Functional Beverages Market by Type (Energy Drinks, Sports Drinks, Dairy-based Beverages, and Others), End-user (Fitness Lifestyle Users, Athletes, and Others), Distribution Channel (Supermarkets/Hypermarkets, Specialty Stores, E-Commerce, and Others), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global Functional Beverages Market Analysis

The global functional beverages market size is predicted to garner $2,12,286.10 million in the 2021–2028 timeframe, growing from $1,27,555.60 million in 2020, at a healthy CAGR of 6.60%. 

Market Synopsis

Strategic alliances among market players, along with growing demands for functional beverages across the globe, are expected to accelerate the growth of the functional beverages market.

However, high cost of functional beverages and them not being suggested as healthy food are some of the growth-restricting factors for the market.

According to the regional analysis, the Asia-Pacific functional beverages market size is anticipated to grow during the review period and generate a revenue of $42,032.60 million, with CAGR of 7.00% due to increasing adoption of organic drinks in the region.  

Functional Beverages Overview

Functional beverages are the non-alcoholic beverages that contain high nutritional values with ingredients such as dietary fibers (DFs), vitamins, minerals, probiotics, amino acids, and raw fruits. This will include sports drinks, energy drinks, dairy, ready-to-drink tea, coffee, and fortified juices. Functional beverages help body for improving hydration, energy, and athletic endurance.

Covid-19 Impact on Functional Beverages Market Shares

The novel coronavirus pandemic severely affected several industries. The global functional beverages market experienced a notable moderate growth during this period. Disruption in manufacturing capacity and supply chain during the COVID-19 period is one of the factors that might have affected the market for functional beverages.

On the other hand, the growth of the market is owing to increasing adoption of healthy eating and drinking habits along with growing health concerns throughout the pandemic. Furthermore, according to an article by TheDailyGuardian, in September 2020, demand for energy booster drinks increased due to COVID-19. All such factors are expected to positively affect the functional beverages industry. The above-stated factors show that the pandemic may have affected the market positively and it will ultimately bring the sustainable opportunities for functional beverages market in the coming years.

Increasing Prevalence of Nutraceutical Drinks to Surge the Market Growth

The global functional beverages industry is witnessing a massive growth mainly due to increasing demand for nutraceutical drinks and products owing to presence of healthy components such as plants, fruits, and vegetables, along with increasing demand for dairy-based beverages. Moreover, rising health consciousness and per capita income globally are some of the factors that may fuel the growth of the global functional beverages market.

Furthermore, functional beverages industry players are adopting innovating strategies to attract customers. For instance, in 2020, PepsiCo, America based food and beverage industry, launched a functional beverage known as Driftwell; this beverage is designed in such a way that it will de-stress, unwind, and calm the customers. Driftwell contains taste of lavender and blackberry along with magnesium. These types of factors are predicted to drive the growth of the market.

To know more about global functional beverages market trends, drivers, get in touch with our analysts here.

High Cost of Functional Beverages to Restrain the Market Growth

Functional beverages can increase the risk of sleep disturbance, heart issues, gastrointestinal issues, and anxiety. Also, functional beverages are very costly as they have expensive ingredients. These are some of the factors anticipated to hinder the market value of the functional beverages in the next few years.

Rising Demand for Instant Energy Drinks to Create Massive Investment Opportunities

The global functional beverages market is spreading at a very fast pace due to increasing demand for instant energy drinks that will provide instant energy along with providing physical and mental stimulation among the fitness freak people across the globe. Moreover, in modern and busy lifestyle, people are busy with their work and therefore consuming a can of energy drink will help them increase attention and alertness along with reducing sleepiness at night. All such factors are positively affecting the functional beverages market growth.

Furthermore, functional beverages industry already has leading market players innovating strategies to attract customers. For example, in 2019, GacLife, US based beverage company, announced that they have launched seven types of health beverages that help improving skin health, detoxification, sleep, energy, and relaxation. All such types of innovations and strategic alliances will accelerate the overall functional beverage market and it will bring lucrative market opportunities for key players in the upcoming years.

To know more about global functional beverages market trends, opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The energy drinks type sub-segment is predicted to have a dominating share as well as fastest market growth in the global market. The sub-segment is expected to register a revenue of $91,170.80 million during the forecast period. Energy drinks are beverages that have ingredients that give instant energy, concentration, and alertness to the consumer. Some of the most trending energy drinks are 5-Hour Energy, NOS, Monster, Red Bull, AMP, and Full Throttle energy drink products. Furthermore, companies are adopting various strategies to attract customers. For instance, Anheuser-Busch InBev (ABI), multinational beverage company, in October 2021, announced that they have extended their Budweiser business, world's largest beer brand globally, to energy drinks across India. These factors and strategic alliances may bolster the growth of the sub-segment during the forecast period and functional beverages market demand.

Source: Research Dive Analysis

The fitness lifestyle users sub-segment of the global functional beverages market growth is projected to be the dominant as well as have the fastest growth. It is also projected to surpass $97,161.70 million by 2028, with an increase from $57,359.00 million in 2020. This growth in the market can be attributed to growing population that is health conscious and fitness freak. Moreover, rising trends of increasing sports performance as part of daily activity will inspire the fitness lifestyle users to adopt functional beverages. All such elements may increase the demand for sub-segment and functional beverages market demand.     

Source: Research Dive Analysis

The supermarkets/hypermarkets sub-segment is predicted to have a leading market share in functional beverages globally and register a revenue of $84,579.00 million during the analysis timeframe owing to availability of diverse range of functional beverages and their products in the supermarket, freedom of selection, and other facilities. Furthermore, at supermarkets, buyers can get quality goods at affordable and lower prices. Such factors may create huge opportunities for the sub-segment throughout the forecast period.

Source: Research Dive Analysis

The Market for Functional Beverages in North America to be the Most Dominant

The North America functional beverages market accounted $51,022.20 million in 2020 and is projected to register a revenue of $84,489.90 million by 2028. The extensive growth of the North America functional beverages market is mainly driven by factors such as increasing customer demands and preferences for different types of healthy and functional beverages being manufactured and sold in mainly the US and Canada. Also, in North American countries, people are preferring ready to drink items with existence of top leading companies augmenting the industry growth in the region. These are some of the factors that are fueling the market growth across the globe. These factors will ultimately drive the demand for the functional beverages market across the region.  

The Market for Functional Beverages in Asia-Pacific to be the Fastest Growing

The share of Asia-Pacific functional beverages market is expected to rise at a CAGR of 7.00%, by registering a revenue of $42,032.60 million by 2028. The growth shall be a result of rising demand for sports and energy drinks across the region that enhances the performance and stamina of fitness lifestyle users and athletes and growing trends of canned drinks. Such aspects may bolster the demand for functional beverages market, in the upcoming years.

Competitive Scenario in the Global Functional Beverages Market

Product launches and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading functional beverages market players are The Coca-Cola Company, Monster Beverage Corporation, Red Bull, MaxiNutrition, Coif Bar, Dupont Nutrition Biosciences ApS, Meiji Co., Ltd, Nestlé S.A., Pepsico, Inc., and National Beverage Corp.

Porter’s Five Forces Analysis for the Global Functional Beverages Market:

• Bargaining Power of Suppliers: The product suppliers of functional beverages market are high in number and are larger and more globalized. Bargaining power of supplier depends upon production process and raw material requirement. So, there will be less threat from the suppliers.
  Thus, the bargaining power of suppliers is low. 
• Bargaining Power of Buyers: Buyers have huge options to select from more than 100 top brands of functional beverages; this has increased the pressure on the functional beverages providers to offer the best drink to the consumer. This gives the buyers the option to freely choose functional beverages products that best fit their preference.
  Thus, the bargaining power of the buyers is high. 
• Threat of New Entrants: Companies entering the functional beverages market are adopting various innovations such as developing functional beverages that are available in different packaging and taste. Also, initial investment and the cost to establish the business is very low and the technology needed for manufacturing is easily available in the market.
  Thus, the threat of the new entrants is high.
• Threat of Substitutes: There are various substitutes available for functional beverages such as different types of non-alcoholic drinks that give instant energy, but they are more costly than functional beverages and also more varieties of different flavors and ingredients are available in functional beverages than non-alcoholic drinks.  
  Thus, the threat of substitutes is low.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is rather intense, especially between the global players including Monster Beverage Corporation and Red Bull. These companies are launching their value-added services in the international market and strengthening the footprint worldwide.
  Therefore, competitive rivalry in the market is high.