The Functional Food and Nutraceutical Industry

Innovation Profile
July 2002

The Industry

• Functional foods and nutraceuticals are products that are demonstrated to have physiological (health) benefits and/or reduce the risk of chronic disease beyond their basic nutritional functions. Functional foods are similar to conventional foods while nutraceuticals are isolated from a food and sold in dosage form.
• Canada has an active, research oriented functional food and nutraceutical industry. It is estimated that the Canadian industry has over 300 companies involved in the functional food and nutraceutical industry, from small start up companies to multinational organizations with an estimated market size of between $1 and 2 billion. Exact industry statistics are difficult to determine as companies are classified from the agriculture and biotechnology categories, all the way through to the food and pharmaceutical industries. Agriculture and Agri-Food Canada is currently working on an industry survey with Statistics Canada to obtain official statistics.
• The market is being driven by a growing consumer understanding of the link between diet and disease, aging populations, rising health care costs, advances in food technology and nutrition and expanding scientific and clinical research validating the effectiveness of functional foods and nutraceuticals in preventing diseases. Attractive disease targets for nutraceuticals include cholesterol reduction, cardiovascular disease, osteoporosis, child development, hypertension, diabetes, gastrointestinal disorders, menopause and lactose intolerance. These conditions are both treatable by food ingredients and demonstrate sustainable demand.

* Based on a table produced by the International Food Information Council

Strengths

• Canada’s functional food and nutraceutical sector has the potential to grow and capitalize on tremendous global marketing opportunities. The world market for functional foods and nutraceuticals is large and growing, with recent estimates of market size well over US $50 billion.
• Most of the commodities Canada produces, from British Columbia to the Atlantic, have the potential to be grown and processed into functional foods and nutraceuticals for domestic and international markets.
• Governments, the agri-food sector and the research community are enthusiastic about the potential for these innovative food products to improve citizen’s health, increase jobs, help growers diversify, reduce health care costs and contribute to increased sales of high value-added products in domestic and export markets.

Challenges

• Research efforts are needed across a broad spectrum of scientific, clinical and engineering areas that will support health claims, and encourage the development and commercialization of products, processes and technologies that will give Canada the competitive edge for the new technology-based economy.
• The health benefits and disease risk reduction properties of food components is a growing area of research worldwide bringing about a high demand of skilled human resources. Current training and recruitment levels may not be sufficient to sustain development of the industry in Canada.
• Although Canada’s functional food and nutraceutical industry has been experiencing considerable growth over the last few years, Canada is currently lagging behind the US, Japan, Australia, and the United Kingdom. These markets, where health claims backed by scientific evidence are allowed, have experienced growth in terms of development and marketing of products. Presently in Canada, health claims are not permitted; however, Health Canada has recognized the need to review the regulatory framework and is now in the process of evaluating 10 of the 17 existing generic health claims authorized in the US. Health Canada is also developing standards of evidence which will eventually allow companies to make scientifically validated, product-specific health claims.

Contact:
Allison Rodriguez
Agriculture and Agri-Food Canada
rodrigueza@em.agr.ca