A Systems-Level Review of Economics, Business Strategy, and Food Science in the Development and Policy Governance of Functional Health Foods

Functional health foods have emerged as a major interdisciplinary domain integrating food science, nutrition, economics, business strategy, and regulatory policy. This review synthesizes evidence from studies published between 1998 and 2026 to examine the scientific foundations, market dynamics, regulatory frameworks, and systemic interactions shaping the functional food sector. The analysis reveals that bioactive compounds such as probiotics, polyphenols, omega-3 fatty acids, dietary fibers, and phytochemicals exert physiological benefits through multiple mechanisms including gut microbiome modulation, anti-inflammatory activity, cardiometabolic regulation, and antioxidant defense. Despite strong experimental and clinical evidence supporting certain health benefits, translation into consistent public health outcomes is constrained by variability in bioavailability, food matrix interactions, and individual biological differences. Economic analysis demonstrates rapid global market expansion, particularly in the United States and China, though high product prices and regulatory complexities limit widespread accessibility. Regulatory governance varies significantly across jurisdictions, ranging from Japan’s Food for Specified Health Use (FOSHU) system to the European Union’s stringent health-claim authorization framework. These differences strongly influence innovation strategies and commercialization pathways. A systems-level perspective reveals that successful functional food ecosystems require sequential alignment between scientific validation, regulatory frameworks, and business innovation. Emerging technologies—including personalized nutrition, artificial intelligence-driven product design, microbiome-targeted foods, and nano-delivery systems—offer opportunities to overcome current limitations, but also necessitate regulatory evolution and greater interdisciplinary coordination. Overall, the functional food sector represents a rapidly expanding yet complex innovation ecosystem where scientific evidence, economic incentives, regulatory policy, and consumer perception interact to shape the development and global governance of health-promoting foods.