Functional Food Market Size & Growth| Industry Forecast 2028

Functional Foods Market Forecast to 2028 - COVID-19 Impact and Global Analysis By Product Type (Bakery and Confectionery, Dairy and Frozen Desserts, Sweet and Savory Snacks, Breakfast Cereals, and Others), Category (Organic and Conventional), and Distribution Channel (Supermarkets and Hypermarkets, Convenience Stores, Online Retail, and Others)

  • Report Code : TIPRE00018000
  • Category : Food and Beverages
  • Status : Published
  • No. of Pages : 150
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The functional foods market was valued at US$ 233,620.18 million in 2021 and is projected to reach US$ 418,439.42 million by 2028. It is expected to grow at a CAGR of 8.7% from 2021 to 2028.

Functional foods are whole, fortified, enriched, or improved foods that give health benefits and essential nutrients (e.g., vitamins and minerals) when consumed in adequate amounts as part of a varied diet regularly. Functional foods have unique health benefits beyond the typical daily intake of nutrients, such as increased bone health, cholesterol management, and improved heart health. Further, functional foods market expansion is expected to be driven by the rising demand for nutritious and fortifying food additives. Food manufacturers are fortifying their products with healthy additions such as omega-3 fatty acids, fiber, vitamins, and minerals. The goal of adding the additives mentioned above into the food industry is to raise the nutritional value of food items.

Asia Pacific held the largest share of the global functional foods market in 2020 and Asia Pacific is expected to grow significantly over the forecast period. An increase in consumer interest and a better understanding of the immunity-boosting properties of appropriate diet and dietary habits are among the primary drivers fueling the expansion of functional foods in the region. Further, fast food intake is causing harmful changes in health conditions and increasing the incidence of chronic diseases such as diabetes and obesity. Consumers are spending more money on nutritional foods to boost their general health as they become more aware of these health issues, increasing the region's functional foods market growth.

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Functional Foods Market: Strategic Insights

Market Size Value inUS$ 233,620.18 million in 2021
Market Size Value byUS$ 418,439.42 million by 2028
Growth rateCAGR of 8.7% from 2021 to 2028.
Forecast Period2021- 2028
Base Year2021
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Impact of COVID-19 Pandemic on Functional Foods Market

The COVID-19 pandemic affected many industries due to nationwide lockdowns, business shutdowns, and supply chain disruptions. There was a mixed impact of the pandemic on the functional foods market. Initially, due to lockdowns and business shutdowns, manufacturers suffered from a shortage of raw materials and labor, which affected their production and supply. However, as people became more health-conscious, they preferred health-boosting products. Functional foods experienced significant demand as they help improve bone health, manage cholesterol levels, and heart health. Moreover, the demand for functional or fortified foods has expanded throughout many regions due to positive and intense marketing by corporations and recommendations from health specialists such as doctors, nutritionists, and others. For instance, according to the Functional Food & Beverage 2020 Report from the Hartman Group, based on April research, 31% of consumers are taking more supplements, and 29% are consuming more functional foods/beverages due to the pandemic. Furthermore, many nations are vaccinated, and governments have relaxed the restrictions imposed on manufacturing and trade. Thus, the COVID-19 pandemic significantly impacted the functional foods market.

Functional Foods Market Breakdown – by Region

  • Sample PDF showcases the content structure and the nature of the information with qualitative and quantitative analysis.

Market Insights

Rising Demand for Healthy Snacking 

Due to recent changes in consumer behavior, the worldwide snacks market is shifting away from oily-spicy snacks and toward healthier, sugar-free, nutrient-rich, and low-oil variants packaged in small quantities. This is boosting the growth of the functional foods market as these foods are typically high in important nutrients, including vitamins, minerals, healthy fats, and fiber. New-age consumers seek nutritious, on-the-go, and affordable snacking options that suit their daily nutritional demands while appealing to their taste buds. For instance, according to a recent Mondelez survey, over 59% of adults worldwide prefer to consume multiple small meals throughout the day rather than a few larger ones. Consumers are increasingly interested in functional snacks for energy, focus, and relaxation, particularly in the form of bars and meal replacement foods. Furthermore, incorporating a personalized nutrient premix into a snack food is an effective strategy to incorporate beneficial nutrients such as omega-3 fatty acids, vitamins, and minerals. Functional snacks not only fill the stomach but also provide a longer-lasting cure to hunger. These ingredients supply the building blocks that the body requires while eating nutrient-dense foods. As a result, people will not be as hungry throughout the day. This factor is expected to provide several key trends that will impact the global functional foods market over the coming years.

Category Insights

Based on category, the functional foods market is segmented into organic and conventional. The conventional segment held a larger market share. The organic segment is projected to grow at a faster CAGR during the forecast period. The increasing demand of consumers for organic functional food has motivated the companies and cultivators to promote organic farming, which is driving the segment. Manufacturers are developing organic functional food to cater to the increasing demand from consumers. For instance, Nature's Path Foods, a US manufacturer of packaged certified organic breakfast cereal, reported stellar growth for its Organic Optimum Power Breakfast Cereal. Thus, increased demand for organic foods due to the rise in health awareness, as well as awareness about the harmful effects of pesticides, is driving the organic functional food segment.

Product Type Insights

Based on product type, the functional foods market is segmented into bakery and confectionery, dairy and frozen desserts, sweet and savory snacks, breakfast cereals, and others. The dairy and frozen desserts segment is expected to hold the largest market share in the global functional foods market over the forecast period. Fermented dairy products provide health benefits and are widening the range of functional dairy products. Along with this, the nutritional benefits provided by milk play a significant role in controlling chronic diseases. Fortified milk contains various nutrients, and it is a good source of vitamin A and D and helps prevent iron deficiency anemia in children. It also helps improve bone health as fortified milk is a good source of calcium, phosphorous, and vitamin D. Frozen dessert is basically a dessert made by freezing liquids, semi-solids, and sometimes solids. Functional frozen desserts are providing health benefits to the consumers as they include various functional ingredients such as prebiotics and probiotics. Thus, the health benefits offered by functional frozen desserts are fueling the segment’s growth in the global functional foods market.

Functional Foods Market, by Category – 2020 and 2028

Functional Foods Market, by Category – 2020 and 2028
  • Sample PDF showcases the content structure and the nature of the information with qualitative and quantitative analysis.

Distribution Channel Insights

Based on distribution channel, the functional foods market is segmented into supermarkets and hypermarkets, convenience stores, online retail, and others. The supermarkets and hypermarkets segment accounted for the largest market share in the functional foods market in 2020, while the online retail segment is expected to be the fastest-growing segment during the forecast period. The e-commerce boom has effectively supplied significant opportunities to online retail sales of functional food products. Following the commencement of the pandemic, leading manufacturers are more actively accessing popular e-commerce platforms with a mix of tempting prices, robust sales and support, and an upgraded shopping experience for consumers. This aspect is expected to help online platforms become one of the fastest-growing distribution channels globally. These factors are driving the online retail channel segment of the functional foods market.

The key players operating in the functional foods market include Unilever; Clif Bar & Company.; Laird Superfood; Abbott; Danone S.A.; GENERAL MILLS, INC.; HILDUR; Nestlé;  Kellogg Company; and Good Source Foods, LLC. These players are engaged in developing innovative products to meet the emerging consumer trends. Moreover, they are involved in mergers & acquisitions, business expansion, and partnerships to expand their market share globally.

Report Spotlights

  • Progressive industry trends in the functional foods market to help players develop effective long-term strategies
  • Business growth strategies adopted by developed and developing markets
  • Quantitative analysis of the functional foods market from 2019 to 2028
  • Estimation of global demand for functional foods
  • Porter's five forces analysis to illustrate the efficacy of buyers and suppliers operating in the industry
  • Recent developments to understand the competitive market scenario
  • Market trends and outlook, as well as factors driving and restraining the growth of the functional foods market
  • Assistance in the decision-making process by highlighting market strategies that underpin commercial interest, leading to the market growth
  • The size of the functional foods market size at various nodes
  • Detailed overview and segmentation of the market, as well as the functional foods industry dynamics
  • Size of the functional foods market in various regions with promising growth opportunities
Report Coverage
Report Coverage

Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends

Segment Covered
Segment Covered

Product Type, Category, and Distribution Channel

Regional Scope
Regional Scope

North America, Europe, Asia Pacific, Middle East & Africa, South & Central America

Country Scope
Country Scope

Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, United Arab Emirates, United Kingdom, United States

Frequently Asked Questions

Can you list some of the major players operating in the global functional foods market?

The major key players operating in the global functional foods market include Abbott Laboratories; Clif Bar and Company; Danone S.A.; General Mills, Inc; Good Source Foods, LLC; Hildur Functional Foods Pvt. Ltd; Kellogg Company; Laird Superfood; Nestlé S.A.; and Unilever Plc.

Which region held the largest share of the global functional foods market?

In 2020, Asia Pacific dominated the global functional foods market. The region is expected to continue its dominance during the forecast period. Trends in this market are influenced by the increased demand for nutrient-rich foods as well as the rising trend of healthy snacking across the region. The increased prevalence of chronic diseases across the region is also driving the demand for functional foods to support the healthier lifestyle of the consumers.

Based on category, why does the organic segment account for the fastest-growing share in the global functional foods market?

The market for the organic segment is expected to grow at a faster pace during the forecast period due to the increased concern regarding personal health, the environment, and animal welfare. The growing environmental concerns over the use of harmful chemicals in agriculture and farming and its harmful effects on consumers’ health have led to an increased demand for organic functional foods.

What is driving the functional foods market?

The increased demand for nutrient-rich foods as well as the increased prevalence of chronic diseases across the world is driving the growth of the functional foods market. Along with this, the COVID-19 pandemic has had a significant impact on consumer buying behavior and eating habits. There has been an increase in health concerns and the growing awareness regarding the consumption of natural and functional food post-pandemic which is also driving the growth of the functional foods market. Along with this, the rising trend of healthy snacking across the world is also increasing the demand for functional foods.

Based on product type, which segment dominated the global functional foods market in 2020?

In 2020, the dairy & frozen dessert segment accounted for the largest functional foods market share, based on product type. Consumers are increasingly consuming dairy products as it is important for building healthy bones and for maintaining a healthy weight. Yogurt is the most popular functional dairy product and is an excellent source of protein, calcium, and potassium. Also, there is a growing trend of fortification of dairy products which further drives the growth of the segment.

Based on product type, which segment held the fastest CAGR in the global functional foods market during the forecasted period?

Based on product type, the sweet and savory snacks segment was the fastest-growing segment in the market. The growing trend of healthy snacking across regions such as North America, Europe, and the Asia Pacific is driving the demand for savory snacks across the world. Consumers are increasingly interested in functional snacks for energy, focus, and relaxation, particularly in the form of bars and meal replacement foods.

The List of Companies - Functional Foods Market

  3. DANONE S.A.
  9. NESTLé S.A.

The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.

  1. Data Collection and Secondary Research:

As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.

Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.

  1. Primary Research:

The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.

For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.

A typical research interview fulfils the following functions:

  • Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
  • Validates and strengthens in-house secondary research findings
  • Develops the analysis team’s expertise and market understanding

Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:

  • Industry participants: VPs, business development managers, market intelligence managers and national sales managers
  • Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.

Below is the breakup of our primary respondents by company, designation, and region:

Research Methodology

Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.

  1. Data Analysis:

Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.

  • 3.1 Macro-Economic Factor Analysis:

We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.

  • 3.2 Country Level Data:

Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.

  • 3.3 Company Profile:

The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.

  • 3.4 Developing Base Number:

Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.

  1. Data Triangulation and Final Review:

The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.

We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.

We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.

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