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Learn what’s driving the top US functional beverage trends and how new approaches to energy and hydration are creating growth opportunities in the market.
Functional beverages have become a critical part of the beverage industry, reflecting consumers’ increasing focus on health, wellness, and convenience. With growing demand for beverages that provide added benefits such as enhanced energy, improved hydration, and overall health support, the US functional beverage market continues to expand rapidly, creating new opportunities for brands.
The $50 billion US functional beverage market is forecast to reach $62 billion in 2027, growing at a 4.5% CAGR (2022-2027).1 Energy drinks lead as the largest functional beverage category at $16.0 billion (accounting for one-third of the market), followed by sports drinks at $12.2 billion.2 While energy drinks continue to show solid growth (est. 3.2% CAGR, 2022-2027), sports drinks are growing even faster (est. 5.6% CAGR).3
| Functional Beverage Type | Sales (in Billions) |
| Energy drinks | $16.0 |
| Sports drinks | $12.2 |
| Sports protein RTD and meal replacements | $6.4 |
| Functional waters | $4.1 |
| Dairy alternative beverages | $3.2 |
| Functional juices | $3.2 |
| Functional RTD coffees and teas | $1.8 |
| Functional carbonates | $1.7 |
| Yogurt beverages | $1.2 |
Hydration is at the forefront of functional beverage trends. As the number one driver for sports drink consumption,4 hydration means more than just quenching thirst. Consumers seek hydration for health and vitality, as well as for performance and recovery,5 with electrolytes and amino acids the most important supporting ingredients.
Continued high demand is driving growth and innovation in energy drinks. With more than one in three US consumers concerned about their energy and stamina levels,6 brands are meeting the needs of this expanding consumer base through clean label strategies, segmentation (e.g., fitness energy drinks and gamer energy drinks),7 and exciting flavors. In an energy drink, taste is more important than health to consumers.8
The most popular claim in new North American functional beverage launches after energy/alertness is high in/source of protein.9 Protein is the most important ingredient to Gen Z and Millennial consumers globally,10 with protein signaling to consumers a healthier product.11 This points to opportunities in protein-fortification beyond sports protein RTD and meal replacement beverages.
These trends are supporting several emerging niches in the functional beverage market, including the protein water segment. Protein water provides a refreshing ready-to-drink option that delivers on consumers’ demand for healthy protein but with a flavor, mouthfeel, and hydration experience more like those of a sports or energy drink.
Beverages for proactive hydration are another growth area. While hydration beverages are often framed as a reactive solution to thirst and dehydration from exercising, health-focused consumers have a high awareness of the importance of maintaining hydration throughout the day for optimal health and energy. Messaging around proactive hydration is essential to connecting with these consumers.
Consumers’ evolving energy needs are also creating space for new approaches to energy drinks that align better with the health and wellness trend. This includes energy drinks with less caffeine and sugar and no artificial-sounding ingredients. About one in four US consumers are influenced by natural ingredients and low/no/reduced sugar claims when purchasing an energy drink.12
Functional beverages play a significant role in helping consumers support their health and wellness goals—from hydration to energy—in a convenient and enjoyable way. As consumers’ needs expand and evolve, brands can stay ahead by leveraging these trends to guide their product development and marketing strategies.
Glanbia Nutritionals supports brand innovation by offering relevant consumer insights, beverage formulation services, and essential beverage ingredients. These include functional proteins like BevWise®, bioactive ingredients like CreaBev® and vibrantly refreshing flavors by Foodarom® for delicious beverages that keep consumers coming back.
Interested in leveraging these trends for your business? Contact us to explore how we can help you innovate and capture market opportunities.
A functional beverage is a drink that provides a beneficial effect beyond basic nutrition. These health and wellness benefits can come from a wide range of bioactive ingredients—from adaptogenic herbs like ashwagandha to MCTs for the keto diet to tryptophan for sleep support.
Some examples of functional beverages are energy drinks formulated with caffeine and B vitamins, sports drinks with added electrolytes and antioxidants, yogurt drinks that have probiotics, and beauty-from-within beverages containing collagen. The functional beverage market continues to grow as more people look for benefits like energy, relaxation, immune support, cognitive support, muscle building, and more.
Dairy is the main source of calcium in the American diet, making it the top food group for supporting healthy bones at all ages. Dairy is also a source of high-quality protein, with all the essential amino acids in the right proportions to meet the needs of the body—especially important for muscle building and maintenance for active, sports performance, and aging consumers. Dairy also contains several beneficial bioactive proteins such as lactoferrin, which supports healthy iron levels.
Dairy alternatives such as plant-based milks and plant-based yogurts are often fortified, making them a good calcium source for those with milk allergies or lactose intolerance. Some are also high in plant-based protein. In addition, both dairy and dairy alternatives are often fortified with vitamin D to improve calcium absorption. Dairy/plant-based milk blends are a trend that combine the high-quality protein of dairy with the phytonutrients and lower calories of plant-based milks.
Plant-based milk is made starting from beans (such as yellow peas or soybeans), nuts (such as almonds or cashews), grains (such as oats or rice), seeds (such as flax or hemp seeds), or another whole plant source. The starting material can either be soaked in water, ground into a slurry, and filtered to remove the insoluble fiber, or it can be ground into flour first before removing the insoluble fiber.
Next, water and other ingredients like flavors, sweeteners, vitamins, minerals, and thickeners are added. Finally, the plant-based milk is pasteurized and packaged. Some (like pea milk) are a good source of plant-based protein, while others (like oat milk) are known for their soluble fiber benefits. Manufacturers can also start with optimized ingredients to minimize any bitter plant tastes and ensure the smoothest texture.
