Given the mounting consumer proclivity towards healthier eating habits, functional foods and drinks will gain more traction in the APAC market in the coming years. By Bobby Verghese, Consumer Analyst at GlobalData.

With the novel coronavirus disrupting day-to-day lives, consumers have become more focused on their personal health and wellbeing. They actively seek new ways to optimise their health and have intensified demand for healthy products with better for you claims. 

Similarly, functional foods and drinks with tags such as immunity-boosting or antibacterial are on the rise. Functional products, which are typically augmented with healthy ingredients catering to specific wellbeing requirements of consumers, have become the talk of the town. 

"Health-seekers are not only looking for functional ingredients in traditional food and drinks such as milk and yoghurt, but also indulgent categories such as confectionery, cookies and jelly," says Srimoyee Nath, Consumer Markets Analyst at GlobalData.

Rising Demand For Products With Immunity-Boosting, Antioxidant & Relaxation Claims

The pandemic has massively highlighted the importance of foods and drinks that boost immunity. Consumers are adopting healthier food habits that help them to better fight with the virus and increasingly opting for health foods and nutritional supplements fortified with immunity-boosting ingredients such as Vitamin C and turmeric. 

Furthermore, rising pollution rates are encouraging consumers to seek foods that have antioxidant properties. This is further substantiated by GlobalDatas Q2 2021 consumer survey, wherin 77 percent of the respondents in the APAC region find immunity-boosting ingredients to be somewhat/very appealing, while 56 percent of respondents believe antioxidants to have a positive impact on their health.

Capitalising on this trend, various brands in the region rolled out products with immunity boosting ingredients. For instance, Tera Food and Beverage Company Limited, based in Thailand, launched QminC, a functional RTD drink infused with curcumin—the bioactive ingredient in turmeric, 20 percent lemon juice, the antioxidant L-Glutathione, and vitamins B6 and B12. Positioned as a multifunctional antioxidant drink with liver detoxifying, heart-protective, and immunity-enhancing properties, QminC went on to become one of the blockbuster launches in Thailand in 2020.

Furthermore, the stress induced by the pandemic, drove the hunt for products that can deliver a relaxing, calming, and/or mood-lifting effect—providing a sense of enhanced wellbeing. Ingredients such as hemp and cannabidiol (CBD) thereby gained immense popularity, with various manufacturers including these ingredients in their product formulations during the pandemic.

For instance, Thailands largest tea producer, Ichitan, ventured into the functional beverages space in April 2021 with the launch of Green Lab, a terpene infused beverage positioned as providing relaxation and stress relief. The Thai market is bracing for the imminent CBD movement, as the regulatory approvals for CBD infused beverages is expected in the second half of the year. Additionally, energy drinks manufacturer Osotspa, has also been conducting research in the hemp-based beverages space, a segment which looks highly promising for Thailand, and the rest of the APAC region.

A Marked Shift Towards Plant-based Alternatives & Extracts

Besides elevating health-consciousness among consumers, the pandemic also spurred the consumption of plant-based alternatives for meat, seafood, and dairy. While this was a global sentiment, there was an increased propensity among Asian consumers to purchase plant-based alternatives driven by the longstanding traditional use of soy-derived milk and meat alternatives in China and Southeast Asian countries.

Furthermore, it is noteworthy how ingredients such as aloe vera and matcha have penetrated all APAC markets in some categories. While aloe vera is a common ingredient in beauty and personal care products, brands are also incorporating the superfood ingredient in categories such as yoghurt and jellies.

For instance, Dongjun Dairys aloe vera flavoured yoghurt and Marudai Foods 3-Layer Jelly Parfait containing aloe vera are available in the Chinese and Japanese markets, respectively. Morinagas Aloe Yoghurt also makes a mark in this space with its healthfulness and fresh texture. Mention can be also made of Yamazaki Nabisco’s recently launched cookies under the Oreo Crispy banner that is available in a Matcha Roll Cake variant, as well as Yuanqi Forest (Anhui) Beverages Gyokuro—a shaded Japanese green tea, under the Genki Forest Qingjian banner featuring matcha and jasmine.

These launches from Japan and China, respectively, appeal to shoppers looking to incorporate superfoods or functional ingredients in their diets. Furthermore, in Japan, Fujiya Co. Ltd.s chocolates in a Matcha Shiratama variant demonstrates how the ingredient is being included in non-traditional categories, thus suggesting its vast prospects in the overall APAC region.

Local Ingredients Gaining Popularity

The pandemic has amplified consumer trust in local products made with indigenous ingredients, as it gives them a sense of assurance and authenticity. While small, domestic players have been tapping the localism trend for long, major multinationals have also ventured in this space.

With 76 percent of respondents in APAC in GlobalDatas Q2 2021 survey finding local ingredients or flavours to be somewhat or very appealing, manufacturers are incorporating local ingredients with nutritional, health, and functional benefits into their product lines, thus enticing variety seeking consumers and health-enthusiasts. As an example, Ito En Ltd.s fruit-flavoured drink contains the juice of Hyuganatsu—a type of citrus from Miyazaki. This drink garners the trust of Japanese consumers as the local ingredient is perceived to be healthy, of good quality, sustainable, and authentic. This trend also extends to unconventional categories, with products such as confectionery being infused with better-for-you ingredients. For instance, Cadburys Dairy Milk chocolate bar from Mondelez India is infused with mint crystals, which localises its flavour and is perceived to endow it with a healthy halo.

The functional food and drinks market in APAC is estimated at US$203.8 billion in 2021, according to GlobalData Consumer Intelligence Centre. Given the mounting consumer proclivity towards healthier eating habits, functional foods and drinks will gain more traction in the APAC market in the coming years. The inclusion of innovative functional ingredients will garner greater consumer interest in better-for-you products, which in turn will pave way for further product launches in the arena.