Functional Beverages Market Research Report - Forecast to 2027

Functional Beverages Market Information By Type (Energy Drinks, Sports Beverages), By Distribution Channel (Store Based, Non-store Based), By Function (Health & Wellness, Weight Management) - Forecast till 2027

ID: MRFR/F-B & N/1331-CR | February 2021 | Region: Global | 110 pages

Functional Beverages Market Overview

Market Research Future (MRFR) projects that the Functional Beverages Market could record a growth rate of 6.63% between 2018 and 2023 (appraisal period). The functional beverages market size is also expected to touch an approximate valuation of USD 234.48 BN by 2023-end.

Functional Beverages Market COVID-19 Analysis

The COVID-19 outbreak has had a brutal impact on the food industry, with the lockdown leading to temporary shutdown of manufacturing facilities and pause of several operations. In view of the devastating effects of the SARS-CoV-2 pandemic, players are focusing on bolstering their supply chains while accelerating their manufacturing processes to develop a wider range of functional beverages, in a bid to prevent further revenue losses. Also, with the growing health consciousness following the novel coronavirus and the resultant rise in the demand for sports & performance drinks, enhanced fruit drinks & juices and energy drinks could favor the market during the analysis period.

Functional Beverages Market Dynamics


Rising Introduction of New Flavors to Boost Market Demand

Product innovations and their rising introduction in local flavors to lure in a higher number of customers are the major marketing tactics employed by manufacturers, which could result in solid functional beverage market growth. Attractive packaging designs and the rising preference for green packaging are some of the top market trends among manufacturers.

Surging infusion of natural ingredients in functional drinks has helped spark the interest of various health enthusiasts. Also, promotional activities conducted by top players to boost brand recognition also open up growth avenues for the functional beverages market.

Functional Beverages Market Opportunities

Expanding E-Commerce Sector to Present Huge Opportunities

Expanding retail sector along with the growing popularity of e-commerce can present attractive opportunities to leading firms in the global market. Established vendors of functional beverages are inclining towards online channels owing to lower expenditure in infrastructure and communication. E-commerce helps organizations easily reach out to a wider customer base, thereby resulting in extensive business exposure.


High Costs of Functional Beverages to be a Challenge in Developing Countries

High costs associated with premium functional beverages and the low purchasing capacity of consumers in developing countries could be a key challenge for players in the following years.

Segment Overview

Sports Beverages Gain Popularity as Preference Among Athletes Soars

The major types of functional beverages are sports beverages, energy drinks, functional fruits and vegetable juices, prebiotic and probiotic drinks, dairy alternative beverages, functional dairy products, and others. ‘Others’ include water, teas & coffee, among others. Out of all the types, the sports beverages segment can most likely hit USD 63.88 billion by 2023, considering the soaring number of athletes as well as sports enthusiasts with high preference for these beverages. On the other hand, the functional fruits and vegetable juices segment can escalate a fast rate of 7.13% over the given period.

Store-Based Distribution Channel Takes the Top Position

Top distribution channels that help bolster the consumer base are store based as well as non-store based. The store based channels are in the lead and can accrue close to USD 185.2 billion by 2023.

Health and Wellness Segment to Touch Highest Valuation

The various function-based market segments considered in the report are energy & rejuvenation, health & wellness, hydration and weight management. The health and wellness segment can touch the highest valuation of USD 91.25 billion by 2023, with energy & rejuvenation segment expected to reach USD 87.38 billion the same year.

Regional Analysis

Europe Continues to Lead

In 2017, the biggest share of 32.4% in the global market belongs to Europe, which is touted to touch a significant USD 74.26 billion by 2023. The European market is also projected to record a 6.22% CAGR in the coming years, given the rising emphasis on wellness and health along with the robust pool of consumers of energy-rich drinks and dairy products.

North America Secures the Second Lead in Global Market

Since 2017, North America has been the second market leader with a share of 29.34% and could even record a decent growth rate of 6.97% over the analysis period. The extensive ranges of functional beverages offered by the huge number of manufacturers, with attractive packaging that draws in more consumers can further spur the market growth over the oncoming years. The US functional beverages market is currently in the lead, followed by Canada and Mexico, by virtue of the expanding sports and energy drinks industry in the country.

Asia Pacific Functional Beverage Market to Make Significant Progress

The APAC market is all set to grow at a significant rate of 7.29% over the evaluation period, on account of mounting health awareness among consumers and the resultant surge in their preference for functional beverages. Increased disposable income coupled with the rising cases of osteoporosis, arthritis and cardiovascular disease have also fostered the product demand in the region. Convenience beverages are witnessing strong demand in view of the evolving lifestyle of the Asian consumers, leading to solid growth of fortified/functional plant-based, malt-based hot drinks and functional energy drinks sales.

Competitive Landscape

Companies to Focus on Product Innovation and Launches

Most of the vendors adopt a variety of competitive strategies such as acquisition, merger and collaboration to gain a higher share in the global industry. Rapid increase in health-consciousness among consumers is encouraging firms to concentrate more on producing innovative high quality functional beverages, to gain the upper hand in the competition.

Nestle is a well-known name in the functional beverages industry. The company keeps track of the continuously evolving lifestyles of the consumers and their changing needs in order to provide optimum nutrition, health, taste and wellness via its extensive product offerings. Exhaustive research and development is the key strategy that the company adopts, to offer consumers an extensive range of safe, high quality beverages at affordable prices.

List of Key Companies Covered in this Report

  • Nestle S.A. (Switzerland)

  • The Coca-Cola Company (U.S.)

  • PepsiCo Inc. (U.S.)

  • Fonterra Co-operative Group Ltd. (New Zealand)

  • Mondelez International Inc. (U.S.)

  • Hain Celestial Group (U.S.)

  • Monster Beverage Corporation (U.S.)

  • Kraft Heinz Company (U.S.)

  • Campbell Soup Co. (U.S.)

  • Danone (France)

Recent Developments

  • October 2020Crave has launched a natural energy beverage, with three new flavors: Passionfruit & Vanilla (Pornstar Martini), Pineapple & Coconut (Piña Colada) and Mint & Lime (Mojito). The drink has a mix of top quality natural ingredients derived from B and C vitamins and organic green coffee beans that help bolster the energy levels as well as the immune system. These functional beverages are gluten-free, sugar-free, vegan friendly, and have no artificial sweeteners.

Report Overview

Key challenges, barriers and drivers that affect the functional beverages market size, along with key segments along with regions and the top vendors are listed in the MRFR report. MRFR report lists the functional beverages market growth industry study, taking into account the base year, projected period as well as the size during the given period. Apart from comprehensive market segmentation, the report also throws light on the functional beverages market revenue during the review period as well as the historical value, in terms of volume and value, technological developments, and the top factors inducing market growth. Besides, well-known manufacturers with considerable functional beverages market share and the key competitive strategies followed by them to stay relevant are also profiled in the MRFR report.

Segmentation Table

By Type

  • Energy Drinks

    • Sports Beverages

    • Prebiotic and Probiotic Drinks

    • Functional Fruits and Vegetable Juices

    • Functional Dairy Products

    • Dairy Alternative Beverages

    • Others

  • Water

  • Teas & Coffee

By Distribution Channel

  • Store Based

  • Non-store Based

By Function

  • Health & Wellness

  • Energy & Rejuvenation

  • Weight Management

  • Hydration

Frequently Asked Questions (FAQ) :

Functional Beverages Market is projected to grow at approximately 6.63% CAGR during the assessment period (2018-2023).

Functional Beverages Market is estimated to reach a valuation of approx. USD 234.48 BN by the end of 2023.

Increasing demand due to the growing healthy eating habits among consumers and increasing per capita disposable income, are major tailwinds pushing the growth of the Global Functional Beverages Market.

North America holds the largest share in the Global Functional Beverages Market, followed by Europe and the Asia Pacific, respectively.

Nestle S.A. (Switzerland), Danone (France), The Coca-Cola Company (U.S.), Fonterra Co-operative Group Ltd. (New Zealand), PepsiCo Inc. (U.S.), Campbell Soup Co. (U.S.), Mondelez International Inc. (U.S.), Kraft Heinz Company (U.S.), Hain Celestial Group (U.S.), and Monster Beverage Corporation (U.S.), are some of the top players operating in the Global Functional Beverages Market.

Global Functional Beverages Market – Summary

Food quality, over the years, has improved a lot but intake of nutritional foods has plummeted. This can be termed as a side-effect of fast-tracked lifestyle that allows almost no time for preparation of nutritious foods. Hence, a need for functional beverages spurred. These beverages help in maintaining the overall nutrition of the human body and keeping the body hydrated. Makers endeavor to address health issues of all and bring in holistic development. The global functional beverages market can expect a substantial 6.63% CAGR during the forecast period (2018-2023) with an estimated scaling of USD 234.48 billion valuation. Market Research Future’s (MRFR) detailed report includes segments, competitions, and drivers for better predictive analysis of the future market.

Functional beverages are gaining traction owing to its benefits regarding ingredients such as minerals, vitamins, herbs, amino acids, antioxidants, and bacteria. It can help people achieve a better immune system, improved heart rate, sound digestive health hydration, and enhanced electrolyte replenishing. Furthermore, to get more momentum, makers of functional beverages are developing new products. Such as variants based on sugar-free technology or caloric formulations. High investments are also being made in research & developments (R&D) which could assist in market expansion.

The organized retail sector is also growing by leaps and bounds. Earlier it used to be available only in drugstores and fitness stores. However, its availability chart has expanded and taken in supermarkets, hypermarkets, and specialty stores. With a broader spectrum, the sale has also increased. In addition, e-commerce channels are revamping functional beverage market sales structure.

On the downside, stringent government policies are making it hard for the sector to work smoothly. The cumbersome permit process is a major factor. On the other hand, high-calorie content in many beverages along with sugar can find their appeal among the populace going down. Individuals are now showing great concern for their diabetes level, and additionally, weight is an aspect to worry about. The functional beverages market can suffer owing to these drawbacks.


By type, the functional beverage market can be segmented into energy drinks, functional fruit and vegetable juice, sports beverages, prebiotic & probiotic drinks, functional dairy products, dairy alternative beverages, and others. Among these, sports beverages are presently covering the maximum market share which is going to remain the same during the forecast period as well. The market can easily scale USD 63.88 billion market. Energy drinks sub-segment would follow the lead closely by aspiring for a USD 52.58 billion market valuation.

Based on distribution channels, the functional beverages market can be segmented into store-based and non-store based. Store-based segment is leading with an overwhelming margin and can easily reach USD 185.2 million by 2023.

By function, the functional beverage market can be segmented into hydration, energy & rejuvenation, health & wellness, and weight management. Health & wellness currently leads the market with USD 63.44 billion and is expected to leap to USD 91.25 billion by 2023. Energy & rejuvenation segment is also following the lead closely and can reach a valuation of USD 87.38 billion.

Regional Analysis:

Region-wise, the functional beverage market covers actions of namely North America, Europe, Asia Pacific (APAC), and Rest-of-the-World (RoW).

Europe has the largest market share. With a predicted total valuation of USD 74.26 billion during the forecast period, the region is going to escalate further. Its projected CAGR of 6.22% during the review period can be attributed to Germany, France, Spain, and Italy’s major contribution. France can register the maximum regional growth of 6.98% CAGR.

North America has the second largest market. It can scale a market value of USD 68.12 billion at a CAGR of 6.42% during the forecast period. Mexico is expecting the fastest regional CAGR of 6.97% during the forecast period, whereas, the U.S. will have the largest market share of USD 49.51 billion.

The APAC will register the fastest CAGR of 7.29% during the forecast period, and India, Japan, and China will cement their position with substantial market growth. China’s expected market share would be of USD 19.96 billion of the total expected regional value USD 59.79 billion.

Market Insight:

The intense market experiences strategical implementations made by market influencers. Common tactics such as mergers, collaborations, acquisitions, and new product launch are tested methods but contribute significantly to the global market expansion. For instance, the Coca-Cola Company acquired Ades from Unilever recently to use plant-based beverages in their portfolio. Danone set up a new unit in Mt. Crawford, Virginia to expand their business.

Prominent market players are PepsiCo Inc., The Coca-Cola Company, Nestle S.A., Danone, Kraft Heinz Company, Fonterra Co-operative Group Ltd., Mondelez International Inc., Monster Beverage Corporation, Campbell Soup Co., Hain Celestial Group, and others.     

Escalating demand for functional food & beverages among the increasing health conscious population is encouraging the key players of functional beverage industry to expand their business portfolio in the global market

Major key players listed in the functional beverages market include Danone (France), The Coca Cola Company (US), PepsiCo Inc. (US), Kraft Heinz Company (US), Hain Celestial Group (US), Nestle S.A (Switzerland), Monster Beverage Company (US), Fonterra Co-operative Group Ltd. (New Zealand), Mondelez International Inc. (US), Campbell Soup Co. (US), and others. Functional beverage has an established market throughout the globe owing to shifting consumer demand towards healthy diet. Also, the growth in the marketing strategies adopted by the key players is a major driver in the global functional beverage market. These listed players account for the major share in the global functional beverage market. To compete with the new players entering the functional beverage market, the established players follow certain strategies to sustain their consumer base.

Danone accounted for the highest market share in terms of development and is projected to constitute 19% of the developmental share in the global functional beverages market. The company is majorly focusing on new product launches which are more healthy and nutritious for the consumers. For instance, in the first two quarters of the year 2018, the company launched about 4 functional beverages in different regions. Moreover, the company is also undergoing geographical expansion to make their presence prominent. Acquisition and joint-ventures are also witnessed to be a part of their strategic development in past few years.

The Coca Cola Company is anticipated to account for a share of 17% of the overall development in the global functional beverages market. This company is highly involved into diversified strategic developments. The company is focusing into new product launches offering a wide range of products to the consumers and is also undergoing strategic acquisitions to have a sustainable growth. It is highly involved into R&D and launch of new products widening their product portfolio. The company is also undergoing acquisition of small firms to increase its presence in the developing market. For instance; Xiamen Culiangwang, maker of plant-based protein beverages in China was acquired by Coca-Cola Company to expand their portfolio of beverages in China.

PepsiCo Inc. also holds a prominent place in the market with strong focus on product launch followed by expansion of their production capacity and geographical reach. The company is also focusing on launching new products frequently to increase their product offerings and compete in the market. For instance, in 2017, as a part of its expansion in functional beverages segment, PepsiCo India launched vitamin -fortified water product, the Aquafina Vitamin Splash.

Major manufacturers also are found to have a high focus on strategic product launch to seek consumers’ attention towards their product range. They are also involved in the strategic agreement which will further support the company to expand and reach out to consumers across the regions. Acquisitions are also made to mark the company’s presence and expand their business line. In the strategy analysis, product launch dominated the market accounting for a share of 45%. Product innovations and introduction of new flavors is what the players are focusing upon. They tend to increase their product offerings in the market to compete against their competitors. They are also inclined towards expanding their geographical presence and expanding their production capacity to fulfil the growing consumer demands. Moreover, acquisition is holding 21% of share in strategy market for functional beverages.

Additionally, the companies are inclined towards product promotions and strengthening their marketing base. The promotional strategy aids in retaining the existing customers and to regenerating new customer base.