Take a walk through any large grocery store or specialty market—or browse online food product sites—and you’re likely to encounter a wide variety of protein powders, energy drinks, power bars, probiotics, vitamin waters, and calcium-fortified beverages designed to support bone health. These items are enhanced with nutrients, phytochemicals, botanicals, or dietary supplements, and are categorized in the industry as functional foods. Functional foods are those that can have a positive impact on health beyond basic nutrition; they aim to do more than just fulfill daily nutrient needs—they may also help reduce disease risk and promote overall well-being. Although the U.S. Food and Drug Administration (FDA) is responsible for regulating functional foods, it has yet to issue an official definition.
The FDA states, “Terms such as ‘functional foods’ or ‘nutraceuticals’ are commonly used in the marketplace. These foods are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act, even though they are not explicitly defined by law.” Nevertheless, the demand for these foods is on the rise, and many experts predict that functional foods will see substantial growth in the near future. As U.S. consumers become more health-conscious, they are increasingly seeking natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods market are responding by regularly launching new offerings.
Kara Nielsen, an expert in food and beverage trends, commented in a recent Packaged Facts report on cutting-edge wellness, “With growing consumer awareness and interest in medicinal foods, functional ingredients sourced from nature are becoming more sought after in the natural food and beverage sector.” According to a report by Technavio, the global functional foods and beverages market is expected to grow steadily, with a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021. During the same period, analysts predict a CAGR of 6.53% for the U.S. market. This trend is driven by an aging population focused on maintaining health, rising medical costs, and increased consumer interest in the link between healthier eating and well-being.
Functional foods are transitioning from a niche market to a mainstream one, with some of the largest food companies showing interest. For instance, Campbell’s CEO Denise Morrison highlighted the company’s desire to venture into fast-growing areas like organic and functional foods with its acquisition of Pacific Foods for $700 million earlier this year. PepsiCo acquired the probiotic beverage company KeVita last fall and launched its Tropicana Essentials Probiotics line, becoming the first brand to introduce probiotics to the mainstream juice aisle. Additionally, General Mills’ venture capital unit led a $6.5 million Series D investment in Farmhouse Culture, a startup focused on fermented and probiotic foods and beverages.
Major players in the functional foods sector are expected to continue rolling out new products as research and development progresses. They remain vigilant for potential acquisitions to enhance profits and share prices, often looking towards smaller, agile startups for innovative opportunities. Historically, Japan and Russia were pioneers in developing functional foods that aid digestion and enhance performance. The first commercial application of a functional food in the U.S. occurred in 1924 when the Morton Salt Company began adding iodine to its products at the government’s request to address a regional iodine deficiency linked to goiter.
Oatmeal significantly raised public awareness about the potential benefits of functional foods, as highlighted by 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. The FDA approved the claim that beta-glucan could reduce serum cholesterol in 1997, marking a pivotal moment in the functional food industry.
While some early product launches were successful, others failed to gain traction. For instance, Kellogg’s Ensemble line of cholesterol-lowering foods, which featured “natural soluble fiber” from psyllium husk, was discontinued within a year due to poor sales, attributed to generic packaging and marketing issues. However, as marketing, packaging, and distribution strategies improved, the success of functional foods grew. General Mills launched its Fiber One cereal in 1985, and Danone introduced its popular Activia probiotic yogurt in France in 1987, later bringing it to the U.S. in 2006. Both products continue to thrive today, with Fiber One tapping into the high-fiber trend and Activia successfully overcoming initial consumer skepticism about “friendly bacteria.”
Since then, a diverse range of functional foods has flooded the U.S. market, although some manufacturers must navigate the fine line of health claims to avoid potential issues with the Federal Trade Commission (FTC). The FTC mandates that health claims must be scientifically substantiated, and functional food products cannot legally claim to cure diseases. Additionally, health claims on food labels must undergo regulatory examination by the FDA, which can be a lengthy and costly process. Companies must also conduct safety reviews and research on functional food substances and petition the FDA for Generally Recognized as Safe (GRAS) status.
Consumer acceptance remains a crucial element for the market, and Culhane emphasizes that long-term success relies on personal experiences that encourage lifestyle changes. For example, while lycopene—a powerful antioxidant found in tomatoes, watermelon, and other foods—can reduce prostate tumors, it requires long-term consumption for effectiveness. “The challenge is to make young adults aware of how their dietary choices can impact their health,” she noted.
Culhane also warned that not all functional foods provide maximum benefits based on typical consumption methods; serving sizes can significantly affect efficacy. For instance, to achieve the cholesterol-lowering benefits of soy protein, one would need to consume a quart of soy milk daily, or approximately three cups of oatmeal to realize the benefits of beta-glucan.
Today, consumers can purchase buttery spreads, such as Lipton’s Take Control and Raisio Group’s Benecol, which contain plant stanols and sterols to help lower heart disease risk, alongside high-fiber breads and baked goods like Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies to manage cholesterol. Stanols and sterols are plant compounds naturally found in vegetable oils and cereals that inhibit the absorption of dietary cholesterol, thereby reducing total and LDL cholesterol levels in the blood.
These compounds are increasingly integrated into functional foods. For instance, Minute Maid Premium Heartwise orange juice features Cargill’s trademarked CoroWise plant sterols, while Joseph’s Bakery flatbreads include ADM’s CardioAid plant sterols. Other functional food innovations are underway, as scientists explore beta-glucan extraction from mushrooms for immune support, develop fiber-rich inulin flour from chicory root, and investigate beneficial nutrients from algae.
While algae-derived food products offer health advantages, researchers acknowledge challenges in quantifying 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—presents new avenues for those interested in developing functional food ingredients. Kristi Crowe-White, Ph.D., an associate nutrition professor and registered dietitian at the University of Alabama, remarked, “The future of functional foods is moving toward a deeper understanding of the chemistry and composition of native or raw foods. We have a solid foundation of around 20 compounds that are well established, but there are many more to explore. It’s an exciting time to be in this field.”
As the industry evolves, consumers may find themselves asking, “Is calcium citrate the best option for their dietary needs?” This question reflects a growing awareness of the importance of calcium in bone health and the need for effective supplementation. Functional foods are poised to play an essential role in meeting these nutritional demands as research continues to uncover the benefits of various ingredients.