Beverages: Beyond Hydration: Functional Drinks Flood Shelves and New Markets

Why it is the topic trending:

• Significant Market Growth: The functional drinks market is experiencing substantial global growth, with an expected CAGR of 7.1% from 2022 to 2030, reaching $204.8 billion in 2022. This indicates a major and expanding consumer interest.

• Meeting Diverse Consumer Needs: Functional beverages cater to a wide range of health and wellness goals, addressing needs like improved gut health, immunity, energy levels, and mood. This broad appeal contributes to their popularity.

• Expansion into Out-of-Home Market: The trend is no longer limited to supermarkets and convenience stores but is now significantly penetrating the out-of-home market, including foodservice operators. This expansion signifies a wider consumer accessibility and demand.

• Focus on "Additional Benefits": Consumers are increasingly seeking drinks that offer health benefits beyond basic hydration and taste, reflecting a growing interest in proactive health management through diet.

• Innovation and New Ingredients: The beverage sector is continuously innovating with new ingredients like magnesium and targeting specific needs like post-alcohol recovery, keeping the trend dynamic and relevant.

Overview:

The article discusses the booming trend of functional beverages, defined as drinks offering physiological or health benefits beyond hydration and taste. The market is experiencing significant global growth and is now expanding beyond traditional retail into the out-of-home sector. The article highlights examples of functional drinks gaining popularity, such as fruit juices and smoothies (the fastest-growing category in the UK out-of-home sector), matcha lemonades, and beverages containing magnesium or targeting hangover relief. The trend is driven by growing consumer interest in health and wellness and is further fueled by innovation in the beverage industry.

Detailed Findings:

• Definition of Functional Beverages: Drinks offering a physiological or health benefit aside from hydration and taste, aimed at improving areas like gut health, immunity, energy, or mood.

• Global Market Size and Growth: The functional drinks market was valued at $204.8 billion in 2022 and is projected to grow at a CAGR of 7.1% through 2030.

• Fastest Growing Category in UK Out-of-Home: Fruit juices and smoothies are the fastest-growing drinks category in the UK out-of-home sector due to consumer interest in health and wellness and expanded offerings.

• Consumer Motivation for Fruit Juices/Smoothies: Most consumers buy them regularly, and a significant portion want to consume something healthy.

• "Additional Benefits" Phase: Consumers are eager to incorporate items into their diet with additional health benefits like vitamins or minerals.

• Greggs Partnership with Plenish: Fast-food bakery chain Greggs now sells Plenish Turmeric and Ginger shots to improve its health credentials, reflecting the trend.

• Matcha Trend: Green tea, particularly matcha, is gaining popularity for its purported health benefits, including boosting metabolism, focus, skin health, reducing inflammation, improving mood, sleep, and immunity.

• Black Sheep Coffee's Matcha Lemonade: UK coffee chain Black Sheep Coffee has seen lemonade sales skyrocket due to the launch of Matcha Lemonades, highlighting demand for functional, flavor-led options.

• Iced Drinks as Year-Round Staples: Iced drinks have become year-round staples, driving footfall and spend for foodservice operators.

• Future of Functional Drinks: Expected trends in 2025 include 'Rapid Hydration' as a core element of functional health drink innovation.

• Magnesium as a Key Ingredient: Magnesium is anticipated to be a key ingredient in functional drinks due to dietary deficiencies. BetterYou launched magnesium waters for hydration, energy, and focus.

• "Post Night Out" Benefits: Functional drinks targeting hangover relief are expected to see developments, with US startup 'Sure Shot' targeting the European market.

Key success factors of product (trend):

The key success factors driving the functional beverage trend include:

• Clear Health Benefits: Consumers are looking for drinks that demonstrably offer specific health advantages beyond basic hydration.

• Taste and Flavor: While functionality is important, the drinks must also taste good to encourage regular consumption.

• Convenience and Accessibility: Functional drinks are readily available in various retail and foodservice outlets, fitting into busy lifestyles.

• Ingredient Innovation: The use of new and scientifically backed ingredients like magnesium or adaptogens drives consumer interest.

• Meeting Specific Needs: Targeting particular consumer needs like energy, sleep, immunity, or recovery resonates with specific user groups.

• Effective Marketing and Communication: Clearly communicating the benefits and ingredients to consumers is crucial for success.

Key Takeaway:

The functional beverage trend is robust and expanding rapidly, driven by a growing consumer focus on health and wellness. This trend is evident in the significant market growth, the diversification of functional drinks into the out-of-home market, and the continuous innovation in ingredients and targeted benefits. Foodservice operators must recognize this shift and ensure they stock a variety of health-led drinks with functional advantages to meet evolving consumer demands.

Main trend:

The main trend is the Significant Expansion and Mainstreaming of Functional Beverages across various retail and foodservice channels, driven by a strong consumer focus on health and wellness.

Description of the trend (please name it):

Functional Beverage Ubiquity: This trend describes the increasing presence and widespread availability of functional beverages, offering health benefits beyond basic nutrition, in supermarkets, convenience stores, and now prominently in the out-of-home market like cafes and fast-food chains, reflecting a deep integration of these health-focused drinks into everyday consumer consumption habits.

What is consumer motivation:

• Proactive Health Management: Consumers are increasingly taking a proactive approach to their health and seeking convenient ways to incorporate beneficial ingredients into their diet.

• Targeted Wellness Goals: Functional drinks appeal to individuals looking to address specific health and wellness goals, such as boosting immunity, improving energy, or aiding digestion.

• Convenience and On-the-Go Consumption: These beverages offer a quick and easy way to obtain health benefits, fitting well into busy lifestyles.

• Seeking Natural and Plant-Based Options: Many functional drinks utilize natural ingredients like herbs, vitamins, and plant extracts, aligning with the growing preference for such options.

• Desire for Enhanced Performance and Well-being: Consumers are looking for drinks that can help them feel better, perform better physically and mentally, and improve their overall well-being.

• Preventative Health Measures: Some consumers use functional beverages as a way to potentially prevent future health issues or support their body's natural defenses.

What is driving trend:

• Growing Consumer Awareness of Health and Wellness: There is a heightened public consciousness regarding the importance of diet and lifestyle for overall health.

• Increased Availability of Scientific Research: More research highlighting the benefits of specific vitamins, minerals, herbs, and other functional ingredients fuels consumer interest.

• Innovation in Beverage Technology: Advances in food science and beverage formulation allow for the creation of more palatable and effective functional drinks.

• Marketing and Advertising by Beverage Companies: Beverage companies are actively promoting the health benefits of their functional products, increasing consumer awareness and demand.

• Expansion of Retail Channels: The availability of functional drinks in a wider range of outlets makes them more accessible to a larger consumer base.

• Influence of Health and Wellness Influencers: Online influencers and experts often promote functional beverages as part of a healthy lifestyle.

What is motivation beyond the trend:

• Optimal Health and Longevity: The underlying motivation is often the desire to achieve optimal health and potentially live longer and healthier lives.

• Improved Quality of Life: Consumers seek products that can enhance their daily functioning, energy levels, and overall sense of well-being.

Description of consumers article is referring to:

The article refers to a broad range of consumers:

• Health-Conscious Individuals: Those actively seeking out products that offer health benefits beyond basic nutrition.

• On-the-Go Consumers: Individuals with busy lifestyles who need convenient and quick ways to improve their health or address specific needs.

• UK Out-of-Home Sector Consumers: Specifically mentioned in the context of the fastest-growing category (fruit juices and smoothies) and the popularity of matcha lemonades, indicating a diverse group interested in healthier options when eating out or on the go.

• Fast-Food Consumers at Greggs: This indicates an appeal for healthier options even within traditionally less health-focused environments.

• Coffee Shop Customers at Black Sheep Coffee: Demonstrating a demand for functional and flavor-led options in typical coffee shop settings.

• Consumers Interested in "Rapid Hydration," Magnesium Benefits, and Hangover Relief: Highlighting specific needs and preferences within the broader functional beverage market.

This suggests a wide demographic, likely spanning various ages, incomes, and lifestyles, but united by an increasing interest in beverages that offer health and wellness advantages.

Conclusions:

The functional beverage trend is firmly established and continues to expand its reach across different sales channels. Driven by a strong consumer desire for health and wellness benefits, and fueled by innovation within the beverage industry, functional drinks are becoming an increasingly ubiquitous part of the consumer landscape. Foodservice operators and retailers must adapt to this trend by offering a diverse range of functional options to cater to the evolving needs and preferences of health-conscious consumers.

Implications for brands:

• Significant Growth Opportunities: Brands in the functional beverage space have substantial potential for growth as the market continues to expand.

• Importance of Clear and Accurate Health Claims: Brands must ensure that the health benefits they claim are scientifically supported and clearly communicated to consumers.

• Innovation in Ingredients and Formulations: Continuous innovation in terms of ingredients and product formulations is crucial to stay ahead in this competitive market.

• Strategic Partnerships: Collaborations with foodservice operators and other outlets can significantly increase brand visibility and market penetration.

Implication for society:

• Potential for Improved Public Health: Increased consumption of functional beverages with genuine health benefits could contribute to improved public health outcomes.

• Greater Focus on Preventative Health: The trend may encourage a greater societal focus on preventative health measures through diet and lifestyle.

Implications for consumers:

• More Choice and Variety: Consumers have access to an ever-increasing range of functional beverages catering to diverse needs and preferences.

• Convenient Ways to Support Health: Functional drinks offer a convenient and accessible way to supplement their diet and address specific health goals.

• Need for Informed Choices: Consumers should be discerning and look for products with scientifically supported health benefits.

Implication for Future:

• Further Market Expansion and Diversification: The functional beverage market will likely continue to grow and diversify into even more niche categories and formats.

• Increased Integration into Foodservice: Functional drinks will become an increasingly standard offering in cafes, restaurants, and other foodservice establishments.

• Focus on Personalized Nutrition: Future innovations might see more personalized functional beverage options tailored to individual needs.

Consumer Trend (name, detailed description):

Proactive Health Through Beverages: Consumers are increasingly using beverages as a proactive tool to manage and improve their health, seeking out drinks that offer specific functional benefits and support their overall well-being beyond basic hydration and nutrition.

Consumer Sub Trend (name, detailed description):

Demand for Targeted Health Solutions in Beverages: Within the proactive health trend, consumers are specifically seeking beverages that address particular health concerns or goals, such as improved gut health, enhanced energy, better sleep, or hangover relief.

Big Social Trend (name, detailed description):

Empowered Health Consumer: Individuals are taking more responsibility for their own health and are actively seeking information and products that support their well-being, leading to greater demand for functional foods and beverages.

Worldwide Social Trend (name, detailed description):

Global Wellness Movement: The focus on health and wellness is a global phenomenon, with consumers around the world increasingly prioritizing healthy lifestyles and seeking out products that align with these values.

Social Drive (name, detailed description):

The Pursuit of Optimal Well-being and Disease Prevention: The fundamental human desire to feel healthy, energetic, and prevent illness is a primary driver behind the increasing adoption of functional beverages as part of a proactive health strategy.

Learnings for brands to use in 2025:

• Focus on Efficacy and Credibility: Ensure functional claims are backed by scientific evidence to build consumer trust.

• Tailor Products to Specific Consumer Needs: Develop functional beverages that target particular health concerns or desired outcomes.

• Prioritize Taste and Palatability: Even with health benefits, taste remains a crucial factor for consumer acceptance and repeat purchase.

Strategy Recommendations for brands to follow in 2025:

• Invest in Research and Development: Continuously explore new ingredients and formulations with proven health benefits.

• Develop Clear and Transparent Marketing: Communicate the specific health benefits of your products clearly and honestly to consumers.

• Expand Distribution Channels: Make functional beverages readily available in a variety of retail and foodservice outlets to maximize reach.

Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it:

The prominent trend of functional beverage ubiquity signals that in 2025, brands and companies should prioritize innovative formulations and strategic market expansion by developing efficacious and palatable drinks that cater to specific health and wellness needs and ensuring their widespread availability across both retail and out-of-home channels to capitalize on the growing consumer demand for proactive health solutions through beverages.

Final Note:

• Core Trend: Functional Beverage Ubiquity: Functional drinks are becoming increasingly widespread and mainstream.

• Core Strategy: Innovative Formulations and Market Expansion: Focus on creating effective products and making them easily accessible.

• Core Industry Trend: Blurring Lines Between Beverage Categories: The functional drinks category is merging with and evolving from sports drinks, soft drinks, and even traditional remedies.

• Core Consumer Motivation: Proactive Health Management and Targeted Wellness Goals: Consumers are using beverages to actively improve their health and address specific needs.

Final Conclusion:

The functional beverage market is no longer a niche but a significant and expanding force in the food and beverage industry. Driven by health-conscious consumers and fueled by continuous innovation, these drinks are becoming a staple in various consumption settings. For brands and foodservice operators, understanding and embracing this trend by offering a diverse and credible range of functional beverages is crucial for staying relevant and meeting the evolving demands of today's health-aware consumers.

Core Trend Detailed:

Functional Beverage Ubiquity describes the permeation of beverages offering health benefits beyond basic hydration and taste into the mainstream consumer market. These drinks, ranging from vitamin-enhanced waters to those containing probiotics or adaptogens, are no longer relegated to specialty health food stores but are now readily available across a wide spectrum of retail environments, including supermarkets, convenience stores, drugstores, and increasingly, in various foodservice establishments. This trend signifies a broad consumer acceptance and demand for beverages that actively contribute to their well-being, reflecting a shift in consumption habits towards more health-conscious choices in everyday life.

Key Characteristics of the Core trend:

• Widespread Availability: Functional beverages are easily found in diverse retail and foodservice outlets.

• Variety of Health Benefits: The category encompasses drinks targeting various aspects of health, such as immunity, energy, digestion, and mental focus.

• Mainstream Consumer Adoption: These drinks are no longer niche products but are purchased by a broad range of consumers.

• Integration into Daily Routines: Functional beverages are often incorporated into consumers' regular dietary habits.

• Innovation in Formulations: The industry constantly sees new ingredients and product formulations designed to enhance functionality and appeal.

• Marketing Focus on Health Benefits: Brands actively promote the specific health advantages of their functional beverage offerings.

Market and Cultural Signals Supporting the Trend:

• Significant Market Growth Statistics: The multi-billion dollar market size and projected growth rate of functional beverages clearly indicate a strong economic trend.

• Increased Shelf Space Allocation: Retailers dedicating more shelf space to functional drinks reflect the growing consumer demand.

• Partnerships in Foodservice: Collaborations between functional drink brands and foodservice operators, like Greggs and Plenish, signal a broader market integration.

• Consumer Interest in Health and Wellness: The overall societal focus on health, fitness, and well-being drives the demand for functional food and beverages.

• Media Coverage and Influencer Marketing: The frequent appearance of functional drinks in health and wellness publications and social media further popularizes the category.

• Demand for Convenient Health Solutions: Busy consumers seek easy and accessible ways to incorporate health-boosting products into their daily lives.

How the Trend Is Changing Consumer Behavior:

• Prioritization of Beverages with Added Benefits: Consumers are increasingly choosing functional drinks over traditional sugary drinks or plain water when seeking hydration and refreshment.

• Seeking Specific Health Outcomes from Beverages: Individuals are selecting functional drinks tailored to their particular wellness goals, such as a probiotic drink for gut health or an energy drink with vitamins for a boost.

• Integration of Functional Drinks into Out-of-Home Consumption: Consumers are now expecting and seeking out functional beverage options when they are eating out or grabbing drinks on the go.

• Increased Awareness of Beverage Ingredients: Consumers are becoming more knowledgeable about the ingredients in their drinks and looking for those that offer tangible health advantages.

Implications Across the Ecosystem:

• For Brands and CPGs:

  • Significant Growth Opportunities: The expanding market offers ample opportunities for brands to innovate and capture market share.

  • Importance of Scientific Backing: Credibility and consumer trust depend on scientifically supported health claims for functional ingredients.

• For Retailers:

  • Opportunity to Increase Basket Size: Functional beverages can be a higher-margin category, contributing to increased revenue.

  • Need for Effective Merchandising: Clear categorization and highlighting the benefits of functional drinks can help guide consumers.

• For Consumers:

  • More Accessible Health and Wellness Options: Functional beverages provide convenient ways to support their health goals.

  • Potential for Improved Dietary Intake: Drinks fortified with vitamins and minerals can help supplement dietary needs.

Strategic Forecast:

• Functional beverages will likely become an even more integrated part of the beverage landscape, potentially evolving beyond specific "functional" categories to influence mainstream beverage formulations.

• We can expect to see a continued emphasis on scientifically validated ingredients and more transparency in product labeling regarding health benefits.

• The trend of functional drinks targeting very specific needs or demographics (e.g., sleep support, cognitive enhancement) is likely to grow.

• Partnerships between functional beverage brands and healthcare or fitness providers could become more common.

Areas of innovation (based on discovered trend):

• Personalized Functional Beverages: Drinks tailored to an individual's specific health needs based on data from wearables or at-home tests.

• Biotechnology in Beverage Formulation: Utilizing advancements in biotechnology to create highly effective and targeted functional ingredients.

• Sustainable and Environmentally Friendly Functional Drinks: Focusing on ingredients and packaging that minimize environmental impact.

• Integration of Functional Beverages with Digital Health Platforms: Creating ecosystems where functional drink consumption is tracked and linked to overall health and wellness goals within digital platforms.

Final Thought (summary):

The pervasive trend of Functional Beverage Ubiquity demonstrates a significant shift in consumer preferences towards drinks that actively contribute to health and well-being. This widespread adoption across retail and foodservice signifies a fundamental change in how consumers approach hydration and refreshment, creating substantial opportunities for brands to innovate and provide accessible, beneficial beverages that seamlessly integrate into modern lifestyles.

Source: https://www.foodnavigator.com/Article/2025/06/04/functional-beverages-expand-into-out-of-home-market/