By: Michael Lojkutz, Director of Innovation
More and more, consumers are taking the time to do something that many say is in decline, broadly speaking — and that’s read! Indeed, more and more consumers are taking the time to read the ingredient panels, or at the very least, look for the big bold callouts on labels, menus, signage, and advertisements. It’s not a new phenomenon, it’s actually a trend that has been gaining ground over a number of years. And, it’s reflective of their ever-growing interests and concerns on what they consume.
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Additionally, for years manufactures have been trying to properly respond to this greater focus, cleaning up their formulations and labels by removing ingredients such as high fructose corn syrup, preservatives, and artificial colors and flavors. For many of today’s consumers, those efforts are just the table stakes; they are looking for much more.
In fact, increasingly, and especially with younger generations, consumers are wanting to see ingredients that bring additional value to their meal and snack times. Which is to say, it’s no longer good enough to be good enough; taking ingredients out isn’t enough, we need to add value. Enter the growth of functional foods. With upwards of 90% of consumers saying they are interested in functional foods and beverages and 80% saying they plan to make a change to their diets moving forward, functional food isn’t a passing fad — it’s here to stay and heading towards being a mainstay. Some even estimate that the functional food and beverage space will grow to more than $260 billion by 2027.^^
Before we dive in deeper, let’s first define what functional food and beverages are. According to the Mayo Clinic, “Functional foods are foods that have a potentially positive effect on health beyond basic nutrition. Proponents of functional foods say they promote optimal health and help reduce the risk of disease.” This includes products that contain high levels of a certain vitamin, like orange juice with a high level of vitamin C. Others have a wider view of the functional space, including any food or beverage items that contain non-traditional or “fortified ingredients” such as vitamins, minerals, fiber, probiotics, stimulants, and others. A good example of the latter is a sports drink, which contains some amount of collagen peptides, which are not naturally occurring. These products have taken the market by storm in recent years and are growing exponentially.
When talking about functional foods, it’s important to remember that there is no one size fits all approach. Consumers are looking for different functional components in their food than they are in their beverages, and different generations are looking to address different needs.
Understanding what consumers see as desirable functional components in their food as opposed to their beverages is critical when addressing a need state, and those needs are very different. According to a report by The Hartman Group, hydration, energy, general prevention, digestion, cardiovascular/cholesterol reduction, immunity, fitness performance and weight management all have places in the minds of consumers, but choosing which consumers want to address with food vs beverage is key. Shifts occur in the popularity of these need states and since the start of the Covid-19 pandemic, we’ve seen an increase consumers’ desire for added immunity and prevention ingredients, where previously digestion and brain functions were top of mind. Near the end of 2020, ^Google Trends data showed an approximate 500% increase in searches for immunity in food and drink worldwide.
That being said, consumers have not totally turned their back on mental health and mood improvement either, with Mintel reporting that 29% of consumers looking for more information on how to improve their moods. For us in the Innovation lab, we have begun working with nervines and nootropics, ingredients such as herbs that have been shown to help reduce stress or aid in relaxation. As a company that has embraced health and wellness at the core of our product offering, these natural ingredients present an exciting new frontier in our product development efforts. The functional space allows consumers a new way to use natural ingredients to increase their health and wellness. In the same way they might have swallowed vitamins or even medications in the past, consumers are swapping for something they do anyway and can enjoy, like eating breakfast or drinking an afternoon beverage.
In the Leahy Innovation Lab, we have built a library of ingredients which we refer to as our Functional Ingredient Index, which allows us to address defined consumers’ need states. By clearly identifying what our goal is when developing a product, we are able to pinpoint which raw ingredients will work with functional fortifying ingredients while keeping in mind and capitalizing on consumer flavor preferences. For instance, if we identify immunity as our key driver, we are able to easily access those ingredients and leverage the best attributes of them to create the most delicious beverages possible. For us, one of the most exciting things continues to be pushing the envelope of what is possible in high acid beverage development, and every project allows us to reach further into the future, creating a more fruitful life for everyone.
Our Innovation team is incredibly excited about what is happening in this space and what it represents for the future. We are confident that functional foods and beverages are here to stay and will allow us to build on our legacy of brands that address the needs of today’s consumers and tomorrow’s.