April 17, 2024
Functional Beverage Market

Functional Beverage Market Driven By Increasing Health Consciousness

The global functional beverage market is driven by growing consumer awareness regarding the health benefits associated with nutrient-enriched beverages. Functional beverages are drinks that are infused with added nutrients, herbs, vitamins, amino acids, or other components that provide benefits beyond basic nutrition. They comprise various products including energy drinks, sports drinks, fortified juices and non-carbonated drinks. These beverages aid in reducing the risk of several lifestyle diseases, boosting immunity, and managing weight and hydration levels.

The increasing health consciousness among people and busy work schedules have augmented the demand for functional drinks. These beverages fulfill the daily nutritional requirements and provide instant energy. They are convenient alternatives to packaged foods and supplements. Moreover, the rising trend of active lifestyles and participation in sports activities have resulted in higher consumption of sports and energy drinks. Sustainable packaging solutions and natural ingredient formulations are further attracting consumers.

The global functional beverage market is estimated to be valued at US$ 220.66 Mn in 2024 and is expected to exhibit a CAGR of 6.6% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

The functional beverage industry is witnessing progressive product launches from major brands. Companies are introducing enhanced products with multiple functional benefits and exotic flavors to cater to dynamic consumer preferences. For instance, in 2022, PepsiCo expanded its Propel brand with the launch of Propel Antioxidant Water infused with acai and fruit extracts. Similarly, in 2023 Coca-Cola introduced its Aha sparkling water in additional great-tasting flavors like blueberry pomegranate and peach pineapple.

Plant-based beverages are gaining immense traction due to rising veganism and focus on sustainable products. Consumers are displaying increased affinity towards herbal teas, cold-pressed juices, and non-dairy milk beverages infused with nutrients. For example, in 2021, Oatly expanded its product range by launching Ready-to-drink coffee beverages loaded with essential vitamins, minerals, and fibers. This trend is expected to continue in the next five years with several new product innovations.

Porter’s Analysis

Threat of new entrants: Low capital requirements and established global distribution channels lower the threat of new entrants. However, brand loyalty and nutritional expertise pose high barriers.
Bargaining power of buyers: Large retail chains have significant bargaining power over brands. However, diversified product portfolios of brands reduce buyers’ power.
Bargaining power of suppliers: Strong dependence on key ingredients like vitamins and minerals increases suppliers’ bargaining power. However, established supply networks balance this power.
Threat of new substitutes: New health snacks and energy drinks pose a mild threat. However, diverse functional benefits and brand positioning make substitutes less attractive.
Competitive rivalry: Intense rivalry exists among global and regional players. Branding, innovation, and acquisitions are key to gain market share in this competitive landscape.

Key Takeaways

The Global Functional Beverage Market Demand is expected to witness high growth over the forecast period. The market size for 2024 stands at US$ 220.66 Mn.

Regional analysis: North America dominates the market currently due to health consciousness. However, Asia Pacific is expected to witness the fastest growth over the forecast period owing to changing lifestyles and increasing health expenditures in the region. China, India & Japan will be the key markets in Asia Pacific.

Key players: Key players operating in the functional beverage market are The Coca-Cola Company, PepsiCo, Nestle, Danone, Red Bull, Campbell Soup, Materne. Coke’s Propels and Gatorades are strong brands in the sports drinks segment. Nestle’s Nesquiks are leading players in the global flavored beverages market.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it