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Functional Foods a Potential $39 Billion Niche: Study

NEW YORK -- Functional foods and beverages -- those products that provide a positive pharmaceutical benefit beyond basic nutrition by virtue of their inclusion of medically beneficial ingredients -- are growing into a huge niche market estimated at nearly $25 billion in 2006 and destined to touch $39 billion by 2011, said market research publisher Packaged Facts in a new study.

During the five-year period from 2002 to 2006, mass-market sales of functional foods grew by 30 percent, according to the report, "Functional, Fortified and Inherently Healthy Foods and Beverages: The U.S. Phood Market." (In the report, Packaged Facts labels the category "Phoods" to emphasize a connection to pharmaceutical attributes.)

Packaged Facts estimated that annual percentage gains for the business will likely remain at 10 percent over the next two years, maintaining a steady 9 percent growth rate thereafter.

Functional foods are seen as an excellent alternative delivery system for many of the nutritional supplements already being taken by the masses, the report noted.

"During the next few years, the largest increases in nutraceutical ingredient demand are expected to be for glucosamine, probiotics, and sterol esters, whey protein, omega-3 fatty acids, and Co-Q10 -- all key drivers in the nutraceuticals market," said Don Montuori, publisher of Packaged Facts, in a statement.

Montuori said consumer demand for functional foods is "skyrocketing, and we expect that greater consumer awareness of the benefits of these foods will stimulate market growth beyond our estimates."
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