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MP15504
MAPS : Functional Foods: March 2004

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This report covers: probiotic yoghurts, yoghurt drinks, functional foods, health-related factors, health foods, heart disease, osteoporosis, digestive system, regulatory factors, genetically modified foods, health-giving components in foods by health sector, gastrointestinal, cardiovascular, skeletal,breast, prostate cancers, hormonal, joints, vision, pregnancy, breakfast cereals, cereal bars, yoghurts, yoghurt drinks, milk, and , soya milk, bread, ready meals, fruit juices, smoothises, and, eggs, cheese, the, US, Japapn, healthy diet, retailer own-label,

Companies covered include: General Mills, Kelloff, W, Jordan, cereals, Nestlé, Quaker Oats, Weetabix, probiotic yoghurts, yoghurt drinks, Danone, Müller, Ocean Spray, Onken, Vandemoortele, Yakult Honsha, margarines, and, spreads, McNeil Consumer Nutritionals, Unilever Bestfoods, Matthews, functional drinks, PepsioCo, Skane Dairies, Marks & Spencer, Tesco,

EXECUTIVE SUMMARY

Executive Summary
The functional foods market principally involves the fibre/mineral/ vitamin-fortified breakfast cereals, probiotic yoghurts and yoghurt drinks containing 'friendly' bacteria, and cholesterol-lowering margarines containing plant stanols or sterols sectors. However, the functional market has been expanding over the years to also include variants within the bread, ready meals, fruit juices and bottled water sectors. A further category of significant and rapid growth recently has been soya milk. The main target of these products is to address the problems associated with skeletal, heart and digestive health that become more prevalent with increased age.
The market grew by 10.8% in value terms for the 12-month period ending October 2003, after a substantial 24.7% growth in the previous year to October 2002. Breakfast cereals, yoghurts and yoghurt drinks, and margarines and spreads accounted for around 87% of the market's value over the period. A high proportion of individual functional foods are sold through the major grocery multiples, while the major manufacturers tend to be international companies that can afford the substantial research and development costs involved. Examples of manufacturers are Unilever Bestfoods, Johnson & Johnson, Kellogg, Nestlé, Danone, Müller, PepsiCo and AB Foods, although some smaller companies are also important in the market.
Advertising expenditure fell significantly in 2002, after peaking in 2001, but stabilised in the 12 months ending June 2003. A feature, however, is the high proportion of advertising expenditure in support of the functional variants of margarines and spreads, and to a lesser extent yoghurts, in comparison with the total expenditure within these segments.
Although growth in the functional foods market declined considerably for the year to October 2003, it was still well above that of equivalent traditional products. Growth is predicted to continue in the medium term at a higher level than that of traditional products, owing to continued consumer interest in, and government support for, healthy eating and living; an ageing population profile which will benefit from such foods; and the recognised evolution towards functionality in foods.
However, in the longer term, market growth is predicted to decline to around 5% by 2008, the end of the 5-year forecast period, assuming that few new functional products of major success in sales terms will be launched. Growth may, nonetheless, return to its current higher level if further substantial products do appear within the period to 2008.

TABLE OF CONTENTS

Executive Summary
 
1. Introduction
 
Introduction
 
Background
 
Definition
 
Sources of Information
 
2. Strategic Overview
 
FACTORS DRIVING OR AFFECTING THE MARKET
 
Demographic, Social and Economic Factors
 
Table 1: The UK Population by Age Band (million), 1971-2021
 
Figure 1: Percentage of the UK Population Aged Under 16 and Over 65 (%), 1971-2021
 
Table 2: Trends in Life Expectancy by Sex (years), 1900-2021
 
Figure 2: Trends in Life Expectancy by Sex (years), 1900-2021
 
Health-Related Factors
 
Heart Disease
 
Osteoporosis
 
Digestive System
 
Regulatory Factors
 
Genetically Modified Foods
 
ACTIVE HEALTH-GIVING COMPONENTS OF FOODS
 
Health-Giving Components in Foods by Health Sector
 
Gastrointestinal
 
Active Components
 
Cardiovascular
 
Active Components
 
Skeletal
 
Active Components
 
Breast, Prostate Cancers, etc.
 
Active Components
 
Hormonal
 
Active Components
 
Joints
 
Active Components
 
Vision
 
Active Components
 
Pregnancy
 
Active Components
 
THE TOTAL MARKET FOR FUNCTIONAL FOODS
 
Table 3: The Functional Foods Market by Sector by Value (£m and %), Years Ending October 2001-2003
 
DISTRIBUTION
 
MAJOR MANUFACTURERS
 
ADVERTISING EXPENDITURE
 
The CONSUMER
 
MARKET FORECASTS
 
Table 4: The Forecast UK Functional Foods Market by Value (£m), 2004-2008
 
Figure 3: The Forecast UK Functional Foods Market by Value (%), 2004-2008
 
3. The Functional Foods Market
 
OVerview
 
BREAKFAST CEREALS AND CEREAL BARS
 
Breakfast Cereals
 
Cereal Bars
 
YOGHURTS AND YOGHURT DRINKS
 
Yoghurts
 
Yoghurt Drinks
 
MARGARINES AND SPREADS
 
MILK AND SOYA MILK
 
BREAD
 
READY MEALS
 
FRUIT JUICES AND SMOOTHIES
 
BOTTLED WATER
 
EGGS
 
CHEESE
 
Table 5: Retail Sales of Functional Foods and Drinks by Sector by Value (£m and %), Years Ending October 2001-2003
 
Figure 4: Sales of Selected Functional Foods by Value (£m), Years Ending October 2001-2003
 
4. Advertising and Promotion
 
main media advertising expenditure
 
Table 6: Main Media Advertising Expenditure on Functional Food Brands (£000), Years Ending December 1999-2002 and June 2003
 
Table 7: Main Media Advertising on Selected Foods Sectors and Proportions Represented by Functional Products (£m), Years Ending December 1999-2002 and June 2003
 
Exhibitions and Conferences
 
5. Distribution
 
Overview
 
Table 8: Sales for Selected Foods That Offer Functional Food Variants With Over 70% of Sales Through Grocery Multiples by Retail Outlet (%), 2002
 
Table 9: Sales for Selected Drinks That Offer Functional Food Variants With Over 85% of Sales Through Grocery Multiples by Retail Outlet (%), 2002
 
6. An International Perspective
 
Introduction
 
The US
 
Japan
 
Europe
 
7. PEST Analysis
 
POLITICAL Factors
 
ECONOMIC Factors
 
SOCIAL Factors
 
TECHNOLOGICAL Factors
 
8. Consumer Dynamics
 
Introduction
 
Table 10: Summary of Attitudes Towards Healthy Eating and Purchase of Functional Foods, November 2002 and October 2003
 
Healthy Diet
 
I Believe I Eat Healthy Foods And Have A Healthy Diet
 
I Would Like To Eat Healthy Foods More Often
 
Table 11: Attitudes Towards Healthy Foods and Diet (% of respondents), 2003
 
knowledgeAbility and Confusion about healthy eating
 
I Believe I Am Knowledgeable About Healthy Eating
 
I Am Confused About What I Should Eat To Stay Healthy
 
Table 12: Knowledgeability and Confusion About Healthy Eating (% of respondents), 2003
 
Concern about osteoporosis and heart health
 
I Am Concerned About Bone Debilitating Conditions Such As Osteoporosis, And Am Interested In Foods Claiming To Address This
 
I Am Concerned About Heart Health And Maintaining Healthy Cholesterol Levels, And Am Interested In Foods Claiming To Assist In This
 
Table 13: Concern about Osteoporosis and Heart Health and Healthy Cholesterol Levels (% of respondents), 2003
 
Concern About The Digestive System and the Risk of Cancer
 
I Am Concerned About The Health Of My Digestive System, And Am Interested In Foods Claiming To Target This
 
I Am Concerned About the Risk of Cancers, And Am Interested In Foods Claiming to Reduce The Risk
 
Table 14: Concern About Healthy Digestive Systems and Cancer (% of respondents), 2003
 
Purchasers of Cholesterol-Lowering Margarines
 
I Regularly Buy Cholesterol-Lowering Margarines
 
I Have Occasionally Bought Cholesterol-Lowering Margarines
 
Table 15: Purchasers of Cholesterol-Lowering Margarines (% of respondents), 2003
 
Purchasers of Probiotic Yoghurts and Yoghurt Drinks
 
I Regularly Buy Probiotic Yoghurts Or Yoghurt Drinks
 
I Have Occasionally Bought Probiotic Yoghurts Or Yoghurt Drinks
 
Table 16: Purchasers of Probiotic Yoghurts or Yoghurt Drinks (% of respondents), 2003
 
Purchasers of Fibre/Vitamin/Mineral-Fortified Bread and Soya Milk
 
I Sometimes Buy Fibre/Vitamin/Mineral-Fortified Bread
 
I Sometimes Buy Soya Milk
 
Table 17: Purchasers of Fibre/Vitamin/Mineral Bread and Soya Milk (% of respondents), 2003
 
ConFidence in existing Diet
 
I Feel That I Get All I Need In The Way Of Healthy Food From My Existing Diet Without Eating Foods With Health Claims
 
Table 18: Respondents Who Are Confident That Their Existing Diet Provides All Needs Without Eating Foods With Health Claims (% of respondents), 2003
 
9. Major Manufacturers and Suppliers
 
Introduction
 
breakfast Cereals and Cereal Bars
 
General Mills
 
Kellogg
 
W Jordan (Cereals) Ltd
 
Nestlé
 
Quaker Oats
 
Weetabix
 
probiotic yoghurts and yoghurt drinks
 
Danone
 
Müller
 
Ocean Spray
 
Onken
 
Vandemoortele
 
Yakult Honsha
 
Margarines and Spreads
 
McNeil Consumer Nutritionals
 
Unilever Bestfoods
 
Matthews Foods
 
functional drinks
 
PepsiCo
 
Skane Dairies
 
Other functional foods manufacturers
 
Retailer own-label
 
Marks & Spencer
 
Tesco
 
10. The Future
 
continued interest in healthy eating
 
greying population
 
Maturing Sales
 
Evolving Market
 
Table 19: The Forecast UK Functional Foods Market by Sector by Value (£m), 2004-2008
 
Figure 5: The Forecast UK Functional Foods Market by Sector by Value (£m), 2004-2008
 
11. Further Sources
 
Trade Associations
 
Publications
 
General Sources
 
Government Sources
 
Other Sources
 
Bonnier Sources

Text © 2004 Key Note

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Last updated by Amanda Porteous May 2004

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