The revolution of functional foods: Trends, markets, and opportunities

What are the functional foods, and which health benefits do they offer?

Functional foods are foods that provide health benefits beyond basic nutrition, often due to the presence of bioactive compounds, probiotics, added vitamins, or natural properties that support specific bodily functions. Examples of functional foods include fresh fruits and vegetables, as well as processed items like yogurt and kefir. Fortified foods, which have added nutrients, also fall into this category. These foods can support immunity, improve digestion, promote heart health, and assist with weight management.

Rich in beneficial compounds like dietary fiber, omega-3 fatty acids, plant sterols, and carotenoids, functional foods provide a range of health benefits. More specifically, polyphenols in foods like olive oil provide antioxidant properties that may lower the risk of cancer and heart disease. Dietary fibers, whether soluble or insoluble, aid digestion, regulate bowel movements, and can help reduce cholesterol levels. Carotenoids, natural pigments in yellow, orange, and dark green vegetables, exhibit strong antioxidant activity. Omega-3 fatty acids are essential fats that promote heart and brain health, reduce inflammation and must be obtained through diet. Functional foods may also include probiotics (beneficial bacteria) and prebiotics (non-digestible food components that help stimulate healthy bacterial populations in the colon). Together, they support gut health by balancing intestinal microbes, preventing infections, and boosting immune function.

Why functional foods are taking over the market

Functional foods have been a part of human history and diet for centuries, but in recent years, they have gained more and more consumer interest and preferences. Several factors are driving the growth of the functional foods market. The rise in lifestyle diseases and cardiovascular issues prompts consumers to prioritize preventive healthcare through nutrition. Additionally, the COVID-19 pandemic has increased awareness of the need to boost immunity and overall well-being. The aging population is particularly interested in foods that support age-related health concerns, such as heart health, joint mobility, and cognitive function. Furthermore, the popularity of specialized diets—like keto, vegan, and gluten-free—has created a demand for functional foods that cater to specific nutritional needs. There is also a strong consumer focus on digestive wellness, leading to increased opportunities for probiotic and prebiotic products.

Olive oil is a strong example of a great-history product that has gained consumers over the past years due to its superior nutritional profile and numerous health benefits. The growing consumer preference for plant-based alternatives to animal fats presents a significant market opportunity, with olive oil being superior to other vegetable oils. This demand is reflected in the substantial increase in global olive oil consumption (dark green lines), as illustrated in the diagram by the International Olive Council (IOC).

Source: https://www.internationaloliveoil.org/changes-in-olive-oil-consumption/

Functional foods' market share and trends per continent

The worldwide market for functional foods was assessed at USD 337.57 billion in 2024 and is anticipated to grow to USD 645.47 billion by 2031, exhibiting a compound annual growth rate (CAGR) of 8.44% throughout the forecast period. The functional foods market offers a variety of opportunities across different regions. The Asia-Pacific area is becoming a key growth driver, thanks to rising disposable incomes and heightened health awareness, especially in China and India. In North America and Europe, established markets continue to show strong demand for premium health products, including organic and allergen-free options. At the same time, the Middle East and Africa are becoming more aware of nutrition and health trends, making them emerging markets with considerable potential for future growth.

More specifically, North America leads the global functional foods market, with the U.S. at the forefront due to consumer awareness, advanced food technologies, and a strong regulatory environment. The North American market is projected to reach USD 645.47 billion by 2031, growing at a CAGR of 8.44%. Recent FDA labeling requirements introduced in December 2023 aim to enhance transparency, especially for processed foods with multiple ingredients that must be presented clearly to the market. This practice can build stronger consumer trust, which is expected to boost further the market growth of many categories of functional foods (e.g. fortified beverages). Additionally, Canada announced a USD 100 million investment in May 2023 for research in plant-based proteins and probiotics, further driving innovation in the sector.

In the Asia-Pacific region, rapid growth is fueled by increased health awareness and demand for health-enhancing products. Urbanization, rising incomes, and an aging population are key drivers. Regulatory changes, such as stricter labeling laws in China and new legislation in Australia promoting local manufacturing, are shaping the market landscape and highlighting the region's growing influence on the global functional foods sector.

Food supply systems adaptation and opportunities

Due to the rise in awareness for functional foods, the food supply chain has already started adapting to this growing demand, starting from the field.

Berries and kiwifruit are typical examples of functional foods that have gained a position in consumers' diets nowadays, thanks to their high vitamin C content and amazing taste. This higher demand boosts the industry to adapt. For example, Greece has become the 3rd biggest kiwi producer globally, rising into this position in a very short period of time, with many farmers in the Northern mainland shifting from stone fruits to kiwifruit cultivation, focusing on product exports, reading this market trend.

At the same time, the struggle to reach and maintain high yields under the pressure of climate change makes this production shift more challenging. Research shows that Hayward kiwifruit production in New Zealand's Bay of Plenty may become marginal by 2050 and potentially unviable by 2100. In response, key market players are developing climate adaptation plans to ensure the industry's resilience. Additionally, they are exploring growing regions with more favorable future climates.

Berries are also highly regarded in the functional foods market for their rich antioxidant content, including flavonoids, anthocyanins, and polyphenols that combat free radical damage. The market is expanding, with cultivation areas increasing, particularly in Spain, where a 4% increase is expected for the 2025 season.

On the other hand, the functional foods market offers numerous strategic opportunities for stakeholders in the food supply chain. One key area is ingredient innovation, with rising demand for unique functional ingredients like adaptogens, nootropics, and specialized proteins. Companies that can create and supply these ingredients will be well-positioned for growth.

However, there are also many opportunities for the processing and manufacturing sector and new tools and processes are established to support them.

Formulation expertise is also essential, as food manufacturers need technical knowledge to incorporate functional ingredients while preserving taste and texture.

Moreover, supply chain solutions are becoming increasingly vital. Due to growing demand, ensuring a steady supply of specialized functional ingredients can be challenging. At the same time, digital technologies are revolutionizing the industry, with B2B e-commerce changing how ingredients and products are sourced and distributed.

Concluding remarks

By 2025, the functional foods market will keep evolving, fueled by consumer demand for products that not only curb hunger but also enhance overall health and wellness. In addition to health benefits, consumers are increasingly looking for options that support sustainable practices throughout the food supply chain. While the sector is already expanding to meet these needs, it’s crucial for everyone involved—from producers to consumers—to recognize that functional foods are not a new concept. However, there is still significant room for innovation and improvement in how we utilize them.