Functional Beverages Market by Type (Energy Drinks, Sports Drinks, Dairy Beverages), Application (Health & Wellness, Weight Management), Distribution Channel (Supermarkets, Convenience stores, E-commerce), and Geography - Global Forecast to 2029

The Functional Beverages Market is expected to register the highest CAGR of 6.7% from 2022–2029 to reach $179.8 billion by 2029. Functional beverages refer to non-alcoholic drinks containing non-traditional ingredients such as vitamins, minerals, dietary fibers, amino acids, raw fruits, and probiotics. Sports drinks, energy drinks, herbal tea, vitamin water, and fruit drinks with additives are commonly available functional beverages. They are widely consumed to improve health, energy, athletic endurance, and hydration. Functional beverages assist in delivering nutrients and bioactive compounds to the body, including antioxidants, fatty acids, fibers, plant extracts, and micronutrients. As a result, their consumption promotes a healthy cardiovascular system, improves digestion, prevents cancer, boosts immunity, regulates weight loss, strengthens joints, and enhances memory.

The growth of this market is mainly driven by factors such as the growing demand for functional beverages in emerging economies, increasing demand for sports drinks, and a rise in health expenditure. However, the accessibility to healthier substitutes and the high price of functional beverages compared to conventional beverages are expected to restrain the growth of this market to a certain extent.

The COVID-19 outbreak caused by the SARS-CoV-2 virus created a severe public health emergency globally, spreading quickly in more than 215 countries. To combat & control the spread of this disease, numerous countries worldwide declared emergencies and announced complete nationwide, statewide, or citywide lockdowns, halting all travel, transport, manufacturing, educational institutions, and non-essential trade, which significantly impacted many industries globally and reduced manufacturing and distribution activities worldwide. In the functional beverages market, manufacturers faced disruptions in raw material supply due to the COVID-19 pandemic. Also, imports and exports in many countries were either restricted or delayed since the outbreak, creating hurdles for suppliers.

The food & beverage industry across different regions suffered from severe disruption due to lockdowns, travel bans, border restrictions, and manufacturing unit shutdowns, which resulted in shortages in raw materials and disturbances in supply chains. The functional beverages market also faced similar difficulties as manufacturers could not operate at full capacity. However, as consumers became health-conscious during the pandemic, they preferred healthy and nutritious foods & 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 overcame the demand and supply gap, which boosted their growth pace. Therefore, the COVID-19 pandemic had a mixed impact on the functional beverages market.

On the other hand, the market's growth is the result of increasing demand for functional beverages due to rising health awareness regarding healthy lifestyles & diets. Also, companies are focusing more on energy drinks that boost immunity to fight against infection. Moreover, according to a news article published by Outlook India, in July 2020, the demand for energy drinks increased due to their immunity-boosting properties.

Increase in Health Expenditure

The consumer has become more health conscious during the pandemic; people started consuming healthy and nutritious foods and beverages. Also, the demand for immunity-boosting beverages has increased. The healthcare expenditure of people worldwide has increased significantly due to the rising concerns regarding health and the growing prevalence of chronic diseases, such as cancer, heart disease, diabetes, and obesity. According to the U.S. Centers for Medicare & Medicaid Services (CMS), in 2020, health spending accounted for 19.7% of the country's GDP. In addition, healthcare spending in the U.S. increased by 9.7% in 2020, totaling USD 4.1 trillion. As people are becoming health conscious, they are increasingly spending on foods and beverages that help them stay healthy. Hence, the increasing healthcare spending is projected to offer notable growth opportunities for the functional beverages market players in the coming years.

Sports Drinks Segment to Witness Fastest Growth During Forecast Period

Based on type, the sports drink segment is expected to register the highest CAGR during the forecast period of 2022–2029. The key factor attributed to the highest growth of this segment is the increasing popularity of sports drinks among teenagers and adults due to higher involvement in sports in developed economies.

Based on application, in 2022, the health & wellness segment is expected to account for the largest share of the functional beverages market. The large market share of this segment is attributed to factors such as an increase in health-conscious people and demand for clean-label and non-GMO food products.

Based on distribution channel, in 2022, the convenience store segment is expected to account for the largest share of the functional beverages market, while the E-commerce segment is expected to register the highest CAGR during the forecast period. The major growth of this segment is attributed to factors, such as the availability of a wide variety of products at online stores, with significant discounts, and home delivery service.

North America: The Dominating Regional Market

The functional beverages market is divided into five regions: North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2022, North America is expected to account for the largest share of the functional beverages market. The large market share of this region is attributed to the well-established packaged drinks market, high awareness of the health benefits of functional beverages, and high demand for healthy drinks across the region.

 Asia-Pacific is expected to register the highest CAGR during the forecast period. The growth of this market is mainly attributed to the increasing incidences of diabetes and obesity, rising low-carb and clean-label trends, growing demand for sugar-free products and awareness regarding health and fitness in the region.

Key Players

The report includes a competitive landscape based on an extensive assessment of the key strategic developments by leading market participants in the industry over the past four years.Some of the key players operating in the functional beverages market are Danone S.A. (France), Meiji Holdings Co., Ltd. (Japan), Monster Beverage Corporation (U.S.), National Beverage Corp. (U.S.), Nestle S.A. (U.S.), PepsiCo, Inc. (U.S.), Red Bull GmbH (Austria), Suntory Holdings Limited (Japan), The Coca-Cola Company (U.S.), and The Kraft Heinz Company (U.S.).

Scope of the Report:

• Energy Drinks
• Sports Drinks
• Dairy-based Beverages
• Nutraceutical Drinks
• Vegetable & Fruit Beverages
• Other Beverages

• Health & Wellness
• Weight Management

• Supermarkets & Hypermarkets
• Convenience Stores
• Pharmacies & Health Stores
• E-commerce
• Other Distribution Channels

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • Spain
  • Italy
  • France
  • U.K.
  • Russia
  • Rest of Europe (RoE)
• Asia-Pacific (APAC)
  • China
  • Japan
  • India
  • Australia
  • Rest of Asia-Pacific
• Latin America
  • Brazil
  • Argentina
  • Mexico
  • Rest of Latin America (RoLATAM)
• Middle East & Africa

Key Questions Answered in the Report: