Functional food hard to swallow

Is the food industry setting itself up for another embarrassing U-turn? Fresh from the controversy over the use of genetically modified organisms, the industry is already rubbing its hands at the prospect of a new, high margin category, dubbed ‘functional foods’.

These are foods that claim to be physically ‘beneficial’ for certain parts of the body. Margarines Benecol and Flora pro activ claim to lower cholesterol, while Nestlé’s LC1 claims to help digestion. And now pharmaceutical giant Novartis is taking the unprecedented step of launching a whole range of functional foods in the UK this autumn. Novartis’ Aviva brand launches with a range of drinks, biscuits, snack bars and cereals designed to benefit heart, bone and digestion. Kellogg is preparing to roll out its own range under the Ensemble brand.

The advent of functional foods has not come soon enough for Novartis – which has seen sales fall in its crop protection, seed and animal health divisions – or for Kellogg, where profits fell 22 per cent in 1998. Both the food and pharmaceuticals industries must improve their fortunes.

One healthy thing about functional foods are the margins they offer manufacturers, margins that are under pressure in other areas from supermarket own labels, the growing costs of advertising and the low inflation environment where price hikes are hard to sustain. But manufacturers will have a job establishing the credibility of these products among UK shoppers who are deeply suspicious of food industry claims.

Doctors are, after all, sceptical of the claims of the neutriceuticals. To combat this scepticism, Young is writing a persuasive paper for the British Medical Association extolling the virtues of functional foods.

It is hard to imagine exactly who will be the consumers of functional foods. Surely those who care most about their health already attempt to eat healthily, and will be unswayed by the claims of neutriceuticals. According to the British Nutrition Foundation, low income groups have the highest prevalence of heart disease, yet functional foods will be too expensive for them. Supermarkets say sales of Benecol got off to a fairly strong start, though appear to have tailed off.

In the US and Japan, these foods have been lucrative for manufacturers. But neither of these markets has undergone the same hysteria over food policy as the UK.

These are early days for functional foods, and the industry predicts their sales will quadruple to £1bn in five years. But unless they can persuade medical professionals of their efficacy, and win over sceptical consumers, the industry could find itself with warehouses full of distinctly dysfunctional – and unsellable – foods.

Cover Story, page 24