Lessons from the functional boom: overview
- Functional beverage brands are more likely to succeed by owning a consumer outcome such as better energy, sleep or nutrition rather than relying on a single trending ingredient
- Embedding functional drinks into existing daily rituals, such as morning coffee or post-workout refreshment, is often more effective than trying to create entirely new consumption habits
- Making functionality easier to understand through outcome-led messaging and clearer retail segmentation could help drive mainstream adoption
- Taste remains critical to long-term success, with repeat purchases driven by enjoyment as much as health benefits
- Strong branding is becoming a key differentiator, with functionality acting as a supporting credential rather than the sole reason consumers choose a product
The functional beverage industry is rapidly growing, with the global functional foods and beverages market projected to grow from $365.1bn in 2024 to $591.7bn by 2030, according to BCC Research.
As the category gains momentum and brands look to capitalise on the opportunity, there are some clear learnings for the drinks industry.
During a discussion at Future Food-Tech London 2026, executives from Space Goods, XOXO SODA, Tavern and more spoke about how the functional beverage market is evolving – and what drinks brands can learn from its growth.
From how brands position their products to how they build consumer habits, here are five takeaways from the functional beverage boom.
1. Sell the outcome, not the ingredient
As the functional beverage space becomes more crowded, brands may have more to gain from owning a consumer outcome than a particular ingredient. Space Goods CEO David Randall argued that ingredients will trend and change over time, while a broader outcome gives brands more room to evolve as consumer needs change.
“You’re probably not investing in brands that are trying to own ingredients because ingredients are going to trend over time and it’s more about… investing in brands that own an outcome and they’re the ones that are going to last the test of time," he says.
Pointing to Huel and AG1, Randall adds: “Huel for example, they owned a complete nutrition system rather than owning protein. AG1 owned a daily health routine rather than owning a specific ingredient in the set.”
The advantage is that brands can evolve their products as ingredients and consumer trends change, without losing what they stand for.
2. Fit into an existing routine
For Randall, it is not just about the outcome a product delivers, but where it fits into consumers’ lives. Rather than asking people to create a new habit around a functional drink, brands can build on rituals that already exist.
“The big build for brands in the functional space, versus vitamins, is where we’re including these ingredients in daily rituals,” he says.
“How do you harness something that consumers are doing anyway, rather than trying to create a new habit?”
Randall says brands are seeing success by “owning those different changes in an existing ritual, rather than trying to create an entirely new habit”.
That could mean upgrading an existing morning coffee, afternoon pick-me-up, post-workout drink or evening wind-down, rather than trying to establish an entirely new drinking occasion.
3. Make functionality mainstream
While the industry is growing, there is still some confusion around functional beverages. Business intelligence company Vypr surveyed UK shoppers to understand their views on the category, finding that 35% had heard of functional beverages but did not fully understand what they were. A further 61% said they had never tried a functional drink.
Randall believes this could be partly down to how the category is currently positioned, with functional drinks often treated as a specialist category rather than something that belongs in the everyday drinks repertoire.
He says retailers could help by shifting towards an outcome-led approach, asking consumers questions such as: “How do I have a better morning? How do I have a sharper afternoon? How do I have a better sleep in the evening?” and positioning products around the outcomes they deliver.
Rory Paterson, founder and CEO of XOXO SODA, says retailers are already starting to respond to the category’s growth by improving how functional drinks are presented to shoppers.
“The retailers themselves are starting to look at how they can help the shopper journey for those consumers. That means by segmenting the actual space itself,” he explains.
The shift, he explains, is already visible on shelves, noting that three or four years ago, there was little dedicated space for functional drinks. Retailers are now beginning to segment the category and think more carefully about the shopper journey.
4. Taste still matters
As the functional beverage category becomes more crowded, brands still need to deliver on one of the most basic expectations of any drink: taste. While a functional claim may be enough to get a consumer interested in a drink, it does not guarantee they will come back for more. Ultimately, it is the taste and enjoyment they get from the product that will drive repeat purchase and help build a loyal customer base.
On how brands can deliver health benefits without compromising on taste, Paterson says: “You need to balance the health benefits and still make it something that someone’s going to come back to every single day.”
Consumers, he added, are looking for something that is “better for you” but still offers “the same enjoyment, same indulgence” as the drinks they already consume.
For beverage brands, the lesson is clear: function may get consumers to pick up the can, but taste gives them a reason to buy it again.
5. Build the brand, then let function support it
As the functional beverage space becomes more crowded, brands are also having to find ways to stand out beyond the benefits or ingredients in their products. Randall says consumers want to connect with brands on a more personal level, meaning functionality can provide the credibility, but it should not necessarily be the entire proposition.
“People want to engage on a personal level with the brand rather than on a scientific level,” he says. “So you kind of need the credentials behind you, but the reason to want to come and play to begin with.”
Paterson said this reflects a shift in how functional brands approach branding. “Five, six years ago, everyone was trying to build the brand off of the function, whereas now I think everyone’s come around to [the idea that] you build the brand and the function is part of that” he says.
Randall points to Space Goods’ own approach as an example, saying the brand deliberately moved away from the traditional “lab-coat, science-first” look of the supplements category, using bright pink packaging to create a more playful and distinctive identity.
For brands entering an increasingly crowded functional beverage market, the lesson is that functionality may explain what a product does, but a strong brand gives consumers a reason to choose it.
