Chapter 1: Executive Summary
Scope and Methodology
Scope of Report
Exclusions
Report Methodology
Introduction
Nutraceuticals and Functional Foods
Governmental Regulation of Health Claims
Types of Health Claims
FDA Warns Marketers of Drug Claims
Global Market Context
Health Concerns on a Global Scale
Key Global Players
Global New Product Introduction Trends
Market and Marketer Overview
Total U.S. Sales Reach $30.7 Billion
Figure 1-1: U.S. Retail Sales of Functional Foods and Beverages, 2006-2008 (in billions of dollars)
Functional Foods Less Vulnerable to Economic Downturn
Growing Health Concerns and an Aging Population
Aging Boomers and Chronic Conditions
Market Projections: Sales to Hit $43 Billion by 2013
Competing in Functional Foods and Beverages
New Product Development
"High Vitamins," "Upscale" Gain as Functional Product Tags
Fiber and Whole Grains Galore
Probiotics and Prebiotics: Focus on Digestive Health
Half of Consumers Have Purchased High-Antioxidant Products
Omega-3 Fatty Acids Going Strong
Soy Products Proliferate
Superfruits: Juices and More
Beyond the Fruit: Chocolate, Tea and More
Organic Introductions
Products Targeting Women
Products Targeting Children
The Consumer
High Levels of Receptivity to Functional Foods
Figure 1-2: Distribution of Consumers by Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits," February 2009 (percent)
Purchasing Rates by Product Characteristics
Demographic Trends

Chapter 2: Introduction

Market Definition
Defining "Functional"
Exclusions
Nutraceuticals and Functional Foods
Governmental Regulation of Health Claims
Types of Health Claims
Health Claims That Meet Significant Scientific Agreement (SSA)
Qualified Health Claims
Structure/Function Claims
Nutrient Content Claims
FDA Warns Marketers of Drug Claims
Medical Organization Logos
Marketers Identify Functional Products
Key Nutrients and Ingredients
Vitamins
Minerals
Dietary Fiber
Probiotics and Prebiotics
Soy Protein and Soy Isoflavones
Omega-3 Fatty Acids Going Strong
Herbal and Botanical Ingredients
Table 2-1: U.S. Functional Food Market: Key Nutrients and Ingredients, 2009

Chapter 3: Global Market Context

Health Concerns on a Global Scale
Figure 3-1: Key External Drivers in the Global Food and Beverage Industry (percent)
Nutrition and Obesity
Key Global Players
Table 3-1: New Functional Product Introductions from Leading Global Marketers, 2004-2008 (number of product introduction events)
Global New Product Introduction Trends
Table 3-2: New Functional Product Introductions: By Global Region, 2004-2008 (number of product introduction events)
Figure 3-2: Share of New Functional Product Introductions: By Global Region, 2008 (percent)
Regional Trends
Table 3-3: Top Functional Product Categories: Asia/Pacific, 2004-2008 (number)
Table 3-4: Top Functional Product Categories: Europe, 2004-2008 (number)
Table 3-5: Top Functional Product Categories: Latin America, 2004-2008 (number)
Table 3-6: Top Functional Product Categories: Canada, 2004-2008 (number)
Opportunities in International Functional Food Markets
Latin America
Asia
Russia and Eastern Europe
Looking Ahead: Health Concerns Will Shape Marketing Strategies
Chapter 4: Market and Marketer Overview
Retail Sales and Market Share Trends
Total U.S. Sales Reach $30.7 Billion
Figure 4-1: U.S. Retail Sales of Functional Foods and Beverages, 2006-2008 (in billions of dollars)
Supermarkets at 39% of Sales
Figure 4-2: Share of U.S. Functional Food and Beverage Sales by Retail Channel, 2008 (percent)
IRI-Tracked Sales of Key Functional Categories at $10 Billion
Table 4-1: Mass-Market Sales in Key Functional Food and Beverage Categories, 2003-2008 (in millions of dollars)
Table 4-2: IRI-Tracked Sales of Key Functional Food and Beverage Product Categories, 2007 vs. 2008 (in millions of dollars)
Foods Account for 59% of IRI-Tracked Functional Product Sales
Table 4-3: IRI-Tracked Sales of Key Functional Food and Beverage Categories by Classification, 2003-2008 (in millions of dollars)
Figure 4-3: Share of IRI-Tracked Sales of Key Functional Food and Beverage Categories: By Classification, 2003-2008 (percent)
Market Outlook
Introduction: Food Spending in Times of Economic Crisis
Table 4-4: Quarterly Personal Consumption Expenditures on Food vs. Overall Goods & Services, 2006-2008 (in billions of dollars)
Table 4-5: Consumer Price Increases for Food, Food at Home and Food Away From Home: May 2008 through February 2009 (percent increase)
Figure 4-4: Consumer Distribution Based on Change in Financial Situation, 2008 (percent of U.S. adults)
Table 4-6: Attitudes Toward Healthier Foods and New Nutritional Products in Relation to Personal Financial Situation, 2008 (percent and index)
Functional Foods Less Vulnerable to Economic Downturn
Changes in Spending Habits
Rising Food Costs
Figure 4-5: Consumer Price Index for Selected Food and Beverage Categories: 1999-2008
Table 4-7: U.S. Functional Food and Beverage Market: Percentage Change in Dollar vs. Volume Sales by Product Category, 2007 vs. 2008 (in millions of dollars)
Growing Health Concerns and an Aging Population
Obesity and Health
Consumers Seeking "Wellness"
Aging Boomers and Chronic Conditions
Table 4-8: Projected U.S. Population by Age Bracket: 2007, 2010 and 2015 (in thousands)
IFIC Study on Diet and Health Connections
Packaged Facts Survey Confirms High Consumer Interest in Functional Foods
Table 4-9: Percent of U.S. Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Special Nutritional Benefits, 2009
Table 4-10: Percent of U.S. Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content, 2009
Table 4-11: Percent of U.S. Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns, 2009
Table 4-12: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits," February 2009 (percent of U.S. adults)
Figure 4-6: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits," February 2009 (percent of U.S. adults)
Ramping Up Research & Development
The Role of Convenience
Lessons from Organic Market
Table 4-13: Consumer Attitudes About Buying Organic Foods and Beverages, 2009 (percent of U.S. adults)
Traditional Supplements Still Going Strong
Figure 4-7: U.S. Retail Sales of Nutritional Supplements: 2003, 2007 and 2012 (in millions of dollars)
Competition from Restaurants and Take-Out
Market Projections: Sales to Hit $43 Billion by 2013
Table 4-14: Projected U.S. Retail Sales of Functional Foods and Beverages: 2008-2013 (in millions of dollars)
Marketer Overview
Competing in Functional Foods and Beverages
Highlighting Naturally Health-Beneficial Ingredients in Existing Product Portfolios
Extending Existing Brands with Fortified Products
Acquiring Smaller Marketers Active in Functional Products
Launching New Functionally Oriented Brands
The Competitors
Table 4-15: Selected U.S. Functional Food and Beverage Marketers, Brands and Products, 2009

Chapter 5: New Product Development

Trends in New Product Introductions
Added Nutrients Fuel IRI New Product Pacesetters
"High Vitamins," "Upscale" Gain as Functional Product Tags
Table 5-1: Number of U.S. Functional Food and Beverage New Product Introductions: By Package Tag/Claim, 2006-2008
Table 5-2: Number of U.S. Functional Food and Beverage New Product Introductions: By Package Tag/Claims for Selected Product Classification, 2008
Functional Drinks Category Leads in Product Introductions
Table 5-3: Number of U.S. Functional Food and Beverage New Product Introductions: By Product Category, 2003-2008
Functional Ingredient Trends
Fiber and Whole Grains Galore
Probiotics and Prebiotics: Focus on Digestive Health
Good Bacteria Growing in Popularity
Probiotic Claims Require Careful Handling
Prebiotics Encourage Friendly Flora
Half of Consumers Have Purchased High-Antioxidant Products
Superfruits: Juices and More
Table 5-4: New Product Introductions with Select Superfruits, 2004-2008 (number)
Table 5-5: Purchasing of Selected "Superfruit" Beverage Types Within The Past 12 Months, 2009 (percent of U.S. adults)
Beyond the Fruit: Chocolate, Tea and More
Omega-3 Fatty Acids
Flax Seed as Source of Omega-3
Omega-3 Market Growth in Question
Despite Questions, Omega-3 Maintains Mainstream Appeal
Soy Products Proliferate
Organic Introductions
Figure 5-1: Levels of Agreement with Statement, "I Am Usually Willing to Pay More for Organic Foods, 2009 (percent of U.S. adults)
Targeted Functional Product Types
Condition-Specific Products Aimed at Boomer Market
Heart Disease and Cholesterol
Beauty Foods Fight Signs of Aging
Figure 5-2: Levels of Agreement with Statement, "I Like the Idea of Foods and Beverages That Provide Beauty Benefits," 2009 (percent of U.S. adults)
Digestive Health and Immunity
Performance-Enhancing Products—Not Just for Athletes
Energy: Drinks and More
Brain Health and Memory
Products Targeting Women
Products Targeting Children

Chapter 6: Competitor Profiles

Groupe Danone
Company Overview
Company Tightening its Focus on Health, Core Brands
Table 6-1: Selected U.S. Adult Demographics for Use of Dannon Yogurt, 2008 (index)
Functional Products: Activia and Beyond
Table 6-2: Selected U.S. Adult Demographics for Use of Stonyfield Farm Yogurt, 2008 (index)
Table 6-3: U.S. Mass-Market Sales of Select Dannon Products, 2007-2008 (in millions of dollars)
Company Banks on Information, Innovation
International Expansion Also Health-Focused
Kellogg Co.
Company Overview
An Emphasis on Innovation
International Presence
Kashi: Extending the Brand
Table 6-4: Mass-Market Sales of Selected Kellogg Functional RTE Cereals, 2007-2008 (in millions of dollars)
Table 6-5: Selected U.S. Adult Demographics for Use of Kashi GoLean Cold Cereal, 2008 (index)
Table 6-6: Selected U.S. Adult Demographics for Use of Kashi Bars, 2008 (index)
Functional Snacks and Beverages
Kraft Foods, Inc
Company Overview
Health and Wellness Are Core Strategies
Table 6-7: Selected U.S. Adult Demographics for Use of Kraft South Beach Frozen Pizza, 2008 (index)
Table 6-8: Selected U.S. Adult Demographics for Use of Balance Bar, 2008 (index)
Breaking New Ground in Healthy Foods
Nestlé SA
Company Overview
Health/Wellness—And Indulgence
Nutrition in Developing Nations
Bars, Dinners and Beverages
Table 6-9: Selected U.S. Adult Demographics for Use of Original PowerBar, 2008 (index)
Table 6-10: Selected U.S. Adult Demographics for Use of Boost, 2008 (index)
PepsiCo, Inc.
Company Overview
Not Just a Soda Company
SoBe
Table 6-11: Selected U.S. Adult Demographics for Use of SoBe Functional Drinks, 2008 (index)
Naked Juice
Table 6-12: Mass-Market Sales of Naked Juice Functional Beverages, 2007-2008 (in millions of dollars)
Tropicana Stumbles Due to Packaging Debacle
Propel Fitness Water
Quaker Oats Touting Functional Value Foods
Table 6-13: Selected U.S. Adult Demographics for Use of Quaker Oats Oatmeal, 2008 (index)
Nature’s Path Organic
Company Overview
Function and Taste
Superfoods: Focus on Hemp
Gluten-Free: A Serendipitous Development
Environmental Responsibility and Cause Marketing
Eat Well, Do Good
Table 6-14: Mass-Market Sales of Selected Nature’s Path Categories/Brands, 2007-2008 (in millions of dollars)

Chapter 7: The Consumer

High Levels of Receptivity to Functional FoodsFigure 7-1: Distribution of Consumers by Level of Agreement with Statement, "Rather Than Vitamin/ Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits," February 2009 (percent)Figure 7-2: Distribution of Consumers by Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits," February 2009 (percent)
Demographics to Functional Food ReceptivityTable 7-1: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Gender, 2009 (percent) Table 7-2: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Gender, 2009 (percent)Table 7-3: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Age Bracket, 2009 (percent)Table 7-4: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Age Bracket, 2009 (percent) Table 7-5: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Household Composition, 2009 (percent) Table 7-6: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Household Composition, 2009 (percent) Table 7-7: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Highest Level of Educational Attainment, 2009 (percent) Table 7-8: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Highest Level of Educational Attainment, 2009 (percent) Table 7-9: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Household Income Bracket, 2009 (percent) Table 7-10: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Household Income Bracket, 2009 (percent) Table 7-11: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Race/Ethnicity, 2009 (percent) Table 7-12: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Race/Ethnicity, 2009 (percent)Table 7-13: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Locale of Residence, 2009 (percent) Table 7-14: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Locale of Residence, 2009 (percent) Table 7-15: Level of Agreement with Statement, "Rather Than Vitamin/Supplement Pills, I Prefer to Buy Foods or Beverages with Specific Nutritional Benefits": By Region of Residence, 2009 (percent) Table 7-16: Level of Agreement with Statement, "I Am Buying More Foods/Beverages Because of Their Specific Nutritional Benefits": By Region of Residence, 2009 (percent) Purchasing Rates by Product Characteristics Table 7-17: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns, 2009Table 7-18: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content, 2009 Table 7-19: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits, 2009 Women Are the Prime ConsumersTable 7-20: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Gender, 2009Table 7-21: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Gender, 2009 Table 7-22: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Gender, 2009 Varied Patterns by Age Table 7-23: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Age Bracket, 2009 Table 7-24: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Age Bracket, 2009 Table 7-25: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Age Bracket, 2009Patterns by Household Composition Table 7-26: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Household Composition, 2009 Table 7-27: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Household Composition, 2009 Table 7-28: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Household Composition, 2009 Strong Correlation with Higher Education and Income Table 7-29: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Highest Level of Educational Attainment, 2009 Table 7-30: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Highest Level of Educational Attainment, 2009 Table 7-31: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Highest Level of Educational Attainment, 2009 Table 7-32: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Household Income Bracket, 2009 Table 7-33: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Household Income Bracket, 2009 Table 7-34: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Household Income Bracket, 2009 African-Americans and Asian-Americans as Prime Consumers Table 7-35: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: White Non-Hispanics, 2009 Table 7-36: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Race/Ethnicity, 2009Table 7-37: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Race/Ethnicity, 2009 Urban/Suburban and Coastal Skews Table 7-38: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Locale of Residence, 2009 Table 7-39: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Locale of Residence, 2009 Table 7-40: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Locale of Residence, 2009Table 7-41: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Their Nutritional Benefits in Relation to Specific Health Conditions or Concerns: By Region of Residence, 2009 Table 7-42: Percent of Consumers Who Have Purchased Food or Beverage Products in the Last 12 Months Because of Specific Nutritional Content: By Region of Residence, 2009 Table 7-43: Percent of Consumers Who Have Purchased Beverage Products in the Last 12 Months Because of Their Special Nutritional Benefits: By Region of Residence, 2009