Table of Contents
Executive Summary
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- Impact of COVID-19 on functional drinks
- Top Takeaways
- The issues
- Functional drinks compete with supplements
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- Figure 1: Functional drinks usage, instead of or in addition to traditional supplements, February 2020
- Sugar under increased scrutiny
- CBD is hot, but having legal troubles
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- Figure 2: Functional drinks with CBD
- The opportunities
- Benefit stacking can help brands stand out
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- Figure 3: Repertoire of functional attributes usage in drink products, February 2020
- Expand functional horizons
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- Figure 4: GT’s Living Foods product examples, water kefir, kombucha, apple cider vinegar tonic
- Older adults an untapped audience
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- Figure 5: Benefits of functional drink products used, any benefit or none of the above, by age, February 2020
- What it means
The Impact of COVID-19 on Functional Drinks
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- Figure 6: Short, medium and long term impact of COVID-19 on Functional Drinks, April 2020
- Opportunities and Threats
- Immunity support for the win in the short and medium term
- Stressed-out consumers want relaxation wherever they can find it
- Most consumers are skeptics, will demand proven results
- In-store traffic challenges will impact brands of all sizes
- Impact on the functional drinks market
- Function is everywhere
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- Figure 7: Total US retail sales of non-alcoholic beverages, by segment, 2017 and 2019
- Big brands stand the most to gain
- Startups will thrive or die
- Supply chain disruptions may hinder emerging functional drinks
- Some brands may be too late for DTC opportunity
- How the crisis will affect functional drinks’ key consumer segments
- Brands need to make some effort to recruit older consumers
- The future is uncertain for Gen Z
- How a COVID-19 recession will reshape the functional drinks market
- Back to basics with communications on functional drinks market during a recession
- Functionality innovation will slow in the short-term
- COVID-19: US context
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The Market – What You Need to Know
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- Functionality pairs well with beverages
- Functional drinks offer desirable quick fix
- Expand offerings to fill needs of seniors
- Sustainable packaging can give brands an edge
Market Perspective
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- Functionality in high demand
- Function knows no boundaries
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- Figure 8: Total US retail sales of non-alcoholic beverages, by segment, 2017 and 2019
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- Figure 9: Total US retail sales of non-alcoholic beverages, by segment, 2017 and 2019
- VMS brands must contend with functional drink competition
Market Factors
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- Seeking shortcuts to wellness
- Aging population needs attention
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- Figure 10: Population aged 18 or older, by age, 2014-24
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- Figure 11: Benefits of functional drink products used, any benefit or none of the above, by age, February 2020
- Single-use plastic needs a makeover
Key Players – What You Need to Know
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- Protein is a hook for many adults
- Top fermented drink brands expand functional horizons
- Private label options can expand exposure
- Eyes peeled for sugar
- Future uncertain for CBD in food and drink
- Future looks bright for adaptogens and nootropics
What’s In
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- Consumers craving protein
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- Figure 12: Functional drinks with plant-based protein
- Top fermented drink brands expand functional horizons
- GT’s adapts to keep pace with new competitors
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- Figure 13: GT’s Living Foods product examples, water kefir, kombucha, apple cider vinegar tonic
- KeVita growth reflects flexibility
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- Figure 14: KeVita product examples, water kefir, kombucha, apple cider vinegar tonic
- Private label options can expand exposure, impact market growth
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- Figure 15: Private label functional drinks
What’s Out
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- People are on sugar watch
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- Figure 16: Functional juice drinks
- Inconsistent regulation of CBD causes market roadblocks
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- Figure 17: Functional drinks with CBD
What to Watch
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- Adaptogens and nootropics – getting to know you
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- Figure 18: Drinks with adaptogens and nootropics
- New ways of boosting energy
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- Figure 19: Clean energy drink examples
- Just add water
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- Figure 20: Functional powdered drink mixes
The Consumer – What You Need to Know
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- Familiar functionality in demand
- Functional drinks enjoy habitual use
- Niche beverages moving to mainstream shelves
- In-store image can make or break a brand
- Functional drinks interchangeable with some supplements
- Brands need to gain consumer trust
Functional Ingredient Usage
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- Consumers seek familiar functionality
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- Figure 21: Functional ingredient usage in drink products, February 2020
- Younger adults more open to emerging ingredients
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- Figure 22: Use of select functional ingredients in drink products, by age, February 2020
- Parents seeking more functionality from beverages
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- Figure 23: Functional ingredient usage in drink products, by parental status, February 2020
Functional Attributes of Drinks Used – and Frequency
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- Hydration and energy most popular benefits
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- Figure 24: Functional attributes usage in drink products, February 2020
- Functionality sought with high frequency
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- Figure 25: Frequency of usage of drink products, by functional attributes, February 2020
- Stacked benefits can build loyalty
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- Figure 26: Repertoire of functional attributes usage in drink products, February 2020
Functional Drinks Types of Interest
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- Functional drinks shift from niche to mainstream
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- Figure 27: Use of and interest in select functional drink product types, February 2020
- Younger adults currently main audience
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- Figure 28: Interest (net*) and non-interest (net**) in select functional drink product types, by age, February 2020
Functional Drinks – Format and Size Preferences
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- Powders can’t match RTD convenience
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- Figure 29: Preferred format for functional drink products, February 2020
- Full-size, single-serving in demand
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- Figure 30: Preferred size for functional drink products, February 2020
Functional Drinks – Discovery and Research
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- Finding an in-store spotlight is key
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- Figure 31: Information sources for functional drink products, February 2020
- Friends and family are also big influencers
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- Figure 32: Select information sources for functional drink products, visiting stores, friends and family, by age, February 2020
- Social media presence crucial in engaging younger consumers
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- Figure 33: Select information sources for functional drink products, social media, by age, February 2020
- Parents seeking info at higher rates across sources
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- Figure 34: Information sources for functional drink products, by parental status, February 2020
Functional Drinks – Attitudes and Behaviors
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- Functional drinks and supplements offer overlapping benefits
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- Figure 35: Functional drinks usage, instead of or in addition to traditional supplements, February 2020
- Brands need to gain consumer trust
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- Figure 36: Trust in efficacy of functional drinks, February 2020
- Younger consumers and parents keen on organic, sustainable claims
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- Figure 37: Willing to pay more for organic ingredients, sustainable packaging, by age, February 2020
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- Figure 38: Willing to pay more for organic ingredients, sustainable packaging, by parental status, February 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
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