Functional Beverages, Key Driver of the Non-Alcoholic Beverage Industry in the United States

Sports Drink
Other Non Alcoholic Beverage
United States
Market & Price Trends
Published Feb 23, 2024
Functional beverages are driving significant growth in the non-alcoholic beverage industry in the United States. With a global market exceeding USD 164.06 billion in 2023 and projected to reach USD 277.59 billion by 2033, the U.S. emerges as a key player, generating over USD 40 billion annually. These beverages offer added health benefits, appealing to consumers' growing interest in wellness. From energy-boosting drinks to hydration-enhancing options fortified with essential vitamins and minerals, functional beverages are reshaping the industry landscape.

Industry Overview

The global functional beverage market reportedly reached USD 164.06 billion in 2023 and is expected to surge to USD 277.59 billion by 2033, boasting a 5.4% compound annual growth rate (CAGR) throughout this period. North America leads the market, generating over USD 40 billion in annual sales, with the United States (US) standing out as the dominant player in the industry.

The beverage industry in the US is experiencing robust growth, with a CAGR of 4.90% projected until 2028. This growth is fueled by several trends, among which the increased demand for functional beverages stands out. Functional beverages offer additional health benefits beyond basic nutrition, often containing added vitamins, minerals, probiotics, or other bioactive ingredients that provide specific health benefits.

Figure 1. Functional Beverage Global Industry Outlook

Source: Future Market Insights (FMI)

Functional Beverage Industry Trends in the US

The surge in demand for functional beverages in the US is primarily fueled by increasing consumer interest in health and wellness, with these drinks offering support for various aspects, including immune function, digestion, energy levels, and mental clarity. As consumer preferences evolve, the functional beverage market is expected to sustain its growth trajectory, leading to opportunities for both existing manufacturers and new entrants to introduce innovative products.

Other trends driving the functional beverage industry in the US include:

  • Sustainable packaging is gaining traction, with brands prioritizing eco-friendly materials to appeal to environmentally conscious consumers.
  • Personalization through AI-driven recommendations enhances customer engagement and loyalty by offering tailored beverage options.
  • Upcycled ingredients are becoming popular, aligning with sustainability goals and reducing waste.
  • Multifunctional hybrid beverages are rising in popularity, providing convenience and versatility by combining benefits from different beverage categories.
  • Brands are focusing on culturally relevant beverages, incorporating local ingredients for authenticity.
  • A growing emphasis on functional drinks targeting mental well-being reflects a broader trend towards holistic health.

Functional Beverage Pricing in the US

Functional drinks in the US exhibit diverse pricing influenced by brand, ingredients, packaging size, and distribution channel. Single-serving options range from USD 2 to 5 per unit, while multipacks or larger containers average USD 1 to 2 per serving. Premium varieties, boasting unique formulations or organic ingredients, can fetch higher prices of USD 6 to 10 per serving. Brands strive to maintain affordability by enhancing production efficiency and offering various pack sizes. Moreover, accessibility is emphasized, with products available in multiple retail locations to accommodate evolving consumer preferences.

Functional Beverages Product Segmentation

Segmentation by Ingredient Type

Segmenting the functional beverage market by ingredient type enables manufacturers to tailor products to meet specific consumer preferences and health needs, driving product relevance and competitiveness. This approach facilitates innovation and fosters consumer engagement by delivering tailored solutions aligned with individual health and wellness goals. Some products include:

  • Antioxidants: Drinks formulated with antioxidants are meant to combat oxidative stress and promote overall health. Antioxidants help neutralize free radicals, reducing the risk of chronic diseases and supporting wellness.
  • Minerals: Beverages infused with vital minerals like calcium, magnesium, potassium, and zinc provide a range of health advantages, including promoting bone health, supporting muscle function, and maintaining electrolyte balance.
  • Amino Acids: Beverages enhanced with amino acids are formulated to aid muscle repair, boost athletic performance, and facilitate protein synthesis throughout the body.
  • Probiotics: Probiotic-infused beverages feature live beneficial bacteria that promote gut health, enhance digestion, and strengthen the immune system.
  • Prebiotics: Functional drinks containing prebiotic ingredients, like soluble fibers, act as nourishment for probiotics, stimulating the growth and activity of beneficial gut bacteria.
  • Vitamins: These drinks are fortified with essential vitamins like vitamin C, vitamin D, and vitamin B complex, offering nutritional support and aiding in addressing dietary
  • Superfruit Extracts: Functional beverages may incorporate extracts from superfruits such as açaí, pomegranate, or goji berries, prized for their high antioxidant content and potential health benefits.
  • Botanical Flavors: Beverages may feature botanical extracts or flavors derived from plants renowned for their medicinal or functional properties, including ginger, turmeric, or green tea.

Segmentation by Product Type

Segmenting the functional beverage market by product type categorizes offerings based on their intended benefits, catering to diverse consumer preferences and lifestyles. This allows manufacturers to develop targeted products tailored to specific needs, such as hydration or energy enhancement, meeting varying consumer demands. Some of the product type categories include:

  • Energy Drinks: Energy drinks are a variety of caffeinated and stimulant-infused options. About 15% of consumers state they have bought energy drinks.
  • Sports Drinks: With 13% of consumers having bought them, sports drinks cater to individuals seeking hydration and electrolyte replenishment during physical activities.
  • Vitamin-Enhanced Water: Vitamin-enhanced water offers a hydrating option fortified with essential nutrients, with 9% of consumers having purchased them.
  • Electrolyte Water: Garnering 7% of consumer purchases, electrolyte water provides a hydration solution focused on replenishing essential minerals lost during exertion.
  • Protein Drinks: 5% of consumers have bought protein drinks, which serve as a convenient source of protein for fitness enthusiasts and those looking to supplement their diet.
  • Post-Workout/Recovery Drinks: With 3% of consumers stating previous purchases, post-workout drinks cater to individuals seeking recovery and replenishment after physical activity.

Figure 2: Previous Purchase Popularity Based on Product Type

Source: Statista

Leading Players in the US Functional Beverage Market

Several prominent companies in the US functional beverage industry provide a wide array of functional drinks customized to suit different consumer preferences and requirements.

  • Red Bull: Renowned for its signature energy drink, providing a quick boost of energy and mental alertness, appealing to students, athletes, and professionals alike.
  • The Coca-Cola Company: Offers Powerade, a sports drink replenishing electrolytes during physical activity, and Glacéau Vitaminwater, providing essential vitamins and minerals in a refreshing beverage.
  • PepsiCo: Known for Gatorade, a sports drink favored by athletes for its electrolyte-replenishing properties, and Propel, offering enhanced water beverages with added vitamins and electrolytes.
  • Monster Beverage Corporation: Specializes in high-energy drinks like Monster Energy, available in various flavors and formulations to meet diverse consumer preferences.
  • Nestlé S.A.: Provides Boost, a nutritional drink for individuals with increased nutritional needs, and Nescafé Coffee Protein Smoothie, combining protein benefits with the rich flavor of coffee for a convenient on-the-go option.

The growing functional beverage sector is rapidly becoming a cornerstone of the non-alcoholic beverage industry in the US. With its diverse range of offerings tailored to meet evolving consumer needs and preferences, this sector is driving significant growth and innovation. From energy-boosting drinks to hydration-enhancing options fortified with essential vitamins and minerals, functional beverages are reshaping the beverage landscape. As consumer interest in health and wellness continues to rise, manufacturers are poised to capitalize on this trend by further expanding their product portfolios and delivering innovative solutions that cater to a wide range of lifestyle and wellness goals.

For a detailed analysis of the non-alcoholic beverage industry in the US, read the US Non-Alcoholic Beverage Market: Demonstrating Consistent Growth and Promising Opportunities report on Tridge's website.

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