Credit Crunch – What is in store for the functional food sector?
With the last true global credit crunch over 20 years ago, this will be the first time that the functional food market has weathered a recession of this kind. Tim Van der Schraelen, marketing & communication manager at BENEO-Orafti discusses what challenges food ingredients manufacturers and producers will have to overcome in 2009 and beyond.
Rising commodity prices are always one of the key measures of an economy under pressure and one look at these major UK retailers shows that premium priced products are already under pressure from changing buying patterns: Sir Stuart Rose, executive chairman of M&S, was credited as saying that customers were trading down – a factor that had affected its food business, where sales have slumped. He argues that M&S food still sits at the ‘top of the quality tree’, but it has had to slash prices to hold on to customers. In addition, Tesco chief executive Sir Terry Leahy reports the same phenomenon. Sales of its Finest food range as well as organic products have declined in the past six months as customers trade down.
Creativity pays dividends
Although the typical consumer of functional food products spends a comparatively small proportion of their disposable income on food, they are still becoming increasingly aware of what they are spending their money on and asking the question ‘is it worth it?’ To help them to answer this question and minimise the impact of the credit crunch on the health ingredients sector as a whole, functional food manufacturers will increasingly be called to furnish their clients with robust and relevant health claims that can be passed on to customers in new and innovative ways
This article is available in full in the Winter 2009 issue of Nutraceuticals Now