The growing awareness of lifestyle-related diseases and the importance of preventive healthcare, along with changing dietary preferences and increasing health awareness are the key factors propelling the demand for functional food products in Asia-Pacific (APAC), said a report by GlobalData.
Priyanka Jain, Consumer Analyst, GlobalData, said, “Despite the waning of COVID-19 concerns, APAC consumers are gravitating towards natural, organic, and functional food products that are perceived to help in alleviating health concerns. This aligns with GlobalData’s 2023 Q4 consumer survey finding that the food purchases of 62 per cent of APAC consumers are often or always influenced by how well the product/service impacts their health and well-being.”
The health trend is also spurring demand for probiotic and nut-based snacks. As a result, the APAC food market with health and wellness attributes expanded at a value compound annual growth rate (CAGR) of about 7–9 per cent over 2017–22, she added.
Tim Hill, Key Account Director, GlobalData Singapore, said, “Premium prices remain a key barrier to the penetration of health and wellness attributed foods in the highly cost-conscious retail market. Moreover, amid high inflation and the prolonged Russia–Ukraine conflict, food manufacturers are under pressure to pass on these high input costs to consumers to conserve their margins. Notably, GlobalData’s survey reveals that 49 per cent of APAC consumers are concerned about the impact of inflation on their household budgets. Owing to the cost-of-living crisis, these frugal consumers are switching to cheaper brands and labels or cheaper stores. The limited product awareness is also undermining the segment’s growth prospects.”
Priyanka Jain said, “Manufacturers are thereby compelled to strike a fine balance between price and health benefits. Moreover, increasing participation in physical activities will stimulate demand for functional on-the-go offerings, particularly for snacking and mealtime accompaniments. For instance, ProV Foods launched a range of pre-soaked nuts such as almond, pecan, and walnut, under the ProV Lite Activated Nuts brand name in India. As macroeconomic conditions improve, consumers can be encouraged to trade up to premium food products more frequently. Manufacturers need to create awareness of these products through marketing initiatives.”
Functional/fortified food products have remained a niche segment in the APAC region due to their above-average prices compared to regular variants. “To expand their consumer base, manufacturers must highlight the benefits associated with product consumption. Leading companies are also leveraging alternative ingredients and production techniques to develop healthier alternatives with more personalized claims, such as ‘promotes gut health and blood circulation’ and ‘energy-boosting’,” said Tim Hill.