesity 'epidemic, with future predictions showing a substantial proportion of adults and children becoming obese or overweight over the next decades. This situation is likely to continue to make health the major consideration of food and drink manufacturers, and the subject of the majority of their new product development (NPD) work.

However, advertising expenditure on functional foods fell by almost 40% in the year ending June 2007; this was principally accounted for by a large decline in promotional expenditure on yoghurt drinks, which accompanied their falling sales.

Sales of functional foods over the next 5 years (to 2011/2012) are predicted to increase at rates reflected by their traditional counterparts. This should not be unexpected, as many functional variants have now become mainstream.

• Executive Summary
• 1. Introduction
  • Background
  • Definition
  • Information Sources
• 2. Strategic Overview
• Market Dynamics and Segmentation
  • Factors Driving or Affecting The Market
  • Demographic Trends Age Profiles and Life Expectancy
  • Table 1: Trends in Life Expectancy by Sex (Years), 1900, 1971, 1976,1981, 1986, 1991, 1996, 2001 and 2003
  • Table 2: The Uk Population by Age Group (% and Million), 1971, 1981,1991, 2001, 2005, 2011, 2021 and 2031
  • Specific Health-Related Issues
  • The Regulatory Situation
  • Market Size
  • Table 3: The Functional Foods Market in Great Britain by Product Sector by Value at Current Prices (m at Rsp and %), 2004/2005, 2005/2006 and 2006/2007
• Distribution
• Competitive Structure
• Advertising
• The Consumer
• Market Forecasts
  • Table 4: The Forecast Functional Foods Market in Great Britain by Value at Current Prices (m at Rsp and %), 2007/2008-2011/2012
• 3. The Functional Foods Market
• Background
  • Health Benefits
  • Table 5: Health-Giving Components in Foods by Health Sector
• Market Size
  • The Total Market
  • Functional Foods Contents
  • Table 6: The Functional Foods Market in Great Britain by Product Sector and Brand by Value at Current Prices (m at Rsp and %), 2004/2005,2005/2006 and 2006/2007
  • Product Sectors
  • Breakfast Cereals
  • Yoghurts
  • Yoghurt Drinks
  • Margarines and Spreads
  • Soya Products
  • Cereal Bars
  • Bread
  • Pufa-Enriched Eggs
  • Milk and Cheese
  • Soft Drinks and Water
  • Manufacturers Shares
  • Table 7: Estimated Market Shares within Functional Foods by Value at Current Prices (m at Rsp and %), 2006/2007
• 4. Advertising and Promotion
• Main Media Advertising Expenditure
  • Table 8: Main Media Advertising Expenditure on Functional Foods by Brand (000), Years Ending June 2005-2007
• Promotional Activity
• Exhibitions and Conferences
• 5. Distribution
• Distribution by Retail Outlet
  • Table 9: Distribution of Major Foods with Functional Variants (%),2005/2006 and 2006/2007
• 6. An International Perspective
• The Global Market
  • Western Europe
  • The Us
  • Japan
• 7. Pest Analysis
  • Political and Economic Factors
  • Social and Demographic Factors
  • Technological Factors
• Functional Foods Contents
• 8. Consumer Dynamics
• Overview
  • Table 10: Summary of Research Findings regarding Consumers Habits and Attitudes Concerning Functional Foods and Related Health Issues (% of Respondents), August 2007
• Product Usage
  • Regular Eating of Probiotic Yoghurts
  • Table 11: Regular Eating of Probiotic Yoghurts (% of Respondents), August 2007
  • Regular Drinking of Probiotic Yoghurt Drinks
  • Table 12: Regular Drinking of Probiotic Yoghurt Drinks
  • (% of Respondents), August 2007
  • Regular Eating of Cholesterol-Lowering Spreads
  • Table 13: Regular Eating of Cholesterol-Lowering Spreads
  • (% of Respondents), August 2007
  • Regular Drinking of Soya Milk or Eating of Soya Yoghurts
  • Table 14: Regular Drinking of Soya Milk or Eating of Soya Yoghurts
  • (% of Respondents), August 2007
  • Regular Eating of Fortified Breads
  • Table 15: Regular Eating of Fortified Breads (% of Respondents), August 2007
• Attitudes towards Foods with Health Claims
  • Interest in Buying Foods with Health Claims
  • Table 16: Interest in Buying Foods with Health Claims
  • (% of Respondents), August 2007
  • Current Diet Versus Eating Foods with Health Claims
  • Table 17: Current Diet Versus Eating Foods with Health Claims
  • (% of Respondents), August 2007
  • Lack of Belief in Health Claims Made by Food and Drink Manufacturers
  • Table 18: Lack of Belief in Health Claims Made by Food and Drink
  • Manufacturers (% of Respondents), August 2007
• 9. Company Profiles
• Introduction
• Agnitrin Dairy Ltd
  • Profitability
  • Table 19: Financial Results for Agnitrin Dairy Ltd (000), Years Ending 31st December 2004 and 2005
• Allied Bakeries Ltd/Associated British Foods Plc
  • Profitability
  • Table 20: Financial Results for Associated British Foods Plc (m), Years Ending 17th September 2005, 16th September 2006 and 15th September 2007
  • Alpro (Uk) Ltd
  • Profitability
  • Table 21: Financial Results for Alpro (Uk) Ltd (000), Years Ending
• 31st December 2004-2006
  • Functional Foods Contents
• Coca-Cola Enterprises Ltd
  • Profitability
  • Table 22: Financial Results for Coca-Cola Enterprises Ltd (000), Years Ending 31st December 2004-2006
• Dairy Crest Group Plc
  • Profitability
  • Table 23: Financial Results for Dairy Crest Group Plc (000), Years Ending 31st March 2005-2007
• Danone Ltd
  • Profitability
  • Table 24: Financial Results for Danone Ltd (000), Years Ending
• 31st December 2004-2006
• W Jordan (Cereals) Ltd
  • Profitability
  • Table 25: Financial Results for W Jordan (Cereals) Ltd (000),Years Ending 29th February 2004 and 28th February 2005-2006
• Kellogg Marketing and Sales Company (Uk) Ltd
  • Profitability
  • Table 26: Financial Results for Kellogg Marketing and Sales
  • Company (Uk) Ltd (000), Years Ending 1st January 2005,
• 31st December 2005 and 30th December 2006
• Mcneil Nutritionals Ltd
  • Profitability
  • Table 27: Financial Results for McNeil Nutritionals Ltd (000), Years Ending 2nd January 2005,1st January 2006 and 31st December 2006
• Mller Dairy (Uk) Ltd
  • Profitability
  • Table 28: Financial Results for Mller Dairy (Uk) Ltd (000), Years Ending 31st December 2004-2006
• NESTL Uk Ltd
  • Profitability
  • Table 29: Financial Results for Nestl Uk Ltd (000), Years Ending 31st December 2004-2006
• Noble Foods
  • Profitability
  • Table 30: Financial Results for Deans Foods Group Ltd (000), Years Ending 30th September 2003-2005
• Onken Dairy (Uk) Ltd/Dr Oetker (Uk) Ltd
  • Profitability
  • Table 31: Financial Results for Dr Oetker (Uk) Ltd (000), Years Ending 31st December 2004-2006
• Quaker Oats Ltd
  • Profitability
  • Table 32: Financial Results for Quaker Oats Ltd (000), Years Ending 31st December 2003-2005
  • Functional Foods Contents
• Rachels Organic Dairy/Rachels Dairy Ltd
  • Profitability
  • Table 33: Financial Results for Rachels Dairy Ltd (000), Years Ending 31st December 2004-2006
• So Good International Ltd
  • Profitability
  • Table 34: Financial Results for So Good International Ltd (000), Years Ending 31st December 2004-2006
• Tropicana Uk Ltd
  • Profitability
  • Table 35: Financial Results for Tropicana Uk Ltd (000), Years Ending 31st December 2004-2005 and 30th December 2006
• Unilever Plc
  • Profitability
  • Table 36: Financial Results for Unilever Plc (m), Years Ending 31st December 2004-2006
• Warburtons Ltd
  • Profitability
  • Table 37: Financial Results for Warburtons Ltd (000), Years Ending 25th September 2004, 24th September 2005 and 30th September 2006
• Weetabix Ltd
  • Profitability
  • Table 38: Financial Results for Weetabix Ltd (000), Years Ending 25th December 2004, 31st December 2005 and 30th December 2006
  • Yakult Uk Ltd
  • Profitability
  • Table 39: Financial Results for Yakult Uk Ltd (000), Years Ending 31st December 2004-2006
  • The Yeo Valley Organic Group Ltd
  • Profitability
  • Table 40: Financial Results for The Yeo Valley Group Ltd (000), Years Ending 29th May 2005 and 28th May 2006
• Retailers Own Labels
• 10. The Future
• Forecasts 2007/2008 to 2011/2012
  • Table 41: The Forecast Functional Foods Market in Great Britain by Product Sector by Value at Current Prices (m at Rsp and %), 2007/2008-2011/2012
  • Functional Foods Contents
• 11. Further Sources
  • Associations
  • Trade Publications
  • Market Research Organisations
  • General Sources
  • Government Sources
  • Major Manufacturers
  • Bisnode Sources
  • Key Note Research
  • The Key Note Range of Reports