Functional beverages are having a moment. Ranging from drinks enhanced with vitamins and herbs to protein and CBD, the category is meeting many needs at once. A quick glance down the supermarket or convenience store aisle reveals just how prominent functional beverages have become in today’s retail landscape.
And now the category is overflowing into other sales channels, including the out-of-home market.
What is a functional beverage?
Functional beverages are largely categorised as those offering a physiological or health benefit, aside from the classic purchase drivers of hydration and taste. Examples include drinks aimed at improving gut health, immunity, energy levels, or mood.
Globally, the functional drinks market is expected to grow from $204.8bn (€179.3bn) in 2022 at a CAGR of 7.1% through to 2030 (Grand View Research).
Fruit juices and smoothies the ‘fastest growing’ drink category
In the UK out-of-home sector, soft drinks and coffee continue to be the most popular non-alcoholic drinks bought, according to fresh research from Lumina Intelligence.
But the fastest growing drinks category is fruit juices and smoothies. This is due to growing consumer interest in health and wellness, suggests the insights-arm of William Reed Ltd, and expanded offerings driven by supplier innovation.
When consumers were asked why they bought a fruit juice or smoothie, most responded that they regularly drink these products, with a significant proportion saying they wanted to consume something healthy.
“We believe the trends around healthier eating are constantly evolving and that we are currently in a phase of ‘additional benefits’, where consumers are eager to add things into their diet that have additional health benefits, such as drinks with vitamins or minerals,” explains Lumina’s insight lead Katie Gallagher.
The key takeaway here? Operators must ensure they stock health-led drinks with functional benefits.
Which foodservice operators sell functional drinks?
While many foodservice operators sell functional drinks, new partnerships and innovations are making a splash in the segment.
Fast-food bakery chain Greggs has partnered with drinks company Plenish to help improve its health credentials. The foodservice operator now sells Turmeric and Ginger shots, which according to Lumina reflects the broad and growing trends within health.
Others are leaning into the health benefits of green tea. Matcha, the finely ground powder of shade-grown green tea, is purported to boast a range of health benefits. These include boosting metabolism, improving focus, supporting skin health, reducing inflammation, improving mood, enhancing sleep, and boosting immunity.
UK coffee chain Black Sheep Coffee is one operator to embrace the matcha trend. Lemonade sales have skyrocketed, driven by its launch of Matcha Lemonades.
For Lumina, this clearly highlights growing demand for functional, flavour-led options. The fact that lemonades are a chilled drink is also of interest. “Iced drinks have transitioned from seasonal novelties to year-round staples, driving both footfall and spend.”
What’s next for functional beverages?
The functional beverage trend is being spurred on by consumer demand for health and wellness. But it’s also encouraged by innovation and new ingredients in the beverage sector.
Lumina is expecting functional drinks in 2025 to include ‘Rapid Hydration’, which insight lead Gallagher predicts to be a “core element” of functional health drink innovation - highlighting the further merging and evolution of the sports, soft and functional drinks category.
“Magnesium is set to be a key ingredient within functional drinks innovation due to estimations that most diets are lacking in it. BetterYou launched a range of magnesium waters with three varieties, unlocking the health benefits of magnesium for ‘hydrate’, ‘energy’ and ‘focus’.
“‘Post night out’ is another area we expect to see developments in, capitalising on trends where consumers seek to evade the negative impact of alcohol. US start up ‘Sure Shot’ is targeting the European market with its functional drink aimed at combatting the hangover.”
