girl holding milk

US Functional Beverage Market Insights for 2022

The US functional beverage market has seen some significant shifts in response to consumers’ evolving needs during the pandemic. Here’s a look at the fastest-growing functional beverage types and the functional benefits that are most important to consumers right now.

Highlights:

  • Dairy alternative beverages, energy drinks, and functional carbonates are some of the top growing functional beverages.
  • Consumers are seeking benefits like hydration, energy, relaxation, and more.
  • Protein is expanding in the functional beverage market. 

US Functional Beverage Market Overview

The $48.4 billion US functional beverage market is forecast to grow at a CAGR of 6.6% between 2020 and 2025, according to data from Euromonitor.1 Energy drinks continue to make up the largest share of the US functional beverage market at an estimated $18.6 billion, followed by sports drinks at $10.4 billion, and sports protein RTD/meal replacements at $5.8 billion.2

Fastest-Growing Functional Beverage Types

Before the pandemic, functional carbonates showed the highest growth rate at an estimated CAGR of 10.2%, followed by dairy alternative beverages at 7.1%.3 Energy drinks were in the number five spot at 3.5%.4 Since the pandemic, some important shifts have been underway in the functional beverage market, bringing energy drinks up to the number two spot, just behind dairy alternative beverages.5

The fastest-growing segments based on the forecast CAGR between 2020 and 2025 are:

  • Dairy alternative beverages (10.8 percent)
  • Energy drinks (8.8 percent)
  • Functional carbonates (6.8 percent)
  • Sports protein RTD/meal replacements (5.7 percent)
  • Functional RTD coffee and tea (5.7 percent) 6

According to the Plant Based Foods Association, plant-based milk sales grew 20.4 percent in 2020, up from 5 percent the prior year, reaching $2.5 billion.7 Key purchase drivers for plant-based milk such as health, variety, and taste became even more relevant during the pandemic. Not only was health top of mind for consumers, but lockdowns also made them more interested in exploring new foods and beverages at home.

Energy drinks have also been meeting the needs of the day, helping consumers stay alert and focused as they spend more time at home and cope with disruptions in work and school routines. Some brands capitalized on this new demand by launching energy drinks with additional relevant functional benefits like immunity support.

water bottle on backpack

Top Functional Benefits Consumers Are Seeking

To understand which health and wellness benefits are most important to consumers right now, Mintel surveyed consumers about their functional food and beverage consumption. The top functional benefits (based on their consumption of foods and beverages making a benefit claim) are:

  • Hydration (34 percent)
  • Energy-boosting (26 percent)
  • Calming/relaxing (25 percent)
  • Immunity (23 percent)
  • Digestive aid (22 percent)8

Functional Ingredients for Beverages

Functional nutrition is in demand, and beverages offer a quick and easy way for consumers to gain these benefits. Although functional beverages may be best known as go-to sources of energy ingredients (such as caffeine and B vitamins) and performance ingredients (such as protein, amino acids, and electrolytes), consumers’ ingredient demands continue to expand.

Ingredients for relaxation (such as chamomile and L-theanine) and for immunity (such as vitamin C and probiotics) have become particularly sought after during the pandemic. Adaptogens like ashwagandha and reishi are also gaining attention as consumers seek ingredients to help manage stress.

Spotlight on Protein for Functional Nutrition

The mainstreaming of protein, which has been reshaping categories throughout the food industry, is having important effects on the functional beverage market. There’s no doubt that protein has always had a prominent place in sports, nutrition, and performance drinks. But increasingly, protein is expanding throughout the functional beverage market into a variety of product types. 

Protein-fortified waters, juices, coffees, and carbonates are notable examples of this new breed of functional protein beverage that speaks directly to mainstream consumers. While dairy protein remains the preferred protein source in functional beverages, plant-based proteins from legumes, nuts, and seeds continue to gain traction.

man and woman walking

Quench Their Thirst for the Perfect Beverage

To meet consumers’ diverse and evolving needs, staying on top of functional beverage market trends and choosing the right ingredients are key. Looking ahead, we can expect many consumers will continue to prioritize functional benefits even after the pandemic subsides. The pandemic served as a wake-up call to many, heightening awareness of the importance of a healthy lifestyle.

To create functional beverages your consumers will love, learn more about Glanbia Nutritionals' functional beverage ingredients—including our plant-based solutions made from pea, oat, chia, and flaxseed.

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References

1-2. Euromonitor, July 2021 - Data ending 2021.
3-4. Euromonitor, January 2020 - Data ending 2019.
5-6. Euromonitor, July 2021 - Data ending 2021.
7. Plant Based Foods Association, Retail Sales Data, 52 weeks ending December 27, 2020.
8. Mintel, Functional Ingredients in Food and Drink – US, February 2021.

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