With Functional Foods, Science Becomes the Secret Ingredient
What do frozen baby food, rice chips and a pomegranate smoothie have in common?
They are all examples of functional foods — foods or drinks that provide a health benefit beyond basic nutrition — that are taking a growing bite out of the food market even as they face increased skepticism.
Some of these products’ enhanced qualities are naturally part of the food, while others are developed through fortification or scientific manipulation.
Nearly ubiquitous examples include milk with vitamin D added and table salt with iodine added.More recent products include rice with a dose of beta carotene to help residents of poorer countries get more vitamin A.
“It is definitely a growth industry. The potential to make money is very strong,” said Will Rosenzweig,managing director of Physic Ventures, an investment firm that sinks a significant amount of moneyinto the food business.
The growth in functional foods is now estimated at 8 percent to 10 percent a year, compared with 2 percent annually in other portions of the industry.
The U.S. market for fortified and functional foods is expected to reach $33 billion in 2008, saidBarbara Brueckner, innovation manager at Mattson, a Foster City company that develops products for the food and beverage industry. Dairy products account for about $26 billion of total sales.“It is certainly attractive for food companies to get involved with,” said David Mark, president of Dmark Consulting in Massachusetts.
The key, industry officials say, is to create healthier products that taste good. That’s where companies like Mattson come in.
The firm has 20,000 square feet of offices and labs with 70 employees. Mattson has come up withproducts for food conglomerates, restaurants, grocery stores and fast-food chains.
Steve Gundrum, president and chief executive for Mattson, said the functional food business isscience-driven. Mattson develops healthy products then educates the public about the benefits.“Science is leading the consumer,” Gundrum said.
In 2005, Mattson created a branch called Brand New Brands, which spun out four companies. One was Lightfall Foods, which focused on women and came up with a 90-calorie smoothie that containsextra protein and fiber. Next was Corazonas Foods, which focused on men and developed a tortillachip that was heart healthy.
Attune Foods produces so-called pro-biotic chocolate and granola bars. Pro-biotics have potentially beneficial bacteria or yeasts. The newest, Dreamerz, developed a milk-based beverage that enhances melatonin levels, which help regulate sleep and other functions.
Functional foods that are said to improve the brain’s cognitive abilities are also on the rise. There are a number of these products in the baby food market.
Gundrum said functional foods are popular with the aging Baby Boom generation who are seekingnutrition data on the Internet. Also important, he said, is people’s desire for healthier lifestyles while still having fun.
The functional foods industry has had some problem with claims made about its products. Whilepeople such as consultant Mark say most pronouncements are true, there have been exceptions.
“The hype is way ahead of the science,” Mark said.
Industry claims are regulated by the Food and Drug Administration. Gundrum said functional foodshave to meet strict FDA standards before health claims can be made.
And investors should investigate claims before putting money into a new product, Rosenzweig added.
“The rules are not ideal yet,” he said. “It’s one of the things that gives us pause.”
Before investing, Rosenzweig’s firm looks at a functional food product’s inherent value, its intellectual property characteristics, whether its data is credible and whether the product is tasty and can be distributed to consumers.
He said the functional food market has a lot of opportunity and potential, but at the moment it can be a risky venture.
“We’re very active in the market,” he said, “but we are extremely selective.”
David Mills is a freelance writer.All contents of this site © American City Business Journals Inc. All rights reserved.
