Functional Beverages: Market Trends and Opportunities, 2nd Edition

Table of Content

CHAPTER 1: EXECUTIVE SUMMARY

Recent Trends in Adoption and Innovation

Key Consumer Trends

Packaging Trends

Scope

CHAPTER 2: RECENT HISTORICAL TRENDS FROM THE PANDEMIC TO THE INFLATION ERA

HIGHLIGHTS

• FIRST TIME USE OF ONLINE GROCERY SHOPPING AND RESTAURANT ORDERING METHODS IN

Table 2-1. Coronavirus Food Ordering Habits: "Because of the coronavirus, I have for the first time used…", 2020 (percent of consumers)

BOOSTED ONLINE GROCERY SHOPPING ACTIVITY

Activity Spiked in 2020 during the Early Part of the Pandemic

Table 2-2. Coronavirus Food Purchase Habits: "Because of the coronavirus, I am…", 2020-2021 (percent of consumers)

• Many Consumers Continued Ordering More Groceries Online in 2021 and

Figure 2-1. Grocery Ordering Habits Continue to Be Affected by the Pandemic, 2021-2022 (percent of consumers)

Frequency of Grocery Shopping in 2023: In-Person vs. Online

• Figure 2-2. Frequency of Buying Groceries In-Person and Online,

SNACKING AND HEALTHY EATING HABITS

Trends from 2021-2022

Table 2-3. Coronavirus Eating Habits: "Because of the coronavirus, I am eating more…", 2021 (percent of consumers)

Figure 2-3. Coronavirus Habits in Snacking, Eating Frequency, and Eating "Comfort" Foods, 2021-2022 (percent of consumers)

Figure 2-4. Coronavirus Habits in Eating Fresh Produce and Processed Foods, 2021-2022 (percent of consumers)

• Changes to Snacking Habits in

Table 2-4. Current Snacking Activity Compared to Pre-Pandemic Levels, 2023 (percent of consumers)

Preferred Types of Snacks

Table 2-5. Preferred Types of Snacks, 2023 (percent of consumers)

CONCERNS ABOUT COVID-19 EXPOSURE HAVE REMAINED

Most Still Consider the Pandemic a Health Threat Personally or to Family/Friends

Table 2-6. Coronavirus Health Concerns: "I am concerned about the…", 2020-2023 (percent of consumers)

Figure 2-5. COVID-19 Statistics, March 2020-March 2023 (weekly trends in deaths and new hospital admissions)

Concerns about COVID-19 Variants

Figure 2-6. Concerns about the Delta/Omicron Variant and Future Variants of COVID-19, 2021-2023 (percent of consumers)

Concerns about Future Potential Pandemic Outbreaks

Table 2-7. Future Potential Pandemic Outbreak Concerns, 2023 (percent of consumers)

RISING PRICES DURING THE PANDEMIC

Table 2-8. Consumer Concerns about Rising Food Prices, 2021-2023 (percent of consumers)

The Vast Majority of Consumers Have Noticed the Rising Cost of Food, and Many Are Changing Their Purchasing Decisions

• Figure 2-7. Noticing the Rising Cost of Food and Beverages over the Past Year,
• Figure 2-8. Impact of Rising Costs on Food/Beverage Purchasing,
• Consumers Find Price More Important for Food and Beverage Purchase Decisions in
• Figure 2-9. Purchase Drivers for Food and Beverage Purchase Decisions,

Cutting Back on Household Expenses

Table 2-9. Consumers Cutting Back on Household Expenses in the Last 12 Months, 2022 (percent of consumers)

Table 2-10. Types of Household Expenses Cut Back on in the Last 12 Months, 2022 (percent of consumers)

Table 2-11. Consumer Spending on "Extras", 2023 (percent of consumers)

FOOD SHORTAGES DURING THE PANDEMIC

Concerns about Food Shortages

Table 2-12. Consumer Concerns about Food Shortages, 2021-2022 (percent of consumers)

Stockpiling of Food and Beverage Items

Table 2-13. Consumer Stockpiling of Food and Beverage Products, 2022 (percent of consumers)

NEGATIVE PERSONAL EFFECTS OF THE PANDEMIC

• Negative Effects Reported in 2020 and

Table 2-14. Coronavirus Concerns: "The coronavirus has negatively affected my…", 2020-2021 (percent of consumers)

Continuing Mental and Physical Health Effects

2022

Figure 2-10. Changes in Mental and Physical Symptoms during the Pandemic, 2022 (percent of consumers)

2023

Figure 2-11. Current Feelings on Mental and Physical Symptoms Compared to "Normal" or Preferred Level, 2023 (percent of consumers)

Stress Levels and Impact on Food/Beverage Consumption

• Figure 2-12. Stress Levels and Impact of Stress on Healthfulness of Food/Beverage Consumption,
• Figure 2-13. Impact of Food Consumption on Mental or Emotional Well-Being,

PANDEMIC EFFECTS ON WORK

• Changes to Work Patterns Have Continued in 2021 and

Figure 2-14. Coronavirus Changes to Work Patterns, 2021-2022 (percent of consumers)

IN-STORE SHOPPING PATTERNS

Figure 2-15. Changes to In-Store Shopping Activity Continue in the Vaccine Era, 2021-2022 (percent of consumers)

CHAPTER 3: OVERVIEW AND MARKET TRENDS

HIGHLIGHTS

THE COVID-19 PANDEMIC WAS THE JUMPSTART THE ONLINE GROCERY MARKET NEEDED

Impact on the Beverage Market

CONCERNS ABOUT FOOD WASTE

Most Consumers Are Concerned about Food Waste

• Figure 3-1. Levels of Concerns about Food Waste and Reasons for Concern,

Table 3-1. Levels of Concern about the Environment and Sources of Food Waste, 2022 (percent of consumers)

How Consumers Reduce Food Waste

• Figure 3-2. Actions Taken to Reduce Food Waste,

Opportunities for Functional Beverages

Figure 3-3. Marketing Video for New Food Waste Product

FOOD INTOLERANCES, FOOD ALLERGIES, AND DIETARY RESTRICTIONS ARE A CONCERN TO MANY CONSUMERS

Figure 3-4 Ingredients and Allergen Content in a Functional Beverage

• Prevalence in

Figure 3-5. Prevalence of Food Allergies, Gluten Intolerance, and Lactose Intolerance, 2022 (percent of consumers)

Figure 3-6. Prevalence of Food Allergies and Intolerances/Sensitivities, 2022 (percent of consumers)

Rising Rates of Reported Food Allergies and Lactose Intolerance over Time

Table 3-2. Food Allergies and Lactose Intolerance, 2017-2022 (percent of consumers)

Purchases of Foods with Allergy-Friendly Labels

• Figure 3-7. Seeking Allergy Friendly Food Labels,

Many Consumers Purchase Allergy-Friendly Foods for Reasons Other Than an Allergy or Intolerance

• Figure 3-8. Reasons for Choosing Allergy Friendly Food Labels,

PLANT-BASED AND PLANT-FORWARD TRENDS

Definitions

Vegan

Vegetarian

Pescatarian

Flexitarian

Omnivore

Plant-Based Dairy Products

Plant-Based Eating and Sustainability Are Buzzwords Important to the General Public

Figure 3-9. Magazine Covers Reflect the Issues of Importance to General Consumers

• One-Fourth of Consumers Claim to Primarily Follow a Flexitarian Diet in

Figure 3-10. Diets/Eating Philosophies Primarily Followed by Consumers, 2022 (percent of consumers)

NUTRIENTS, INGREDIENTS, AND DESIRED HEALTH BENEFITS SOUGHT BY CONSUMERS

Functional Health Benefits

• Figure 3-11. Functional Benefits Sought from Food/Beverages/Nutrients,

Consumers Continue to Seek Out Nutrient Sources in Foods and Beverages

• Figure 3-12. Nutrients Consumers Seek to Consume,

Table 3-3. Preferences for Functional Food and Beverage Ingredients, 2022 (percent of consumers)

Table 3-4. Looking for/Preferring or Never Hearing of Functional Food and Beverage Ingredients, 2021-2022 (percent of consumers)

Sources Used to Consume Nutrients

• Figure 3-13. Sources Consumers Use to Consume Nutrients,

Consumers Report Increasing Consumption of Protein from Poultry and Whole-Plant Sources

• Figure 3-14. Changes in Consumption of Protein Sources in the Last Year,

Avoiding or Limiting Sugar Intake

• Figure 3-15. Avoiding or Limiting Sugars,

Reasons for Avoiding or Limiting Sugar Intake

• Figure 3-16. Reasons for Avoiding or Limiting Sugars,

Sugar Continues to Be Preferred Over Low/No-Calorie Sweeteners

• Figure 3-17. Preferences for Sweeteners,

Table 3-5. Preferences for Sweetener Types, 2022 (percent of consumers)

Many Sweeteners Are Considered Unsafe by Consumers

• Figure 3-18. Consumer Beliefs on Safety of Ingredients,

Avoiding or Limiting Sodium

• Figure 3-19. Actions Taken to Limit/Avoid Sodium,

Information Consumers Seek Out on Nutrition Facts Labels

• Figure 3-20. Information Consumers Seek Out on Nutrition Facts Labels,

MINDFUL AND INTUITIVE EATING

Definition

Dieting Activity

Figure 3-21. Adherence to a Diet/Eating Pattern in the Past Year, 2019-2023

Frequency of Feelings and Behaviors Associated with Mindful and Intuitive Eating Patterns

• Figure 3-22. Frequency of Feelings/Behaviors Involving Food,

Consumer Mindfulness Index

• Figure 3-23. Consumer Mindfulness Index,

CHAPTER 4: MARKET SIZE AND FORECAST

HIGHLIGHTS

SCOPE

FUNCTIONAL BEVERAGE SALES

Sales by Product Category

Table 4-1. Functional Beverage Retail Sales by Product Category, 2017-2022 (million dollars)

Table 4-2. Functional Beverage Retail Sales by Product Category, 2022, 2023E, 2024P-2027P (million dollars)

CONSUMER BEVERAGE PURCHASES

Types Purchased

Table 4-3. Beverage Types Purchased by Consumers, 2023 (percent of consumers)

Frequency and Source of Purchases

Table 4-4. Frequency and Source of Ready-to drink Packaged Beverage Purchases in the Last 12 Months, 2023 (percent of consumers)

CONSUMER PREPARATION OF DRINKS AT HOME

Figure 4-1. Consumer Use of Beverage Systems and At-Home Drink Preparation, 2023 (percent of consumers)

CHAPTER 5: MARKETING TRENDS AND OPPORTUNITIES

HIGHLIGHTS

"SUPERFOODS", "ADAPTOGENS", AND "FOOD AS MEDICINE"

Figure 5-1. Immune Boosting Beverage Markets with Superfood Claims

HEMP AND CBD

Figure 5-2. Hemp Drink Mixes Feature a Number of Functional Ingredients for Various Benefits

Figure 5-3. Sparkling Hemp Beverages Marketed to Restore and Rejuvenate the Mind and Body

BRAIN HEALTH, COGNITIVE FUNCTION (NOOTROPICS), AND MENTAL FOCUS

Figure 5-4. Coffee Marketed to Improve Mental Focus and Boost Energy in the Body

Figure 5-5. Brain Boosting Ingredients in RTD Format

Figure 5-6. Different Formulas Provide Various Brain Health Claims Such as Improved Memory and Boosted Output

SLEEP, RELAXATION, AND STRESS RELIEF

Dealing with Sleep Issues

Figure 5-7. Better Sleep Supported by Beverage Ingredients

Promoting Relaxation and Stress Reduction

Figure 5-8. Beverage Mix Marketed for Stress Relief

The Role of Alcoholic Beverages and Non-Alcoholic Alternatives

Figure 5-9. Non-Alcoholic Wines from a Large Independent Producer

Figure 5-10. Non-Alcoholic Beers Marketed as Craft Beers with No Compromise

ENERGY AND SPORTS FUNCTIONS

Figure 5-11. Sports Drink Mix Made with Clean, Premium Ingredients

Figure 5-12. Functional Beer Made to Refresh Athletes after Exercise

Figure 5-13. Energy Drink Mix Marketed as "Jitter-Free"

Figure 5-14. Sparkling Water Energy Drinks Help You Recharge with "Clean Ingredients You Can Pronounce"

IMMUNITY BOOSTING AND GUT HEALTH

Figure 5-15. Enhanced Water for Gut Health and Immune Support

Figure 5-16. Prebiotic Soda Brand Features Clean Label Claims

MEAL REPLACEMENT AND WEIGHT MANAGEMENT

Figure 5-17. Keto Nutritional Meal Replacement Shakes Claim to Be Clinically Proven to Help Consumers Lose Weight

Figure 5-18. Two Different Complete Meal Replacement Shakes with Similar Branding

Figure 5-19. Nutrients in Nutritional Shake Claim to Nourish the Body and Mind

SOME CONSUMERS ENGAGE IN "CLEANSE" AND "DETOX" DIETS OR INTERMITTENT FASTING TO BOOST IMMUNITY, MOOD, ENERGY, OR OVERALL HEALTH

Figure 5-20. Juice Cleanse Marketed for Weight Loss and Energy Boost

Figure 5-21. Probiotic Shots for Detoxification and an Energy Boost

Figure 5-22. Detox Tea Blend Marketed for Weight Loss, Immunity, and Increased Energy

OPPORTUNITIES TO INTEREST OLDER CONSUMERS IN FUNCTIONAL BEVERAGES

TARGETING FAMILIES WITH CHILDREN

Beverages for Kids

Figure 5-23. Probiotic Products Made with Kids in Mind for Snack Time

Figure 5-24. Weight Management Beverages for Children Deliver Delicious Nutrition and Better-for-You Claims

Figure 5-25. Kids Vitamin-Packed Beverages for Enhanced Hydration without Sugar

Beverages for Parents

Figure 5-26. Water with Light Alcoholic Content for Relaxation

OPPORTUNITIES TO TARGET GAMERS

"BETTER-FOR-YOU" TRENDS

Clean Label

Figure 5-27. Clean Label Prebiotic Fiber Ingredients Improve Nutritional Profile of Finished Products

Unrefined Sugar

Figure 5-28. Kombucha Using Honey and Cane Sugar to Bolster Image of Premium and Simple Ingredients

Sugar-Free/No Sugar Added Products and Alternative Sweeteners

Figure 5-29. Zero Calorie, Zero Sugar Energy Drinks Help Consumers Power Up with Clean Energy Minus the Sugar

Low-Carb/High Protein, Keto, and Paleo Diets

Figure 5-30. Prebiotic Keto Coffee Beverage Features Multiple Functional Benefits

Vegan/Plant-Based Products Appeals to Those Looking to Eat a Plant-Forward Diet

Figure 5-31. Plant-Based Creamer with Prebiotics

Figure 5-32. Vegan Nutritional Shake Featuring Prebiotic Fiber and Added Vitamins and Minerals

Figure 5-33. Sipping Broths for Better Immunity, Vitality, and Digestive Health

Organic and Non-GMO Products

Figure 5-34. Organic Products from a Larger Beverage Company

Figure 5-35. Non-GMO Functional Coffee Made with Organic Ingredients

Dairy and Dairy Alternatives

Figure 5-36. Examples of Functional Beverages in the Dairy and Dairy Alternative Space

Carbonated Soft Drinks

Figure 5-37. Examples of Functional Carbonated Soft Drinks

Energy and Sports Drinks

Figure 5-38. Examples of Energy and Sports Drinks with Greater Functionality

Enhanced Waters

Figure 5-39. Examples of Enhanced Waters

Tea

Figure 5-40. Examples of Functional Teas

Coffee

Figure 5-41. Examples of Functional Coffees

Juice

Figure 5-42. Examples of Functional Juices

PERSONALIZED NUTRITION

Figure 5-43. Personalized Meal Replacement Beverages Custom Made Just for You

Figure 5-44. Health Testing Company Recommends Foods to Eat Based on Personal Biological Markers and Formulates Customized Supplements

DIRECT-TO CONSUMER (DTC) MARKETING

New Companies and Products with Niche Appeal May Choose DTC Channels

Figure 5-45. Functional Beverages to "Unlock Your Best Brain" Mostly Sold Via E-Commerce

Subscriptions Save Consumers Money and Boost Sales

Figure 5-46. Functional Beverages Provide a Discount with a Subscription Delivery

Private Labels

Figure 5-47. Private Label Premium Honey Exclusive to DTC Retailer

IN-STORE PURCHASING TRENDS

Figure 5-48. Target Online Order Pickup Is One Option That Increases Store Traffic after an Online Order

Retail Stores Rely More On Impulse Purchases

Figure 5-49. Functional Beverages in a Checkout-Area Cooler

Private Label Products Are a Driver of Store Traffic and Retailer Loyalty

Figure 5-50. Private Label Brands Advertised Alongside National Brands for Seasonal Promotion

Figure 5-51. Private Label Brand Sells Protein Shakes

CHAPTER 6: CONSUMER DEMOGRAPHICS

HIGHLIGHTS

PURPOSEFULLY SEEKING OUT FUNCTIONAL BEVERAGES, AND WILLINGNESS TO PAY MORE FOR THEM

Table 6-1. Consumers Opinions on Functional Beverages, 2023 (percent of consumers)

TRENDS BY GENDER

Table 6-2. Seeking Out and Willingness to Pay More for Functional Beverages by Gender, 2023 (percent of consumers)

TRENDS BY AGE BRACKET

Table 6-3. Seeking Out and Willingness to Pay More for Functional Beverages by Age Bracket, 2023 (percent of consumers)

PATTERNS BASED ON HOUSEHOLD INCOME

Table 6-4. Seeking Out and Willingness to Pay More for Functional Beverages by Household Income Bracket, 2023 (percent of consumers)

REGIONAL DIFFERENCES

Table 6-5. Seeking Out and Willingness to Pay More for Functional Beverages by US Region, 2023 (percent of consumers)

URBAN, SUBURBAN, AND RURAL CONSUMERS

Table 6-6. Seeking Out and Willingness to Pay More for Functional Beverages by Urban, Suburban, or Rural Living, 2023 (percent of consumers)

EDUCATIONAL ATTAINMENT

Table 6-7. Seeking Out and Willingness to Pay More for Functional Beverages by Educational Attainment, 2023 (percent of consumers)

PRESENCE OF CHILDREN IN THE HOUSEHOLD

Table 6-8. Seeking Out and Willingness to Pay More for Functional Beverages by Presence of Children in HH, 2023 (percent of consumers)

RACE/ETHNICITY

Table 6-9. Seeking Out and Willingness to Pay More for Functional Beverages by Race/Ethnicity, 2023 (percent of consumers)

PLANT-FORWARD CONSUMERS

Table 6-10. Seeking Out and Willingness to Pay More for Functional Beverages by Primary Diet/Eating Philosophy, 2023 (percent of consumers)

ONLINE GROCERY SHOPPERS (FOOD DELIVERY AND PICKUP SERVICES)

Table 6-11. Seeking Out and Willingness to Pay More for Functional Beverages by Shopping Online for Groceries in the Last 30 Days, 2023 (percent of consumers)

CLEAN LABEL DIETERS

Table 6-12. Seeking Out and Willingness to Pay More for Functional Beverages by Adherence to a Clean Label Diet, 2023 (percent of consumers)

CHAPTER 7: CONSUMER PSYCHOGRAPHICS

HIGHLIGHTS

SPECIAL EATING RESTRICTIONS OR PREFERENCES

Table 7-1. Extent to Which Consumers Report Following a Special Diet, 2023 (percent of consumers)

Table 7-2. Special Diets Followed by Consumers, 2023 (percent of consumers)

LEVELS OF STRESS, ANXIETY, TIREDNESS, LONELINESS, ENERGY, AND FOCUS

Table 7-3. "Please rate how you currently feel in these areas (stress, tiredness, anxiety, loneliness), compared to your "normal" or preferred level", 2023 (percent of respondents who reported feeling more of these characteristics)

Table 7-4. "Please rate how you currently feel in these areas (stress, tiredness, anxiety, loneliness), compared to your "normal" or preferred level", 2023 (percent of respondents who reported feeling lower levels of these characteristics)

PERCEPTIONS ABOUT HEALTH AND NUTRITION

Concerns About Health Can Be Addressed by Functional Foods and Beverages

Table 7-5. Health Concerns That Can Be Addressed by Functional Beverages, 2023 (percent of consumers)

Nutrition and Healthy Foods

Table 7-6. Opinions about Healthy Foods and Nutrition, 2023 (percent of consumers who agree)

Vitamins/Supplements and Alternative Medicine

Table 7-7. Opinions about Alternative Medicine and Vitamins/Supplements, 2023 (percent of consumers who agree)

Table 7-8. Taking Vitamins or Supplements, 2022 (percent of consumers)

Table 7-9. Reasons for Taking Vitamins or Supplements, 2022 (percent of consumers who take vitamins or supplements at least occasionally)

Opinions on Sweeteners, Calories, and Sugar Content

Table 7-10. Consumer Opinions on Sweeteners, Calories, and Sugar Content by Gender and Age Bracket, 2022 (percent of consumers who strongly agree)

INFLUENCES ON FOOD/BEVERAGE CONSUMPTION OR SHOPPING CHOICES

Figure 7-1. Influences on Consumer Food/Beverage Consumption or Shopping Choices, 2023 (percent of consumers)

OPINIONS ON SUSTAINABILITY

Figure 7-2. Consumer Opinions on Sustainability, 2023 (percent of consumers)

CHAPTER 8: PACKAGING TRENDS

HIGHLIGHTS

THE BALANCE BETWEEN EFFECTIVE, SUSTAINABLE, AND LOW-COST PACKAGING

Figure 8-1. Use of Attractive Printing and Packaging to Give Functional Beverages an Upscale Image

PROTECTIVE PACKAGING IS IMPORTANT FOR PRODUCT INTEGRITY

RETAIL-READY PACKAGING PROMOTES STOCKING EFFICIENCY IN STORES

Figure 8-2. Retail-Ready Boxes and Trays Promote Stocking Efficiency of Functional Beverages

CONSUMER INSIGHTS ON RECYCLING, HOUSEHOLD WASTE, SUSTAINABILITY, AND PACKAGING

Functional Beverage Connection

Recycling and Household Waste

Table 8-1. Consumer Opinions on Recycling and Household Waste, 2023 (percent of consumers who strongly agree)

Access to and Use of Curbside/Residential and Drop Off Recycling Services

Table 8-2. Consumer Access to Curbside/Residential and Drop Off Recycling Services, 2023 (percent of consumers)

Table 8-3. Consumer Frequency of Using Curbside/Residential and Drop Off Recycling Services, 2023 (percent of consumers with access to each service)

Opinions on Packaging Materials

Table 8-4. Consumer Opinions on Packaging Materials, 2023 (percent of consumers who strongly agree)

Sustainable/Eco-Friendly Packaging Types Consumers Look for

Table 8-5. "Do you especially look for any of the following in terms of "sustainability" or "eco-friendly" packaging?", 2023 (percent of consumers)

Packaging Types Considered Eco-Friendly

Table 8-6. "Which packaging types would you consider eco-friendly?", 2023 (percent of consumers)

Priorities Placed on Food Packaging Features

Table 8-7. Priorities Placed on Packaging Features for Food Products, 2023 (percent of consumers)

Priorities Placed on Ready-to-Drink Beverage Packaging Features

Table 8-8. Priorities Placed on Packaging Features for Ready-to-Drink Beverages, 2023 (percent of consumers)

Opinions on Food Packaging

Table 8-9. Consumer Opinions on Food Packaging, 2023 (percent of consumers)

Opinions on Beverage Packaging

Table 8-10. Consumer Opinions on Beverage Packaging, 2023 (percent of consumers)

Beverage Packaging Forms that Consumers Purchase

Table 8-11. Forms of Beverage Packaging Purchased by Type of Beverage, 2023 (percent of consumers purchasing each beverage type)