Description

This report provides comprehensive and current information and analysis of the functional drinks market including functional drinks market size, anticipated market forecast, relevant market segmentation, and industry trends for the functional drinks market in the US.

Current market landscape

As inflation stretches budgets, functional beverages, which often carry a premium price point, will need to work to prove their value. Especially important in the short term, functional drinks must prove the benefits that they claim, including guidance for usage that ensures consumers experience the benefits that justify price points. This is especially relevant for beverages with less-familiar ingredients, though more traditional beverages (fruit juice, milk, tea) need refreshed messaging to remind consumers of the functional value embedded within more mainstream options.

Functional drinks market share and key industry trends

  • Gen Z has reported year over year decreases in the otherwise top reported functional ingredients and benefits: added vitamins (-12%), electrolytes (-12%), added fruits (-11%), hydration (-8 %), energy boosting (-6 %), immune boosting (-5%)
  • Millennials are most likely to note functional benefits to be an important factor for them when choosing a nonalcoholic beverage (30%), and they have a range of associations with healthy beverages (organic – 50%; offers functional benefits – 46%; clean label – 42%).
  • Baby Boomers are most likely to agree that healthy living is a part of their personality, but least likely to agree that functional drinks are more effective than taking vitamin/mineral supplements (32%); functional drinks with stress reducing ingredients help them relax (52%); functional drinks help them accomplish their health goals (49%).

Future market trends in functional drinks

While Millennials are top consumers of functional drinks, brands will be challenged to find a common ground with Gen Z. These are typically consumers not currently facing health concerns, often with less-established budgets, and access to too much information surrounding what “healthy” even means. Brands can prioritize engagement with this generation with a less serious and more casual approach to functional drinks, perhaps taking notes from snacking category – these drinks can play many roles simply with just a fun feel, before even getting into the benefits of their ingredients (relieving boredom, a boost in mood). Older consumers remain a key opportunity, as health is a part of their identity and their consumption of functional benefits and ingredients is on the rise, however, this generation needs guidance on how to maximize the benefits of functional drinks as they are not entirely convinced.

Read on to discover more about the functional drinks consumer market, read our Trending Flavors and Ingredients in Non-Alcoholic Beverages – US – 2022, or take a look at our other Drinks research reports.

Quickly understand

  • Non-alcoholic beverage choice factors.
  • Trended consumption of functional drink benefits and ingredients.
  • Healthy beverage associations.
  • Interest in functional attributes of specific drinks.
  • Attitudes towards functional beverages.

Covered in this functional drinks market report

Brands include: GTS, Health Ade Kombucha, Kevita, Lifeway, Tropicana, Costco, PepsiCo, Life Wtr, Bubly Bounce, Bubbl R, Wis Pak, Poppi, Olipop, Culture Pop, Fit Soda, Bai Antioxidant Infusion, Bai Boost, Ocean Spray, Suja Life, Traditional Medicinals, Yogi, Celestial Seasonings, Marley Mellow, Gaia, Sound, Orgain, Vital Proteins, Mary Ruths, Om, Bulletproof Xct, Host Defense Mushrooms, Rritual, Kin, Gatorade G, Abbott Pedialyte, Biolyte, Gatorade G, Recess, Sober Curious, Gldn Hour, Drink Sound, De La Calle, Karma Water, Pop & Bottle, Oats Overnight, Jibby Coffee, Creative Roots, Erewhon Functional.

Expert analysis from a specialist in the field

This report, written by Kelsey Olsen, a leading analyst in the Food and Drink sector, delivers in-depth commentary and analysis on functional drinks market research to highlight current trends and add expert context to the numbers.

From simply quenching thirst or providing additional ingredients that meet specific wellness needs (like stress relief), any beverage can be functional. Beverages seeking a truly functional identity will need to find a balance of fun and function, by guiding consumers through the experience, painting a picture of how the benefits can be reaped, but importantly bringing a boost to the non-alcoholic drinking occasion.

Kelsey Olsen, Food and Drink Analyst
Kelsey Olsen
Food and Drink Analyst

Table of Contents

  1. Overview

    • What you need to know
    • This Report looks at the following areas
    • Definition
    • Market context
  2. Executive Summary

    • Top takeaways
    • Market overview
      • Figure 1: Category outlook, 2022-27
    • Opportunities and challenges
    • Find common ground with Gen Z
      • Figure 2: Trended consumption of functional ingredients in beverages, by generation, 2021-22
    • Baby boomers are unexpected opportunity
      • Figure 3: Functional beverage attitudes, by generation, 2022
    • Inclusivity through familiarity will appeal to different healthy living identities
      • Figure 4: Consumption of functional ingredients in beverages, by healthy living agreement, 2022
    • Highlight benefits from an added value perspective
      • Figure 5: Functional beverage attitudes, by financial situation, 2022
    • Help consumers sift through the benefits, beyond the inherent
      • Figure 6: Correspondence Analysis – Symmetrical map – Functional benefit interest by drink type, 2022
    • Key consumer insights
    • Meet generational needs
    • Guide consumers through the ingredient list, and remind of inherent benefits
    • Aim for inclusivity across healthy living identities
  3. Market Value Indicators

    • Slight movement in market share of non-alcoholic beverages
      • Figure 7: Total US retail sales of selected non-alcoholic beverage categories, by segment, at current prices, 2022
      • Figure 8: Total US retail sales of selected non-alcoholic beverage categories, by segment, at current prices, 2020 and 2022
    • Education will provide value for old and new products and claims
      • Figure 9: Functional/plus claims in new product launches – Non-alcoholic beverages*, 2020 and 2021
    • Find a balance of inclusivity and personalization with beverages
      • Figure 10: Functional claims in new product launches – Non-alcoholic beverages*, by subcategory, 2020 and 2021
    • Benefits translate to value for food and drink shoppers
      • Figure 11: Food and drink value indicators, 2022
  4. Market Factors

    • Accessibility dependent on affluence is stretched by inflation
      • Figure 12: Functional beverage attitudes, by financial situation, 2022
    • A renewed focus on “healthy” definition with proposed update
    • Health priorities unique to generations
      • Figure 13: Health/benefits priorities of diets, 2022
    • Functional drinks may shine in evolution of sober curious movement
      • Figure 14: Awareness of sober curious/mindful drinking lifestyle, by age, 2022
    • Changes in legal landscape of substances
  5. Key Players

    • A positive for probiotics
      • Figure 15: Multi-outlet sales of selected kombucha/water/kefir/probiotic drink brands, by leading companies and brands, rolling 52 weeks 2021 and 2022
    • Build an identity for functional waters
      • Figure 16: Multi-outlet sales of selected functional water brands, by leading companies and brands, rolling 52 weeks 2021 and 2022
    • Not your average can of soda
      • Figure 17: Multi-outlet sales of selected functional soda brands, by leading companies and brands, rolling 52 weeks 2021 and 2022
    • The range for functionality in juices
      • Figure 18: Multi-outlet sales of selected functional juice drink brands, by leading companies and brands, rolling 52 weeks 2021 and 2022
    • Teas need renewed messaging on functionality
      • Figure 19: Multi-outlet sales of selected functional tea brands, by leading companies and brands, rolling 52 weeks 2021 and 2022
    • Adaptogens a growing space for niche brands
      • Figure 20: Multi-outlet sales of selected functional adaptogens, by leading companies and brands, rolling 52 weeks 2021 and 2022
  6. Competitive Strategies and Market Opportunities

    • Put the “fun” in “functional”
      • Figure 21: Canned functional beverage packaging
    • Quench the thirst first
      • Figure 22: Electrolyte beverages
    • Be there for the sober curious
      • Figure 23: Sober curious and mocktail Instagram posts, 2022
    • Romanticize the occasion
      • Figure 24: Instagram posts romanticizing the functional drink occasion, 2022
    • A greater approach to gut health
      • Figure 25: Gut health promoting drinks, 2022
    • Mental wellness is for all
      • Figure 26: Mental wellness promoting drinks, 2022
    • Balancing the act of calm and energy
      • Figure 27: Caffeinated beverages with balancing elements, 2022
    • Function for the family
      • Figure 28: Functional Beverages for kids, 2022
    • Influencers bring familiarity to otherwise unfamiliar, niche ingredients
      • Figure 29: Erewhon Functional Smoothies, 2022
  7. The Functional Drinks Consumer – Fast Facts

    • Highlight the value of functionality, whether inherent or not
    • Meet wide ranging ideas of “healthy” and “functional” with elements of familiarity
    • Keep generational needs top of mind
  8. Non-Alcoholic Beverage Choice Factors

    • Taste is non-negotiable
      • Figure 30: Non-alcoholic beverage choice factors, 2022
    • Baby Boomers have the needs to be met and the means to do so
      • Figure 31: Beverage choice factors, by generation, 2022
    • Paint the flavor experience “picture” pre-purchase
      • Figure 32: Beverage choice factors, by healthy living agreement, 2022
  9. Trended Consumption of Functional Drink Benefits

    • Set the foundation with familiar benefits
      • Figure 33: Trended benefits of functional drinks consumed, 2021-22
    • Quench Millennial thirst with convenience
      • Figure 34: Trended benefits of functional drinks consumed, by generation, 2021-22
    • Inclusivity will reach more identities
      • Figure 35: Benefits of functional drinks consumed, by healthy living agreement, 2021-22
  10. Trended Consumption of Functional Ingredients

    • Give consumers an ETA
      • Figure 36: Trended consumption of functional ingredients in beverages, 2021-22
    • Work to win over Gen Z with a fun, casual feel
      • Figure 37: Trended consumption of functional ingredients in beverages, by generation, 2021-22
    • Make functionality feel more simple and approachable
      • Figure 38: Consumption of functional ingredients in beverages, by healthy living agreement, 2022
  11. Healthy Beverage Associations

    • Pay attention to sugar amidst a craving for flavor
      • Figure 39: Healthy beverage associations, 2022
    • Create variety for Millennials, simplify for Gen Z
      • Figure 40: Healthy beverage associations, by generation, 2022
    • More is more for the healthy living individual
      • Figure 41: Healthy beverage associations, by healthy living agreement, 2022
  12. Interest in Functional Attributes of Specific Drinks

    • Don’t overlook functionality of staple ingredients
      • Figure 42: Correspondence Analysis – Symmetrical map – Functional benefit interest by drink type, 2022
    • Bring more to the table with milk
      • Figure 43: Functional benefit interest by drink type, 2022
    • Stretch the benefits of coffee and tea
      • Figure 44: Functional benefit interest by drink type, by generation, 2022
  13. Functional Beverage Attitudes

    • Help consumers feel the benefits
      • Figure 45: Functional beverage attitudes, 2022
    • Engage with the 55+ consumer
      • Figure 46: Functional beverage attitudes, by generation, 2022
  14. Appendix – Data Sources and Abbreviations

    • Consumer survey data
    • Abbreviations and terms
    • Abbreviations

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