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The functional food market is projected to increase by USD 127.46 billion, at a CAGR of 7.66% between 2023 and 2028.
The APAC region witnesses a rapid surge in demand for functional food, particularly in developing nations like China, India, and Indonesia. The escalation in demand is fueled by the popularity of functional and packaged foods, coupled with the increasing disposable incomes of consumers. Major contributors to the APAC market include China, Japan, South Korea, and India. China stands out in global volume production. The region's growing health consciousness, particularly among millennials, drives the inclination toward functional foods, addressing early aging signs, wrinkles, and chronic inflammation. Additionally, the rising vegan population contributes to increased consumption. Abbott Laboratories plays a key role with offerings like Ensure High Protein Nutritional Pudding and Similac Soy Isomil, aligning with global trends and forecasts.
The Market shows an accelerated CAGR during the forecast period.
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Rising health awareness is notably driving market growth. People who are more concerned about their health are actively looking for foods that offer added health advantages rather than just nutrients. The demand for functional foods that provide additional health benefits such as better immunity, weight management, digestion, and heart health has surged as a result of this trend. Instead of using food to treat illnesses, consumers are becoming increasingly interested in using foods to prevent diseases. Further, companies are responding to this growing health consciousness by incorporating these ingredients into their products. They are widely available in the market; they include everything from vitamins and minerals to plant extracts and bioactive substances.
Additionally, businesses are spending money on research and development (R&D) to find novel functional food ingredients that have specific health benefits. Thus, increasing health awareness among consumers has led to higher consumption of safe, functional food ingredients, which will propel the growth of the market during the forecast period.
The emergence of personalized nutrition is an emerging trend shaping the market growth. The emergence of personalized nutrition is poised to significantly fuel the market growth and trends of the market by catering to individualized health needs and preferences. Personalized nutrition involves tailoring dietary recommendations and functional food formulations based on an individual's unique characteristics, including genetic makeup, lifestyle, and health goals. Further, as personalized nutrition gains prominence, the global market stands to benefit from a more engaged and discerning consumer base. Companies that can effectively communicate the personalized benefits of their products and integrate cutting-edge nutritional science are likely to capture a larger market share.
Moreover, the synergy between personalized nutrition and food reflects a growing understanding that health and wellness are inherently individual, driving the industry toward a more tailored and consumer-centric approach. Therefore, the abovementioned factors will positively impact the growth of the global market during the forecast period.
The high cost of functional foods is a significant challenge hindering the market growth. In general, they are expensive owing to their distribution cost, storage cost, and transportation parameters. The complex extraction process adds to the cost. They are priced 30% to 500% higher than comparable conventional foods. Elevated production costs associated with sourcing and incorporating specialized functional ingredients contribute to higher overall product prices. This can discourage price-sensitive consumers, limiting market accessibility to a broader demographic. The premium pricing may create a perception that they are a luxury or niche product, deterring a substantial portion of the population from integrating them into their regular diets. Affordability remains a key factor for widespread adoption, especially in regions where economic constraints influence purchasing decisions.
Additionally, the high cost may result from extensive R and D efforts to formulate and validate the health benefits. Manufacturers often invest in scientific studies and clinical trials to substantiate health claims, and these expenses can contribute to the overall cost structure. Therefore, the high cost of functional food will reduce its adoption among consumers and will negatively impact the growth of the market during the forecast period.
Consumers are becoming more health-conscious and are actively seeking functional dairy products that offer additional health benefits beyond basic nutrition. Functional dairy items are perceived as a convenient way to incorporate essential nutrients into daily diets. The demand for protein-rich diets has driven the growth of dairy products fortified with additional proteins, such as whey or plant-based proteins. Thus, the increasing health awareness, demand for protein-enriched options, emphasis on digestive health with probiotics, calcium, and vitamin-fortified products for bone health, and the innovation of functional dairy beverages will propel the growth of the dairy products segment in the global market during the forecast period.
The market share growth by the offline segment will be significant during the forecast period. Supermarkets and hypermarkets are the most popular and preferred distribution channels, given the convenience of availing a wide assortment of products under one roof. Some of the major companies in this segment include Walmart, Tesco, Target, and others. Factors such as discounts and an enhanced shopping experience enabled by attractive shelf displays entice consumers to purchase these food items from supermarkets and hypermarkets.
The offline segment was the largest and was valued at USD 159.12 billion in 2018.
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Further, on-trade distribution channels include bars, pubs, gyms, and restaurants. Sports and energy drinks are used as mixers by consumers who prefer alcoholic beverages to get a sparkling and fizzy outcome. The distribution of functional foods and beverages through this channel is expected to grow during the forecast period, with an increasing number of young people inclining toward a partying culture. As these foods and beverages mask the effects of alcohol, they are finding growing use in pubs, clubs, and restaurants. The continued preference for in-store shopping experiences, consumer desire to physically examine products before purchase, the role of traditional retail channels in providing immediate accessibility to a wide range of products, and the growing number of offline retail stores worldwide will foster the growth of the offline segment of the global market during the forecast period.
APAC is estimated to contribute 39% to the growth of the global market during the forecast period
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Technavio’s analysts have elaborately explained the regional market trends and analysis and drivers that shape the market during the forecast period. In APAC, countries such as India, New Zealand, and Taiwan are driving the demand for them. The availability of online distribution channels drives the sales of functional foods in APAC. The high penetration of the Internet and smartphones has increased the online shopping of functional foods that contain value-added nutrition. The abovementioned factors are likely to propel the growth of the market in APAC during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in market forecasting and market growth analysis.
This research and growth and forecasting market report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including Abbott Laboratories, Archer Daniels Midland Co., Arla Foods amba, Campbell Soup Co., Cargill Inc., Conagra Brands Inc., Danone SA, General Mills Inc., Good Source Foods Inc., Hildur Functional Foods Pvt. Ltd., Kellogg Co., Laird Superfood Inc., Meiji Holdings Co. Ltd., Mondelez International Inc., Nestle SA, PepsiCo Inc., Raisio plc, Roquette Freres SA, The Coca Cola Co., Tyson Foods Inc., and Unilever PLC
The Market analysis and report of qualitative and quantitative analysis of companies have been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The Market is experiencing significant growth driven by increasing demand for nutritional and fortifying food additives among the geriatric population. With rising medical costs, both government agencies and nongovernmental organizations are promoting the consumption of them enriched with essential nutrients such as omega-3 fatty acids, carotenoids, and fiber to combat prevalent health concerns like cardiovascular disease. They play a crucial role in promoting cardio health, addressing conditions like congestive heart failure and artery hardening, while also supporting sports enthusiasts with products tailored to their nutritional needs. Antioxidant vitamins, nucleotides, synbiotics, and fatty acids are among the key ingredients enhancing the nutritional profile of functional foods, contributing to improved health outcomes and reduced risks of infectious diseases.
This market research report forecasts market growth by revenue at global, regional & country levels and provides a market growth and forecasting analysis of the latest trends and growth opportunities from 2018 to 2028.
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Functional Food Market Scope |
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Report Coverage |
Details |
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Page number |
165 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 7.66% |
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Market Growth 2024-2028 |
USD 127.46 billion |
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Market structure |
USD Fragmented |
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YoY growth 2023-2024(%) |
6.8 |
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Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 39% |
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Key countries |
US, China, Japan, Germany, and UK |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Abbott Laboratories, Archer Daniels Midland Co., Campbell Soup Co., Cargill Inc., Conagra Brands Inc., Danone SA, General Mills Inc., Good Source Foods Inc., Kellogg Co., Laird Superfood Inc., Meiji Holdings Co. Ltd., Mondelez International Inc., Nestle SA, PepsiCo Inc., Raisio plc, Roquette Freres SA, The Coca Cola Co., and Unilever PLC |
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Market dynamics |
Parent market analysis, Market Growth and Trends Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Distribution Channel
7 Market Segmentation by Product Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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