How Asian Food & Drinks Market Is Diversifying Into Functional Offerings Asian food manufacturers are striving to expand their portfolio of functional offerings, going beyond soft drinks to sectors,says GlobalData, a data and analytics company.
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In recent years, especially after the pandemic, there has been a growing trend towards functional foods in the food and beverage industry. These foods offer additional health benefits beyond basic nutrition as they are designed to promote good health. However, with the pandemic waning, manufacturers are turning their attention to other functional attributes beyond immunity boosters.
Functional Foods and Natural Food Market witnessed the biggest growth during COVID. The global Functional Food Market grew from $180.59 billion in 2021 to $188.83 billion in 2022 at a CAGR of 4.6 percent and is projected to reach $285.30 billion by 2030.
In India, the health and wellness industry is dominated by the traditional, complementary medicine segment followed by the personal care, beauty, and anti-aging segment which was $124 billion in 2018 and is projected to reach $638 billion by 2025 with a CAGR of 22 percent.
Additionally, Asian food manufacturers are striving to expand their portfolio of functional offerings, going beyond soft drinks to sectors, such as bakery and cereals and savory snacks, as the region's fortified/functional bakery and cereals market alone was worth $2.4 billion in 2022, according to GlobalData, a data and analytics company.
"Despite the disruption to retail and on-premise distribution due to the pandemic, the demand for immunity-boosting dairy and soy food surged annually by 20 per cent in 2020. Similarly, vitamin drink brands, such as QminC and Carabao Group's Woody C-plus, received a positive reception in Thailand in 2021. This is attributed to consumers seeking various means to stave off infections in the absence of effective medications or vaccines against COVID-19," said Tim Hill, key account director, GlobalData Singapore.
"Functional/fortified products have remained a niche segment in the APAC food and beverage industry due to their above-average prices compared to regular variants. Considering the economic slowdown and inflationary pressures, the demand for such products will remain muted in the immediate future. Manufacturers can overcome this consumer resistance to price hikes by rolling out smaller product pack sizes with pocket-friendly price tags," added Hill.
With the fear of the virus dissipating, consumer preferences are changing. For instance, people returning to their hectic pre-pandemic lifestyles are seeking food and drinks that boost physical stamina and cognitive alertness, alleviate fatigue and stress, and aid in relaxation and sleep. "Asian food and beverage companies are exploring the market with various new functional offerings to tap this trend," said Bobby Verghese, Consumer Analyst at GlobalData.
Established brands are now investing in startups who have been able to bring the innovation factor through their venture providing proven health benefits claims, and bringing price viability to established brands. Startups benefit from the big brands' established distribution channels making it a win-win situation for both. Regulatory authorities need a different, innovative mindset for innovative and understanding functional foods. Considering the economic slowdown and inflationary pressures, the demand for such products will remain muted in the immediate future. Manufacturers can overcome this consumer resistance to price hikes by rolling out smaller product pack sizes with pocket-friendly price tags.
