Functional Beverages: Market Trends and Opportunities, 2nd Edition

Report Overview

Functional Beverages: Market Trends and Opportunities is the go-to source for a complete understanding of U.S. consumer trends regarding functional beverages. This report combines Packaged Facts’ extensive monitoring of the food and beverage market with proprietary surveys, and evaluates current trends and future directions for marketing and retailing, along with consumer patterns during the pandemic and inflation area and across the broader food and beverage market.

Functional beverages purport to provide functional benefits that consumers perceive as important to health or day-to-day life, such as:

• increased energy
• enhanced hydration
• boosts in cognitive function/brain activity
• better sleep and relaxation
• boosts in immunity
• increased gut health
• meal replacement and weight management
• sports performance improvement

Functional beverages are appealing to those who want to make small changes for big results. Consumers also increasingly want and expect products with “better-for-you” attributes that are perceived as more nutritious or healthful. “Better-for-you” traits seen in many functional beverages include clean labels, natural/organic ingredients, reduced or eliminated sugar and calories, and vegan/plant-based designations.

With a focus on “what’s next” and current consumer trends, Functional Beverages: Market Trends and Opportunities is packed with insights about consumer trends, behavior, and motivations to help beverage producers, retailers, packaging companies, employers, and investors gauge consumer perspectives and find areas for growth in a competitive market.

Functional Beverages: Market Trends and Opportunities delivers actionable predictions and recommendations designed to guide producers, retailers, and investors in making business decisions by providing data and insights about consumer behavior and what consumers think about these products.

Scope

This Packaged Facts report analyzes the dynamics of the current landscape of the functional beverage market. Consumer demographics, perceptions, motivations, and behavior pertaining to beverages and attitudes on food, diet, health, and product packaging are taken into account. Effects of the COVID-19 pandemic on consumers are also analyzed in a broad sense, as well as in the context of seeking out functional beverages.

Functional beverages are segmented by the following product categories:

• Energy and Sports Drinks
• Functional Carbonated Drinks
• Functional Coffees and Teas
• Functional Dairy and Dairy Alternative Beverages
• Functional Juices
• Functional Waters
• Nutritional Shakes, Protein Drinks, and Meal Replacements
• Other Functional Beverages

Sales include both ready-to-drink (RTD) versions that are bottled or canned and beverage powders. This report also includes functional dry coffee and tea that are brewed with water to become functional beverages.

This report includes sales of the above items from:

• Grocery stores, supermarkets, and discount grocers (e.g., Kroger, Safeway, ALDI)
• Mass merchandisers (e.g., Walmart, Target, Meijer) and warehouse clubs (e.g., Costco, Sam’s Club, BJ’s)
• Convenience stores (e.g., Pilot/Flying J, Circle K, 7-Eleven) and dollar stores (e.g., Dollar General, Family Dollar)
• Other retailers, such as gift stores
• All online outlets, including online-based grocers (e.g., Amazon, Thrive Market, FreshDirect, Boxed), third-party pack-and-deliver companies that use their own workforces to purchase groceries at various stores and deliver them to customers (e.g., Instacart), brands that sell their own food products via their websites, direct-to-consumer, and online sales from websites or apps of retailers in the previous categories

Historical numbers for the retail functional beverage market are provided from 2017 through 2022. Market forecasts are provided from 2023 through 2027.

The reasons for and implications of shifts in consumer perception and behavior are analyzed in the context of future market opportunities.

Additionally, Functional Beverages: Market Trends and Opportunities has dozens of tables highlighting numerical survey data on consumer demographics and psychographics and numerous marketing photographs. This report goes in-depth on COVID-19 and inflation trends that have affected the food and beverage market.

The information contained in Functional Beverages: Market Trends and Opportunities was developed from primary and secondary research sources. Primary research includes interviews with food and beverage market experts; participation in and attendance at food industry events; and extensive internet canvassing.

Primary research also includes national online consumer polls of U.S. adult consumers (age 18+) conducted on an ongoing basis by Packaged Facts to analyze attitudes of consumers and their relevant food and beverage preferences.

Survey data from MRI-Simmons are used to analyze the demographics and psychographics of consumers.

Supplementing Packaged Facts’ exclusive surveys are analysis of the 2022 and 2023 Food & Health Surveys conducted by the International Food Information Council, which analyze consumer food purchase decisions, diet and lifestyle choices, snacking activity, and perception of health benefits in foods.

Packaging Trends

Packaging aesthetics can be important to beverages, bolstering brand recognition and justifying higher prices for premium products.

Additionally, sustainability is a key packaging trend that affects the functional beverage market – and the food and beverage market overall – and will continue to drive change in the packaging industry. Packaging that is deemed excessive, wasteful, environmentally unsound, or otherwise hard to dispose of or recycle creates frustration and can negatively affect the experience of buying or opening beverages.

People who are more focused on wellness and healthy eating, including functional beverage users, tend to be more interested in sustainable packaging. Thus, functional beverages are targeted aggressively for sustainable packaging changes. Packaging suppliers, retailers, and beverage marketers alike have placed focus on improving the environmental footprint of their product packaging.

Nonetheless, marketers also must balance form and function of packaging with these desires; fundamentally, the most important function of packaging is to protect the product inside. For beverages, this means no leaks/spillage, longer shelf life, keeping beverages hot or cold, and preventing contamination. Additionally, beverage packaging for easy consumption on-the-go is a key design attribute for functional beverages. Functional beverages are often sold in single servings with a convenient cap or dispensing feature to make drinks easy to consume, pour, or reseal without spilling.

Highlights

• The coronavirus has led to long-term changes in the eating and drinking habits of many consumers. Some are seeking indulgence from food when other sources of comfort and indulgence feel less available, while others are seeking out foods or beverages with real and perceived health benefits to improve overall health or counterbalance other bad habits.
• Convenient food and beverage ordering methods are being used more commonly in the wake of the pandemic. First-time purchases and higher volumes of have led to rapid growth in online order fulfilment, as well as expansion in food and beverage delivery and takeout.
• The pandemic has had lasting impacts on consumers and changed many shopping habits permanently. Many are still concerned about COVID-19 variants, as well as shortages and inflated prices, after the trauma of more than three years of varying levels of economic, social, and health-related upheaval.