France attracting overseas investment in functional foods, report

By Jess Halliday

- Last updated on GMT

Related tags Functional foods Nutrition Investment France

The functional foods industry in France is booming, according to a
report from Invest In France that claims the sector attracted 7 per
cent of all new foreign investment projects in the country between
2002 and 2007.

An outlook published by Aroq this week anticipates it the global functional foods market will be worth some $90.5bn (c€58.5bn) by 2013.

While this underscore a general consumer interest in preventative health and diet, an Ipsos survey from the end of last year indicated that the French may be particularly receptive to such products: 52 per cent of respondents said they are concerned about the effects on their health of the food they eat.

Invest in France, an agency that exists to promote international investment in the country, says the industry in France represented €600m in 2006, and annual growth is in excess of 10 per cent.

However it is not just consumer demand in France that appears to be driving investment.

The agency has identified a number of strategic factors that are attracting companies from oversees to set up base in the country.

"This sector offers high development potential, combining three industries in which France is particularly strongly positioned - agri-food, pharmaceutical and cosmetics," said Philippe Favre, chairman and CEO of Invest in France.

Food supplements, in particular, hinge much of their innovation on developments in the pharmaceutcial and cosmetics areas, industries which tend to have higher R&D budgets at their disposal.

This leads to cross-industry partnerships in hot areas of interest.

For instance, Nestle and L'Oreal teamed up to tap the beauty-from-within trend, with their Inneov line of food supplements.

The dairy sector has also proved ripe for collaboration, particularly when it comes to dairy as a carrier for probiotics.

Danone and Lactalis, French dairy stalwarts both, have enriched products with bioactive ingredients.

Last year Danone, whose Actimel probiotic yogurt is now said to reap a staggering €400m, made a bold move into beauty foods with its Essensis beauty yoghurt.

In addition, Invest In France says government support for research, in the form of a tax credit for search and development activities, is a major spur.

Under the French rules, up to 50 per cent of R&D expenses, up to a limit of €100m, can be reimbursed in the first year.

In year two up to 40 per cent of expenses can be reimbursed, and in year three up to 30 per cent.

Also, in 2004, France launched a new strategy to stimulate industrial competitiveness, particularly in R&D-led innovation, but creating competitive clusters based on public/private partnerships.

These clusters, which are intended to spark industrial growth and create jobs throughout France, can bring together partners from companies, universities, financial bodies, local authorities, and state and European institutions.

Invest in France says four such clusters focus on functional foods: Nutrition Sante Longevite in Nord Pas-de-Calais, Prod'Innov in Aquitaine, Vitagora in Burgundy, and Qu@limed in Montpellier.

According to the agency's report, 200 foreign firms recognized potential in France's industry and infrastructure to help make the most functional food opportunities between 2002 and 2007.

Their investment projects created 9610 new jobs in the country.

This is 5 per cent of the new jobs created by such projects across all industry sectors.

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