Exploring Functional Beverage Growth Opportunities for European Food & Beverage Companies

Top Growth Categories and Trends in Europe’s Functional Beverage Market

The €25 billion functional beverage market in Europe, the Middle East, and Africa (EMEA) is experiencing strong and steady growth with an estimated CAGR of 6.4% between 2019 and 2024.¹ Energy drinks lead the category at 44% market share with a forecast CAGR similar to the functional beverage market as a whole.² 

While energy drinks are a clear favorite among European functional beverage consumers, forecast growth is much higher for functional RTD coffees and teas (at 13.9%), functional waters (at 12.2%), and dairy alternatives (at 10.8%).3 Consumer trends in personalization and sustainability, along with a renewed focus on health due to COVID-19, are also shaping opportunity in the functional beverage market. 

Opportunities for European Functional Beverage Manufacturers

1. Functional Coffees and Teas

RTD coffees and teas have traditionally been positioned as a clean label energy source for more health-conscious consumers, offering the benefits of an energy drink in a different format. Recent innovations including cold brew, plant-based dairy blends, and new flavors have broadened their appeal even further. The growing interest in these formats makes them the perfect vehicle to deliver in-demand functional ingredients ranging from MCTs to botanicals to immune-supporting vitamins.
 

2. Intermittent Fasting Beverages

Consumers’ growing expectation for personalization in consumer packaged goods continues to expand into food and beverage. Functional beverages are well-positioned to address consumers’ specific health and lifestyle needs, including supporting needs that arise from trending diets. Just like zero carb, MCT-fortified products supported the keto trend, products formulated for intermittent fasters meet the need for personalization. This includes fasting beverages with electrolytes and fasted workout support beverages with BCAAs.

3. Functional Waters

Functional waters have shown significant growth in Western Europe since 2013, outperforming other waters.⁴ Purchase drivers for functional waters include hydration, vitamins and minerals, energy, post-workout recovery, and taste. The low price point of functional waters compared to other functional beverages, along with the wide and largely untapped range of options for functional ingredients, makes this a category to watch closely. Currently, functional waters in the European market can be found that contain protein, electrolytes, antioxidants, vitamins, adaptogens, and collagen.

4. Dairy Alternatives

Dairy alternative beverages continue to expand in Europe and include beverages made from almond, oat, coconut, rice, hemp, cashew, pea, and more. While taste is a key driver, these products also address consumers’ interest in sustainability and support their pursuit of plant-based and flexitarian diets. Health is another motivator as many dairy alternatives are fortified with vitamins & minerals. Up to 30% of dairy alternative drink product launches made a vitamin and mineral claim in 2019. ⁵ Many are fortified with vitamin and minerals to compete with nutrients found naturally in milk and to boost their health halo.

5. Mind/Body Health Drinks

Another opportunity in functional beverages is the emerging interest in products that support the brain and nervous system with benefits like improved focus, mood, and stress reduction—benefits that support the whole person, mind, and body. While functional beverages with natural positioning such as functional teas and herbal soft drinks are leading this area, other formats are promising. In the UK, for example, 21% of functional beverage consumers show an interest in sports or energy drinks that support brain function.⁶

Succeeding in Europe’s Functional Beverage Market

Growth opportunities abound in Europe’s functional beverage market for food and beverage companies that stay on top of the trends and seek a clear understanding of their target consumers—including the ingredients, formats, and health benefits that are most important to them. 

Glanbia Nutritionals has a deep understanding of end-to-end beverage development from health beneficial bioactives, functionally optimized proteins to premix solutions we can help you address the needs of today's consumers while creating a winning functional beverage. Contact Glanbia Nutritionals today to learn more about our functional beverage ingredient and premix offerings to help you capture the European market.

References

1-3. Euromonitor Passport, July 2020.
4. Euromonitor, Blurring Lines in European Functional Beverages, April 2019.
5. Mintel, A year of innovation in plant-based drinks, yogurts & ice cream – 2019, April 2019.
6. Mintel, A year of innovation in sports and energy drinks - 2019, December 2019.