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Monday, July 23, 2007

Spotlight: Functional foods and nutraceuticals

A healthy industry

THE FUNCTIONAL FOODS AND NUTRACEUTICAL (FFN) sector is a growing industry in Canada.

The FFN sector represents an interesting area of food processing—foods are either enriched or processed so as to produce a product with increased health benefits, usually in the areas of general health, vascular health or energy.

According to the working paper Results from the Functional Foods and Nutraceuticals Survey - 2005, the FFN sector has shown significant across-the-board increases since it was first measured in 2002.

What are FFNs?

The terms “functional foods” and “nutraceuticals” are relatively new, with no universally accepted definition.

According to Health Canada, a nutraceutical is a product isolated or purified from foods that is generally sold in medicinal forms not usually associated with foods. A nutraceutical is demonstrated to have a physiological benefit or provide protection against chronic disease.

Examples include beta-glucan from oats, essential fatty acids from marine or vegetable oil, fish oils and ginseng.

Similarly, a functional food may be a conventional food that is consumed as part of a usual diet, and is demonstrated to have physiological benefits and/or reduce the risk of chronic disease beyond basic nutritional functions.

Examples of functional foods include fruit juice with calcium, yogurts with probiotics, and omega-3 eggs, milk and meat.

Industry snapshot

In 2004, FFN firms provided 9,175 products in three main areas: vascular health, energy and general nutrition.

Total revenues for the 389 firms in the sector were $2.9 billion.

The 118 functional food firms had revenues of $823.9 million, while the 174 neutraceutical firms recorded revenues of $1.6 billion.

The remaining $442.7 million came from the 97 firms that produced products in both fields.

FFN firms employed 51,685 individuals in 2004.

Raw Ingredients

The raw ingredients for FFN products come from different sources. For functional foods, nearly all raw ingredients were sourced domestically, with 45 firms indicating that they used oil seeds and 40 firms used grains and cereals.

Thirty-seven nutraceutical firms also used oil seeds, but a fifth used foreign seafood or marine products as an input, and nearly one third sourced herbs or spices from abroad. A quarter of dual product firms stated that they used domestically sourced fruits as an input, which is an ingredient source that did not appear to have the same importance to either nutraceutical or functional food only firms.

Foreign ingredients were relatively minor, but for nutraceutical products they appeared to be extremely important. While many oil seed and grain/cereal products are sourced within Canada, herbs and spices tended to be sourced from abroad.

Exports

The bulk of exports came from nutraceutical firms, which exported $356 million worth of products, over three times the amount exported by functional food firms. Total FFN exports amounted to $545 million.

Not surprisingly, nearly half of all firms stated that they exported products to the United States, while roughly 10% exported to Korea and another 10% exported to Japan. One third of exporters shipped their products to other destinations.

There was also a keen interest in expanding export destinations for Canadian FFN products.

For more information, contact Charlene Lonmo (613-951-6617), Business Special Surveys and Technology Statistics Division.

See also
Official approvals boost sales THE DAILY -- New products