Functional Drinks Market Size, Share & Trends Analysis Report By Type (Sports Drinks, Energy Drinks, Nutraceutical Drinks), By Distribution Channel, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global functional drinks market size was worth USD 204.8 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 7.1% from 2023 to 2030. Increasing awareness regarding the health benefits of consuming functional drinks, enriched with health-enhancing ingredients such as amino acids, vitamins, and minerals among others is anticipated to boost market demand in coming years. Furthermore, growing marketing efforts and innovative product launches by the major players may further fuel the market growth during the forecast period. The COVID-19 outbreak had a positive impact on demand for functional drinks owing to the surge in demand for the products that provide immunity-boosting and other health benefits. According to a whitepaper published by Kerry Group, more than 65.0% of consumers have become more concerned about health after the pandemic. Furthermore, the ease of the availability of functional drinks through e-commerce, retail, and grocery stores has contributed to market growth during the pandemic.

However, the growth of the functional beverages market was affected due to the lockdown and trade restrictions that disrupted the raw material supply leading to a production shortage. The market is steadily reaching its pre-covid levels as manufacturers are focusing on new product launches that cater to evolving consumer needs.

Factors such as ease of consumption and numerous health benefits provided by functional drinks are the major drivers for the market. Additionally, the market is witnessing the introduction of numerous new flavors, as a result of recent product innovations, which is further driving up product demand. Furthermore, increasing healthcare costs, trends toward disease prevention, and inclination toward maintaining a healthy lifestyle are some of the main factors propelling the market.

Functional drinks help to improve a variety of body functions such as heart rate management, digestive health, immune system, and weight management. It also helps in improving bone health, vision and eye health, mental energy, and managing cholesterol levels owing to the presence of various ingredients such as raw fruits & vegetables, amino acids, vitamins, and minerals. The consumption of healthy drinks that contain nutrients to address these particular health issues is becoming more popular among consumers which may boost product demand.

Growing demand for lactose-free and plant-based drinks among consumers owing to the rising adoption of various diets such as keto and vegan are driving the product demand. Furthermore, the growth of organic, non-GMO, and clean-label products is impacting consumer buying behavior. Thus the demand for functional drinks is anticipated to increase due to the consumer preferences for such drinks over carbonated beverages during the forecast period.

Ready-to-drink (RTD) beverages are gaining traction as consumers are inclined to maintain good health despite leading busy lives. Functional juice, functional sparkling water, functional soda, and functional tea have all become more popular as a result of the rise in the consumption of nutritious and healthy drinks. Additionally, nootropic drinks are becoming more popular among consumers who are concerned about maintaining mental health. Such innovations will significantly impact the overall market growth.

Type Insights

The global functional drinks market is segmented into sports drinks, energy drinks, and nutraceutical drinks based on the type. Sports drinks are estimated to develop at a CAGR of 7.1% during the forecast period of 2023-2030. The factors contributing to the segment growth include the rising trend of fitness & healthy lifestyle, an increasing number of fitness centers and gyms as well as increasing commercialization of sports events in counties like China and India. Sports drinks are useful for reviving energy during sports activity, while energy drinks provide instant energy boosts as well as physical and mental stimulation.

Energy drinks dominated the market with the highest revenue share of 40.0% in 2022. The main ingredients used in energy drinks are caffeine which provides stimuli and taurine, which is vital for skeletal muscle development and cardiovascular function. Energy drinks are the preferred functional drink type in advanced economies like the U.S. and Canada due to their high caffeine content whereas sports drinks are more common in developing nations due to the increasing popularity of physical and sports activities.

Distribution Channel Insights

The global functional drinks market is segmented into hypermarkets/supermarkets, specialty stores, online, and others based on the distribution channel. An online distribution channel is anticipated to have the highest expansion rate at a CAGR of 7.8% during the forecast period of 2023-2030. The factors contributing to the segment growth include increasing internet penetration in rural areas, coupled with a high adoption rate of online shopping among youngsters and working consumers.

The growing adoption of technology and the introduction of new user-friendly shopping apps are raising demand for the online segment in the forecast period. Moreover, online shopping is convenient and budget-friendly. The increasingly hectic lifestyle and the rising number of working ladies in developing countries are further increasing demand for the functional drinks in the foreseeable timeframe.

Regional Insights

Asia Pacific registered a high revenue share of 36.06% in 2022. According to the International Diabetes Federation, China has the highest number of diabetic people (141.0 million), followed by India with more than 74.0 million adults having diabetes in 2021. Therefore, major players such as Coca-Cola and PepsiCo are focusing on removing artificial ingredients and lowering the sugar content in their beverage products as well as developing new functional drinks for the health-conscious consumers in the region.

The market in North America is anticipated to register a significant CAGR of 7.1% in 2022. The major factor driving the sales of fortified plant-based drinks and energy drinks is the rising prevalence of cardiovascular illnesses, arthritis, and osteoporosis coupled with the increasing demand for convenience beverages and consumers' changing lifestyles. Furthermore, the regional functional beverages market is expanding significantly as a result of the rising awareness of nutrition-focused diets, particularly among millennials. Consumers in countries like Canada and the U.S. strictly adhere to health-conscious diets that include functional beverages.

Key Companies & Market Share Insights

The global market is highly competitive with many international and regional players. Major companies enter into strategic partnerships, mergers & acquisitions, and joint ventures to gain a competitive edge in the market. In addition, manufacturers focus on capacity expansions and research & development for new product development to offer trending products to consumers.

For instance, in May 2021, PepsiCo launched a sparkling water product infused with functional ingredients named Soul boost. The new drink is available in two variants namely Ease and Lift.The Ease variant is used to support relaxation whereas the Lift is used for supporting mental stamina. Some of the  key companies  in the global  functional drinks market include:

• The Coca-Cola Company

• Monster Beverage Corporation

• PepsiCo

• Red Bull GmbH

• Otsuka Holdings Co., Ltd.

• Suntory Group

• DANONE SA

• Nestlé

Functional Drinks Market Report Scope

Global Functional Drinks Market Segmentation

This report forecasts revenue growth at the global, regional, and country levels along with provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global functional drinks market report based on type, distribution channel, and region:

• Type Outlook (Revenue, USD Billion, 2017 - 2030)

  • Energy Drinks

  • Sports Drinks

  • Nutraceutical Drinks

• Distribution Channel Outlook (Revenue, USD Billion, 2017 - 2030)

  • Hypermarkets/Supermarkets

  • Specialty Stores

  • Online

  • Others

• Regional Outlook (Revenue, USD Billion, 2017 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia & New Zealand

  • Central & South America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • South Africa