Results from the Functional Foods and Natural Health Products Survey (2011)
This survey of firms involved in the Functional Foods and Natural Health Products (FFNHP) industry in Canada was conducted for Agriculture and Agri-Food Canada by Statistics Canada. It includes tables and charts about revenues, products, distribution channels, labor, trade, and innovation research and development. Trade data does not exist for FFNHP products, so the data from this survey serves as the primary source of economic data on the Canadian FFNHP sector. It is the fourth iteration of the survey and updates information from the 2007 survey. While direct comparisons between 2007 and 2011 data cannot be made because there has been substantial change to the questionnaire and sampling frame between surveys, it is reasonable to believe that the sector has demonstrated remarkable growth.
Functional foods (FFs) are foods with demonstrated health benefits, such as probiotic yogurt. Natural Health Products (NHPs) are extracts derived from natural sources with health benefits, such as omega-3 capsules. The full report includes the Health Canada definitions used in the survey.
Overview and brief analysis
|* Comparisons between 2007 and 2011 values should be made with caution, because the methodologies of data collection were different.|
|Number of Firms||750||689|
|Revenues||$11.3 Billion||$3.7 Billion|
|Exports||$1.7 Billion||$731 Million|
|Research and Development||$238 Million||$147 Million|
The functional foods and natural health products sector is a fast-growing and significant component of the food industry
- The FFNHP industry is Canada's fastest growing agriculture and agri-food sector. Despite differences in methodologies between surveys, it is reasonable to believe that revenues from this industry grew remarkably: the 2011 FFNHP survey reported FFNHP revenues of $11.3 billion in 2011, compared with $3.7 billion reported in the 2007 FFNHP survey, and mirrors global growth in FFNHP.
- The FFNHP revenue of $11.3 billion is significant when compared to total food product revenues in the food and beverage processing sector of $92.8 billion in 2011. FFNHP exports of $1.7 billion are sizeable when compared to the total food product exports of $24.6 billion. The FFNHP employment of 16,259 compares favourably with the total food industry employment of 297,000.
The functional foods and natural health products sector is driven by research and development and by innovation
- The percentage revenues spent on Research and Development (R&D) in the FFNHP sector (2.1%) is significantly greater than the same for food industry as a whole (0.8%). Roughly twice as much R&D was spent on NHPs than FFs.
- The predominant form of intellectual property protection for FFNHP firms is trade secrets (181 firms), followed by trademarks (175 firms) and patents (94 firms). Patents are not the primary instrument used by firms for protecting FFNHP innovations.
Natural health product firms are specialized while functional food firms are diversified with high-value products
- The average revenue of Functional food (FF) firms is $38 million while that of NHP firms is $7 million. Those firms involved in both FFs and NHPs generate $23 million per firm on average. In addition, the average revenue of an FF product line is $0.9 million while that of an NHP product line is $0.2 million.
- NHP firms' revenues are predominantly from their NHP products, indicating that they are relatively more specialized in the NHP sub-sector. In contrast, FF firms tend to have revenues from other non-FF business activities. Firms producing both FFs and NHPs generate revenues roughly equally from both. For example, a supplement company would be focused on supplements only, while a food company may have a line of healthy food products as one of its many offerings.
Opportunity exists to strengthen value chain linkages to primary producers
- One out of three FFNHP firms use bioactives or medicinal ingredients derived from flowers, herbs and spices; fruits; and seafood or other marine species. FF firms use dairy products and oil seeds as inputs.
- However, such agri-based inputs are not being sourced primarily in Canada: NHP inputs are primarily imported, while inputs such as dairy products, oil seeds, and grains and cereals are sourced equally from Canada and abroad.
- Quality and year-round availability were the most important factors for FFNHP firms to source agri-based inputs from other countries even if such inputs are available from Canadian sources.
- Addressing such issues of quality and year round availability for agri-based inputs such as flowers, herbs and spices, fruits, seafood and other marine species, dairy, oil seeds, and grains and cereals may improve the down-stream linkages between primary producers and the FFNHP sector in Canada.
Functional foods and natural health products are primarily consumed domestically
- Most FFNHPs are consumed domestically (85% from domestic revenues). Therefore an opportunity exists to further develop both domestic and export markets.
Firms are aware of and seek assistance from regulatory agencies
- FF and NHP companies are aware of regulatory assistance available, as 8 out of 10 companies reported having contact with either the Canadian Food Inspection Agency or Health Canada.
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