Strategic opportunity overview released

Targeted foods have broad implications for the future of the food and beverage industry. As consumers are using diet to address health conditions, companies are responding by launching products with functional benefits targeted at specific health needs or population groups.

The rise of chronic health conditions coupled with increasing consumer awareness of the connection between diet and health are creating high demand for products other than medicine that can address individual concerns. The company believes that five areas which will be highly targeted from a population or health need will be weight management, cardiovascular health, arthritis/joint health, digestive disease and anti-ageing/beauty.

Established food and beverage giants, as well as emerging companies, are rapidly entering the targeted food category with existing products being enhanced to meet specific needs, and novel products being launched that are targeted to specific populations. Targeted foods are meeting these conditions in three clear ways:

• health/disease conditions such as coeliac disease, arthritis, cardiovascular disease and digestive health;
• physical/mental states ie, performance, beauty and brain function; and
• age/gender ie, women, menopause and infant nutrition.

Examples of targeted food products range from bread with soy isoflavones for menopausal women to soda with glucosamine for joint health.

According to the company, the global functional food and beverage market is poised to grow from $59.6 billion in 2004 to $218.5 billion in 2010. The company expects that targeted foods will comprise $54.6 billion to $76.5 billion, or 35% of the functional food category by 2012. Beverages are the largest product category within targeted foods, encompassing 60% of targeted food products, and will continue to drive innovation.

The company believes that targeted foods are of significant importance for the established players in the food and beverage industry due to premium pricing, higher than average gross margins, highly attractive growth rate and relevance to consumers’ emerging health needs.

The company expects that transaction volume will increase over the next three years through licensing, alliances, mergers and acquisitions, and recommends that emerging companies in targeted foods establish a clear growth agenda.

For more information, visit TSG.