Functional Food in Export: Why the Label Decides on the Margin

Demand is growing from several directions at once. The key driver is structural: the population in Europe, North America and Asia is aging, and with age comes an increased interest in foods that do more than just satisfy hunger. Bone and muscle health, cognitive function, gut health as the basis for general well-being: these are no longer niche topics, but the main concerns of a growing consumer group.

At the same time, the perception of nutrition has fundamentally changed. Around 62 percent of consumers worldwide want transparency about ingredients, and more than half actively read the label. Demand for “clean label” products, i.e. foods with comprehensible, preferably short ingredient lists, is growing every year. And government rules are reinforcing this trend: Great Britain has extended the sugar tax to milk drinks by 2025, the WHO is promoting taxes on sugar-rich products worldwide, and the Middle East is introducing tiered taxation models. This creates structural momentum for reduced-sugar formulations and functional alternatives. Particularly relevant for Swiss manufacturers: Products with scientifically proven added value are increasingly actively in demand in the B2B sector. Industrial customers and retail chains demand substantiated claims, not marketing promises.

The greatest risk in functional food exports is not the product, but the label. More precisely: it is the assumption that a label that is legal in Switzerland is also valid in other markets.

In Switzerland, health-related claims are regulated in the Annex to the Ordinance on Food Information (LIV), which is largely harmonized with EU law. Companies that produce for both Switzerland and the EU are well advised to use EU Regulation 1924/2006 as a basis. The European Food Safety Authority (EFSA) has only approved around 267 of the more than 2.300 health claims submitted; the rejection rate is almost 90%. Companies that want to use a claim that is not on the approved list need to go through their own approval process, which takes three to five years and requires extensive clinical studies.

Botanical substances are a particularly sensitive area. Many plant-based claims, from Echinacea to Ginkgo and Valerian, are formally “on hold” in the EU: they have been submitted but not yet evaluated. Some Member States tolerate these claims under national law, while others do not. For Switzerland, there is no corresponding transitional regulation. Claims that are “on hold” in the EU do not have a vested right in Switzerland. Anyone wishing to use them needs an individual authorization from the Federal Office for Food Safety and Veterinary Affairs.

In the USA, access to claims is structurally different. So-called structure/function claims, i.e. statements about the role of a nutrient in normal body functions, do not require prior FDA approval for conventional foods. This makes the US market accessible to manufacturers who are stuck in the approval process in the EU. But: Any formulation that implies a reduction in the risk of disease is immediately a health claim with a full FDA approval process. The line between permitted and non-permitted claims is finer than expected in the US market.

Since Brexit, the UK has taken its own path. All EU claims that were approved before 1 January 2021 are valid in the UK. New EU claims that were approved after this date need to be applied for separately at the UKNHCC. If a product is produced for both the EU and the UK at the same time, there is also a packaging problem: the UK requires a UK business address on the label, an EU address is no longer sufficient. Titanium dioxide (E171) is banned as a food additive in the EU, but is still approved in the UK. In some cases, it is simply not possible to have a single recipe for both markets.

Europe is the natural first export market for Swiss SMEs: no tariffs, same regulatory basis, cultural proximity. Germany, Austria and the Benelux countries are the next steps for manufacturers who have established themselves on the Swiss market.

The Middle East offers disproportionate potential for clean-label, reduced-sugar and halal-certified products. Saudi Arabia and the UAE are introducing tiered sugar taxation; this creates structural demand for functional alternatives.

Asia-Pacific is the largest growth volume: 40 percent of the global functional food market, with an annual growth of almost 11 percent. Japan has one of the most sophisticated regulatory frameworks for functional foods worldwide (FOSHU system) and a strong willingness to pay for scientifically proven products with a European origin signal.

The USA remains the largest single market, with a high price level for differentiated products and a regulatory access that is easy to navigate for Swiss manufacturers through Structure/Function Claims.

The right approach depends on the target country, but there is a clear basic rule: The compliance setup decides earlier in the process whether an export project is viable or not.

Those who primarily export to the EU and the UK rely on EU Regulation 1924/2006, check the UK’s special status for each formulation, and avoid botanical claims that are not based on solid evidence. Those who go to the US formulate claims as Structure/Function Claims and remove formulations that are self-evident in the EU context but would lead to an FDA approval process in the US.

Those who want to serve several markets at the same time plan several label versions from the outset, not as a subsequent correction, but as part of the market entry strategy. The costs of a clean regulatory setup upfront are a fraction of the costs of a market recall or a relabeling during ongoing operations.

Switzerland Global Enterprise supports Swiss food companies in the preparation and implementation of export projects: from market selection and target group analysis to the introduction of local trade and certification requirements, to support at international trade fairs and fact-finding missions.