Consumers’ increasing awareness of the advantages of nutrient-rich foods has prompted global food and beverage companies to begin enhancing their products with nutritional additives, leading to the creation of new products—and new categories of products—targeting consumers’ changing health and wellness needs.
Many of these new products (and product classes) fall under the broad category of “functional foods,” which also contains functional beverages. These products often purport to do more than mere conventional foods, which are consumed primarily for taste, aroma, or nutritional value (such as quenching hunger or thirst).
Functional foods are thought of as foods that provide consumers with more or added health benefits than would be the case with the consumption of conventional foods. Functional foods can provide a variety of health benefits, including decreasing stress, aiding in digestion, helping manage weight, improving cognition, or increasing energy and focus. Evolving consumer demands and preferences that prioritize wellness and health have created enormous market opportunities for functional foods—and consumers have responded.
According to one market researcher, functional foods’ global revenues stood at approximately $305 billion, and the industry is projected to reach $597 billion by the end of 2032.
Functional Foods, Global Annual Revenues
Source: Precedence Research, May 2023, www.precedenceresearch.com/functional-food-market
Functional Foods and the Law
Curiously, there is no legal definition for functional foods. Instead, the Food and Drug Administration (FDA) views functional food products as being in one of four separate categories:
- Conventional Foods (including beverages)
- Dietary Supplements
- Medical Foods
For companies that make, distribute, or sell functional foods, proper product categorization is critical, as it determines how a company approaches practically every other step in the product’s commercialization lifecycle, including product ingredients, packaging, labeling, marketing, and advertising. Proper product categorization also impacts whether a company is required to notify the FDA or seek its approval prior to bringing the product to market.
If the FDA determines that a functional food product is improperly categorized, there is a high likelihood that appropriate safety and labeling requirements were not followed in the product’s manufacture and marketing. As a result, the FDA may conclude that the functional food product is unsafe, adulterated, or even misbranded, leading to enforcement actions that can be costly and damaging to a company’s brand or reputation.
There are several bright-line rules make it relatively easy for companies to avoid a product being categorized as a drug or medical food, but the same cannot be said for conventional foods and dietary supplements. Because these categories are subject to different federal laws and regulations, product categorization becomes an essential step for functional food businesses to consider before manufacturing and marketing their products. Adding to the complexity of product categorization, FDA does not conduct pre-market review of categorization for many products; therefore, companies are left to determine a product’s categorization and introduce it into the marketplace without knowing definitively whether the FDA will agree with the company’s self-classification. As one might imagine, this circumstance creates a great deal of uncertainty and regulatory risk.
Our team has made available a guide—The Future of Functional Foods—that further explains how the FDA may categorize a functional food product. While there is no exact science to selecting the proper category for a functional food product, Husch Blackwell can help businesses navigate the complex regulatory scheme and determine the best avenue to ensure that a functional food product complies with all FDA requirements.