Functional Beverages are low sugar, non-alcoholic, plant-based , ready to drink beverages .These include non-traditional ingredients like cannabis, mushrooms, new fibres, natural extracts ,pre/probiotics, herbs etc. For example, Kombucha is a fermented, lightly effervescent, sweetened black or green tea drink and provides health benefits. It is fortified with B-group vitamins and minerals and kills bacteria. The market for the fermented tea beverage in the US was valued at $492 million in 2019. This is a stark contrast to their market which was $152 million merely four years ago. The Kombucha market has similarly increased nearly 41% to $534 million wholesale in 2017 and is expected to grow $ 1.8 billion by 2020.
Nowadays what people look for is not only a product that tastes good but also one that provides some health benefits. Howard Telford, Senior Beverage Analyzer at Euromonitor International, commented on current push for functional beverages into meal space saying, “There is a shift toward consumers viewing beverages as a sort of preventive nutrition occasion. People are interested in functionality, and instead of asking ‘What is in this bottle?’, they are asking ‘What is the bottle doing for me’? “
Key market players in the functional beverages sector are:
The Coca Cola Company
Tyson Food Inc.
In 2016, Pepsico purchased kombucha and probiotic brand KeVita to ‘expand it’s health and wellness offerings in premium chilled beverage space’ and Coca Cola’s venturing and emerging brands division have invested $20 million in the kombucha brand. This data clearly shows that even market players are moving into functional beverages because that’s what the consumer is looking for.
Functional beverages with benefits are becoming fashion and people are actually turning away from carbonated soft drinks (CSDs), which actually contain a lot of sugar and some artificial flavorings. According to the Proprietary 2018 Innovation Market Insights survey, 3% of U.S. consumers claim that they have decreased their consumption of CSDS over the past year. “Carbonates are clearly the beverage category which is most affected by health concerns” said Tom Vierhile ,Vice-President of Strategic Insights North America. “Of consumers who say they have decreased their consumption of carbonated beverages, 70% say it is because these drinks are unhealthy.”
To add to this, the carbonated soft drink sector is being greatly affected due to Covid-19, while there is no such case with functional beverages. Soft drink and beer producers are scrambling for access to CO2 ,which is a key ingredient for such beverages. Production is down to 30% ,which means that the shortage will threaten some of hottest parts of the $28 billion carbonated drinks market.
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