In the UK alone, this represents a £33m opportunity for the convenience channel.
While growing strongly, the functional beverage category is currently underrepresented in the impulse channel when compared to grocery stores. Providing the right products to consumers with the right signposting can help manufacturers and retailers make the most of this opportunity, says Britvic.
A £33m opportunity
Functional benefits are becoming increasingly important to consumers. Almost half (48%) of households say health properties/ health enhancing benefits are important when buying food and drink, according to NielsenIQ Homescan Survey (Nov 2021).
This has already been seen in the grocery channel for soft drinks: now there’s an opportunity for the impulse channel to follow suit, says Britvic.
“Functional wellness products have seen significant growth in the impulse channel, growing value at +29% over the last year as customers look for healthier alternatives in the channel.
“However, this category remains small, accounting for only 2% of the total sales through impulse-led stores.
“Getting impulse stores to the same value share size of the functional wellness sector as grocery multiples represents a £33m opportunity for the convenience channel.
“With customers willing to pay more for healthier products, this category also opens new avenues to get convenience shoppers to trade up to more premium brands, with price per litre of functional wellness drinks 35% higher than the soft drinks category average.”
Britvic points to the success of brands such as natural energy drink Purdey’s (sales grew 13% in 2021 following its relaunch); while brands such as Naked Smoothies (up 17%) and Innocent Super Smoothies (up 15%) are also helping drive growth.
Drinks offering vitality to support a strong body are already well-established: such as those with boosted vitamins and immunity claims. Classic energy drinks, natural energy drinks, and those offing a pick-me-up boost are also categories to watch.
Meanwhile, there’s a growing opportunity in areas such as gut health (such as kombucha, kefir, birch water), which is growing at 35.6% according to NielsenIQ.
Look also to rehydration, with brands that promote themselves as more hydrating than water (such as alkaline waters). And then there’s also an opportunity to get in on the emerging CBD segment.
Signposting functional drinks
So how can manufacturers and retailers make the most of this opportunity?
“Certain in-store levers can help retailers close the gap between those interested in functional wellness drinks and those buying in the category,” says Britvic.
“Shoppers see functional wellness drinks as a segment and expect these products to be merchandised together. Offering the right range is also crucial for growing awareness and sales – 46% of consumers agree that the number of new products makes shopping for health food confusing, while 63% agree it’s difficult to know whether products claiming to have health benefits (i.e., immunity) make a difference to your health.
“Retailers are therefore advised to build customer trust by stocking credible functional wellness brands and improving shopper education around these products.”
This can be done by centering ranges around well-known and credible ‘beacon brands’.