Functional beverages: A market on the rise with health and wellness at its core

January 15, 2024

A recent report from offers a comprehensive analysis of the U.S. functional beverage market, highlighting evolving consumer preferences and behaviours.

Functional beverages, known for their health-centric benefits such as increased energy, enhanced hydration, improved cognitive function, and better sleep, are gaining traction among consumers seeking small yet impactful lifestyle changes. The report underscores the growing demand for “better-for-you” products, characterised by clean labels, natural or organic ingredients, reduced sugar and calories, and vegan or plant-based options. This shift reflects a broader consumer trend towards more nutritious and healthful choices in the beverage sector.

Market dynamics and consumer behaviour

The functional beverage market is segmented into various categories, including energy and sports drinks, functional carbonated drinks, coffees and teas, dairy and dairy alternative beverages, juices, waters, nutritional shakes, protein drinks, meal replacements, and other functional beverages. The report covers sales across multiple channels, including grocery stores, supermarkets, mass merchandisers, convenience stores, and online outlets. A key aspect of the report is its analysis of the COVID-19 pandemic’s broad impact on consumer behaviour, particularly in the context of functional beverages. The pandemic influenced shopping patterns, with a notable increase in online grocery shopping and changes in snacking and healthy eating habits. The report also delves into the rising concerns about inflation and food prices, which have become significant factors in consumer purchasing decisions.

Opportunities and challenges in the functional beverage market

The report identifies several opportunities for growth in the functional beverage market. These include the rising rates of food allergies and lactose intolerance, the growing interest in plant-based and plant-forward trends, and the increasing consumer focus on nutrients, ingredients, and desired health benefits. Marketing trends such as the emphasis on “superfoods,” adaptogens, and “food as medicine” concepts are also highlighted. Additionally, the report discusses the challenges and opportunities in packaging, balancing the need for effective, sustainable, and low-cost options. Consumer insights on recycling, household waste, sustainability, and packaging preferences are also explored, providing valuable information for beverage producers, retailers, packaging companies, and investors looking to tap into this dynamic market.

Top image credit: Unsplash

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