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Functional Food Companies Seize Opportunity in This Growing Market

Melina-Druga

What are functional foods?  According to the Mayo Clinic, a functional food has “a potentially positive effect on health beyond basic nutrition…. While functional foods may help promote wellness, they can’t make up for poor eating habits.”

Examples of functional foods include some dietary supplements, fortified beverages and whole grains.  The demand for functional foods have increased as people have discovered the link between diet and health, the International Food Information Council Foundation reports.

 

number-1Fruit Essentials

One of the first companies to bring fruit based functional foods to the market.

 

number-2Organika

Sells products that have been certified by a government agency.

 

number-3Happy Family

Leading brand in organic snacks for infants and toddlers.

 

 

1. Fruit Essentials

“Our products are jam-packed with healthy nutrients. Ready to nourish your busy lifestyle!”
– Fruit Essentials

 

Founded in 2000, the company was originally a marketing agency name Synergetic Marketing.  In 2003, it switched to branding and worked with a small number of companies.  It also changed its name to Synergetic Marketing and Distribution.  A year later, the Fruit Essentials line was created.  In 2006, Fruit Essentials became its own company, Fruit Essentials Inc., and began working full time in the health and wellness industry.

All products manufactured by Fruit Essentials contain fruit-based ingredients.  It is the first company to do so, according to Fruit Essentials.  It uses a “less is more” philosophy when creating products and use minimally processed fruit extracts.

Ingredients used include cranberry seed oil, cranberry seed flour and ellagic acid extract, according to the company.

The functional food market is estimated to reach $3 billion by 2020, according to Hexa Research.  The high number of people with chronic diseases such as obesity, diabetes and high blood pressure is fueling the growth.  The largest market is the United States, consuming 75% of the world’s functional foods.  The rest of the world will account for future growth.  Europe will be the exception, however.  Strict laws regulating health foods has hampered the European market.

 

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2. Organika

“Here to serve, inspire, and contribute to the good health and well-being of people all around the world for generations to come.” – Organika Twitter page

 

Founded in 1990, Organika is available in 26 countries.  It manufactures 560 natural health products.  Company founder Tom Chin was inspired to started Organika when he suffered from kidney stones and found a natural method to eliminate the stones and avoid surgery.   Organika began with four products.  The company is headquartered in Richmond, British Columbia, and sells supplements and functional foods.

In 2004, Organika became one of the first companies to be certified by Health Canada and also became a leader in the Natural Product Numbers obtained from Canada, according to the company.

Globally, the probiotics market is forecasted to grow at a compound annual growth rate (CAGR) of 7% between 2016 and 2023, according to Global Market Insights.  In 2015, the market was valued at $36.6 billion.  The largest segment of the probiotics market is yogurts.  This is because of increased awareness that the intestines contribute to 70% of immunity.

In addition, prebiotic dairy products are forecasted to reach $49 billion in 2023, according to Global Market Insights, while dietary supplements will increase at a CAGR of 7.4% until 2023.

 

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3. Happy Family

“Happy Family is the leading provider of premium organic foods for babies, toddlers & children of all ages!”  –  Happy Family Twitter page

Founded in 2003 as a healthy alternative to manufactured baby foods.  It launched with a frozen food collection that was sold out of “gourmet” garages.  According to the company, the frozen food line did not sell as well as it had hoped, so it switched to trying to discover a product that sells in the baby food aisle, so in 2007 Happy Family introduces a probiotic infant cereal.  Two years later, food in pouches were introduced, and the company was featured in an American Express small business commercial.

In 2011, Happy Family won two awards:  Target’s Vendor of the Year, and Ernst and Young’s Entrepreneur of the Year for New York.  The following year, it won three more:  Crain’s New York Business’s “40 Under 40”,  the Inner City Award from ICIC (Initiative for a Competitive Inner City), recognized as one of the “Fastest Women-Owned/Led” companies by Inc. magazine where it spent two years on the 500 list as “Fastest Growing Organic Food Company” list.

Today, the company’s products are sold in 15,000 stores.  In addition to baby food, the company also manufactures prebiotics, probiotics and super grains, and it is headquartered in New York City.

Between 2015 and 2019, the global baby food and infant formula market is forecasted to grow at a CAGR of 7.69%, according to Sandler Research, PRNewswire Reports.  Technavio, meanwhile, forecasts the market will grow at a CAGR of 11.51% through 2020.

 

In the U.S., the market leader is Gerber, but its market share is slipping.  It had a 60% market share in 2011, but by 2015, it had fallen to 49%, according to Euromonitor International.

 

The organic baby food market was worth $1.2 billion in 2014, according to Future Market Insights.  In 2020, it is forecasted to reach $3.5 billion, a 19.5% CAGR.

 

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