The push for functional beverages

Functional beverages have gone mainstream. On March 17th, PepsiCo announced that it would be acquiring poppi, a leading prebiotic soda brand. The acquisition by the major consumer packaged goods (CPG) company reinforces the growth functional beverages continue to see in the marketplace, as well as the desire from consumers for healthier options.

“Beverage is a $248 billion segment; had slight deceleration this year, growing at about 2%, but functional beverage continues to be a growth pocket, gaining share of the total industry, and outperforming,” Alice Mintz, director of brand strategy with SPINS, told Nutritional Outlook. “When it comes to different formats, diet soda—where all the fiber, prebiotic sodas live—is over-contributing relative to its size. So, diet sodas have 6% share but are driving 27% of growth. That’s incredibly phenomenal as consumers continue to look for this digestive health platform.”

Consumers are also changing the way they think about juice, based on their desired health benefits. “When we think about other spaces, juice has undergone a complete reframe. There was an avoidance for a while because of their sugar content…but now we’re back to this understanding that inherently, fruit is functional,” explains Mintz. “Where we’ve seen this come to be is tart cherry juice. Tart cherry juice is the biggest growth driver of shelf-stable juices right now. Then when you take the principles of what tart cherry juice is providing—relaxation—where do we see that happening in functional ingredients, the growth of magnesium.”

So, functional beverage trends are aligning themselves with overall trends in functional benefits. Consumers want an outcome and seek products that promise to promote that outcome. This allows manufacturers to leverage well-known associations between certain foods and their benefits. According to Mintz, this presents an opportunity to “refresh the familiar.”Sticking with the example of juice, she points to orange juice and the connection consumers make between citrus, vitamin C, and immune health. Reframing orange juice as immune supportive has the potential to give it new life by changing the way consumers think about the product.

Looking at popular macro nutrients, protein continues to see growing interest with evolving consumer needs. According to Mintz, ready-to-drink protein is the fastest growing subcategory as consumers not only seek protein’s benefits but also convenience. One trend in particular that can be attributed to the growth of RTD protein beverages is the rise of GLP-1 drugs and the needs of its users. Protein is a macro nutrient that helps GLP-1 drug users maintain muscle mass as they lose weight while also helping to promote satiety and hit weight management goals.

These trends are just a snapshot of the overall functional beverage space. According to Mintz, consumers are well-informed and seeking specific benefits, driving growth of not just specific beverage categories but subcategories. “What’s interesting in beverage right now is that functionality has gone beyond just being a specific category, or being associated, with say, kombucha,” she explains. “Now, we’re seeing this acceleration of functionality in every single beverage subcategory.”