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‘Functional water is predicted to grow very fast’: Euromonitor on functional beverage trends

By Rachel Arthur+

03-Jun-2016
Last updated on 06-Jun-2016 at 16:12 GMT2016-06-06T16:12:37Z

Beyond normal nutritional value: functional beverages
Beyond normal nutritional value: functional beverages

Energy drinks, sports drinks, and functional bottled water are among the functional and fortified beverage categories to watch, according to Euromonitor International.

The overall global functional and fortified beverage market retail value was $92bn in 2015, and reported a CAGR of 4.9% in 2010-2015, according to figures from the market research company.

There’s plenty of innovation to be found in the functional beverage category: probiotic water, juice and coffee; drinks which address cognitive health; beauty drinks; and drinks to aid relaxation or sleep – but what defines a functional beverage?

Beyond normal nutritional value

“There is no universal definition of ‘functional beverages,’ simply because all types of beverages are functional in the most basic sense that they help the body to function,” explained Maria Mascaraque, Health and Wellness Associate at Euromonitor.

“When identifying fortified and functional products, we focus on products to which health ingredients (typically those with health claims) have been added. Fortified and functional beverages provide health benefits beyond their nutritional value, and/or the level of added ingredients wouldn’t normally be found in that product.”

For Euromonitor’s definition, that means the product must have been actively fortified and enhanced during production.

“As such, inherently healthy products such as 100% fruit or vegetable juices are only considered fortified or functional if additional health ingredients (for example, calcium or omega-3) have been added,” continues Mascaraque. “To be included, the health benefit needs to form part of positioning and marketing of the product.

“There is one exception to the inclusion of fortified products in this category: products to which vitamins have been added to replace vitamins lost during processing are excluded. These products would not typically be positioned on the basis of containing added nutrients.”

Adding value

Energy drinks are a huge category, but what else is on the radar when it comes to functionality?

“According to our forecast, after fortified/functional energy drinks and sports drinks, fortified/functional bottled water is predicted to grow very fast, with an expected $3bn absolute growth between 2015 and 2020 (constant 2015 prices, fixed 2015 exchange rates) and 9% CAGR,” said Mascaraque.

“Another category that is expected to perform well is the functional/fortified fruit and herbal teas category, with a predicted 63% growth in the forecast period ($562m in absolute terms) and 10.3% CAGR.”

Spotlight on water

Highly developed, saturated markets for bottled water provide a challenge for beverage manufacturers, and promoting water as something more than simply ‘naturally healthy’ is an opportunity for brands, said Simone Baroke, analyst, Euromonitor.

“In Western Europe, fortified/functional value sales leapt by 50% from $308m in 2009 to $464m in 2014,” said Simone Baroke, Euromonitor.  

“In North America, sales reached $2.5bn in 2014, but registered a far more modest review period increase of 6%.”

In this category waters boast an array of vitamins, minerals, antioxidants, amino acids, and even fatty acid ingredients. Take for example the July 2015 launch of FATwater from Bulletproof, which fuses water with nanoparticles of oil, which creator Dave Asprey says helps the body absorb water.

Fruit and herbal teas

Fortified/functional fruit and herbal teas, for Euromonitor's definition, are ones to which health ingredients have been added. The CAGR of this category is expected to be similar to that of functional water. 

Products are typically based on a mix of fruit and herbs, which as a result have certain health and wellness benefits. This could be teas marketed as wellness teas, energy boosting teas, calming teas or beauty enhancing teas.

Herbal teas mixed with fruit, or fruit-based teas with added functional ingredients (eg blackcurrant & guarana tea) are also included in this category, if marketed as a ‘wellness’ tea.

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