Functional foods are purported by scientists to provide consumers with health benefits over and above food’s most basic uses: providing energy and sustaining life. Western nations, including New Zealand, face significant health challenges as their populations suffer from unprecedented rates of chronic illnesses like cancer and obesity, and health-conscious consumers appear willing and able to purchase these products. The functional food industry has been growing rapidly for the last decade and is widely tipped to continue this growth. However, there is concern that the market is largely unregulated and consumers are confused by the sheer volume of news and information about functional food and health issues. The purpose of this study is to examine the way that a functional food producer makes sense of its role in this complex social, political and economic context, particularly regarding its contribution to public health. The study takes a communication perspective and uses primarily a thematic analysis. Theories of organisational sensemaking, identity and image provide a framework for the case study analysis focusing on organisational communication with stakeholders and attempts to manage contextual issues that affect both the case study organisation and the whole industry. Data was gathered by interviewing higher-level managers from a range of divisions in the organisation, and by collecting a selection of corporate communication documents produced by the organisation for consumers. The study found that the case study organisation’s identity was heavily influenced by health values that align with the product’s proven health benefits. However, the organisation promotes the product as a premium food product, which prices a number of consumers out of the market, and illustrates the limitations this particular product has for improving consumer health. At the same time, the organisational identity comes under threat from challenges to the sustainability of the organisation’s production methods. Analysing the way organisational members respond to these threats provides an interesting picture of the way sensemaking processes are affected by external influences as internal stakeholders re-assess the organisation’s identity.