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The Functional Foods and Beverages Market is projected to increase by USD 132.84 billion from 2022 to 2027. The market is estimated to grow at a CAGR of 7.45% between 2022 and 2027. In 2017 the market size was valued at USD 240.20 billion.
Product innovations is a key factor driving the functional foods and beverages market growth. Manufacturers of functional foods and beverages are laying special emphasis on balancing functional benefits and flavours in the market to match the changing consumer preferences. Brands are also focusing on sugar-free and low-calorie formulations as these are in high demand. Advances in technology have enabled the development of products that mask the unpleasant taste of some functional ingredients. For example, effective microencapsulation allows manufacturers to hide the bitter taste of amino acids and other ingredients. Over the past few years, the market has also witnessed growth because of better packaging and innovation. Several companies are using innovative packaging designs to market their products. Unlike paper, other alternatives are flexible and take various shapes of the product.
This market is segmented by product into functional foods and functional beverages. The functional foods segment will contribute 40% to the growth of the market. With consumers gradually moving toward healthier alternatives, the demand for healthy foods is increasing. This is primarily because of an increase in health conditions such as digestive disorders and common lifestyle diseases such as diabetes, obesity, hypertension, and heart ailments. The organic functional foods segment is registering exponential growth as consumers across all regions have started opting for products made using organic ingredients.
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The increasing use of natural ingredients and botanicals in functional drinks is notably driving the market growth, although factors such as product ingredient labelling may impede the market growth. Our researchers analyzed the data with 2022 as the base year and the key drivers, trends, and challenges. A holistic analysis of drivers, trends, and challenges will help stakeholders in the value chain refine their marketing strategies to gain a competitive advantage.
Trend
The increasing use of natural ingredients and botanicals in functional drinks is the primary trend in the functional foods market. The market is witnessing the launch of more functional drinks containing natural ingredients. Vendors in the market are experimenting with unique ingredients and are introducing numerous assortments of natural functional drinks.
Scheckter's Organic Energy is a 100% organic energy drink. It contains organic Brazilian guarana, organic raw Brazilian coffee seed, ginkgo Biloba, organic pomegranate juice, organic ginseng, organic elderberry, organic lemon juice, organic raw fair trade sugar, and natural spring water. The introduction of natural ingredient-based functional drinks is expected to have a positive impact on the growth of the market in focus during the forecast period.
Challenge
Product ingredient labeling is the major challenge hindering the functional foods market growth. Skepticism regarding the effectiveness and health benefits of functional foods and beverages can inhibit market growth. Research has been conducted to validate the claims made by the manufacturers of these foods and beverages regarding their effectiveness and to check for health risks associated with the consumption of these products.
Some studies have shown that many of the ingredients found in popular energy drinks have side effects and contain more than the recommended amount of potentially harmful chemicals. Studies have also stated that the mixing of functional beverages formulated to boost energy (such as those containing caffeine) with those formulated to lower blood pressure (such as those containing taurine) can cause side effects in the body. Such factors are expected to hinder the growth of the global foods and beverages market during the forecast period.
Customer Landscape
The report includes the adoption lifecycle of the functional foods market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Functional Foods and Beverages Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the functional foods market.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has 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 vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The functional foods and beverages market segmentation by distribution channel consists of offline and online. Supermarket and hypermarket Supermarkets and hypermarkets are the most popular and preferred distribution channels for functional foods and beverages, given the convenience of availing a wide assortment of products under one roof. Furthermore, factors such as discounts and an enhanced shopping experience enabled by attractive shelf displays entice consumers to purchase functional foods and beverages from supermarkets and hypermarkets.
The functional foods and beverages market segmentation by product consists of functional foods and functional beverages. The market share growth of the functional foods segment will be significant during the forecast period. The market is driven by product and ingredient innovations in the functional food segment. The increasing demand for functional foods among the ageing population, health-conscious adults, and parents concerned about their children's health are factors driving the growth of the functional foods segment during the forecast period.
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The functional foods segment was valued at USD 154.54 billion in 2017 and continued to grow until 2021. The demand for healthy foods is increasing with consumers gradually moving toward healthier alternatives. The organic functional foods segment is registering exponential growth as consumers across all regions have started opting for products made using organic ingredients due to their higher nutritional profile than their conventional counterparts. Thus, increased awareness about the benefits of a healthy diet will trigger the demand for functional foods during the forecast period.
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APAC is estimated to contribute 33% to the growth of the global functional foods market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The functional foods and beverages market in APAC is expected to witness the highest growth rate during the forecast period, owing to the high demand for these products in this region. China, Japan, South Korea, and India are the major contributors to the market in APAC. In terms of volume production, China is one of the key countries in the region. In these countries, there is an increasing inclination toward functional foods and beverages owing to the rise in health consciousness, especially among millennials.
The outbreak of COVID-19 resulted in lockdowns in major countries such as Malaysia, Indonesia, China, Japan, and India, which led to the partial or complete shutdown of production facilities in APAC. However, the rising demand for e-commerce channels is shifting consumer preference toward the online purchase of personal care products. E-commerce channels allow price-sensitive consumers to compare prices online and find the ideal deal. Thus, the regional functional foods and beverages market is expected to witness steady growth during the forecast period.
The report forecasts on the functional foods market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
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Functional Foods And Beverages Market Scope |
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Report Coverage |
Details |
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Page number |
171 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 7.45% |
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Market growth 2023-2027 |
USD 132.84 billion |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
6.52 |
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Regional analysis |
APAC, North America, Europe, Middle East and Africa, and South America |
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Performing market contribution |
APAC at 33% |
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Key countries |
US, China, Japan, Germany, and UK |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Archer Daniels Midland Co., Arla Foods amba, Campbell Soup Co., Danone SA, Del Monte Pacific Ltd., Fonterra Cooperative Group Ltd., General Mills Inc., Hildur Functional Foods Pvt. Ltd., Kellogg Co, Keurig Dr Pepper Inc., Nestle SA, Otsuka Holdings Co. Ltd., PepsiCo Inc., Suntory Holdings Ltd., T.C. Pharmaceutical Industries Co. Ltd., The Coca Cola Co., The Kraft Heinz Co., Tyson Foods Inc., Unilever PLC, and Zbiotics Inc. |
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Market dynamics |
Parent market analysis, 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 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 Product
7 Market Segmentation by Distribution Channel
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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