Being part of the functional food and beverage movement is sort of like journeying with Indiana Jones to find the Arc of the Covenant. You never know what is around the next corner, and you are trying desperately to reach the destination before your competition. A simple walk down the drink aisle of Whole Foods really says it all. The sheer volume of functional beverage entries is intimidating.  Even more frightening is the fact that 50% of those brands won’t be on the shelf one year later.  It’s a fight for survival in the beverage aisle.  Functional food brands have not yet proliferated to the extent that functional beverages have, but it won’t be long. Consumers have clearly stated in survey after survey that they want their health & wellness to result primarily from what they eat and drink, and so it is not a huge leap to assume expanded growth for these once niched market segments.  Increasingly consumers are looking for foods that are “naturally functional”.

Trend #1: Survival of the Fittest

Functional foods and beverages topped $40 million category in the U.S. alone. In 2012, the functional category outpaced traditional food and beverage sales in the U.S. So the first trend to note is brand proliferation followed by a shakeout of slow movers. We are already seeing this happen within the beverage sector, and foods will follow suit as the number of entries expands.

Trend #2: Hot Health Conditions

Whether you are talking foods, beverages or supplements, it’s all about condition-specific applications. Increasingly, consumers are shopping based on specific and identified health needs. They are smarter and are honing in on personal health issues and potential solutions. Consumers are looking for a more focused approach that allows them to assess results and health improvements or lack thereof. The most dominant health conditions at this point in time include Energy/Performance, Healthy Aging, Immunity, Digestion, Cardiovascular, Joint Support, Weight Loss and Diabetes.

Trend #3: High Failure Rate

It is estimated that roughly 80% of new functional products fail in the marketplace. This is largely due to inadequate promotion, inadequate consumer and trade education (just because it is a food, don’t assume that consumers will readily see the added value or be willing to pay more for it), and the fatal flaw of introducing undifferentiated me-too products (how many energy drinks can the market support?). Despite increased creativity and innovation in the sector, don’t expect this pattern to improved anytime soon. If anything, risk will increase as the category proliferates.

Trend #4: Super Fruit Boom Hasn’t Peaked

There are literally hundreds of undiscovered fruits hidden in the rainforests of the world.  Don’t expect this trend to subside anytime soon.  Americans are enamored with these healthy superfoods.  Next on the horizon are sea buckthorn berries (beauty), yacon (diabetes) and camu camu (immunity).

Trend #5: Still Going Strong

Antioxidants continue to be the belle of the ball, primarily due to increased consumer awareness and demand.  Shoppers may not know what antioxidants are, but they do know they are good for health and wellness.  Likewise, the other power players in functional food and beverages continue to be fiber, soy or whey protein, Omega-3’s and probiotics/prebiotics.

Trend #6: On the Rise

Expect to see spices and seasonings emerge as functional ingredients over the coming months.  Also keep an eye on tart cherries, which boast some impressive research on gout/arthritis treatment.

Trend #7: Less Is More

Mom research supports what we all suspect.  She is totally overwhelmed with food choice and making the right decisions for herself and her loved ones.  Generally, the fewer ingredients on the nutrition facts panel the better.  Keep is simple is their new mantra.  Are we listening?

Trend #8: Taste Still Matters

Don’t go thinking that because consumers are seeking greater functionality in the foods and beverages they consume, that taste is a secondary consideration to performance.  Successful brands must deliver on both great performance and great taste.  Delivery on those two key benefits has been the driver behind the success of functional brands like Corazonas in recent years.  The old adage “if it doesn’t taste good, nothing else matters” is still true.

Trend #9: Walk the Talk

It’s important to remember that product education in this category is in its infancy.  Consumers may talk about eating healthy and making better food choices, but that doesn’t always translate to purchase behavior.  The more your customers know about your products health benefits and clinical support, the more likely they are to embrace your brand.

In summary, functional food and beverages are definitely a categories to watch over the coming years.  Consumers are clamoring for new products and are looking to food first for enhanced nutrition and functionality.  Soon demand will exceed supply.  Get busy.