‘Brisk’ Future for Functional Beverages

Several converging attributes suggest sales growth for the category: report

functional beverages

LONDON -- The functional-beverage market is "poised to grow at a brisk [rate] through 2020,” according to a new report from Future Market Insights.

Functional beverages—those fortified with a range of ingredients such as herbs, vitamins, minerals and amino acids—purport to address a variety of health issues, from simple hydration to overall nutritional well-being.

The market can be segmented based on type into energy drinks, sports drinks, nutraceutical drinks, dairy-based beverages, juices, enhanced water and others. Energy drinks is the largest segment in functional beverages followed by sports drinks and nutraceutical drinks. Another segmentation based on the ingredients used can be as follows: antioxidants, minerals, amino acids, prebiotics, probiotics, vitamins, super fruit extracts and botanicals.

North America is the largest market for functional beverages, according to “Functional Beverages Market: Global Industry Analysis and Opportunity Assessment 2014-2020,” as it contains innovative varieties of drinks that are customized for all age groups and strata.

Growing health concerns and changing lifestyles are some of the major drivers of an inflated demand for functional beverages. An increasing number of health-conscious consumer is another growth engine for functional beverages, according to the report.

“Advancement in product development practices coupled with technology upgrades would drive the market for functional beverages in the forecast period,” the report said. “Ingredient formulation technologies such as micro-encapsulation and particle size reduction techniques have widened product offerings by manufacturers. Development of various ingredients to mask the unpleasant taste of certain amino acids and omega-3 fatty acids has revolutionized the market for functional beverages. Thus, the market is poised to grow at a brisk CAGR between 2014 and 2020.”

It continued, “Innovation is the key to success in the beverage industry. Utilizing ingredients such as natural food/beverage colors, low-calorie natural sweeteners and kosher ingredients are in vogue. Manufacturers are constantly embracing open innovation to gain cost-leadership and fixed suppliers in early development stage. One of the major advantages of a functional beverage is that consumers are ready to pay a premium price for its various functional advantages. Manufacturers and retailers market these drinks in several ways to attract different strata of consumers. For instance, ready-to-drink tea and fruit/vegetable juices are targeted toward obese people who are looking to lose weight. Retailers, as well as wellness centers, play an important role in promoting these products.”

London-based Future Market Insights is a market intelligence and consulting firm, delivering syndicated research reports, custom research reports and consulting services.