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Demand for hydration-focused products is surging in Europe as more consumers prioritise health and wellness. Explore the innovation opportunities emerging from this functional beverage growth.
Over half of Europeans consume functional beverages at least weekly, with the highest rates among Millennials (at 66%).1 The enormous energy drink market remains highly relevant to consumers, while functional waters is a new category to watch.
With functional beverage consumption ramping up, continuous innovation will be essential for brands to maximise their opportunities, address consumers’ needs, and stay ahead of the competition.
Europe’s $48.4 billion functional beverage market is forecast to grow at a 7.6% CAGR to reach $62.1 billion in 2028.2 Energy drinks make up 54% of the market at $26.3 billion, with strong growth ahead (+9.0%), while the fastest grower is the $2.6 billion functional water category (+15.4%).2
Several trends are driving functional beverage growth in Europe. Consumer hydration awareness is high, and some are shifting from a reactive to a proactive approach to optimising health and wellness. This approach is expanding the uses and occasions for functional beverages.
| Beverage Category | Sales (USD Million) | Est. CAGR (2023-2028) |
|---|---|---|
| Energy drinks | $26,312 | 9.0% |
| Drinkable yogurt | $6,348 | 2.9% |
| Milk alternatives | $5,163 | 7.7% |
| Functional juice | $3,524 | -0.1% |
| Sports drinks | $2,865 | 8.5% |
| Functional water | $2,557 | 15.4% |
| Protein RTD | $1,088 | 3.9% |
| Functional carbonates | $426 | 5.1% |
| Functional iced tea & coffee | $162 | -4.1% |
The energy drink category continues to expand, allowing for greater diversification and targeting of consumer segments though additional functional benefits. Energy-plus formulations with ingredients for brain health, mood support, or athletic performance are opportunity areas.
Functional waters are the next frontier in the functional beverage market, offering consumers health-focused hydration with a refreshing flavour experience. Functional carbonates have similar potential, provided sugar levels are kept low.
Consumers’ growing focus on health and wellness significantly influences their beverage choices, with 47% considering health and wellness as their top priority.4 One in five European consumers drinks functional water, while one in three consumes energy drinks.5
Claims of low/no/reduced sugar and natural ingredients have become major purchase drivers for functional beverages overall.
Consumer research from the UK reveals that men are slightly more likely than women to consume functional beverages. 6 This presents an opportunity to develop innovative beverages that better align with women’s needs and preferences.
Opportunities for innovation and development include advanced functional benefits—such as cognitive support nutrients in energy drinks, protein in functional waters, and women-focused beverages with calcium, vitamin D, and iron. Flavour innovation also has enormous potential to excite consumers and differentiate brands.
Regulations and sourcing challenges are key considerations for functional beverage manufacturers. Staying up to date on changes to EU regulations—such as EFSA approvals, novel foods requirements, and health claim restrictions—is essential.
Additionally, sourcing high-quality functional ingredients can present challenges due to supply chain variability, the need for compliance with EU food safety standards, and ensuring ingredient efficacy and stability in beverage formulations.
With a global presence and operations across Europe, Glanbia Nutritionals provides unmatched supply chain reliability and expert ingredient support tailored to the European market.
Our functional beverage solutions include our All N® Premix Energy Formula, All N® Premix Electrolyte Formula, custom premixes, micronutrients, proteins, and our trendsetting Flavours by Foodarom®.
Using these consumer insights and market trends to guide new product development, brands can innovate to drive additional functional beverage growth in the market, particularly in energy drinks and functional waters.
Advanced functional benefits, women-focused products, and new flavours, with a commitment to natural and lower-sugar formulations, are promising strategies. New product lines have the ability to enhance brand recognition significantly.
Contact Glanbia Nutritionals to learn more about our functional beverage solutions and how we can help.
Custom nutrient premixes are tailored blends of vitamins, minerals, and other nutrients used in foods, beverages, and dietary supplements formulated to meet specific nutritional targets. They help manufacturers enhance the nutritional profile of their products while simplifying the production process.
Electrolytes, which include sodium, potassium, calcium, and magnesium, are minerals that carry an electrical charge and help regulate fluid balance, muscle contraction, and nerve function. They are essential for hydration because they maintain proper fluid distribution in the body, preventing dehydration at the cellular level—which is especially critical during physical activity.
Custom nutrient premixes are used in fortified products like nutrition bars, breakfast cereals, beverages, bakery products,dietary supplments and snacks to improve their nutritional value and ensure the even distribution of vitamins, minerals, and other nutrients throughout the production run. They provide precise nutrient combinations in an easy-to-add powder, allowing manufacturers to tailor their products to their consumers’ needs.
Fortification plays a significant role in addressing nutrient deficiencies in the diet. Adding essential nutrients to food and beverages through fortification is one of the fastest, least expensive, and most efficient methods to improve public health.
