The Rise Of Functional Beverages
Functional beverages are drinks designed to have positive effects beyond just taste and hydration.
“46% of U.S. drinkers are trying to reduce their alcohol consumption and 52% enjoy non-alcoholic beverages.”
Think energy drinks giving you that extra pep in your step from caffeine. Vitamin-infused water is a way to ensure you’re always taking your vitamins. Non-alcoholic beverages, including CBD, adaptogens, or nootropics.
Functional beverages are those that can help enhance body functionalities, including the immune system, energy, digestive health, and focus, as examples. This is all due to the presence of vitamins, minerals, and other additives.
Major changes in the beverage industry are moving towards functional beverages as interested consumers continue to push for new ways to improve their health.
The functional beverage is seeing incredible expansion, especially for those who want to explore a sober lifestyle or are simply sober curious. A survey from consumer insight platform Veylinx claims 46% of U.S. drinkers are trying to reduce their alcohol consumption and 52% enjoy non-alcoholic beverages. In fact, U.S. sales for non-alcoholic functional beverages hit $395 million last year.
Changing Tastes
We’ve all heard claims from the beverage industry before, promising healing elixirs for a variety of illnesses. Many of these drinks are created with numerous ingredients. Some effects include energizing from caffeine or caffeine-adjacent ingredients like L-theanine or anti-inflammation through synthetic nootropics. Still, technically (at least in the United States), there is no such category – on a technical basis – of “functional beverages.” The FDA has viewed the product as “conventional beverages or dietary supplements.” If the ingredients were labeled as “unapproved food additives, the products would be considered adulterated; the FDA would render these tampered-with products illegal.
“U.S. sales for non-alcoholic functional beverages hit $395 million last year.”
Because of this, consumers are increasingly concerned about the quality and origin of the ingredients they put in their bodies. Functional beverage brands prioritize transparency by clearly labeling ingredients and highlighting the functional benefits to gain trust and loyalty from health-conscious consumers. Innovation in formulation, flavor profiles, and packaging also drives the market forward, offering exciting and enticing options for drinkers.
Demographic
Functional beverages are specifically for consumers seeking healthier alternatives to sugary sodas and artificially flavored drinks. The desire for improved well-being, convenience, and personalized nutrition has fueled the market's expansion. Manufacturers have responded to this demand by introducing a wide range of functional beverages, including functional waters, energy drinks, probiotic beverages, and herbal teas.
Also, many functional beverages are formulated to accommodate specific dietary needs. These can include plant-based, keto-friendly, gluten-free, and many more.
“The global functional beverages market will grow from $131.47 billion in 2022 to $147.7 billion in 2023...”
Most of these consumers hope to obtain some healthy benefits while on the go. Functional beverages offer a solution by providing targeted benefits in a convenient, ready-to-drink format. The emphasis on holistic wellness, performance enhancement, and personalized nutrition also contributes to their growing popularity.
By The Numbers
As health issues receive increased awareness, it paradoxically propels the demand for functional beverages. The global functional beverages market will grow from $131.47 billion in 2022 to $147.7 billion in 2023, with a compound annual growth rate of 12.4%; additionally, the market is expected to grow to a remarkable $224.99 billion by 2027.
“Buzzwords, such as “clean-label, organic, and non-GMO” are positively impacting the buying behaviors of consumers.”
Therefore, these consumers' preferences for functional beverages over carbonated drinks or fruit juices will continue to drive the demand over the next decade.
Competition
It’s no secret that functional beverages aren’t the cheapest drinks. There is a wide availability of affordable substitutes, including green tea, coffee, and fresh juice. The availability of substitute products is negatively impacting the market growth.
However, manufacturing costs are comparable. The availability of low-calorie natural sweeteners and colors is prevalent; major players are adopting various strategies to meet consumer demand.
“Unlike competitors, functional beverages allow for customization and personalization, aligning with different lifestyles and preferences.”
This diversity ensures that consumers can find a beverage that suits their specific needs – whether it’s hydration, recovery, focus, or immune support.
Rebellious
Beloit Kombucha
Odyssey Elixir
If you’re a functional beverage brand looking to expand your brand awareness, increase sales and get in front of your target market, give us a call! Firebelly specializes in helping food and beverage brands create meaningful social connections.