Functional beverages are drinks fortified with vitamins, minerals, herbs, botanicals, amino acids, or other ingredients that provide physical or mental benefits for consumers. These beverages contain ingredients such as probiotics, vitamins, minerals, Omega-3 fatty acids, prebiotics, and antioxidants that offer additional function to the body. Functional beverages provide hydration along with health benefits such as immunity support, improved heart health, enhanced cognitive function, and better digestive health. Rising consumer awareness about the preventive healthcare approach and health benefits of such beverages is propelling the demand for functional beverages.
The global Functional Beverage Market is estimated to be valued at US$ 191.54 billion in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The rising demand for nutraceutical ingredients offers high growth opportunities for the functional beverage market. Nutraceuticals refer to food or parts of food that provide health benefits in addition to the basic nutritional value. These nutraceutical ingredients such as probiotics, prebiotics, plant extracts, vitamins, minerals, and others offer various health advantages. The growing consumer inclination toward preventive healthcare and awareness about the benefits of nutraceutical ingredients in maintaining good health is fueling the incorporation of these ingredients in functional beverages. With innovative product launches of beverages containing various nutraceutical extracts and formulations, the functional beverage market can tap significant growth opportunities during the forecast period.
Porter's Analysis
Threat of new entrants: The functional beverage market has moderate threat of new entrants due to the high capital required for manufacturing facilities, distribution network, and branding.
Bargaining power of buyers: Buyers have moderate bargaining power due to the availability of substitutes and variety of brands in the market.
Bargaining power of suppliers: Suppliers of raw materials like fruits, herbs, and vitamins have low to moderate bargaining power due to availability of substitute suppliers.
Threat of new substitutes: The threat from new substitutes is high due to growing popularity of other beverages like coffee, tea and introduction of healthier options.
Competitive rivalry: The competition in the market is high among existing key players.
SWOT Analysis
Strength: Wide product portfolio and innovations, strong global brands, wide distribution network. Strong finances to undertake extensive R&D.
Weakness: High capital requirements, vulnerability to commodity price fluctuations, seasonal nature of ingredients. Dependency on few key markets for sales.
Opportunity: Rising health awareness, growing demand for healthy drinks among millennials, untapped markets in developing regions.
Threats: Stringent regulations, tax impositions. Vulnerability to adverse weather conditions affecting raw material supply. Competition from substitute beverages.
Key Takeaways
The Global Functional Beverage Market Growth is expected to witness high during the forecast period of 2023 to 2030 supported by rising health consciousness. The North America region currently dominates the market due to growing demand for nutritional beverages. Key players like PepsiCo Inc., The Coca-Cola Company, and Monster Beverage Corporation have strong presence in the region.
The Asia Pacific region is expected to exhibit the fastest growth rate owing to rising disposable incomes, large population base and growing health awareness. Countries like China, Japan and India are projected to contribute significantly to the regional growth.
Key players operating in the functional beverage market are PepsiCo Inc., Red Bull GmbH, The Coca-Cola Company, Danone SA, Monster Beverage Corporation, JAB Holdings Company, General Nutrition Centers Inc., The Hain Celestial Group Inc., Fonterra Co-operative Group, and Amway Corporation. The players are focusing on new product launches, facility expansion and partnerships to strengthen their market presence
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