Functional foods resist recession but failure rate stays high: Analyst

29-Apr-2014 - Last updated on 30-Apr-2014 at 11:45 GMT

Jeff Hilton: “Research has demonstrated that the demand for functional foods exists, but without a proper understanding of the market, many brands are missing the mark when it comes to a successful launch.”

Functional foods weathered the global economic recession better than most food categories despite a high product failure rate, according to a US-based branding and market expert.

“The worldwide functional food and beverage category is unique in the way that the market has continued to grow throughout the global economic recession, yet still carries a remarkably high 80% failure rate for new products,” said Jeff Hilton, co-founder and chief marketing officer, of the BrandHive consultancy in Utah.

Hilton, who will present his insights at Vitafoods Europe in Geneva next week, added:

“Research has demonstrated that the demand for functional foods exists, but without a proper understanding of the market, many brands are missing the mark when it comes to a successful launch.”

Hilton asserts that only when manufacturer, supplier and consumer needs align will products be truly successful. Product developers must tune into rapid demographic change that means vastly different modes of communication and taste between groups as varied as Millennials, Baby Boomers and Tweens.

His views echo those of European-based branding expert Peter Wennstrom, president of the Healthy Marketing Team, who told the Food Vision congress in Cannes recently that products often failed because manufacturers failed to respect consumer need and desire.

“With every brand you can ask the same question and every consumer can tell you what they expect from the brand tomorrow. Respecting that means you can be very successful in brand innovation,” he said.

However, he said that unfortunately companies often disrespected this in favour of following their own ideas or brand agenda.

Wennström said it was essential for companies to break down their marketing communication into digestible terms for consumers, especially in the complex claims area of nutrition.

“That is a challenge, to actually respect consumer understanding and language,” he said.

Functional foods magic numbers

Analyst Euromonitor International developed an equation last year - a magic number of sorts - that quantified the readiness of consumers in specific regions to buy functional products by correlating per capita spend on food and drink with per capita spend on FF food and drink.

With a correlation coefficient – the degree to which the two variables’ movements are associated – of 0.84, there is a clear relationship present, it found.

It found North America, Australasia and Western Europe have a higher spend on FF food and drink products which offer preventative health measures, especially anti-ageing measures.