Functional Beverages Market By Type (Caffeinated Beverages, Probiotic Drinks, Vegetable & Fruit Beverages, Energy Drink, Nutraceutical Drinks, Fortified Water, and Others), End-user (Athletes, Fitness Lifestyle Users, and Others), Distribution Channel (Supermarket & Hypermarket, Specialty Stores, E-Commerce, and Others), and Region - Market Perspective, Market Intelligence, Comprehensive Analysis, Historical Data, and Forecast for 2023-2032
Market Perspective
The global Functional Beverages Market size was worth around USD 128.1 billion in 2022 and is anticipated to generate revenue of USD 205.8 billion by 2032 at a CAGR of around 4.8% between 2023 and 2032.
The functional beverage market is experiencing strong growth due to increasing awareness of the benefits of consuming products that promote the immune system, weight management, digestive health, and heart health. This growth is being driven by the shift towards clean-label, organic, and non-GMO products, as well as the millennial population's preference for fitness and exercise, increasing purchasing power, and willingness to pay for healthier options.
The most popular functional drinks include yogurts and milk drinks, sports & performance drinks, healthy milk, fortified water, energy drinks, fruit & juices, soy drinks, and herbal teas. The convenience and health benefits of these products are driving demand, as are recent product innovations and the growing trend toward healthy lifestyles and disease prevention. Additionally, rising healthcare costs are contributing to the growth of the functional beverage market.
Key Insights
- Based on the type, the energy drink segment held the largest market share
- Based on end-use, the fitness lifestyle users segment generated the highest revenue
- By distribution type, the e-commerce segment has dominated the market share
- On the basis of region, North America accounted largest market share
Growing Demand for Healthy Hydration Products with Natural Ingredients is Augmenting the Market Growth
The continued consumer trend toward healthy beverages has been linked to probiotic foods, and the growing sales of conveniently packaged beverages with beverages further increase the demand for probiotic beverages, including kombucha. Consumers preferred functional drinks instead of fruit juices and carbonated drinks.
Currently, consumers are more aware of the health implications associated with non-alcoholic categories, so concerned consumers often avoid malignant categories such as sodas and juices in favor of healthier options such as soy milk, probiotics, and other functional drinks. The growing popularity of fermented beverages made from natural ingredients, as well as the increased consumption of probiotics.
As consumers continue to gravitate toward the health and wellness benefits of today's lifestyle, the functional beverage industry is expected to grow. The increased interest in consumerism also influenced the functional food and beverage industry. Most product formulators and manufacturers are looking for new ways to incorporate traditional functional ingredients. Functional ingredients such as adaptogens, nootropics, and pre/probiotics have gained widespread market recognition worldwide, and traditional Ayurvedic herbs are finding their place in consumer health and wellness programs; All this has led to significant changes in the food and drinks of functional groups.
Rapid Inclination Towards a Healthy Lifestyle is Driving the Growth of the Market
The increase in demand for sports and energy drinks among athletes and people who exercise intensely has significantly boosted the growth of the functional beverages market. A growing sports community and a rising number of athletes in developing countries are also driving market growth. In addition, the increasing willingness of consumers for physical fitness and the growing number of fitness centers and clubs are expected to boost the functional beverages market growth.
Manufacturers are focusing on expanding their product offerings by creating new flavors with health benefits and as they target distinct age groups, sports drinks are popular among adolescents and adults. The production of functional beverages from natural ingredients such as natural sweeteners is expected to boost the functional beverages market share, providing an opportunity for manufacturers to add value to their products. The functional and sophisticated beverage category is constantly evolving as consumers HAVE increased focus mainly on energy, sports drinks, and enhanced water, which target a wide range of health concerns.
High Cost Associated with Functional Beverages is Hampering the Market Growth
The rising cost of functional beverages is due to the associated cost with premium beverages and the low purchasing power of customers in developing nations could be a major problem for the functional beverages market. The significant issue associated with low-income households and individuals, the price can be a barrier to the consumption of healthy drinks. The higher price of functional food products due to the inclusion of healthier or natural ingredients is limiting the market's growth. Although, the significance of quality food, consumers are willing to pay a premium price for foods, which contribute to better health and can further enhance the market growth.
Recent Development
In August 2022: PepsiCo invested USD 550 million in the functional energy drink Celsius to accelerate its focus on the energy category and to gain penetration across the energy beverage category.
In May 2022: Koios Beverage Corp. launched 6 new flavors of its Fit Soda functional beverages such as Cherry Slushie, Mimosa, Pumpkin Spice, Sweet Tea Lemonade, Strawberry Snow Cone, and Blueberry Lemonade. The company aims to expand its reach to meet the growing consumer demand with the addition of new flavors.
In March 2021: Arla Food Ingredients introduced Lacprodan ISO. Clear protein-enhanced juice drink concept designed for the fortification of functional beverages. The product consists of 90% protein content, high heat resistance, and a clear solution, therefore it is suitable for pasteurized or ultra-high temperature (UHT) processed juice drinks.
Segmentation Analysis
Based on the type, the market is categorized into caffeinated beverages, probiotic drinks, vegetable & fruit beverages, energy drinks, nutraceutical drinks, fortified water, and others. The energy drink segment is the most dominating segment owing to the growing popularity of sports drinks especially among the younger population due to higher involvement in sports activities.
Based on end-use, the market is segmented as athletes, fitness lifestyle users, and others. The fitness lifestyle users segment is expected to account for the largest share of the functional beverages market. The large market share of this segment is attributed to factors such as an increase in health-conscious people and demand for clean-label and non-GMO food products.
Based on distribution channels, the market is classified as supermarkets & hypermarkets, specialty stores, e-commerce, and others. The e-commerce segment is expected to register the largest share which is attributed to factors, such as the availability of a wide variety of products at online stores, with significant discounts, and home delivery service.
North America is Dominating the Market Share Due to the Proliferation in the Popularity of Plant-based beverages
The functional beverage market in North America is experiencing significant growth, driven by the region's strong economy and focus on health and wellness and a rapidly growing demand for zero-calorie, zero-sugar, and low-carb options. Consumers in the region are increasingly turning to natural foods and beverages, such as plant-based options, to address specific health concerns, rather than relying on chemically derived pills.
The plant-based trend is particularly strong in North America, as these types of beverages have a health halo that makes them an ideal platform for functional ingredients. Research shows that a majority of U.S. shoppers consider food and drink with plant-based claims to be healthy and natural, outperforming regular products and those with all-natural claims. Additionally, the International Food Information Council's 2021 Food and Health Survey found that even when two products have the same nutrition facts label, more than four out of ten shoppers consider plant-based options to be healthier.
As functional beverages provide a convenient platform for addressing specific health issues, they are gaining popularity in North America and driving market growth across the region. Businesses in the functional beverage market can capitalize on this trend by offering a range of natural and plant-based options, and by emphasizing the health benefits of their products to appeal to the growing number of health-conscious consumers in the region.
Asia-pacific is the Fastest Growing Market Owing to the Prevalence of E-commerce Platforms
During the forecast period, the Asia-Pacific region is expected to experience the fastest growth in the functional beverage market, driven by increasing rates of diabetes and obesity, rising demand for low-carb and clean-label products, and growing awareness of the importance of health and fitness. The high prevalence of osteoporosis, cardiovascular disease, and arthritis, along with changing consumer preferences, is also driving demand for functional beverages in the region.
In particular, in India and China, due to the high prevalence of diabetes, consumers are becoming more aware of the importance of a healthy diet and active lifestyle, and are increasingly seeking out natural sweeteners.
Australia is also a significant market for functional beverages, as consumers in the country have become increasingly health-conscious, and are looking for healthier food options that offer functional benefits to their health. Fermented drinks such as Kombucha and nootropic drinks are two popular functional beverages in Australia's functional beverage sector. As a result, the functional beverage industry in Australia has undergone significant changes in recent years, as companies have adapted their product innovation strategies to meet changing consumer demands and as the market for functional beverage products has grown dramatically. Businesses looking to capitalize on this trend should focus on offering a range of natural and low-carb options and emphasizing the health benefits of their products to appeal to health-conscious consumers in the region.
Competitive Landscape
- Arla Foods Ingredients Group P/S
- Danone S.A.
- General Mills Inc.
- Koios Beverage Corp
- Mondelēz International
- Nestle
- PepsiCo
- Red Bull
- SUNTORY HOLDINGS LIMITED
- The Hain Celestial Group, Inc.
- The Kraft Heinz Company
The global functional beverages market is segmented as follows:
By Type
- Caffeinated Beverages
- Probiotic Drinks
- Vegetable & Fruit Beverages
- Energy Drink
- Nutraceutical Drinks
- Fortified Water
- Others
By End-user
- Athletes
- Fitness Lifestyle Users
- Others
By Distribution Channel
- Supermarket & Hypermarket
- Specialty Stores
- E-Commerce
- Others
By Region
- North America
- The U.S.
- Canada
- Mexico
- Europe
- France
- The UK
- Spain
- Germany
- Italy
- Nordic countries
- Denmark
- Finland
- Iceland
- Sweden
- Norway
- Benelux Reunion
- Belgium
- The Netherlands
- Luxembourg
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- New Zealand
- Australia
- South Korea
- Southeast Asia
- Indonesia
- Thailand
- Malaysia
- Singapore
- Rest of Southeast Asia
- Rest of Asia Pacific
- The Middle East & Africa
- Saudi Arabia
- UAE
- Egypt
- Kuwait
- South Africa
- Rest of the Middle East & Africa
- Latin America
- Brazil
- Argentina
- Rest of Latin America
ARE YOU SEEKING COMPREHENSIVE INSIGHT ON VARIOUS
MARKETS?
CONTACT OUR EXPERTS TODAY
Speak to an Expert
Functional Beverages Market By Type
- January-2023
- 148
- Global
- food-beverage
Related Research
Adaptogens Market By Source (Astragalus, Turmeric, Ashwagandha, Ginseng, Cordyceps, and Others), Nat
February-2023
Alginate Market By Product (Potassium Alginate, Calcium Alginate, Propylene Glycol Alginate, Sodium
March-2023
Artificial Sweetener Market By Type (Aspartame, Acesulfame-K, Monosodium Glutamate, Saccharin, and S
March-2023
B2B Food Marketplace Platforms Market Size, Share, and COVID-19 Impact Analysis, By Organization Siz
June-2022
Barbecue (BBQ) Sauce Market Insights Aircraft Air Brake Market Insights 2022, Global Analysis and Fo
July-2021