Take a walk through any large grocery store or specialty shop, or browse online food product websites, and you will find a wide variety of protein powders, energy drinks, power bars, probiotics, vitamin-enriched waters, and calcium-fortified beverages designed to support bone health. These items are enhanced with nutrients, phytochemicals, botanicals, or dietary supplements, and are referred to in the industry as functional foods. Functional foods are those that offer potential health benefits beyond basic nutrition, aiming not only to fulfill daily dietary needs but also to contribute to disease risk reduction and the promotion of overall well-being.
While the U.S. Food and Drug Administration (FDA) is responsible for overseeing functional foods, it has yet to establish an official definition for the term. According to the FDA, “Terms like ‘functional foods’ or ‘nutraceuticals’ are commonly used in the marketplace and are regulated under the Federal Food, Drug, and Cosmetic Act, even though they lack specific legal definitions.” Nevertheless, the market for these foods is expanding rapidly, with many experts predicting that functional foods will experience significant growth in the near future. As American consumers become increasingly health-conscious, they are seeking natural ingredients and nutrient-rich foods and beverages. Companies entering the functional foods sector are responding to this trend by consistently launching new products.
Kara Nielsen, a food and beverage trend expert, noted in a recent Packaged Facts report that “due to growing consumer awareness and interest in medicinal foods, they are gaining traction in the natural food and beverage market, where functional ingredients derived from real sources (rather than laboratories) are in high demand.” A report from Technavio indicates that the global market for functional foods and beverages is expected to grow steadily, with a compound annual growth rate (CAGR) of nearly 8% from 2017 to 2021, while the U.S. market is projected to see a CAGR of 6.53% during the same timeframe. This trend is being fueled by an aging population concerned about health maintenance, rising healthcare costs, and a growing interest in the connection between diet and well-being.
Functional foods have transitioned from a niche market to a key focus for some of the largest food corporations. Campbell’s CEO, Denise Morrison, expressed the company’s intention to expand into faster-growing segments like organic and functional foods when they acquired Pacific Foods for $700 million earlier this year. PepsiCo purchased probiotic beverage maker KeVita last fall and introduced its Tropicana Essentials Probiotics line earlier this year, marking the first brand to offer probiotics in the mainstream juice aisle. Additionally, the venture capital arm of General Mills led a $6.5 million Series D investment in March to support Farmhouse Culture, a startup specializing in fermented and probiotic foods and beverages.
Major players in the industry are expected to continue developing new functional food products as research and development progresses. They are also on the lookout for potential acquisitions to enhance profits and stock performance, with recent partnerships and purchases indicating a focus on agile entrepreneurial startups for innovative ideas. The Japanese and Russians are recognized for their pioneering contributions to the development and implementation of functional foods for improved digestion and performance. The first commercial functional food in the U.S. may have emerged in 1924 when Morton Salt Company began adding iodine to its products at the government’s request to address iodine deficiency in the Great Lakes region, historically known as the “goiter belt.” This iodization of salt, inspired by a Swiss practice, helped mitigate the issue.
Oatmeal has played a crucial role in raising public awareness of functional foods, as highlighted by Carol Culhane, president of International Food Focus Ltd. in Toronto. Oats contain beta-glucan, a soluble fiber that has been shown to lower low-density lipoprotein (LDL) cholesterol, often referred to as “bad” cholesterol. With the release of this information, public interest in the research and discussion surrounding functional foods grew. “It took many clinical trials to validate the data,” she shared with Food Dive. In 1997, the FDA approved the claim that beta-glucan could reduce serum cholesterol, marking a significant milestone.
While some initial functional food products were successful, not all made a lasting impact in the market. In the late 1990s, for instance, Kellogg introduced its Ensemble line of cholesterol-lowering foods containing “natural soluble fiber” derived from psyllium wheat husk but discontinued it within a year due to poor sales attributed to generic packaging and merchandising issues. However, successes in the functional food market have increased as marketing, packaging, and distribution practices have improved. General Mills launched its Fiber One cereal in 1985, and Danone introduced Activia probiotic yogurt in France in 1987, bringing it to the U.S. in 2006. Both products remain popular, with Fiber One capitalizing on the high-fiber food trend and Activia overcoming initial resistance to the concept of “friendly bacteria,” which was more familiar to European consumers.
Since then, a vast array of functional foods have made their way into the U.S. market, with some manufacturers carefully navigating label claims related to health and wellness to comply with Federal Trade Commission regulations. The FTC mandates that any health claims must be scientifically substantiated, and functional food products cannot legally claim to cure diseases. Additionally, health claims on food or beverage labels must pass FDA scrutiny, a process that can be time-consuming and costly. Companies must conduct thorough research and safety reviews of functional food substances and petition the FDA for GRAS (Generally Recognized As Safe) status for their intended uses.
Consumer acceptance remains the pivotal factor for the market, and Culhane emphasized that long-term success relies on personal experiences that motivate lifestyle changes. While lycopene—an antioxidant found in tomatoes, watermelon, and other foods—”can certainly reduce prostate tumors,” she noted that it would not yield immediate results for someone experiencing prostate issues in their 50s. “They would need to start in their 20s,” she cautioned. “The challenge is to encourage young adults to consider how their dietary choices can enhance their health.”
Culhane also warned that not all functional foods provide maximum benefits as typically consumed, and serving sizes may affect their efficacy. “Often, the serving size and daily dosage are impractical,” she explained in an email. “One needs to consume about 1 quart of soy milk daily to achieve the cholesterol-lowering benefits of soy protein. Similarly, approximately 3 cups of oatmeal are required daily to reap the cholesterol-reducing benefits of beta-glucan.”
Today, consumers can find buttery spreads—such as Lipton’s Take Control and Raisio Group’s Benecol—containing plant stanol and sterol esters that help reduce the risk of heart disease, along with high-fiber breads and baked goods, like Schwebel’s Roman Meal 100% Whole Wheat and Kellogg’s Kashi Soft-Baked Cookies, which also assist in lowering cholesterol. Stanols and sterols are plant-derived compounds found in vegetable oils and cereals that inhibit the absorption of dietary cholesterol, which helps to lower total and LDL cholesterol levels in the bloodstream. These compounds are increasingly being included in functional foods, such as Minute Maid Premium Heartwise orange juice, which contains Cargill’s trademarked CoroWise plant sterols, and Joseph’s Bakery flatbreads incorporating ADM’s CardioAid plant sterols.
Other functional food innovations are underway, as scientists extract beta-glucan from mushrooms to enhance immune function, produce fiber-rich inulin flour from chicory root, and investigate various beneficial nutrients from algae. While algal-derived products can promote human health, researchers note challenges in quantifying benefits and understanding how harvesting, storage, and food processing techniques affect the nutritional value of algae. The emerging field of phycology—the scientific study of algae—offers opportunities for those interested in developing new functional food ingredients.
“I believe the future of functional foods is trending toward a deeper understanding of the chemistry and composition of native or raw foods,” said Kristi Crowe-White, Ph.D., an associate nutrition professor and registered dietitian at the University of Alabama, in an interview with Food Dive. “We have a solid grasp on about 20 compounds that are well-integrated, but that’s just the beginning. There are many more to explore. It’s an exciting time to be involved in this field.” As functional foods continue to evolve, products like calcium citrate 630 mg with vitamin D3 are also gaining traction, highlighting the growing consumer interest in fortified foods that support overall health.