global functional drinks
market size in 2022
Research and market data illustrate a confluence of consumer desires for functional foods and beverages, fueled by science demonstrating benefits of health-promoting ingredients. Take drinks alone. Ohad Cohen, Chief Executive Officer, Gadot Biochemical Industries, points to data from Grand View Research: The global functional drinks market size was estimated to be worth $204.8 billion in 2022, expected to achieve a CAGR of 7.1% from 2023 to 2030.
“It is well-known that health is increasingly perceived holistically by consumers, so for nutrition brands, we have moved beyond needing to just convince consumers that wellbeing and nutrition are important; it is now about providing tailored solutions to the right consumers, which can mean combining physical, inner and mental wellbeing claims,” says Paige Wilkinson – Global Marketing Manager, Active Living, Fonterra. “Brands need to understand the different influences, motivations, and barriers to effectively tailor their solutions and build deeper consumer relationships. If we can understand the motivations and perceptions of specific segments of consumers, we can further understand how to position products to best meet their needs.”
In June, Nutiani released consumer data showing multifunctionality is the top health claim consumers are looking for in products. Wilkinson reports that relationships between the following areas are most well recognized by consumers:
• Nearly half of consumers believe mental wellbeing affects their ability to control their weight and exercise regularly.
• More than seven in 10 relate good digestive health to lower stress levels and better immune health.
• Consumers strongly relate physical wellbeing with better digestive, immune, and skin health.
“The takeaway,” Wilkinson says, “is that brands should consider addressing these interconnected health concerns through a single, multifunctional product that will address holistic health solutions, convenience and value-for-money.”
Additional factors driving growth in the functional market:
1. Plant-Based & Upcycled
“Plant based is growing by leaps and bounds as people become more aware of the footprint that animal protein has on our planet,” says Randal Kreienbrink, VP, Artemis International. “To help feed the population estimated to be around 9.9 billion by 2050, the food supply will heavily depend on protein sources upcycled from side streams from plants like berries, grains, and cereals.”
Consider this: More than half of the food we grow is wasted, and converting these streams into high protein and high fiber functional foods and beverages would have a significant impact. “An example would be to concentrate and refine proteins out of the pumice of berries and fruit used to produce juices,” Kreienbrink explains. “The whey protein concentrate produced from the whey stream after cheese production is an example of one of the most successful side stream commercialization.”
2. Sober Curious
“Consumers are increasingly aware of the drawbacks of relying on alcohol for producing relaxed, calming feelings, and generally the unhealthy side effects,” says Lily co-founder Bradley Morgan. “Consumers are more health conscious than ever. As a result, many are turning to adaptogenic beverages filled with nutritional benefits. Powered by plants that have long been prized in holistic medicine, these non-alcoholic beverages are favorable alternatives to ease stress and build towards the peaceful state of mind we crave.”
Lily has introduced a new offering to the beverage market: the Egyptian Water Lily. “Once treasured by ancient pharaohs for how it soothes the body and mind, its mood-boosting effects are no longer a secret,” Morgan says. “This stunning purple flower is packed with rare antioxidants known for aiding in soothing anxiety, stress relief, restoring energy levels, sleep quality, blood circulation and detoxification, and even sparking creativity.”
3. Healthy Assists
Foods and beverages that align with consumers’ busy lifestyles are popular. Dr. Kellyann Petrucci, Founder, Dr. Kellyann, explains, “Foods that provide substantial nutrition and energy for on-the-go are always of interest and importance. Easy to make heat-and-serve soups featuring key nutrients like protein are perfect lunch and dinner solutions. Bone broth is trending and for good reason. There is scientific research supporting the key nutrients and health benefits of the components of bone broth such as collagen, gelatin and glycine. Bone broth has emerged as a superior whole food source of collagen because it’s lower in calories and saturated fats compared to other sources. Naturally full of essential vitamins and nutrients including calcium, magnesium, and phosphorus, bone broth is also a beneficial way to add more protein to your diet.” She adds that Dr. Kellyann’s best-selling liquid bone broths offer up to 16g of protein.
Another trending option, per Dr. Petrucci: “SOD B is also emerging as a popular ingredient in the functional food and beverage market. SOD B is a natural, antioxidant-rich extract derived from cantaloupe. SOD B is a key ingredient in our Dr. Kellyann Lemon Sips, which supports hydration and helps flush toxins out of your system.”
Health aids are especially popular for women’s needs, says Kristel Corson, Chief Marketing Officer, Traditional Medicinals, which has a line of women’s health products, including Mother’s Milk tea to help promote lactation. “The latest trend we see in the women’s functional area is products that help support women through perimenopause and menopause,” Corson says. “There are more than 50 million women currently going through menopause in the U.S., and 50% of the population is expected to go through it at some point, so this remains an important conversation and area for growth.”
4. Stress, Sleep & Mood
“Adaptogens continue to gain steam with consumers, who are learning that they can help the body adapt to daily stressors,” says Corson. “Through recent research we conducted at Traditional Medicinals, we learned that coming out of the pandemic, two of the biggest wellness concerns consumers have are around being stressed and not getting enough sleep. Our research indicates that ashwagandha is the most well-known adaptogen, followed by ginseng and reishi, but some of the other up-and-coming adaptogens are astragalus, rhodiola, eleuthero, and schisandra. Many of these herbs work well in multiple functional food formats, including teas, RTD beverages, and gummies.”
Kelley Bridenbaugh, Marketing Manager, Karma Water, agrees. “Ingredients like maca extract and ashwagandha offer natural solutions for relaxation and stress management. Additionally, there is a growing demand for nootropics, which are cognitive enhancers known to improve focus and mental clarity. Cognizin, a patented citicoline, has garnered significant attention lately for its ability to support mental focus, attention, and recall. These trends underscore the increasing significance of mental well-being and cognitive enhancement in our fast-paced world. As the functional food and beverage market continues to evolve, it is crucial for brands to consider incorporating adaptogens and nootropics into their innovative and personalized offerings to meet these consumer needs.”
5. Active Nutrition
The active nutrition and exercise market is surging. “In October of 2021, Fonterra embarked on a 12-month long sports nutrition innovation journey in the form of the Athlete Incubator Project, an athlete consumer research exercise to inform future performance nutrition innovations and concept design,” Wilkinson says. “At the outset, our mission was to identify future trends and opportunities for performance nutrition by taking a closer look at athletes who are widely considered the first movers in sports nutrition.”
The findings highlighted a key opportunity for growth in performance nutrition, which is to address both the brain and body in product formulations by leveraging protein and broad-spectrum phospholipids, Wilkinson shared. “Could this be the next big trend in performance nutrition for active consumers? These findings point towards yes.”
An emerging ingredient, according to Wilkinson: “Naturally present in milk as part of the milk fat globule membrane (MFGM), phospholipids are complex lipids clinically shown to support a range of mental wellbeing health benefits including staying positive and focused under stress.” One of the most compelling results from the Fonterra Athlete Incubator, Wilkinson adds, was the brain + body protein powder that contained both Whey Protein Isolate for Muscle Health and Strength and Phospholipids for Focus Cognition & Stress. “The brain and body protein powder was a new product concept with an innovative ingredient combination, and despite its novelty it was recommended by 100% of the elite athletes that sampled it. In addition, 58% of them said they noticed improvements in their mindset after a month of daily consumption.”
Cohen adds that recent studies on key minerals present compelling support for inclusion into functional beverages for people with an active lifestyle. “For example, the results of a 2021 meta-analysis found that magnesium supplementation significantly improved plasma glucose and improved insulin sensitivity markers. The review suggests a beneficial role of magnesium supplementation compared to placebo in improving glucose parameters in subjects as well as glucose and insulin sensitivity markers in subjects at high risk of diabetes. This is an example of how powerful magnesium is as a supplement to keep people healthy. The positive link between magnesium consumption and supporting stable and normalized blood sugar is exciting.”
There is an upcyling opportunity here as well. Kreienbrink notes, “Plant based proteins extracted from side streams of berries and grains are being used much more environmentally sustainable that animal-based proteins are growing in popularity. These proteins are being used in protein powder drinks, RTD beverages, nutritional bars and snacks including the popular forms of gummies.”
Highlighting the growth potential in the active space, Dr. Andrew Franklyn-Miller, Chief Medical and Innovation Officer at Nuritas, explains, “At Nuritas, we use artificial intelligence to identify possible new ingredients from nature, faster than was previously possible. Over the last seven years, we have built a proprietary plant-based peptide library in our laboratories and computing power that’s amassed over six million peptides with potential benefits, not yet used in nutrition. Through clinical trials we are able to discover these benefits fast within two years and bring them to the market. Our latest ingredient, PeptiStrong peptides, are the next generation intelligent ingredient for muscles.” He says the ingredient delivers faster recovery, allowing products to offer clinical trial-based claims on performance and recovery. Nuritas peptides have already formulated in food (cereal bars, protein bars) and beverages (gel shots, electrolyte drinks, milk and powder shakes).
Nuritas also is introducing ingredients that could contribute to healthy aging, vitality, and energy, or solutions to menopause, Dr. Franklyn-Miller says. “We are just beginning to scratch the surface of the huge benefits that peptides can unlock and with the use of AI technology, we can finally begin to explore this previously unattainable level of health and wellness.”
6. Clean Label
“Clean Label is huge,” says Kreienbrink. “Simple, few ingredients, ingredients that are non-chemical sounding, ingredients our Grandparents would have used...this trend is here to stay.” An overarching theme is sustainability, under which trends like clean label and plant based reside. “Ingredients used in foods and beverages need to comply with a sustainability program. The United Nations Guidelines are being followed and promoted by the ingredient suppliers to the food and beverage industries.”
This goes beyond the ingredients and into the total package. Corson stresses: “The number one communication vehicle with consumers is packaging, so one of the best ways to show consumers that your brand cares about the environment is by utilizing sustainable packaging. Traditional Medicinals recently launched the first BPI certified compostable tea wrapper, as recyclable, compostable, and PCR plastic continue to be top of mind.”
Derek Mellencamp, General Manager, Aquasana, adds, “It’s clear that Americans are paying attention to microplastics and their impact on the environment and our well-being. Reducing plastic pollution has been a priority for Aquasana for over two decades.” He says the company is committed to leading the charge in identifying and becoming certified to remove harmful contaminants as they emerge, from PFOA/PFOS to lead, microplastics and beyond.
7. Organic Regenerative Ag
“Organic regenerative agriculture continues to gain steam in the functional food space,” says Corson. “Traditional Medicinals teas are organic and many of our farming partners utilize regenerative agriculture methods, and the newest trend we see picking up steam is around Fair for Life. In addition to respecting the human rights and fair working conditions of farmers, Fair for Life also respects the ecosystem and promotion of biodiversity, sustainable agricultural practices, and the betterment of local impact. At Traditional Medicinals, we have made a commitment to have 80% of our herbs sourced from Fair for Life farmers by 2030.”
8. Gluten Free
In 2022, the Gluten Intolerance Group’s (GIG) Gluten-Free Certification Organization (GFCO) third-party gluten-free certification program certified 9,300 products from more than 800 brands worldwide. This marks a significant increase, GIG shared, noting that the number of new certifications increased by 7,255 products from 2021 to 2022. “We’re here to protect the consumer and help them make safe choices,” said Jeanne Reid, GIG Marketing Manager. “As the gluten-free market has expanded, consumers are increasingly savvy. They reward companies that rise to the challenge of a higher standard and are transparent in labeling. Our GFCO mark stands for unmatched reliability for meeting the strictest of gluten-free standards from an independent and credible source.”
An emerging ingredient in gluten-free, says Benina Burroughs Montes, co-founder and Managing Partner of Burroughs Family Farms: “Almonds are inherently gluten-free so they’re an excellent alternative for gluten-intolerant or health-conscious consumers seeking diverse functional options. Almond flour, for instance, has gained traction as a gluten-free baking substitute, which means those with dietary restrictions can enjoy their favorite baked goods, which in many cases are more nutritious because of the almonds. So, I think we can expect continued innovation in almond-based products, especially as manufacturers see the value in promoting a more sustainable approach to functional food and beverages.”
Regenerative agriculture and clean label come into play here, too. “As the market continues to evolve, I think we’re going to see a lot more regeneratively produced almond-based products on the shelf,” Burroughs Montes notes, adding, “The functional food and beverage market is continually evolving. Almonds offer an impressive nutritional value and they are a very versatile ingredient. As consumer demand for clean label and regenerative ingredients intensifies, there’s a great opportunity for the almond industry to offer solutions.”
9. Personalized Nutrition
“There is real interest in personalized nutrition, and many have turned to epigenetics, to begin to understand their health and trying to individualize their nutrition,” according to Dr. Franklyn-Miller. “That research is still in its infancy, but technology can help in the quest for new ingredients with direct novel effects on the human body.”
Cohen adds, “Personalized functional beverages are on the rise, giving brands room to root and flourish. According to FMCG Gurus ‘Personalized Nutrition Report 2021,’ in 2020, 63% of global consumers were interested in beverages that were customized to meet their health and well-being needs and goals.”
“For 2022 Pacesetters, carbonated beverages, sports and energy drinks accounted for a 27% share of all food and beverage Pacesetter dollar sales,” reports Joan Driggs, Vice President, Content and Thought Leadership, Circana. “Among the Top 10 Food & Beverage Pacesetters, eight of 10 are beverages. We observe that consumers demand more than just refreshment from beverages and the market continues to respond with products and attributes that deliver against performance, nutrition, and interesting flavors. Our New Product Survey of consumers finds that more than 41% of consumers want new beverages to help with hydration; better than 25% want more than basic nutrition benefits; and nearly 17% want an energy boost.”
Cohen notes, “For today’s active consumers, hydrating beverages are not just water, but those that provide electrolytes, chiefly calcium, sodium, potassium, and magnesium. Electrolytes are essential for basic life functioning. They play a role in conducting nervous impulses, contracting muscles, keeping us hydrated by maintaining the balance between fluids inside and outside our cells, as well as regulating our body’s pH levels. Recovery, once a goal only athletes sought, is now a common desire for active consumers who don’t want to give up a workout, match, or game because of sore muscles. Functional beverages that include magnesium, potassium, and zinc will help them enjoy daily fitness.”
Cohen also points out that there has been a switch from traditional sports nutrition beverages to everyday energy for active lifestyle consumers, who also want those energy beverages to provide useful ingredients for well-being, notably vitamins, as well as minerals. “Additionally, consumers are expecting these beverages to also ensure hydration and better recovery, as working out and being active are enmeshed in their daily lives. Millennials, women, and families, in general, have also traded sodas for energy and sports drinks. Plus, women of all ages especially need essential minerals such as magnesium, potassium, and zinc. These are ingredients that Gadot offers manufacturers.”
11. Fermented Ingredients
“There is a lot of exciting activity happening in functional foods and beverages,” says Kreienbrink. “One of the top emerging trends is fermented ingredients and fermented foods, either through traditional fermentation processes dating back centuries ago to early times or today’s modern biotechnology. Fermentation helps to improve shelf-life stability, flavor, nutritional benefits, and some of our more popular food items such as beer, wine, and sauerkraut. Through directed fermentation, ingredients like palm oils and other phytochemicals, vitamins, minerals, polyphenols, flavors, and antioxidants are being produced to help fortify the foods we consume.”
12. Salt and Sugar Reduction
“Another leading direction is sugar and salt reduction in all food and beverages,” says Kreienbrink. “This may eventually be mandated by local, state and Federal Governments. Botanicals, berry extracts, and flavors are being used to mimic high sugar flavor profiles with half the calories from sucrose.” WF