Although sales of functional foods have increased by around seven percent a year between 1999 and 2004, the report, entitled Functional Foods and Drinks, holds that many consumers are deterred from buying products containing added active ingredients that provide benefits beyond basic nutrition because they simply do not trust their makers.
In 2004 the US market was worth $19 billion (€16.2) and the Western European market €4 billion ($4.7).
John Band, consumer markets analyst and author of the report, told NutraIngredients-USA.com that in general US consumers are more willing to accept added ingredients than their European counterparts. Forty-five percent of Americans indicated that they distrust the health-boosting claims made by food and drink companies, compared to 63 percent in the UK, 56 percent in Germany and 47 percent in France.
One area where the US lags behind Europe is yogurts containing active probiotic ingredients, such as Actimel and Yakult. US consumers tend to be less receptive to the idea of ingesting live bacteria, however much the benefits are propounded.
Band said he was not convinced that the either FDA's health claims initiative or the anticipated EU legislation have a great bearing on trust. And endorsements by third party bodies such as charities may be "theoretically brilliant", but they are also falling down on the communication front.
"Health claims can be relevant, but labels don't do enough to communicate what they mean," he said.
By and large, FDA-approved qualified health claims are couched in terms that are not marketing friendly. For example, the recently approved claim for tomatoes and prostate cancer reads:
"Very limited and preliminary scientific research suggests that eating one-half to one cup of tomatoes and/or tomato sauce a week may reduce the risk of prostate cancer. FDA concludes that there is little scientific evidence supporting the claim."
Heinz, one of several companies behind the proposal of the claim, welcomed the approval but indicated that it does not plan to use the unwieldy statement on its packaging - even though it has the right to.
Despite the scepticism of more than half of consumers, Germany is Europe's biggest functional foods market with sales of €1 billion - more than 150 percent of sales in any other country.
According to Datamonitor, this is indicative of Germans' fondness for self-medication and health maintenance. In per-capita consumption of functional foods, it is second only to Sweden.
Band said that the food industry has earned the lack of trust it faces today over the past 100 years.
"Enough outlandish claims have been made that people are massively sceptical," he said.
"There is a danger that the more companies use studies with questionable methodology in their communications, the more consumers will be wary."Japan is currently the world's biggest country market, worth $5.1 billion according to sources. (Datamonitor does not track the Japanese market). Here, the government was quick to establish a labelling scheme based on tight scientific criteria, so that consumers are confident that food labelled 'Foshu' (Food for Specified Health Use) is genuinely functional.
Despite the credibility issues faced by the industry in the US and Europe however, Datamonitor maintains that the growth potential for functional food and drinks is huge. To tap into this, Band said it is most important to build functional credibility.
For product development, this means adding functionality with benefits that the consumer can see or measure.
Functionality should also be closely aligned with the product category. For example, a yoghurt is deemed a good vehicle for functional ingredients like probiotics or plant sterols as consumers already perceive yoghurt to be a healthy food.
Finally, Band recommended that companies do take part in health-based initiatives and labelling schemes in order to be taken seriously as a company concerned about health.