The health and wellness trend has brought many transformations in the food and beverage industry. Whether it’s the adoption of more natural colours in food processing or stevia’s growing adoption in the global sweetener market, consumer emphasis on health and well-being is clearly been seen in the food and beverage landscape.
Functional Beverages Market Drivers
Functional beverages – drinks that are aimed to boost health and well-being – are gaining traction globally owing to rising consumer awareness. Before smartphones became ubiquitous, dissemination of information wasn’t a seamless affair and information was limited to niche health magazines. However, rising ownership of smartphones armed with internet on the go, and popularity of social media has led to frequent discussions on health and well-being. Focus on health and wellness, which is an industry-wide trend has augured well for creating greater awareness for functional beverages, which subsequently has translated into higher demand.
Demand for functional beverages is especially strong among the youth and geriatric population. Both these consumer segments have their own needs and preferences, and brands are curating their production and marketing strategies keeping these two important consumer segments in mind.
Functional beverages can be broadly categorised into,
- Energy drinks
- Nutraceutical drinks
- Dairy-based beverages
- Sports drinks
- Enhanced water
Among these, demand for energy drinks is the strongest, owing to high popularity of these drinks among the youth. Brands such as Red Bull and Monster Energy have been successful in creating strong demand for their products among the youth. Concerns over side effects of high energy drinks consumption has led to increased demand for dairy-based and nutraceutical drinks.
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North America Largest Market for Functional Beverages
North America remains the largest market for functional beverages. The two key factors responsible for high demand for functional beverages in the region include greater level of awareness among consumers and high disposable income.
Although the market conditions are somewhat similar in both the US and Canada, the former has a dominant share in the North America functional beverages market, owing to its higher population. As is the global trend, energy drinks remain the preferred functional beverage among consumers, with Red Bull and Monster Energy accounting for nearly 80% of total sales.
Developing countries of Asia Pacific represent a plethora of opportunities for global functional beverage companies. Although many brands have forayed into the emerging markets of Asia Pacific, low level of awareness and poor distribution channels has meant that functional beverages have remained only an urban phenomenon. However, considering the fact that China and India middle class is twice America’s entire population, multinational companies are expected to become more aggressive in their operations in these countries.
Innovation remains a key factor that has helped brands in consolidating their position in the fiercely competitive functional beverages market. Ingredient formulation techniques, reduction of particle size, and micro-encapsulation have enabled manufactures to improve the taste and functionality of their offerings.
Demand for functional beverages that contain natural and organic ingredients is on the rise. Manufacturers are responding to the heightened demand by launching clean-label products, however, sourcing raw materials in a timely and cost-effective manner remains a challenge.
The key players in the global functional beverage market include Nestlé, General Mills, Kraft Foods, PepsiCo, Inc., Campbell Soup Co., Monster Beverage Corporation, The Coca-Cola Company and Red Bull GmbH.
Leading ingredient suppliers in the functional beverage market are DuPont Nutrition & Health, LycoRed Ltd., Archer Daniels Midland Co., Fortitech, Inc., BASF and Nutratech, Inc.
The information presented in this article is based on the report “Functional Beverages Market: Global Industry Analysis and Opportunity Assessment 2014-2020”, by Future Market Insights. You can request a free sample or TOC of the report at http://www.futuremarketinsights.com/reports/sample/rep-gb-103