Functional Beverages Market Research Report and Outlook by 2028

The functional beverages sector is anticipated to achieve a remarkable valuation of US$ 145,146.05 million by the year 2028, rising from US$ 85,728.85 million in 2021. This growth trajectory indicates a compound annual growth rate (CAGR) of 7.8% from 2021 to 2028.

Functional beverages are enhanced with vital nutrients, including proteins, vitamins, minerals, amino acids, and probiotics, designed to provide various health advantages. These beverages play a crucial role in sustaining energy levels, thereby enhancing stamina and athletic performance. The category encompasses a range of products such as energy drinks, sports drinks, functional water, and fortified juices. Energy drinks, in particular, have gained immense popularity among athletes and fitness aficionados. Additionally, functional water and fortified drinks are witnessing a significant rise in consumer interest. This shift towards health-conscious choices is largely driven by a sedentary lifestyle and the growing incidence of lifestyle-related diseases, including obesity and diabetes.

The market for functional beverages is categorized by product type into several segments: energy drinks, sports drinks, fortified juices, functional water, and others. Among these, the functional water segment is expected to experience a substantial CAGR during the forecast period. Functional water, classified as a non-alcoholic beverage, contains additional components often referred to as aquaceuticals, which may include vitamins, minerals, acids, herbs, and raw fruits and vegetables. Many consumers are opting for functional water over regular water to fulfill their daily nutritional needs. The diverse range of flavors available in functional water, offered by various retailers, further enhances its appeal. Manufacturers in the functional beverages sector are investing significantly to broaden their operations in North America by launching innovative products and new flavors. For example, in 2020, PepsiCo, Inc. entered into a US$ 3.85 billion agreement with Rockstar Energy Beverages, a prominent energy drink manufacturer in the United States, aimed at expanding PepsiCo's existing functional beverage portfolio.

Geographically, the functional beverages market is divided into several regions: North America, Europe, Asia Pacific (APAC), the Middle East & Africa (MEA), and South & Central America (SAM). In 2020, North America dominated the market share, while the Asia-Pacific region is projected to exhibit the highest CAGR during the forecast period. The growth in North America can be attributed to the increasing demand for functional beverages among young adults and athletes, alongside emerging fitness trends. Products such as sports and energy drinks are known to enhance athletic performance and stamina, contributing to the rising demand for functional beverages in this region.

Key players in the functional beverages market include major companies such as PepsiCo, The Coca-Cola Company, Nestle, Kraft Foods, General Mills, Campbell Soup Company, Red Bull, The Wonderful Company LLC, Danone SA, and Monster Energy Company. These companies are committed to innovating their product offerings in terms of flavors, packaging, and ingredients to broaden their customer base. Given the competitive nature of the functional beverages market, leading players are making substantial investments in research and development to maintain their market positions.

The overall market size for functional beverages has been determined through a combination of primary and secondary research methodologies. The research process commenced with extensive secondary research utilizing both internal and external sources to gather qualitative and quantitative data relevant to the market. Additionally, numerous primary interviews were conducted with industry stakeholders to validate the findings and gain deeper analytical insights. Participants in this research included vice presidents, business development managers, market intelligence managers, national sales managers, and external consultants, such as valuation experts, research analysts, and key opinion leaders specializing in the functional beverages sector.