Functional Beverages Webinar Available On Demand Now

Rising demand for functional benefits will help beverage segment hit hard by pandemic to recover

By Elizabeth Crawford contact

- Last updated on GMT

Source: Getty/ simonapilolla
Source: Getty/ simonapilolla

Related tags: functional beverage, Euromonitor, Energy, Immunity, Gut health

Shifting shopping habits and channel preferences due to the pandemic hit the non-alcoholic beverage industry hard last year, leading to an overall decline in volume and value, but rising consumer interest in functional options could be a key driver in the overall sector’s recovery in the coming months and years, according to Euromonitor’s head of soft drinks Howard Telford.

“It’s fair to say as US consumers, we drank a bit less of our overall non-alcoholic categories in 2020”​ and “spent a lot less in terms of value per liter”​ on non-alcoholic beverages due in large part to safety restrictions that shuttered or drastically limited the reach of many food service venues and away-from home drinking occasions, Telford said during FoodNavigator-USA’s recent webinar, Functional Beverages, from Adaptogen & Nootropic Infused Water to Prebiotic Soda​.

He explained away-from-home soft drink volume consumption in the US fell 35.1% last year and while it was offset slightly by a 6% increase at retail, total volume still dropped 4.3%.

“The dynamic we’ve faced is a big swing in channel consumption – first from on-premise to large format retail, like supermarkets and hypermarkets and discounts, such as clubs, and of course, a massive uptick in e-commerce,”​ all of which favored higher sales of multi- or value-pack options for home consumption, which traditionally have lower margins than on-premise consumption or even impulse purchases of individual beverages, Telford said.

“The result of those swings and adverse channel mix and package mix, we spent a lot less in terms of value per liter,”​ he said.

For beverage players to recover and rebuild sales, they will need to re-establish value, which is where functional beverages can play a “massive role,”​ Telford said, pointing to their track record before and during the pandemic.

“If refreshment and flavor drives volume for packaged beverages and [carbonated soft drinks] and flavored water, it’s increasingly functionality that drives value,”​ he explained.

For example, he noted top functional beverage categories, which Euromonitor defines as energy, sports drinks, functional waters and kombucha, accounted for about 28% of the combined increase in volume growth for the industry from 2014 to 2019. But, he added, they contributed more than 46% of the combined value growth over that same period.

This growth and consumers' willingness to pay more for beverages that offer benefits beyond refreshment and flavor reflects the increase in permission consumers now grant to food and beverage to address various need states, Telford explains.

Like many trends, the pandemic turbo-charged consumer interest in health and wellness and acceptance of food – or beverages – as medicine. It also has so thoroughly disrupted consumers' day-to-day lives that it has created new need states and opportunities for functional beverages to offer solutions and ultimately land in shoppers’ carts.

“We’ve entered a particularly promising moment for functional beverages and functional foods. This could matter even more for consumers moving forward than it did prior to the pandemic because our notion of health and wellness, our daily routines and our health regimens are in this moment of flux and potentially a moment of reset for some people,” ​Telford explained.

Pointing to consumer research conducted by Euromonitor during the pandemic, he added, “we have more demands on our time, more anxiety, increased stress and our routines might have changed so there might be some different occasions in the day, different products that have entered the basket as a result of that.”

Listen on demand to discover ‘sweet spots’ for functional beverages

Find out which benefits consumers most want from beverages beyond refreshment and flavor, and what other characteristics will help emerging and established functional beverages grow going forward by listening on demand​ to FoodNavigator-USA’s webinar Functional Beverages from Adaptogen & Nootropic Infused Water to Prebiotic Soda​, which is available now HERE​.

Listeners not only learn what trends Euromonitor​is tracking, but also what “sweet spots” in functional beverages hold the most promise, according to emerging brand incubator L.A.Libations​. Entrepreneurs Rosa Li, founder and CEO of wildwonder​, and Marc Washington, founder and CEO of Muniq​, also share strategies for successfully navigating the functional beverage market and marketing tips to connect with consumers while staying ahead of the competition.

Register​now and listen at your convenience for the next three months.

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