Functional Beverages Market is Growing Rapidly & projected to record a CAGR of 6% from 2022 to 2032

Manufacturers are leveraging these trends by innovating their product offerings, for instance, vegan and plant-based beverages. Moreover, nootropic drinks are also gaining prominence among the health-conscious consumers. Such innovations will transform the global functional beverage market in the near future.

Functional beverages are carefully crafted, RTD products distributed in varied flavours. Many manufacturers use packaging and labelling for advertising ingredients and nutritional value by marketing their products as healthy, vegan, or plant-based.

North America continues to lead the pack in the global functional beverages market. Growing awareness of nutrition-focused diets, especially among millennial, is significantly contributing to regional market growth. Consumers in the US and Canada are strictly following health-conscious diets, which include functional beverages.

Moreover, prevalence of e-Commerce platforms in the APAC is attracting huge stakeholders’ attention. Booming digitization, coupled with the convenience of e-Commerce platforms in developing countries such as India is offering a conducive ground for functional beverage manufacturers.

How is the Competitive Landscape in the Functional Beverages Market?

The functional beverages market is highly fragmented with the presence of many small- and medium-sized enterprises (SME). Players are striving to gain competitive edge by developing functional beverages with varied nutritional value. Hence, significant players in the market are investing heavily in R&D, and mergers & acquisitions (M&A).

In the recent past, the function food & beverage market has seen many new entrants. The proliferation of niche brands backed by intensive digital marketing is successfully paving way for new product categories, thus stiffening the market competition.

Initiatives such as the Amazon Accelerator Program and Springboard from Kraft Heinz and General Mills’ 301 INC scout new and upcoming retail brands and guide businesses towards a positive trajectory.

As a response to the situation, major players are acquiring such start-ups and small enterprises through such initiatives. Kraft Heinz’ acquisition of Primal Kitchen, is a result of diligent scouting by Springboard, the giants’ incubation initiative. Further, PepsiCo also acquired Health Warrior, a US-based nutrition-centred company

However, governments are taking legal actions against the miss-representation of the nutritional value of functional food and beverages. For instance, drinks containing cannabinoids cannot be marketed as medicinal products. Lenny & Larry’s nutritious cookies have been subjected to such lawsuits, wherein the protein value of the product was wrongly represented.

Functional beverage manufacturers are striving to avoid such lawsuits as well as, enhancing their product transparency. Leading manufacturers are employing dedicated teams to strategize law-abiding marketing plans that ensure proper representation of functional beverage products.

Further regulatory approvals for unique ingredients, packaging & labelling laws issued by statutory authorities such as the US Food & Drug Administration (FDA) are working in favour of functional beverages market.

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Companies that understand consumers’ preference in different regions will fare well in marketplace. For instance, “energy shots”, small quantities of nutritious drinks are prevalent in Japan, whereas, in India and China, large value packs attract more customers. As such, product innovation, and evolving consumer patterns will influence the growth strategies of market players.

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