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Functional Drinks Products Market Size, Share, & Trends Analysis Report (2023 – 2030)
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Report Overview
The global functional drinks market was valued at USD 39.7 billion in 2022 and is projected to expand at a CAGR of 6.2% from 2023 to 2030. Functional drinks have become increasingly popular over the past few years due to their potential health benefits. These beverages are manufactured to include ingredients that provide a wide range of health benefits such as improved digestion, increased energy, and improved mental clarity. The growing trend of health consciousness among consumers has led to an increase in the demand for functional drinks.
Furthermore, the increasing demand for organic and natural drinks is expected to fuel the growth of the market. Consumers are now more inclined towards organic products, rather than chemical-based drinks, due to their potential health benefits. To meet this demand, several manufacturers are launching organic and natural products. For instance, in April 2021, PepsiCo launched a new range of organic drinks under the name, ‘Organic Gatorade’ in the U.S. This range of organic drinks is made from organic ingredients and is free of artificial colors and flavors.
The rise of the on-the-go lifestyle and busy schedules of customers has led to an increased demand for easy-to-carry functional drinks. Therefore, manufacturers are launching various ready-to-drink (RTD) products in different flavors and sizes. For instance, in March 2021, Coca Cola launched a new range of RTD functional drinks under the brand name, ‘Glow’, in the U.S. This range of drinks contains electrolytes, B-vitamins, and probiotics, and is available in lemon mint, strawberry cucumber, and mango pineapple flavors.
In addition, the growing demand for functional beverages with no added sugar or artificial sweeteners is expected to fuel the growth of the market. Consumers are increasingly opting for sugar-free beverages due to the various health concerns associated with sugar intake. To meet this demand, manufacturers are launching sugar-free drinks with natural sweeteners like stevia. For instance, in April 2021, Nestlé launched a range of sugar-free and low-calorie functional drinks under the brand name, ‘Perrier & Juice’, in the U.K. This range of drinks is available in Peach & Nectarine and Orange & Passion Fruit flavors and contains natural sweeteners.
The increasing availability of functional drinks in convenience stores, supermarkets, and online stores is expected to fuel the growth of the market. Furthermore, the growing trend of e-commerce and the availability of various offers on functional drinks are further expected to drive the growth of the market.
Product Insights
The energy drinks segment is expected to witness the highest growth rate during the forecast period. The rising demand for energy drinks is attributed to the increasing demand for functional beverages with energy-boosting benefits. According to an article published by Mintel, in June 2020, 40% of global consumers agreed that energy drinks help them stay alert and focused. Furthermore, increasing prevalence of lifestyle disorders such as fatigue and stress among people is boosting the demand for energy drinks.
The sports drinks segment is anticipated to register a significant share in the global functional drinks market. Growing awareness about the benefits of sports drinks such as providing energy and electrolytes, and enhancing performance during physical activities are the main drivers of the market. According to an article published by The Guardian, in June 2020, there has been a significant rise in the consumption of sports drinks among athletes and fitness enthusiasts. Furthermore, rising health consciousness among consumers is expected to drive the market over the forecast period.
Distribution Channel Insights
The supermarkets and hypermarkets segment held the largest market share of over 35.3% in 2022. Supermarkets and hypermarkets offer a wide range of functional drinks products and convenience to customers. According to a survey by Supermarket News in 2020, the demand for functional drinks products has grown significantly in supermarkets and hypermarkets due to increasing consumer preference for healthy and organic products. Furthermore, these stores provide products from different brands at a single place, which in turn attracts more customers.
The online segment is expected to register the highest CAGR of 11.4% over the forecast period. The increasing penetration of the internet and rising number of smartphone and laptop users in the country are likely to drive the segment growth. Furthermore, the availability of a wide range of functional drinks products and discounts offered by e-commerce platforms are expected to fuel the segment growth. In addition, the convenience of online shopping, the availability of product reviews, and a wide range of payment options are also expected to drive the segment growth.
Type Insights
The functional drinks segment is anticipated to expand at a CAGR of 8.3% from 2021 to 2027. The increasing demand for healthy drinks with functional ingredients such as vitamins, minerals, and herbs is driving the market for functional drinks. Also, the growing trend of consuming energy drinks as a substitute for coffee is expected to drive the demand for functional drinks. Furthermore, the growing health consciousness among people has shifted the focus towards fortified and functional drinks. For instance, in April 2021, PepsiCo, Inc. launched a new line of beverage called Pepsi Café, a coffee-flavored cola with double the caffeine content of traditional Pepsi.
The non-functional drinks segment is expected to account for the largest revenue share of 42.2% in 2027. The non-functional drinks such as juices and soft drinks are majorly consumed by a wide population, which is expected to drive the growth of this segment. Also, the rising consumption of non-functional drinks as a result of changing lifestyle and growing urbanization is expected to drive the demand for non-functional drinks. Furthermore, the increasing population of health-conscious customers is expected to boost the sale of low-calorie and organic non-functional drinks.
Regional Insights
Europe accounted for the largest revenue share of over 35.5% in 2022 and is expected to remain dominant over the forecast period. This is due to the increasing preference of functional drinks among consumers in the region. Additionally, the presence of major functional drinks manufacturers such as PepsiCo, Red Bull GmbH, and Coca-Cola is expected to further drive the growth of the market. For instance, in December 2021, PepsiCo launched ‘Hello Goodness’, a line of functional drinks in the UK.
The Asia Pacific region is expected to witness the fastest growth over the forecast period. Growing health awareness coupled with the availability of various functional drinks products is expected to drive the growth of the market in the region. Additionally, an increase in disposable income and the launch of various new products are also expected to fuel the growth of the market. For instance, in October 2021, Coca-Cola launched ‘Vio’, a functional drinks range in India.
Financial Projections
In this part of the functional drinks products business plan, we will provide a detailed breakdown of all income and expense categories of the business. These forecasts include cash flow projections and capital requirements for your functional drinks products business. Usually, these projections are drafted for a 5-year period.
Revenue Assumptions
The main source of revenues for a functional drinks products business comes from sales of the product, online and retail. Here you will find a list with a description of each of them and other possible sources of profit such as sponsorship, advertising, and collaborations.
Projecting Expenses
In this section, all the regular expenses related to keeping the functional drinks products business running will be described. The list of operating expenses includes product development and testing, packaging, wages, marketing and advertising, utilities, insurance policies, and others.
Key companies & market share insights
Some of the key companies operating in the functional drinks market are increasingly focusing on product launches and expansion of the distribution channel to gain prominent visibility among consumers. Some of the initiatives are:
– In June 2022, PepsiCo launched its new line of functional drinks called ‘PEPSI MAX’.
– In August 2022, Nestle launched ‘Boost’, a range of nutritionally enhanced beverages.
– In October 2022, Unilever launched ‘Knorr’, a range of functional drinks infused with herbs and spices.
Some of the prominent players in the functional drinks market include:
– PepsiCo
– Nestle
– Unilever
– Coca-Cola
– Kompolt Beverage Brands
– Red Bull
– GSK
– Kraft Heinz
– Monster Beverage Corporation
– Dr Pepper Snapple Group
Global Functional Drinks Market Segmentation
This report forecasts growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global functional drinks products market based on product, distribution channel, type, and region:
1. Product Outlook (Revenue, USD Million, 2017 – 2030)
– Sports Drinks
– Energy Drinks
– Nutritional Drinks
– Herbal Drinks
– Probiotic Drinks
2. Distribution Channel Outlook (Revenue, USD Million, 2017 – 2030)
– Supermarkets & Hypermarkets
– Online
– Others
3. Type Outlook (Revenue, USD Million, 2017 – 2030)
– Carbonated
– Non-Carbonated
4. Regional Outlook (Revenue, USD Million, 2017 – 2030)
– North America
– Europe
– Asia Pacific
– Central & South America
– Middle East & Africa
Frequently Asked Questions
[Q]: What are the Major Drivers of the Functional Drinks Products Market?
[A]: The major drivers of the functional drinks products market are an increasing preference for healthy and nutritional drinks, the rise in the number of health-conscious consumers, and the introduction of new products with health benefits. Furthermore, the growing demand of functional drinks as an alternative to carbonated drinks is expected to drive the market growth.
[Q]: What are the Key Trends in the Functional Drinks Products Market?
[A]: The key trends in the functional drinks products market include the increasing demand for natural and organic functional drinks, the emergence of innovative packaging, and the growing popularity of functional drinks in the millennial demographic. Furthermore, the rising awareness among consumers of the health benefits associated with functional drinks is also driving the market growth.
[Q]: Who are the Key Players in the Functional Drinks Products Market?
[A]: Key players in the functional drinks products market include PepsiCo, Inc., The Coca-Cola Company, Red Bull GmbH, Danone, Nestlé, and Monster Beverage Corporation.
[Q]: What Regions are Offering the Largest Opportunity for Sales of Functional Drinks Products?
[A]: The Asia-Pacific region is offering the largest opportunity for sales of functional drinks products, with an absolute dollar opportunity of $36.3 B (USD) over the forecast period. This is due to the growing population, high disposable incomes, and the increasing awareness regarding health and wellness benefits.
[Q]: What are the Factors Restraining the Functional Drinks Products Market?
[A]: Factors such as the high cost of functional drinks and lack of consumer awareness are restraining the market growth. Furthermore, the presence of stringent government regulations and the lack of standardization in the functional drinks market is also expected to hamper the market growth.
Research Methodology
Impact Analytix employs a comprehensive and iterative research methodology focused on minimizing deviance in order to provide the most accurate estimates and forecasts possible. The company utilizes a combination of bottom-up and top-down approaches for segmenting and estimating quantitative aspects of the market. In Addition, a recurring theme prevalent across all our research reports is data triangulation which looks market from three different perspectives. Critical elements of the methodology employed for all our studies include:
Preliminary data mining
Raw market data is obtained and collated on a broad front. Data is continuously filtered to ensure that only validated and authenticated sources are considered. In addition, data is also mined from a host of reports in our repository, as well as a number of reputed paid databases. For a comprehensive understanding of the market, it is essential to understand the complete value chain and in order to facilitate this; we collect data from raw material suppliers, distributors as well as buyers.
Technical issues and trends are obtained from surveys, technical symposia, and trade journals. Technical data is also gathered from an intellectual property perspective, focusing on white space and freedom of movement. Industry dynamics with respect to drivers, restraints, and pricing trends are also gathered. As a result, the material developed contains a wide range of original data that is then further cross-validated and authenticated with published sources.
Statistical model
Our market estimates and forecasts are derived through simulation models. A unique model is created and customized for each study. Gathered information for market dynamics, technology landscape, application development, and pricing trends are fed into the model and analyzed simultaneously. These factors are studied on a comparative basis, and their impact over the forecast period is quantified with the help of correlation, regression, and time series analysis. Market forecasting is performed via a combination of economic tools, technological analysis, industry experience, and domain expertise.
Econometric models are generally used for short-term forecasting, while technological market models are used for long-term forecasting. These are based on an amalgamation of the technology landscape, regulatory frameworks, economic outlook, and business principles. A bottom-up approach to market estimation is preferred, with key regional markets analyzed as separate entities and integration of data to obtain global estimates. This is critical for a deep understanding of the industry as well as ensuring minimal errors. Some of the parameters considered for forecasting include:
Market drivers and restraints, along with their current and expected impact
Raw material scenario and supply v/s price trends
Regulatory scenario and expected developments
Current capacity and expected capacity additions up to 2030
We assign weights to these parameters and quantify their market impact using weighted average analysis, to derive an expected market growth rate.
Primary validation
This is the final step in estimating and forecasting our reports. Exhaustive primary interviews are conducted, face to face as well as over the phone to validate our findings and assumptions used to obtain them. Interviewees are approached from leading companies across the value chain including suppliers, technology providers, domain experts, and buyers so as to ensure a holistic and unbiased picture of the market. These interviews are conducted across the globe, with language barriers overcome with the aid of local staff and interpreters. Primary interviews not only help in data validation but also provide critical insights into the market, current business scenario, and future expectations and enhance the quality of our reports. All our estimates and forecast are verified through exhaustive primary research with Key Industry Participants (KIPs) which typically include:
Market-leading companies
Raw material suppliers
Product distributors
Buyers
The key objectives of primary research are as follows:
To validate our data in terms of accuracy and acceptability
To gain an insight into the current market and future expectations
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