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"Phoods" Market to Reach $20 Billion, Says Report

New York – As an increasing number of studies point to the relationship between diet
and health, products classified as "phoods," or those that combine the health benefits of
foods with pharmaceuticals, are experiencing healthy market gains, according to a new
report by market research publisher Packaged Facts.

The study, "The New U.S. 'Phood' Market," predicts that total U.S. retail sales of such
food will continue to grow at a healthy pace through 2009, reaching $20 billion by 2007.
As the market develops, annual percentage gains will ramp up from 7 percent to 8 percent
-- and they could be much higher, depending on the success of mainstream cereal and juice
marketers to pull in consumers with formulations targeting specific health conditions.

The report examines all aspects of the "phood" and "bepherage" industry, including
products that provide a positive pharmaceutical benefit beyond basic nutrition. Packaged
Facts classifies such items into the categories of traditional, or "inherently healthy"
(oatmeal, whole grain breads, cranberry juice), fortified (orange juice with plant sterols),
and "designer" (soy protein bars, smart spreads).

"Phoods and bepherages offer significant competitive advantages to marketers," said Don
Montuori, acquisitions editor for Packaged Facts. "In mature food and beverage
categories-such as breakfast cereal and juice-marketers can use medically beneficial
formulations to strengthen brand differentiation, expand market share, draw new users,
and increase consumption among established users."
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