Functional Drinks - Consumer Needs Insights
In the past few years, the Functional Drinks category has become a hotbed of new product development. Innovative new combinations such as collagen-enhanced protein shakes, CBD-infused herbal soft drinks and prebiotic juice shots demonstrate the endless possibilities for the sector.
According to research from Kerry, this innovation boom is meeting strong market demand. In November 2022, they forecast a 10.49% growth per year for the global functional beverage market, reaching nearly $200 billion by 2026. To help drill down into the opportunities arising from this growth, Kerry surveyed 10,000 health-conscious consumers across 7 major global markets.
Their research indicates growth is being driven by an increasing consumer focus on proactive health, beauty and healthy aging. The US market leads the way, accounting for one-third of global spend. Across the continents the order of health, beauty and wellbeing needs shift in order, but perhaps more surprisingly Skin (beauty support) tops the consumer need list in 6 out of the 7 global regions. Immune support also ranks highly and was a particular focus for US and UK consumers. This may well be an outcome of worries around Covid which has brought immune system health to the fore in recent years. A focus on digestive and gut health also ranked highly with 42% naming it as one of their highest functional health priorities. A high scoring rank for general weight management (43%) rather than weight loss points to a shift from lifestyle diets to a more holistic healthy living approach.
Life stages, gender, culture and age skew the data to create more distinct consumer segments. Gen Z and then Millennial females are driving the need for functional products that support Skin and Hair beauty support. This indicates a growing awareness with younger consumers of the benefits of a beauty routine that’s more than skin-deep.
Heart health was the top-ranking need identified by the older consumer segments closely followed by immunity support and digestive/gut health.
Muscle recovery and endurance also ranked highly with a significant difference between men and women e.g. Muscle recovery was important to 44% of men vs 35% of women globally.
Functional beverages to date have predominantly been sold as packaged goods through retail channels. However, the US and UK have seen expanding demand into foodservice. As an example, functional juices appear on 7.6% of menus in the US and are projected to grow to 11% by 2026.
Most strikingly, 95% of the functional product consumers surveyed said that food and beverages with added health benefits helped them to achieve their health goals. This widespread confidence in incorporating functional products as part of a healthier lifestyle bodes well for this category’s future growth.