LOS ANGELES, CA, May 24, 2023 /24-7PressRelease/ — Functional beverages refer to non-alcoholic drinks containing added nutrients and ingredients intended to provide specific health benefits, and their popularity is on the rise. The category is set to become a $225 billion industry by 2027. Gen Z, the demographic born between 1995 and 2010, is among the purchasers driving this trend, especially toward healthier, non-alcoholic drinks with natural ingredients and low sugar content. Examples of functional beverages include plant milk, enhanced water, mood-boosting drinks, probiotic beverages, fortified fruit drinks, performance drinks, and ready-to-drink teas, which consumers use for relaxation, digestion, immunity, and energy.
Fusion, a leader in research and B2B marketing, conducted a study that analyzed data from over 300 respondents representing the entire U.S. market. The study found that more than 65% of consumers aged 18-65 had bought a functional beverage in the previous month. Over half the respondents said they preferred purchasing functional beverages at grocery stores rather than buying from convenience stores, health food stores, restaurants, or online. This insight shows that retailers have an enormous opportunity to create large, attractive displays or partner with other healthy products to capture a segment of this growing trend.
The study compared the purchase behavior of Baby Boomers (born between 1945-1964), Gen X (born between 1965 and 1981), Millennials (born between 1982-1994), and Gen Z. Across all age groups, hydration and taste were the primary factors when purchasing a functional beverage. Additional factors included wellness benefits and product positioning. Gen Z prioritized price, branding, and packaging, compared to other age groups. Digestive health and mental well-being were crucial for Gen Z, while consumers aged over 30 prioritized immune and energy health. Millennials, Gen X, and Baby Boomers were all primarily interested in the wellness benefits functional beverages offer.
The innovative variety of flavors and benefits that functional beverages provide will likely see the market growth continue as more consumers take interest in healthy lifestyle options. Consumers are increasingly concerned about what they consume, and they read nutritional labels. According to Fusion’s study, over 62% of respondents said they always or usually read nutritional labels on functional beverages. Consumer education about health and wellness will continue to drive growth in this market, as is evident from the market’s expected 11.1% compound annual growth rate by 2027.*
As Gen Z continues to grow into a more substantial portion of the shopper demographic with robust purchasing power, it’s essential to keep their behaviors and preferences in mind when planning marketing strategies and promotions. Retailers and beverage companies can dive deeper into the functional beverage trend by contacting Fusion, which specializes in trend analysis, category research, and in-depth shopper and consumer research in the grocery retail segment.
Fusion’s marketing group is committed to providing insights through easy-to-understand motion graphics based on complex data. For further information about Fusion and its client roster and capabilities, visit gowithfusion.com.
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