By Paul Yamaguchi

Are You Ready for Functional Foods?

Or Are You Keeping Your Head In The Sand?

The functional food category is still uncertain territory for some food and beverage manufactures. Unclear terminology, market uncertainty and lack of consumer interest are just a few areas of concern.Regardless of these concerns, 59 percent of companies surveyed by Prepared Foods (Chicago) responded that they are currently developing or marketing functional foods. 10 percent of companies surveyed responded that they would develop functional foods in the next couple of years. The survey shows that the majority of companies are engaging in or are showing interest in developing functional foods and rightfully so, as the functional foods market is growing much faster than dietary supplements and is a $60 billion global market. You can’t keep your head in the sand any longer. Although developing a new product is often challenging and carries a high price, particularly in territories you haven’t been to before, it doesn’t have to be.

Functional Foods 101

Developing functional foods isn’t rocket science; it requires imagination. If you look around you, there are lots of conventional foods that have potential as functional foods if you apply a little creative thought. Yogurt, for instance, has been a functional food since its creation centuries ago. But instead of changing the fruit on a top or a bottom of the containers or shrinking the package size, you can add a new strain of bacteria that may fend off allergy symptoms, prevent cavities or even boost energy levels. These strains are widely available in Japan and Europe. People buy yogurt anyway, why not give them a healthier choice instead of additional flavors? Another idea is to add calcium, dietary fiber or even vitamins to hamburgers or hot dogs. Mothers would love to choose them for their kids over regular burgers and dogs; needless to say, taste must be good.

There are many functional ingredients out there which have already been proven safe and effective. Consumers feel comfortable consuming foods with functional ingredients that they are already familiar with and if they know what they can do for the body. Minerals, fiber and vitamins are a good place to start. You can’t make a food out of healthy ingredients but you can add a healthy ingredient to a food. All you need is some imagination to give consumers a healthier choice.

Large Corporations Dominate the Market

Below is a list of the top ten best-selling functional foods in Japan and their sales, function and functional ingredients. These Top 10 best selling functional foods share 13 percent of the $16 billion Japanese fortified functional foods and 38 percent of the $5.1 billion FOSHU health claim functional foods market. (Functional Foods & FOSHU Japan 2004) As you can see, big brands rule the functional foods market.

In Japan, people choose and take functional foods in stride and both consumers and the industry are benefiting.

Top 10 Best Selling Functional Foods in Japan

	Product/brand name (Brand Manuf.)	Food form	Sales in 2003	Function/Functional Ingredient	FOSHU status
1	Yakult Brand (Yakult Honsya)	Liquid yogurt	$ 600 million*	GI health/probiotics	yes
2	Bulgaria yogurt (Meiji Milk)	Yogurt/Liquid	370 million	GI health/probiotics	yes
3	Xylitol gum (Lotte Co.)	Chewing gum	350 million	Dental health/xylitol	yes
4	Econa cooking oil(Kao Co.)	Cooking oil	215 million	Bodyfat/diacylglycerol	yes
5	Healthya tea (Kao Co.)	Green tea	170 million	Body fat/tea catechin	yes
6	Kenko Salala oil (Ajinomoto)	Cooking oil	95 million	Cholesterol/plant sterols	yes
7	Banso reicha (Yakult Honsya)	Tea	90 million	Diabetes/guava polyphenols	yes
8	Amino vital (Ajinomoto)	Water/gel	85 million*	Energy/amino acids	no
9	Amino supli (Kirin Beverages)	Water/gel	65 million*	Energy/amino acids	no
10	Healthy resetta oil (Nisshin Oillio)	Cooking oil	65 million	Body fat/medium chain fatty acid	yes

Source: Nikkei Business, Paul Yamaguchi & Associates, Inc. *Estimate