Are Functional Foods Recession Proof?

good-bellySales of functional foods and beverages are starting to taper off. 

As the recession bites into grocery spending, shoppers may be focusing more on the essentials, and cutting back on these pricier and “fancier,” fortified extras.

A new report by Packaged Facts  indicates that the U.S. retail market for functional foods and beverages is up 6% — but that’s compared to an 8% gain in 2007. This slowdown is likely due to maturity of the market and economic pressures, the analysts concluded. I wonder if there’s a bit of backlash over glorified claims and increased skepticism — and maybe a return to real food.

Even though the market has not proven to be recession proof, the analysts at Packaged Facts said functional products have some advantages that could prevent them from being as vulnerable as other specialty products. They said shoppers are more focused on maintaining their health in the poor economy, and they may justify spending on functional products as a way to combine food with nutrients that they’d otherwise buy in the form of more expensive dietary supplements.  A Packaged Facts survey of 2,600 U.S. adults found that 55% prefer to buy foods for nutritional benefits rather than supplements. 

Yogurt remains the largest functional category; other best-selling functional products include energy drinks, blended fruit drinks, smoothies and soy milk.  The analysts predict the revenue for functional products will not drop dramatically and believe shoppers will make other trade-offs, including cutting back on restaurant meals.  They expect functional foods and beverages will ramp back up as the economy improves to reach $43 billion by 2012.



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