Many consumers are adopting holistic attitudes to health, wellness, and nutrition. They no longer seek to just “eat healthy” and now choose to eat for overall health and wellness. According to IRI data, 37% of consumers say “food is a better medicine than medicine.” Increasingly, more and more consumers want foods and beverages to be multi-functional and nutrient-dense.
What are functional foods?
Depending on who you ask, functional foods have varying definitions. Nutritionists and dietitians separate functional foods into two categories:
- Conventional foods are natural, whole foods that are rich in nutrients such as fruits, vegetables, whole grains, nuts, seeds, and legumes.
- Modified functional foods include minimally processed foods that are fortified or modified with additional functional ingredients that potentially have beneficial effects on health. Likewise, reducing ingredients that could be considered harmful or not helpful for health can also be regarded as a functional food—for example, lowering the levels of sugar or salt in a food or beverage.
Adding nutrients to food products is not new. Milk has been fortified with Vitamin D since the early 1900s. Vitamin D aids in strengthening bones, preventing bone diseases like rickets, and other essential health benefits.
The process of making yogurt has always required probiotics to thicken the milk and for many years, yogurt manufacturers have also included strains that help maintain a healthy digestive tract and boost the immune system.
Why functional foods and ingredients are on the rise
We can’t talk about functional foods and beverages without mentioning the pandemic’s impact on consumers’ heightened interest in health and wellness. A recent global study showed that 42% of respondents had increased their purchases of functional or fortified foods and beverages during the pandemic. The consumer mindset adopted a holistic and proactive attitude to wellness before the pandemic, however, the pandemic fundamentally accelerated the desire for foods that improve nutrition or immunity.
The lifestyles of aging Generation Z and millennials will poise functional products for growth. By 2025, 41% of the population will be comprised of these two generations. These consumers are already significantly focused on nourishing their bodies to support physical and mental self-care. Nearly 70% of consumers currently use products that feature a functional benefit, and 4 in 10 younger consumers use products with more than three functional benefits.
For both Generation Z and millennials, weight loss, fitness, and exercise have become a priority after indulging in comfort foods while being cooped up during the pandemic. With keto and high-protein diets still trending, high-quality protein sources, both meat and plant-based, are still in great demand. Generation Z is more concerned about their health – especially their mental health. They self-report higher stress responses to both the news and social media than the three generations that preceded them and this emotional fragility is influencing how they think, eat and shop. They desire to go beyond generic “better-for-you” products. They are choosing foods and beverages that are custom to their personal health goals.
Younger consumers are looking for more pleasurable ways to incorporate nutrition into their diet. According to a global report, 85% of consumers prefer to consume health-enhancing ingredients through food and 57% through beverages, compared with only 23% who look to traditional supplement formats, such as pills and tablets.
Eating well means consuming high-quality, nutrient-dense foods that meet their wellness goals and are also tasty. Today, consumers are flavor-seekers and culinary enthusiasts, often leaning into trending new flavors and being more willing to experiment with different ethnic and global cuisines. It’s important to note that while functional foods meet wellbeing needs, they must also appeal to the senses.
One area that younger generations are creating sweeping changes is the beverage industry. Drinkable nutrition is one of the fastest-growing markets in the food and beverage space. This change is propelled by young consumers looking for beverages that deliver tangible benefits such as enhanced hydration and cognitive support while cutting alcohol and sugar consumption.
The data clearly shows that the functional beverages market is packed full of opportunities to meet the needs of this increasingly health-conscious generation. Cold aisle beverages, like teas, coffees, enhanced water beverages, and smoothies are tapping into this market with added nutrients, botanicals, probiotics, and more.
Functional foods growth potential
No doubt, there is a financial appeal in the functional foods market. The functional food market size was valued at $177,770.0 million in 2019 and is estimated to reach $267,924.4 million by 2027, registering a CAGR of 6.7% from 2021 to 2027.
For manufacturers, understanding which functional ingredients and product pairings will lead to market success is the key to finding growth.
Trending functional nutrition opportunities for frozen and refrigerated foods
Every week, we see new trends and opportunities popping up in the frozen and refrigerated foods industry. We’ve categorized a few that we believe have promise now and into the future:
Boosting physical wellbeing and immunity
- Holistic nutrition and wellness – Holistic nutrition is a whole-life approach and is different for every individual. Manufacturers, both large and small, are tailoring new products to meet consumers’ lifestyles, needs, and philosophies. The plant-based shift is driving innovation in the frozen entrée market. From cauliflower macaroni and cheese, protein and grain bowls, to plant-based burgers, brands are customizing their recipes and formulations to be more plant-forward and nutrient-dense.
- Immunity and disease prevention – Consumers are seeking out products that contain nutrients like zinc, selenium, B complex vitamins, and vitamins C and D, as well as alternative health remedies like moringa, elderberry, echinacea, astragalus, and ginger. Even before the pandemic, immunity1 supplements were growing in popularity. Immunity boosters are seen in refrigerated beverages, such as juices, smoothies, refrigerated coffee, and tea. There has also been a rise of ingredients like ginger, lemongrass, and fruits high in antioxidants in dairy and dairy-alternative drinks.
- Decrease inflammation – Boosting immunity and reducing inflammation were among the top health concerns that consumers tried to treat with food and food substances during the pandemic. The trend shows no signs of fading. Plant-based proteins such as chickpeas, seitan, lentils, turmeric, ginger, green tea, avocado, and olive oils are a few ingredients seen in frozen foods, desserts, and beverages.
- Digestive support – Probiotics have recently taken center stage and proven that they are not a fad. The market is expected to attain healthy growth of 7.2% through 2028. Yogurt, kefir, kombucha, juices, smoothies, and butter have been natural trendsetters. Opportunity is significant in this market, as a recent study stated that 40% of consumers are willing to try food and drinks that will aid their digestive health. Research reveals pre, pro, and postbiotics offer benefits to the immune system as well.
- Heart health – Functional foods with heart-healthy benefits have always been in demand. Heart disease is one of the most significant diseases that affects our country.
- Omega-3 fatty acids – Popular in functional foods, omega-3 fatty acids are added to soy products, milk, yogurt, eggs, pasta, margarine, and other foods. They help heart health by curbing inflammation that can lead to heart attacks, improving blood vessel elasticity, and making blood clots less likely.
- Phytosterols – These are used to make margarine, butter, and spreads. Plant sterols block cholesterol absorption in the lower intestine and lower LDL (“bad”) cholesterol levels.
- Fiber – Fiber has also been shown to help lower LDL (“bad”) cholesterol and your risk for heart disease. Beyond heart health, fiber aids digestion and may even help prevent certain cancers. Frozen vegetables and fruits are high in fiber. You may also find fiber in soy milk and many frozen products such as whole wheat bread dough, pizza crusts or waffles.
- Calcium and Vitamin D – Are vital nutrients that support heart health. Manufacturers across the dairy aisle fortify their products with calcium, such as juices, soy products, and milk alternatives. Vitamin D can be found in milk, yogurt, cheese, juices, and margarine.
- Beta-glucans are sugars found in the cell walls of bacteria, fungi, yeasts, algae, lichens, and plants, such as oats and barley. Regular consumption of Beta-glucans is said to reduce the risk ofheart disease and high cholesterol. These food additives may be found in products such as frozen desserts, sour cream, and cheese spreads.
- Improved energy – Generation Z has cornered the market on energy drinks. From coffee-based energy drinks, probiotic seltzers to smoothies, innovation is rising in the refrigerated beverage market. New product development looks to ingredients like caffeine, B vitamins, choline, iron, magnesium, zinc, ginseng, taurine, guarana, yerba mate, teas, coffee, and amino acids to satisfy Gen Z’s demand for energy-boosting beverages.
Enhancing mental wellbeing
With celebrities, athletes and social media bringing mental wellness to the forefront of culture, more consumers are embracing products that address mental performance and mood enhancement. According to a recent study, more than half of global consumers plan to improve their cognitive and mental health over the next 12 months. Trending areas to consider:
- Brain health – Retaining mental sharpness and memory is a high priority for consumers across generations, but more so for those 50 and over. Foods that enhance brain function like leafy greens, nuts, seeds, whole grains and eggs have upped the nutrient content of everything from entrees to snacks in the frozen aisle. Supplements such as caffeine, L-Theanine – an amino acid sometimes found in tea, mushrooms, ginseng, lavender, coconut MCT, and DHA are finding their way into enhanced coffee beverages, juices, snacks, and ice cream.
- Anti-stress and relaxation – Lemon balm, ginseng, GABA, Rhodiola Rosea, magnesium, valerian root, Vitamin B Complex, L-theanine, ashwagandha, and kava are the most used nutrients, herbs, and botanicals used in relaxation-focused beverages, snacks, frozen desserts, and ice cream. Milk phospholipids are receiving a lot of buzz lately. They are a naturally occurring component in milk fat
What’s on the horizon for 2022 and beyond?
A recent 2022 trend report from Spoonshot shares up-and-coming food and beverage trends in the functional food area:
- Synergistic food blends – These are blends of two or more foods that enhance potential health benefits significantly more than the individual ingredients. There is an opportunity for CPG companies to use ingredient pairs rather than focus on a single ingredient. Thus, paving the way for innovation in the food and beverage space. For example, green tea and black pepper enhance the bioavailability of EGCG, thought to reduce inflammation, promote weight loss and help prevent heart disease and the benefits of Vitamin C + Zinc for immune defense. Developing new products with synergistic food blends for cold beverages, smoothies, yogurt, and even ice cream manufacturers could capitalize on the health and wellness benefits and set them apart from the competition.
- Published research of the gut–lung axis points to a connection between your gut microbiome and the lungs. This fact reinforces that biotics in foods seem
sto be a golden opportunity for frozen and refrigerated CPGs.
What’s next for dairy aisle products?
A natural fit for the category, prebiotics hold the most promise. Prebiotics offer consumers a more significant nutritional profile to products they already purchase, such as cold beverages, juices, snacks, breakfast products, dairy and alternative dairy products.
Cold coffees, teas, and juices with immunity defense and natural energy claims appeal to consumers who expect their daily drink to support their health and wellbeing.
Versatile ingredients made from algae are also making inroads for manufacturers of cheese and dairy desserts as thickeners that add vitamins, minerals, and fiber.
With 30-50 million people in the US who are lactose intolerant, lactose-free products have loads of potential for milk, cheeses, and yogurts.
What’s next for frozen aisle products?
The top category in the frozen aisle is the dessert and ice cream category. Consumers want to feel good. Enjoying a tasty treat that has a functional food benefit is a win-win – indulgence without guilt. Plant-based, keto, and immunity claims continue to show the most appeal in this market.
Ready meals and snacks have become more desired by consumers as they continue to eat at home, an evolution spurred by the pandemic. A whole new generation considers frozen meals a part of their lifestyle. New premium frozen meals and snacks with wholesome ingredients and restaurant-quality taste have transformed the frozen aisle. Innovation has entered supermarket freezers, creating entirely new categories, like cauliflower pizzas, plant-based snacks and entrees, high-protein snacks and entrees, ethnic and global specialties loaded with unique flavor profiles and functional ingredients like turmeric, ginger and matcha.
CPGs can uncover functional food opportunities by tailoring meals and snacks to meet consumers’ needs. Consumers desire healthier options with healthier ingredients in the frozen food case; they want more vegetables, higher protein, fewer calories, and no artificial colors, flavors, sweeteners, or preservatives.
Fad or opportunity?
The pandemic acted as a catalyst to escalate the production of new functional foods, most notably those with immunity claims. However, consumers were seeking nutrient-dense and multi-functional foods and beverages long before we first heard of COVID-19. As the population ages, there is a prevalent shift in attitudes toward health and wellbeing.
According to Mintel’s Global Food and Drink Trends, mental and emotional health awareness will increase mindfulness and intuitive eating. This holistic view of wellbeing teaches people to pay more attention to what they eat and how it makes them feel. Coupled with Mintel’s 2030 predictions how consumers view of wellbeing may evolve, makes a solid case for investing in functional foods:
- Smart diets: Technology will enable consumers to construct individualized approaches to physical and mental health.
- Consumers will continue to prioritize plants in their diets, with the earth’s health as much in mind as their own.
- With consumers expected to live longer, many people will want to learn how their diet can benefit long-term physical, cognitive and emotional health.
With the rising popularity of mind and body-boosting ingredients, there are abundant growth opportunities in functional foods. Manufacturers who seek to discover ways to meet consumers’ individual needs through nutrient-dense and custom formulations for unique lifestyles may see increased growth. As emerging ingredients are introduced, the holistic wellness movement evolves and technological advances progress, enterprising CPGs hold the keys to market new functional food categories and products in the frozen and refrigerated aisles.
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