Gone are the days when consumers just wanted a hit of hydration and maybe a touch of sweet indulgence from their beverages. Even before the COVID-19 pandemic, people were looking to packaged drinks to deliver a nutritional punch with ingredients to help boost energy, promote mental focus, and soothe stress. Now consumers have added immunity and a host of other health perks to the long list of functional benefits they want drinks to deliver. In fact, a recent report from the research firm the Hartman Group revealed that 56% of consumers report using functional beverages to treat or prevent a specific condition (1).

“Beverage functionality continues to be at the top of the purchase decision-making process in the beverage aisle,” asserts Alexandra Galindez, CEO, ROAR Beverages. “With the pandemic, the draw to beverages that support immunity has been especially high for obvious reasons. But it’s not just about vitamin C and zinc. Consumers know that immunity is tied to gut health, high stress, dehydration, and lack of sleep. Therefore products that have ingredients such as B vitamins, electrolytes, prebiotics, antioxidants, and adaptogens are also a draw.”

All told, this increased desire for nutritiously delicious drinks has added up to a huge boom in sales: Fior Market reports that the functional beverage market is expected to reach $216.7 billion by 2028, growing at a CARG of 7.08% (2).

In addition to functionality, reducing sugar intake continues to be a priority. “The sugar-free trend is dominating the beverage market,” affirms Elsa Gao, R&D Director, Layn Natural Ingredients. “One report shows that 62% of consumers around the world will choose beverages based on the health effects of products, and 48% of consumers said they choose low-sugar or zero-sugar beverages.” She notes that health-conscious consumers favor clean-label sweeteners, like monk fruit and stevia over traditional artificial sweeteners.

As more consumers have moved to ditch soda and replace alcoholic drinks with mocktails and healthy tonics, they’re also looking for drinks that offer experiential flavors. Kathy Maurella, Chief Marketing Officer for Waterloo Sparkling Water, sees consumers falling for flavors that inspire a sense of comfort, fun or whimsy. “Our Waterloo top sellers lean directly into nostalgic inspiration from black cherry to summer berry to grape.”

On the flip side, exotic flavors are also a draw. “Exotic flavors infuse adventure into a consumer’s everyday life—especially in a convenient, refreshing format like a beverage,” notes Gary Augustine, Vice President of Marketing, Van Drunen Farms. “In fact, according to FMCG Gurus, 75% of North American consumers would likely try a product with an unusual or exotic flavor. We expect to see exotic ingredients like dragon fruit, açai, goji berry, and coffee fruit draw consumer attention this fall and into 2022.”

Paul Voge, CEO, Aura Bora, adds that botanicals are also popular. “We have seen particular interest in herbal ingredients. Aura Bora uses lemongrass, lavender, peppermint, and rose.” (For more on flavor trends, see page 32.)

Many brands are considering new ways to make their healthy drinks accessible to consumers on-the-go. “As we return to a busier lifestyle, we believe that customers will look for wellness solutions that fit into their daily routine with ease,” says Linda Boardman, CEO of Bragg. “Whether they are traveling, or starting to commute back to the office, consumers will seek beverages that can be taken on the go, while still delivering upon the health benefits that they prioritized throughout the period where we were all at home.” To address that need, Boardman notes that Bragg developed several new product lines including delicious, prebiotic Apple Cider Vinegar Shots.

Brian Zapp, Marketing Director, Applied Food Sciences, adds that they’ve seen a big spike in interest in powdered drink sticks. “Perhaps it’s because they cost less to formulate, package, ship, and find a placement on the shelf, but single-serve powdered drink mixes are flooding the R&D teams with our functional extracts included.”

Sustainability is also a key factor in change and innovation. “As environmental concerns are growing among consumers, we expect to see continued growth in brands doing their part,” says Kelli Freeman, VP of Brand Marketing, Bai and Core. Core Hydration is starting with a transition to bottles made of 100% recycled materials, meaning no new or virgin plastic will be created to make their bottles.

“More and more of our retailers are going totally plastic-free, aiming to have no plastic anywhere on the shelf,” adds Voge. He expects aluminum and glass to dominate the beverage aisle shelves, as well as packaging made using ingredients from upcycled products and plants.

5 functional benefits driving demand

1. Natural energy: “Traditional forms of caffeine can have unwanted side effects that make it hard to sit still and focus,” cautions Zapp. “This is because caffeine stimulates the release of epinephrine—better known as adrenaline—in the body, producing a similar experience as our ‘fight or flight’ response.’” Instead, health-minded consumers and the brands that cater to them are looking for variations of caffeine geared toward mental energy and calm focus. One such option is AFS’s AmaTea, made from organic guayusa extract. “Guayusa is an Amazonian tea with a unique blend of caffeine and antioxidants,” explains Zapp. “Current studies on AmaTea organic guayusa extract show that this ingredient stimulates a significantly lower rise in epinephrine than other caffeine forms, including synthetic caffeine anhydrous.” Zapp adds that AFS also offers GCA green coffee bean extract, which provides a natural caffeine kick along with an antioxidant boost from chlorogenic acid.

Van Drunen Farms also offers natural caffeine ingredients that are sustainably sourced from coffee fruit through its Coffeeberry line, notes Augustine. “These leading ingredients offer functional energy fit for a wide variety of consumers—whether they are looking for a boost of 98% standardized caffeine or organic caffeine and antioxidants.”

Consumers seeking a healthy coffee replacement or boost of natural energy with extra antioxidant support are also turning to yerba mate, says Shelley Evans, Founder of Oteas. “Yerba Mate relieves physical and mental fatigue. The natural ingredient is high in anti-inflammatory properties relieving joint and muscle pain. Many athletes are turning to yerba mate as their beverage of choice.”

2. Immune support: Vitamin C is always a popular functional ingredient, with beverages like Bai Boost, Roar, and others delivering 50% to 100% of the RDA of vitamin C in each bottle. But when stocking your shelves, it’s a good idea to pay attention to the sourcing of the nutrient, advises Zapp: “It may come as a surprise that most vitamins are synthetically derived.” Instead, he recommends looking for fruit-based vitamin C, like AFS’s PurC organic vitamin C derived from acerola cherries. “Acerola is one of the highest concentrations of natural vitamin C on the planet, containing 70 times more vitamin C than other fruits and vegetables by weight.” Other popular immune-boosting ingredients to watch for include elderberry, mushrooms, turmeric, vitamin D and zinc.

3. Gut health: Probiotics and prebiotics, as well as fermented drinks like kombucha, continue to be top-sellers. But for consumers looking to try something new for GI health, fulvic minerals may pique their interest. “Fulvic compounds are made of 80+ trace minerals, electrolytes, polyphenols, antioxidants, amino acids and other cellular essentials,” says Sara Bergstein, CEO of blk. “In recent decades, hundreds of accredited scientific and medical organizations have performed independent studies on Fulvic, which have validated eastern medicine practices, and have concluded that Fulvic provides a powerful boost to one’s gut health, hydration, immune system and overall health.”

4. Stress-soothing: “Stress reduction is now the number one category in supplements and more beverage companies are following suit and beginning to look at relaxing products, or combining relaxants into caffeine or energy-based formulas,” notes Cal Bewicke, President, Ethical Natural Inc. The company’s AlphaWave L-Theanine delivers stress-soothing benefits, with clinical studies that support its experiential, relaxant qualities. CBD, adaptogens like ashwagandha, and magnesium also continue to be popular functional ingredients for stress support.

5.  Brain-boosting: Nootropic drinks offer A-game ingredients meant to sharpen focus, improve mood and increase mental energy, and are increasingly popular among gamers and athletes. Popular ingredients include taurine, choline, St. John’s wart, ginseng, rhodiola and B-vitamins. Shitij Chabba, VP HNH Marketing and Minerals & VP Minerals & Nutrients, Balchem, points out that while it makes sense to market to gamers and athletes, brain-boosting ingredients, like the company’s VitaCholine, which has clinically proven cognition claims, also hold big appeal for pregnant woman and mothers. “Pregnant women and new moms are a prime target for beverage innovation,” notes Chabba. “New moms are especially busy, which includes putting their baby’s nutritional needs before their own. Mamarama is a concept we developed to address the maternal segment, delivering a good source of VitaCholine. We’ve added in plant-based DHA Omega-3 to round out the brain-boosting formula and included key vitamins like A and D, plus 10g of plant protein.”

3 Nutritiously Delicious Mocktails

These delicious sips from our experts are perfect for an energizing midday or festive drink.

 

Citrusy Earl Grey Sipper

4 Earl Grey tea bags, like Oteas 16 oz hot water 8 oz fresh lemon juice 8 oz simple syrup (1:1 ration of sugar to water)

Steep tea bags in hot water for 1 hour. Discard tea bags. For each drink, combine 4 oz tea concentrate, 2 oz lemon juice and 2 oz simple syrup in cocktail shaker filled with ice. Shake and strain into glass over ice. Makes 4 drinks.

Recipe courtesy of Oteas

 

Honey Apple Kick

1-2 tsp. of Bragg Apple Cider Vinegar Raw honey, agave, maple syrup, or stevia, to taste 8 oz distilled or purified water Dash of cinnamon (optional)

Mix apple cider vinegar and honey or other sweetener to taste in a glass. Add ice and water. Enjoy.

Recipe courtesy of Bragg

 

Cucumber Cooler

6 oz lavender cucumber Aura Bora 1 1/2 oz of ginger ale 1/2 oz of simple syrup (optional)

Combine ingredients in a glass of ice. Garnish with a lavender sprig or a cucumber slice, if desired.

Recipe courtesy of Aura Bora

Secrets to sales success

When it comes to selling drinks, educating consumers on the benefits that a specific drink can deliver is the most important factor, says Galindez. She also advises using the basket data you have available to garner insights about what consumers purchase together and then launch in-store promotions that bundle those items at a discount. “Retailers now have very sophisticated data that provides insights,” she notes. “For instance, we know ROAR pairs well with better-for-you salty snacks. Therefore, we often pursue displays with these brands to feature both in the aisle or on an endcap.”

Voge sees opportunity in endcaps as well, and encourages retailers to merchandise sparkling beverages near sodas and/or alcohol whenever possible and to play up the ways these drinks can work as healthy alternatives. “Consumers in their 20s and 30s are drinking less alcohol than previous generations—they are looking for alcohol-free alternatives,” he explains. “Consumers in their 40s and 50s are ditching soda—they are looking for sugar-free alternatives.”

Also smart: Highlight new and trending beverage products in the cold space in the front of the store, suggests Voge. “Give new brands a chance to drive trial!” Offering something fresh that shoppers don’t see anywhere else will set you apart from the competition. Cheers to a competitive edge! WF

 

References
  1. The Hartman Group. Functional and Enhanced Beverage Trends. https://www.hartman-group.com/infographics/332626980/functional-and-enhanced-beverage-trends
  2. Fior Markets. Functional Beverages Market. https://www.fiormarkets.com/report/functional-beverages-market-by-type-rehydration-solutions-probiotic-419435.html