Flavor is a key selling point in the functional drinks category. Distinguishable in its wellness features, the category covers major ground in the beverage space, but despite its benefits, consumers will opt for flavor, making functionality a challenge.

As inflation takes a toll on the market, the demographic most likely to engage in functional drink purchases are those who are financially stable. Brands can expand engagement by creating positive perceptions of how functional products benefit everyone. Concurrently, brands will need to remind consumers about the importance of consistent consumption. Cost-conscious consumers will be hesitant to purchase in an inflated market but will find value in larger offerings and variety.

Functional drinks serve a variety of benefits, such as providing energy, nutrition, and hydration. Although beverage options are plentiful, there’s a need for lucid brand messaging. The category struggles to capture consumer retention across age and financial demographics. Ingredient labels and support claims are hard to comprehend. Although category interest helps brands sustain relevance, minimalist messaging will help them stand out.

Currently, Millennials hold the highest engagement, while Gen Z and Gen X express curiosity in the category. Gen Z is motivated by whim and will go after unfamiliar flavors. However, repeat purchases by this group will be hard to maintain. On the other end of the spectrum, Gen X is curious about the categories’ health benefits, but they will require some influence. Brands can capture their attention by introducing protein, fiber, antioxidants, and anti-aging properties into their products.

Inflationary pressures are impacting consumer finances, leading to a decline in functional drink purchases. Consumers still express interest in the category; however, nearly half have lost interest due to inflation. Brands will need to refocus their messaging to acquire new audiences and prove their value.

Consumers tend to turn to functional beverages at various times of the day, depending on their varying preferences. This presents an opportunity for brands to expand drink consumption and build routines while meeting consumer needs. Brands can appeal to consumers by highlighting flavor pairings that incorporate wellness-supporting ingredients like botanicals. The functional drink market faces challenges, but by adapting messaging strategies and capitalizing on consumer preferences, brands can tap into new audiences and prove their value.

While vitamins, proteins, and electrolytes reign in consumption, other functional ingredients such as adaptogens and nootropics are making strides into the category, aiding in stress relief and focus. Although these ingredients are experiencing lower engagement, education on the topic can help intrigue consumers. Beverages are also adding functional mushrooms to help with digestive health, immunity, and mood-boosting.

Kantar Profiles/Mintel, February 2023