Food & Beverage Market
The functional food and drink industry in Canada is becoming increasingly popular, and the number of companies involved is growing dramatically with time. Canadians have been taking their health and wellness more seriously, which is most likely the cause of growth in the Canadian sector of functional food and drink products.
According to a 2012 Ipsos-Reid report, 98% of Canadians surveyed had purchased some type of functional food or drink in the past year. Although healthy eats appear to be popular with Canadians, the functional foods and drink market in Canada is relatively new compared to other countries—such as the US, China and Japan—offering much room for growth.
In 2013, overall retail sales of functional foods and drink showed moderate positive growth. However, sales in certain categories showed a much larger positive growth. Specifically, liquid concentrates; organic coffee and tea as well as gluten-free food products were highly mature in the Canadian marketplace. The functional foods market seems to be “trendy” with drivers of growth shifting within product categories. As with any market, any significant movement within one category typically comes at the expense of another. Understanding consumer purchasing behavior is key to successful commercialization and market trade.
The wants and needs of Canadian consumers are constantly shifting, which quickly alters and effects market conditions. The most common types of functional foods or drink purchased in 2012—according to an Ipsos-Reid report—included healthy cereals, healthy snack foods, yogurt with added probiotics, and juices with added nutrients. The most sought-after ingredients, regardless of the product, were: fiber (87%), vitamins and minerals (86%), protein (85%), and omega-3 fatty acids (80%).
In the functional drink market, liquid concentrates have been receiving much attention at the expense of the soft-drink marketplace. Mio concentrates were introduced to the Canadian marketplace in 2012, and ever since, more brands—including private labels—have contributed to the boosting of the liquid concentrate category in Canada. Another trend in the functional drink market includes beverages with reduced or no sugar content. Health Canada recently approved Stevia as an ingredient allowed in foods and beverages, and subsequently, there has been a drastic increase in products incorporating Stevia into the formulation.
Because there has been such an increased demand for functional foods and drink in the market, large companies such as PepsiCo, Nestle, and a number of others have manufactured a healthier product line. Therefore, leading marketers of foods and beverages in Canada also topped the list of marketers of health and wellness products, making it difficult for small companies to make an impact.
Companies developing functional foods and drink products should market to specific demographics in need, such as the aging population, infants and youth, and mothers. Older adults typically need foods that lower cholesterol, while parents are interested in foods for infants and children that have health-benefiting nutrients, such as DHA-enriched products.
Functional foods and drink sales in Canada are only expected to increase modestly in the near future. Small businesses focusing on functional foods and drink are facing a difficult operating environment when battling a previously established, highly developed marketplace. Categories and brands focusing on healthier nutrition are expected to remain the focus of major marketing and product development. Of course, growth in some categories of functional foods is likely to come at the expense of other categories, making this market one of the tougher ones to stay on top of.
