3 Challenges and Opportunities for Functional Food, Beverage and Supplement Manufacturers

woman drinking BC30 beverage to boost immunity

With functional benefits in demand across all age groups, brands that deliver trusted and innovative products will resonate with consumers

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KerryDigest Fast Facts:

  • A more proactive approach to wellness is spurring demand for functional food, beverage and supplement products with specialised health benefits.
  • Consumers also want products that are novel and innovative from brands that prioritise sustainability.
  • As shoppers get more savvy, brands are challenged to source ingredients from partners with an expertise in co-creation and supply chain transparency.
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KerryDigest Full Scoop:

With growing awareness of the importance of maintaining health, people across a range of age groups and lifestyles are looking for products with ingredients that support their specific wellness concerns. Brands are responding with a wide variety of functional products, pushing consumers to be increasingly savvy about purchase decisions. To help manufacturers make products that stand out and inspire repeat purchases, we identified three key challenges to delivering consistent, trusted and appealing functional products and tapped our team of experts for solutions.

Challenge 1: Sourcing ingredients that deliver on their claims

The functional foods and beverages market is growing, with rising interest in health benefits reflected in the number of health claims used on food and beverages. Innova Market Insights found that nearly 45% of global food and drink launches between March 2020 and March 2021 had a health claim of some kind. Between 2017 and 2021 growth was up 45% for supplements promoting benefits such as digestive, immune and cognitive health.

With so many functional foods, beverages and supplements vying for market space, people want to be sure the products they’re choosing deliver the benefits advertisedtaking daily supplements

With so many functional foods, beverages and supplements vying for market space, people want to be sure the products they’re choosing deliver the benefits advertised by on-pack claims. This puts the responsibility on manufacturers to use ingredients that have strong scientific backing—including research to support their claims.

Meeting the challenge: Success is in the science

The foundation of a functional product is the science supporting it, according to Sonja Nodland, PhD, Principal Scientist for Kerry.

'Consumers have become skeptical of claims made by brands in recent years, meaning validation is crucial,' says Nodland. 'They want maximum transparency over the ingredients in the products that they purchase. The best ingredients are underscored with multiple high-quality peer-reviewed clinical studies that support benefits. It’s helpful if the science is accessible to partnering manufacturers, so that teams are able to review the studies and work with the ingredient manufacturer’s R&D team'.

Tip: To create products that do what they claim, select ingredients with clinical studies that validate the benefits offered.

Challenge 2: Developing innovative products in formats consumers want

At the start of 2021, FMCG Gurus reported that consumers were 'making day-to-day changes to their diets and lifestyles with long-term goals in mind'. Kerry's own consumer research reinforces this and indicates consumers are most interested in maintaining immune, digestive and joint health when purchasing healthy lifestyle products.

These concerns resonate at the same level of interest across nearly all age groups, making it critical to deliver functional benefits across a range of product formats. Parents, for example, might prefer to support their children’s immune health with kid-friendly snacks such as a fruit pouch fortified with yeast beta glucans. Older adults may choose to get their probiotics in a cup of tea. And on-the-go professionals might enjoy the convenience of joint health benefits in a ready-to-drink beverage. Landing on the best applications for innovating requires consumer insights and testing.

Meeting the challenge: Creating innovative products that resonate

While substantiated benefits are the basis of successful products, some functional products can come with challenges where ingredients won't pull through with the efficacy required, making the products difficult to develop. Formulating with ingredients that offer the flexibility to accommodate a variety of applications is critical, says Katy Kinsella, Kerry’s North American Business Development Manager for ProActive Health.

So is understanding the types of products your consumers are interested in eating or drinking, such as through consumer insights and market research. With snacking growing in popularity, both as a source of comfort and an option for nutrition, snack foods are undergoing a renaissance—including in the functional space.

For example, Kinsella recently worked with a Kerry customer to formulate a tea with probiotic ingredients that, in its final form, delivered the required inclusion levels. The new tea product combines the beverage’s traditional health associations with on-trend support for digestive and immune health.

Tip: The best products often come from a solid understanding of consumer trends.

Challenge 3: Satisfying demand for sustainability and transparency

With heightened awareness of what’s in the products we consume and how they’re produced, knowing the origin of ingredients is more important than ever to both consumers and brands. But often sustainable practices and standards can be inconsistent.

With heightened awareness of what’s in the products we consume and how they’re produced, knowing the origin of ingredients is more important than ever to both consumers and brandswoman drinking health beverage

In addition to helping reassure consumers that an ingredient is trusted, supply chain transparency and commercialisation support can indicate that a supplier will provide support throughout the entire product development process, from sourcing to product completion.

Meeting the challenge: Support from start to finish

'Although people tend to think of the supply chain as being involved strictly with sourcing and manufacturing, it’s actually much more than that', says Kinjal Desai, Kerry’s ProActive Health Senior Supply Chain Manager. 'Creating innovative products that meet customer expectations for transparency, taste and nutrition on a global scale includes all the people you meet along the way, from R and D and nutrition scientists to culinary and flavour experts and marketing and regulatory support'.

Having exposure to a supplier’s team of experts can make it easier to answer questions about provenance and claims and can be an asset when problem-solving during formulation and production.

Tip: For a transparent product with reliable support, choose an ingredient manufacturer who nurtures you at every step of the process.

To learn more about developing innovative products that provide value for consumers of all ages, with strong brands, and credible science, download the eBook, Functional Health Benefits for Every Generation.

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