Functional beverages offer additional health benefits owing to the presence of ingredients like vitamins, minerals, herbs, sports nutrients and other active ingredients. These drinks help in improving physical strength and stamina, boost immune system, enhance cognitive performance and mental alertness. They provide energy, hydration and contribute to heart health, weight management and digestive health. With increasing urbanization and busy lifestyles, people are opting for convenient beverages that offer on-the-go nutrition and wellness. The growing awareness about proactive health management to prevent diseases is elevating the demand for functional drinks.

The global Functional Beverage Market is estimated to be valued at US$ 191.54 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period from 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.


Market key trends

One of the major trends in the functional beverage market is the surge in demand for plant-based drinks. With increasing vegan population worldwide, beverage manufacturers are focusing on developing innovative plant-based beverages containing varied functional ingredients. The adoption of flexitarian diets and vegetarianism has led to the introduction of varied functional plant-milk offerings like oat milk, coconut milk, almond milk and soy milk infused with vitamins, minerals, prebiotics and antioxidants. Moreover, the use of ancient grains like amaranth, quinoa and buckwheat in functional beverages is also gaining traction. These ancient grains provide fiber, protein, vitamins, minerals and other phytonutrients that enhance gut health, heart health, immunity and weight management. Manufacturers are utilizing these superfood grains in developing beverages for specific health needs to cater to diverse consumer demands.

Porter's Analysis

Threat of new entrants: The functional beverage market has moderate threat from new entrants due to the already established market presence of major players and requirement of large capital investments.
Bargaining power of buyers: The bargaining power of buyers is moderate due to availability of substitutes and variety of options available from existing players.
Bargaining power of suppliers: The bargaining power of suppliers is low due to availability of numerous ingredient suppliers and lack of differentiation in raw materials.
Threat of new substitutes: The threat of new substitutes is moderate as other beverages such as carbonated drinks, packaged juices, and bottled water are available in the market.
Competitive rivalry: The competitive rivalry is high among existing players due to intense competition.

Key Takeaways

The Global Functional Beverage Market Demand is expected to witness high growth. Regional analysis: North America dominated the global functional beverage market in 2023 due to increasing health consciousness among consumers in the US and Canada. Europe is also expected to witness significant growth due to rising demand for nutrient-enriched drinks in the region.
Key players: Key players operating in the functional beverage market are PepsiCo Inc., Red Bull GmbH, The Coca-Cola Company, Danone SA, Monster Beverage Corporation, JAB Holdings Company, General Nutrition Centers Inc., The Hain Celestial Group Inc., Fonterra Co-operative Group, and Amway Corporation. PepsiCo Inc. and The Coca-Cola Company dominate the global market and are continuously launching new variants to strengthen their market position.