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 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:-
Functional beverages are drinks that provide added health benefits beyond basic hydration. These beverages contain functional ingredients or components like vitamins, minerals, botanicals, or amino acids that help enhance performance or provide health support. They are often marketed for their purported health effects such as managing energy levels, improving digestion, boosting immunity, or providing antioxidants. Common functional beverages include energy drinks, sports drinks, fortified juices, probiotic drinks, and dairy beverages. Advantages of functional beverages include providing an easy and convenient way to improve the nutritional value of the diet, supporting health from the inside out, and offering more choices for active and health-conscious consumers. The growing health awareness among population and busy lifestyle has fuelled the demand for functional beverages globally.
Market key trends:-
One of the key trends witnessed in the functional beverage market is the increasing consumer preference for plant-based functional beverages. Plant-based products are perceived as more natural and sustainable by consumers. Therefore, many companies are focusing on developing functional beverages using ingredients like plant proteins, prebiotics, probiotics, botanical and herbal extracts derived from fruits, vegetables, grains and other plant sources. Another noticeable trend is customized functional beverages according to the individual health needs and goals. Beverage companies are offering specialized products targeted at various consumer groups like, energy and immunity drinks for active adults, brain health drinks for older population, gut health drinks etc. Furthermore, the introduction of functional beverages in innovative portable packaging forms like bottles, cans and pods to match the on-the-go lifestyles is also encouraging the market growth.
Porter's Analysis:-
- Threat of new entrants: The functional beverage market requires high capital investments for production facilities and distribution networks. Established brands also have strong customer loyalty which create entry barriers for new players.
- Bargaining power of buyers: The bargaining power of buyers is moderate in this market as there are numerous functional beverage brands available. However, buyers have less influence on prices set by large brands.
- Bargaining power of suppliers: Raw materials used in functional beverages such as fruit juices, tea, coffee etc. are commoditized. This allows suppliers to switch between buyers easily.
- Threat of new substitutes: Product innovation is bringing new functional beverages with varied ingredients and health benefits. This increases threat of substitution.
- Competitive rivalry: The market is dominated by few major players. Intense competition exists between them on the basis of brand image, flavor innovations, and marketing initiatives.
Key Takeaways:-
The Global Functional Beverage Market Demand is expected to witness high growth, exhibiting CAGR of 8.6% over the forecast period 2023 to 2030, due to increasing health consciousness among consumers. The market size for 2023 is estimated to be US$ 191.54 Bn.
North America dominates the global functional beverage market currently due to rising awareness about benefits of hydration and presence of global brands. Asia Pacific is expected to witness fastest growth owing to growing middle class population and their increasing disposable income in the region.
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. These players are investing heavily in new product launches and strengthening their distribution channels globally.
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Worldwide, the functional drinks market is striding along a sound expansion track. In spite of functional drinks being more costly than customary substitutes, (for example, carbonated beverages), the market is considered to post significant expansion over the coming years. As health awareness turns into an undeniably vital issue in numerous nations, shoppers may move from sugary soft drinks to more beneficial choices in the functional drinks category, boosting market expansion.
Demands originating from the millennial generation, increasing wellness & healthcare awareness as well as busy lifestyles have prompted the developing requirement for functional. These aspects alongside the possibility of healthiness-on-the-go and advancements in the drink flavors have prompted an increase in demand for wellbeing related functional drinks and refreshments which are additionally contrasting options to the customary supplements. The increasing health awareness of functional drinks is prompting the prospect of producing the condition-specific product offerings that will unmistakably emerge in the market.
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In U.S., big chain stores, for example, Walmart have sturdy presence. These stores offer buyers a more broad selection of products at lesser costs in contrast to small competitor stores. Inflow of new flavors in addition to products is additionally working for the market.
Multinational brands are bigger in the classification, getting a charge out of higher sales revenues along with stronger brand reputations. This is primarily on the grounds that energy drinks as well as sports, an imperative piece of functional drinks, begin from overseas markets; subsequently, buyers have more trust in international brands and show brand devotion.
Both health and convenience advantages related to functional drinks are the main aspects affecting the market. Further, the latest product developments have prompted the presentation of numerous new flavors along with products in the functional drinks market which thusly is boosting the market. The trend in the direction of disease prevention and healthy lifestyle, combined with increasing healthcare cost are a few of the significant drivers of worldwide functional drinks market.
Expanding worldwide sporting events along with the commercialization of domestic sporting events in emerging nations of Asia Pacific is giving new expansion prospects to functional drinks in fast-developing markets, for example, India and China.
Doubts on product proficiency and absence of clearness among customer are restraining the overall expansion of the functional drinks market. In addition, a time-consuming consequence of the ingredients utilized in functional drinks is one of the significant challenges for the functional drinks market.
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Growing product portfolio to address the technological progressions and utilization of natural ingredient in functional drinks are the center zones of the prominent players in the market. The customer demands for a perfect clean label have been on the ascent. On the other hand, the producers are not able to define it yet. Another limiting aspect is the existence of strict government regulation.
The functional beverage sector is very focused with the top ten organizations representing over half of the overall industry. The main players in the market are centered on creative flavors and beverages that are safe to consume tastes great as well as are cheaper. The prominent market players active in the worldwide market for functional drinks include Glanbia, Maxinutrition, PepsiCo Inc., Clif Bar & Company, GNC Holdings, The Coca-Cola Company, Nestle S.A, Universal Nutrition, Red Bull GmbH, Groupe Danone and Dr. Pepper Snapple Group Inc. Moreover, market players like Hi-tiger (Fujian Dali Food) are registering very sturdy retail present value sales growth during the year 2017 that resulted in their share expansion. Aiming primarily young consumers and students, Hi-tiger is extensively available in neighborhoods and in small supermarkets near schools.
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