What are Functional Beverages?
The functional beverage is a product that has an “added physiological benefit above and beyond its naturally occurring benefits.” Functional beverages include dairy beverages, sports and performance drinks, energy drinks, ready-to-drink teas, enhanced water, etc.
For example, orange juice with nothing added is just a regular beverage. But, if we add plant sterols to orange juice then it will be known as a functional beverage.
The functional beverage market is projected to reach US$208.13 billion by 2024 growing at an expected CAGR of 8.66%. The pandemic has significantly boosted the visibility of functional beverages, particularly on online platforms. With no real end to the pandemic in sight, the online market for functional beverages is expected to grow in 2022.
Functional Beverage Industry Trends Predicted for 2022
Let’s be honest. It may be the elixir of life, but plain old water is a bit of a bore and most other non-boozy beverages have too much sugar, caffeine, or other additives to be consumed regularly.
Over the last five years, consumers have thought so too as they increasingly gravitate toward healthier eating habits. Since 2016, interest in healthy eating and healthy diets has gone up by 89%, and by nearly 40% since 2019.
And this interest has extended to beverages as well. Consumers today don’t just want their beverages to taste good and help them stay hydrated, they also want added health benefits. And this is why the functional beverages market has seen extraordinary growth. Consumer interest in functional beverages over the last year alone increased by a whopping 272%.
The functional beverage industry has in the past largely been associated with sports and fitness, but consumers are constantly on the lookout for easy ways to get nutritional and health benefits through food rather than medicines. Interest in food as medicine grew by 25% over the last year, and by 780% since 2016. As such, we’ve seen this trend expand beyond supporting sports lifestyles to also catering to more everyday requirements, as our analysis below shows.
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Barrage of Beverages
While many of these claims are well established, there are plenty of emerging functional benefits that recent launches are tapping into. Beverages are a great medium to experiment with in terms of incorporating functional ingredients. It’s no wonder then that there have been a slew of interesting launches from the functional beverage industry over the past few months, covering functional benefits ranging from relaxation and sleep to immunity.
Ocean Spray Cranberries Inc., for example, just launched a new range of functional infused waters under the brand B1U, featuring simple ingredients and no sugar or artificial sweeteners. The variant for the season sports an immunity claim with zinc and Vitamin C to offer protection. Other ingredients highlighted by the range include protein, fiber, and caffeine.
With our out-and-about lives severely curbed by the pandemic, expect to see significant interest in weight management products over the coming years. We’re already seeing a number of beverage products addressing this issue, focusing on specifics. Bolthouse Farms’ Bolts Metabolism shot includes 66mg of cayenne, along with tomato and green tea extract, aimed at boosting metabolism.
With the expanding range of functional applications sought after by buyers, brands today are looking to employ unique ingredients that holistically fulfill the various functional goals of consumers. For instance, sports drink brands are widening their ingredient lists to enrich sports nutrition benefits. This has led to functional beverages with creatines and branch-chained amino acids becoming highly popular.
Functional beverages boosting cognitive health and energy are in an innovation phase with h ingredients such as CBD, collagen, and adaptogens. Incredibly popular among millennials, the use of these ingredients feeds into the food-as-medicine movement.
Moving Beyond Caffeine
While caffeine is used in energy drinks, there is growing awareness of the possible negative effects. Consumers today are seeking healthier alternatives to avoid the post-caffeine crash with its disruptions to quality sleeping patterns.
Sleep is important too and we all could do with more of it. That’s why we’re seeing functional launches that aid rest and relaxation (check out our blog on sleep foods for more on this topic).
Must Read: Future Food Market Insights
The use of L-theanine is revving in the functional beverage market. Capable of supplying sustained energy boost and cognitive advantages the crash, L-theanine is a great alternative to caffeine.
Som Sleep’s range includes L-theanine, GABA (gamma-aminobutyricacid), magnesium, Vitamin B6, and melatonin. Pepsi’s gotten in on the action as well with Driftwell, which includes 200 mg of L-theanine and 10% of the daily requirement of magnesium.
The Road Ahead
In the coming couple of years, we expect to see the functional beverage trends rise. This space tackles a lot more functional needs of consumers. Some of the major health claims to watch out for, based on our data, include eye health, hair health, hormone balance, and brain health.
You can login to our platform to find out which brands are calling out these niche functional benefits.
To say it’s been a tough year is a bit of an understatement. Stress and anxiety have been near-constant companions for many of us, borne out by a 31% spike over the last year, according to Spoonshot data.
With an increasing demand for plant-based options, the functional beverage industry is also incorporating plant-based ingredients in its products such as plant-based waters including pressed lettuce water and sweet potato water.
Corporate giants are innovating at warp speed to combine their successful products with plant-based ingredients to cater to evolving customer expectations.
One impact of stress is dehydration, and conversely, dehydration can cause greater anxiety or stress levels. So, staying hydrated is a very important part of our pandemic life.
Ranjana works as the Lead Research Analyst for Spoonshot. Her past experience includes working with a major global market research company, specializing in food and drink trends. She has also worked with major publications as a writer and editor.