In its new report The US Phood Market, Packaged Facts, a division of MarketResearch.com, estimates that the US market was worth around $24.8bn in retail sales in 2006 - up 9.5 per cent from 2005. Packaged Facts dubs functional foods as 'phoods' and functional beverages as 'bepherages', on the grounds that their health promoting effects are pharmaceutical-like. However the healthy ingredients used in functional foods are regulated as foods, and are not subject to the same testing and approval process as pharmaceutical drugs. Since in today's climate health is a major marketing angle for food predicts, and they are being touted as delivery systems of some of the same nutrients as can also be delivered through supplements - such as lutein from eggs, omega-3 from nuts. For this reason, the report authors say that they are "almost certainly siphoning some sales away from that market". The concept of functional foods is particularly interesting to food and drink manufacturers in categories that are nearing maturity, such as juice and breakfast cereal. "In such cases, marketers can use medically beneficial formulations to strengthen brand differentiation, expand market share, bring new users into the fold, and increase consumption among established users. "They can also reinvigorate lagging brands, create opportunities for line extensions, and compete more effectively with store brands." Amongst the ingredients that are likely to see the greatest increase in demand are glucosamine, sterol esters, probiotics, whey protein, omega-3 fatty acids, CoQ10, soy isoflavones, lutein and lycopene. Herbs likely to grow in popularity include garlic, green tea, saw palmetto, ginseng and black cohish. The report predicts that the market could be worth $39bn by 2011. However although this is said to be a conservative estimate, ongoing expansion may not be without obstacles. In December 2006 the FDA initiated a consultation on whether greater regulation of functional foods and beverages is required, in response to fears from some quarters that the science is not enough to support the claims. Although the FDA has given no indication of the next step, Packaged Facts said: "…Its typical hesitance in granting health claims could indicate that it may very well adopt more restrictive procedures". Packaged Facts' parameters for the phood and bepherage market are that products that have a value beyond basic nutrition by virtue of "medically-beneficial ingredients" - be they inherently healthy (like oats or whole grain breads) or designer (like soy protein bars). It excludes foods that are not otherwise nutritionally-legitimate, such as high-fat cheesecake that says its calcium content can reduce osteoporosis risk. Moreover, it includes product formats that are seen as nutritionally desirable like orange juice or yoghurt, but not white pasta or candy.
