Functional Beverages Global Market Opportunities and Strategies to 2033

This report describes and explains the functional beverages market and covers 2018-2023, termed the historic period, and 2023-2028, 2033F termed the forecast period. The report evaluates the market across each region and for the major economies within each region.

The global functional beverages market reached a value of nearly $154.44 billion in 2023, having grown at a compound annual growth rate (CAGR) of 5.5% since 2018. The market is expected to grow from $154.44 billion in 2023 to $204.74 billion in 2028 at a rate of 5.8%. The market is then expected to grow at a CAGR of 6.3% from 2028 and reach $277.89 billion in 2033.

Growth in the historic period resulted from the growing number of health-conscious consumers, strong economic growth in emerging markets, increased investments, increase in the number of athletes and increasing preference for ready-to-consume juices. Factors that negatively affected growth in the historic period include tax increases and risks associated with energy drink consumption.

Going forward, the rising demand for natural ingredients, increasing number of elderly individuals, rising disposable incomes per capita and surge in e-commerce and retail sales will drive the market. Factors that could hinder the growth of the functional beverages market in the future include stringent regulations.

The functional beverages market is segmented by type into energy drinks, sports drinks, nutraceutical drinks, dairy-based beverages, juices, enhanced water and other types. The energy drinks market was the largest segment of the functional beverages market segmented by type, accounting for 26% or $40.11 billion of the total in 2023. Going forward, the energy drinks segment is expected to be the fastest growing segment in the functional beverages market segmented by type, at a CAGR of 7.3% during 2023-2028.

The functional beverages market is segmented by function into health and wellness and weight management. The health and wellness market was the largest segment of the functional beverages market segmented by function, accounting for 80.8% or $124.82 billion of the total in 2023. Going forward, the health and wellness segment is expected to be the fastest growing segment in the functional beverages market segmented by function, at a CAGR of 5.8% during 2023-2028.

The functional beverages market is segmented by distribution channel into brick and mortar, specialty foodservice stores and online. The brick and mortar market was the largest segment of the functional beverages market segmented by distribution channel, accounting for 64.7% or $99.98 billion of the total in 2023. Going forward, the online segment is expected to be the fastest growing segment in the functional beverages market segmented by distribution channel, at a CAGR of 6.1% during 2023-2028.

Asia-Pacific was the largest region in the functional beverages market, accounting for 41.1% or $63.54 billion of the total in 2023. It was followed by Western Europe, North America and then the other regions. Going forward, the fastest-growing regions in the functional beverages market will be Asia-Pacific and the Middle East, where growth will be at CAGRs of 8% and 6.4% respectively. These will be followed by Western Europe and Africa, where the markets are expected to grow at CAGRs of 5.2% and 4.9% respectively.

The global functional beverages market is concentrated, with large players operating in the market. The top ten competitors in the market made up 44.4% of the total market in 2023. PepsiCo was the largest competitor with a 6.5% share of the market, followed by The Coca-Cola Company with 5.6%, Danone S.A. with 5.4%, Red Bull GmbH with 5.1%, Monster Energy Company with 4.5%, Nestle S.A. with 4%, Suntory Holdings Limited with 3.8%, Fonterra Co-operative Group Limited with 3.2%, Campbell Soup Company with 3.2% and Abbott with 3.2%.

The top opportunities in the functional beverages market segmented by type will arise in the energy drinks segment, which will gain $16.98 billion of global annual sales by 2028. The top opportunities in the functional beverages market segmented by function will arise in the health and wellness segment, which will gain $40.87 billion of global annual sales by 2028. The top opportunities in the functional beverages market segmented by distribution channel will arise in the brick and mortar segment, which will gain $31.81 billion of global annual sales by 2028. The functional beverages market size will gain the most in China at $14.74 billion.

Market-trend-based strategies for the functional beverages market include focus on emerging trends in relaxation beverages, focusing on developing protein-based functional drinks, focus on AI-driven functional drinks, advancements in vegan and plant-based functional beverage development, emergence of healthy hydration drinks for health benefits, launch of nootropic drinks to boost brain health and focus and strategic partnerships and collaborations among market players.

Player-adopted strategies in the functional beverages market include focus on improving portfolio through product launches to expand in the sparkling water category, AI-driven functional drinks that use artificial intelligence (AI) algorithms to develop unique and innovative recipes for functional beverages and investment in new plants to expand product portfolio.

To take advantage of the opportunities, the analyst recommends the functional beverages companies to focus on expanding product lines with functional benefits, focus on protein-based functional drinks, focus on leveraging AI for innovative functional beverages, focus on plant-based functional beverages, focus on developing healthy hydration beverages, focus on developing nootropic beverages, focus on the enhanced water segment, focus on strategic partnerships, focus on expanding distribution channels, focus on competitive pricing strategies, focus on digital marketing channels, utilize sampling and event marketing and focus on targeting health and wellness companies.