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.