Functional Beverages: Would You Like Wellness with That?

In the beverage industry, the move towards refreshment and function has been steadily gathering momentum for the past several years, and shows no signs of slowing anytime soon. Indicative of this is the fact that earlier this month, Anheuser-Busch announced the formulation of their 9th Street Beverages, LLC subsidiary. Noting A-B’s non-alcohol portfolio was up 77% this year, they decided it would be beneficial to establish a clear separation between their beer and non-beer businesses.

As consumers become more health and wellness savvy, they are becoming increasingly aware of the effects that foods and beverages have on their overall wellbeing. Naturally, consumers have begun to seek more than mere Snickers and Gatorade (hunger and thirst satisfaction) from the items they ingest; they now demand multi-tasking from everything they consume. This trend has increased sharply over the past five years, leading the “functional foods” industry to reach a staggering $25 billion.

In 2007, functional beverages accounted for nearly 1/3 of overall sales in the functional foods category. Some attribute this growing trend towards a healthier lifestyle to increased consumer knowledge of herbal and natural ingredients, which logically leads to demanding such ingredients from their lifestyle products.

With that in mind, what does the future hold for this industry segment?

Innovation will be key in the industry expanding and keeping in touch with ever-changing consumer tastes. The sports drink and energy beverage sectors have been around for years, but there is significant opportunity to expand beverages into other arenas, utilizing nutrients that many lack in their daily consumption. This includes calcium, potassium, foliate, and vitamin D. The challenge will come in devising new recipes that use those ingredients, but continue to meet taste standards.

Industry participants continue to innovate to meet the new taste challenge and to create more functionality, and exciting product enhancements, while the category continues to experience explosive growth.