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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.
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
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:
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.
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:
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.
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.
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.
A functional beverage is a drink that provides a beneficial effect beyond basic nutrition. These health and wellness benefits can come from a wide range of bioactive ingredients—from adaptogenic herbs like ashwagandha to MCTs for the keto diet to tryptophan for sleep support.
Some examples of functional beverages are energy drinks formulated with caffeine and B vitamins, sports drinks with added electrolytes and antioxidants, yogurt drinks that have probiotics, and beauty-from-within beverages containing collagen. The functional beverage market continues to grow as more people look for benefits like energy, relaxation, immune support, cognitive support, muscle building, and more.
Dairy is the main source of calcium in the American diet, making it the top food group for supporting healthy bones at all ages. Dairy is also a source of high-quality protein, with all the essential amino acids in the right proportions to meet the needs of the body—especially important for muscle building and maintenance for active, sports performance, and aging consumers. Dairy also contains several beneficial bioactive proteins such as lactoferrin, which supports healthy iron levels.
Dairy alternatives such as plant-based milks and plant-based yogurts are often fortified, making them a good calcium source for those with milk allergies or lactose intolerance. Some are also high in plant-based protein. In addition, both dairy and dairy alternatives are often fortified with vitamin D to improve calcium absorption. Dairy/plant-based milk blends are a trend that combine the high-quality protein of dairy with the phytonutrients and lower calories of plant-based milks.
Plant-based milk is made starting from beans (such as yellow peas or soybeans), nuts (such as almonds or cashews), grains (such as oats or rice), seeds (such as flax or hemp seeds), or another whole plant source. The starting material can either be soaked in water, ground into a slurry, and filtered to remove the insoluble fiber, or it can be ground into flour first before removing the insoluble fiber.
Next, water and other ingredients like flavors, sweeteners, vitamins, minerals, and thickeners are added. Finally, the plant-based milk is pasteurized and packaged. Some (like pea milk) are a good source of plant-based protein, while others (like oat milk) are known for their soluble fiber benefits. Manufacturers can also start with optimized ingredients to minimize any bitter plant tastes and ensure the smoothest texture.
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