Functional Beverages Market Size, Share and Forecast to 2028

The functional beverages market is projected to reach US$ 145,146.05 million by 2028 from US$ million 85,728.85 in 2021; it is expected to grow at a CAGR of 7.8% from 2021 to 2028.

Functional beverages include energy drinks, sports drinks, functional water, and fortified drinks. They increase the nutrient uptake in the body with their high nutrient content, including proteins, vitamins, minerals, etc. Manufacturers of these beverages incorporate probiotic ingredients in their products that help in improving gut health and resolving various digestive issues. Functional beverages are becoming popular among teenagers and youth as they fulfill nutritional requirements and are available in a variety of flavors. Manufacturers are also launching gluten-free, animal-free, low-sugar, and decaffeinated functional beverages to cater to the emerging consumer trends, which is offering lucrative opportunities for the functional beverages market growth.

The functional beverages market in Asia-Pacific is expected to grow at the highest CAGR during the forecast period. The factors driving the market growth in this region include rising urbanization, changing lifestyles and growing health consciousness, and increasing per capita income. Consumers in the region are readily opting for active lifestyles and are participating in various sports and fitness activities. They are joining gyms, dance classes, Zumba classes, etc., to maintain their fitness. They are also consuming products that provide a high nutritional value. All these factors are contributing to the growth of the functional beverages market in Asia-Pacific.

Strategic Insights

Impact of COVID-19 Pandemic on Functional Beverages Market

The food & beverage industries across different regions suffered from severe disruption due to lockdowns, travel bans, border restrictions, manufacturing unit shutdowns, among other adversities, after the onset of the COVID-19 pandemic, which resulted in shortages in raw materials and disturbances in supply chains. The functional beverages market also faced similar difficulties as manufacturers were not permitted to operate at full capacity. However, as the consumers have become health-conscious during the pandemic, they are preferring healthy and nutritious foods and beverages. Moreover, the demand for immunity-boosting beverages also surged during the first quarter of 2020. With the relaxation of government restrictions in late 2020, manufacturers managed to overcome the demand and supply gap, which boosted their growth pace.  Therefore, the COVID-19 pandemic had a mixed impact on the functional beverages market.

Functional Beverages Market Breakdown – by Region

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Market Insights

Increasing Healthcare Expenditures is driving the Growth of Functional Beverages Market

The healthcare expenditures of people across the world have increased significantly owing rising concerns regarding health and growing prevalence of chronic diseases, such as cancer, heart disease, diabetes, and obesity. According to the US Centers for Medicare & Medicaid Services (CMS), in 2020, health spending accounted for 19.7% of the GDP of the country.  In addition, the healthcare spending in the US increased by 9.7% in 2020, totaling US$ 4.1 trillion. As people are becoming health conscious, they are increasingly spending on foods and beverages that help them stay healthy. Thus, the increasing healthcare spending is projected to offer notable growth opportunities for the functional beverages market players in the coming years.

Product Type Insights

Based on product type, the functional beverages market is segmented into energy drinks, sports drinks, fortified juices, functional water, and others. The energy drinks segment is held the largest market share in 2020. Along with boosting energy levels of the body, energy drinks help improve mental and physical performance of consumers. These drinks are popular among teenagers and young adults. However, the risk associated with energy drink consumption related to the products' caffeine and sugar content is likely to restrain the market growth for this segment. Therefore, manufacturers are launching decaffeinated, and low-calorie energy drinks to cater to the changing requirements of consumers.

Functional Beverages Market, by Product Type – 2020 and 2028

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Distribution Channel Insights

Based on distribution channel, the functional beverages market is segmented into supermarkets & hypermarkets, convenience stores, online retail, and others. The convenience stores segment accounted for the largest market share in 2020, while the online retail segment is expected to register the highest CAGR during the forecast period. Online retail stores offer a wide variety of products with significant discounts; also, consumers can conveniently buy desirable products remotely. These platforms offer home delivery services that encourage a large group of customers to shop through e-commerce platforms. The manufacturers of functional beverages are enhancing their online presence by offering a variety of products through e-retailers. This help them in catering to a large audience and enhance their brand awareness.

The key players operating in the functional beverages market include PepsiCo, The Coca-Cola Company, Nestle, Kraft Foods, General Mills, Campbell Soup Company, Red Bull, The Wonderful Company LLC, Danone SA, and Monster Energy Company. These players are engaged in developing innovative products to meet the emerging consumer trends.

Report Spotlights

• Progressive industry trends in the functional beverages market to help players develop effective long-term strategies
• Business growth strategies adopted by key market players to expand in developed and developing markets
• Quantitative analysis of the functional beverages market from 2019 to 2028
• Estimation of global demand for functional beverages
• Porter's Five Forces Analysis to illustrate the efficacy of buyers and suppliers operating in the industry
• Recent developments to understand the competitive market scenario
• Market trends and outlook, and factors governing the functional beverages market growth
• Assistance in the decision-making process by highlighting market strategies that underpin commercial interest
• Size of the functional beverages market size at various nodes
• Detailed overview and segmentation of the market, as well as the functional beverages industry dynamics
• Size of the functional beverages market in various regions with promising growth opportunities