Functional beverages are rapidly transforming the global drinks market, shifting consumer expectations from simple refreshment to targeted health benefits.
Creating a functional beverage is no small feat: with functional ingredients often coming with formulation challenges when it comes to flavour, texture or mouthfeel.
But that’s just the start. A perfectly formulated beverage is no good if the branding doesn’t excite; nor can a functional beverage expect to resonate with health-minded consumers if its full of artificial ingredients.
Here’s our checklist of what matters most in any functional beverage.
1. Flavour: Does your beverage deliver on taste?
Taste and flavour are what matters most to functional beverage consumers.
US consumers say flavour is the top motivator in functional beverage choices, with 61% of consumers saying flavour is their top consideration, according to EY.
It’s the same in the UK: taste also comes out on top as a motivator for buying functional drinks, according to product intelligence business, Vypr.
Whereas consumers might once have been willing to compromise on taste, today they’re not, says Danny Stepper, CEO of L.A. Libations.
“Back in the day, we found ourselves holding our nose and drinking these terrible tasting elixirs,” he said. “The category’s now evolved through that phase to a point now where the consumer demands the function, but the taste as well.
“They say: ‘I want this beverage to do something for me, but I’m not going to sacrifice taste’”.
And this doesn’t just mean something that tastes good. It means flavours that excite and intrigue and invite new consumers into the category: like trending combinations or big name collabs.
2. Function: Does your beverage deliver - and can you prove it?
Drinks need to deliver on the functionality they promise. That’s nothing new, and should be taken as a given.
What’s now important is that drinks must be able to convince consumers of their efficacy before they’ve even bought them. That means scientific studies and research from credible sources.
And it’s not just about convincing consumers. It’s about convincing the new entity holding all the power: AI.
Consumers now rely increasingly on digital tools to explore functional beverages: including online grocer recommendations (19%), fitness and health apps (17%) and loyalty apps (16%). They’re turning to AI to make their purchasing decisions for them: meaning its essential for these tools to be able to access the science and studies behind them.
3. Fun: Do people want to be seen with your brand?
If you want to understand the importance of fun, then look no further than the rise of Olipop and Poppi.
These gut health sodas are positioned first and foremost as fun and flavourful alternatives to traditional sugary soda. The functionality is still important: but it’s not the biggest part of the messaging.
On pack, both brands prioritize bold, colourful images over complicated scientific messaging. That’s the same on social media and marketing: which focuses on flavour and fun like any other soda brand.
While the USP of these drinks might be gut health, “the consumer relationship these brands have built is largely intuitive and feeling-based,” observes Betty Kaufman, strategy director at The Culinary Edge.
4. Formulation: Does the beverage tick all better-for-you boxes?
Consumers turn to functional beverages for the added value that functionality delivers: and it’s the key selling point of the drink.
But they’re also tuned into what else is going on.
As health conscious consumers, they also insist on drinks that are lower in sugar or calories, and avoid artificial colours and sweeteners.
And brands are reformulating as a result.
Earlier this year, Gatorade launched a lower sugar hydration drink which is free from artificial flavours, sweeteners and colours: and contains 75% less sugar than Gatorade Thirst Quencher.
Meanwhile, rising concerns about UFPs risk putting pressure on functional foods and beverages: which may turn to certain ingredients to stabilize or enhance formulas.
Functional beverages that can also claim clean label positioning, therefore, stand at an advantage.
“Consumers expect to be able to have a natural product - one they perceive as having fewer additives - and one that delivers functional benefits,” said Adam Simpson, drinks expert at Vypr.
5. Price: Is the price right for the target consumer?
Flavour may be the top consideration for US functional beverage drinkers: but price comes in second place.
Functional beverages offer a value-added proposition: and are able to command a premium as a result. Fitness enthusiasts and wellness-obsessed consumers are prepared to pay for the best products out there.
Mainstream consumers, however, are feeling the pinch: and are becoming more selective on what they spend their money on. Already, 32% of UK consumers avoid functional beverages entirely as they perceive them as being too expensive.
Brands need to think carefully about who their target audience is and how much they’re willing and able to pay. Meanwhile, the door is wide open for private label innovation and brands that can offer a more affordable price point.
