25 August, 2025 – Often used as everyday supplementary boosters to take care of ourselves, functional beverages have become more important for overall health goals. From immunity and energy to digestion and mental wellbeing, consumer expectations are more sophisticated. Trust, and long-term engagement, is essential for growth. In this report, Innova Market Insights reviews the shifts, category trends and ingredient strategies reshaping the functional beverage space.
Does Wellness Thrive With Proactive Choices?
There is a lot of consideration that goes into health choices, particularly with food and beverage. The relevance of functional beverages has never been higher and with almost a third of consumers committed to their proactive health needs, more than a quarter of them are thinking preventative rather than reactive when it comes to their health. Avoiding sugar and buying products that support wellness goals matter, with the former more so than the latter. People want to see science behind either of these claims, and brands must work to deliver both.
Can Functional Drinks Step up to Everyday Self-Care?
Since 2023, there has been increased consumption of functional food and beverage. Last year, these products ranked third among the most common ways consumers increased their self-sufficient lifestyle choices. Even though there are more products and innovation in this category than ever before, frustration is still present. Challenges remain with a quarter of consumers saying that finding the healthy option in their grocery shopping adds a degree of stress to the task. Other barriers that face the functional beverage category are alignment with health goals and what consumers want from them. With goals varying by demographics, meeting these needs will matter most to them.
Will Shifting Population Dynamics Fuel Functional Beverage Growth?
Functional beverages are integral to the Millennial lifestyle. Nearly two-thirds of them believe that functional food and beverages are effective, and almost half consume functional beverages during physical activities, such as playing sports or exercising. Now in their peak spending years, active Millennials are shaping beverage trends with their preference for drinks with health benefits – a trend that the larger Generation Z cohort is likely to accelerate. In general, functional beverage trends show that more than half of consumers consider price the top indicator of quality in food and beverage with inflation putting some items out of their price range. Even if the health benefits of a product are abundantly clear, budget will always be a constraint. While functional claims are sufficient for many consumers, price-conscious consumers need a broader message to overcome their hesitation. They want the product on the shelf to resonate with their beliefs and goals.
Remaking Soft Drinks From Fun to Functional
To remain competitive, soft drink manufacturers must reduce sugar and add functional ingredients that appeal to health-conscious consumers. Energy drinks demonstrate how functionality can improve alertness and drive growth. With a projected 7% CAGR through 2027, energy drink sales are rising and while only a third of consumers purchased them last year, it highlights a substantial growth opportunity. A significant number of consumers are seeking energy and turn to functional foods and beverages, while 60% focus on getting more sleep. If there is development in the category of drinks that can sustain energy without having an effect on sleeping patterns, then consumers will possibly consider this a health benefit.
Global Consumer Momentum Is Building
Dominance in the energy market is led by the United States and Asia based on research, with nearly two-thirds of 2024 sales compared to other global counterparts. Elsewhere, Brazil is the leader in energy drink retail value growth, closely followed by Peru. Showcasing the popularity of energy drinks that is spreading throughout the world. Although the United States tops the world in energy drink consumption, it is consumers outside the US who report the biggest intake increases over the past year. US consumers have contributed to a 31% increase in usage in the past twelve months, while just 14% cut back – a net gain of 17%. That puts the US eighth in year-over-year momentum.
Are Sports Drinks Just for Athletes?
Sports drinks are no longer limited to athletes, fueling a growing market. For half of consumers, maintaining an active lifestyle is essential for health, with 40% putting emphasis on the importance of energy support, whether they are in competitive sports or engaging in other activities. This reveals a significant and untapped demand for sports drinks among a broader audience. We are likely to see sports drinks adapt to energize all types of consumers, regardless of their exercise intensity.
The United States leads the world in per-capita sports drink consumption, but growth is happening rapidly in other regions. According to the Innova Category Report 2025, two-thirds of the countries analyzed reported increases in sports drink consumption that outpaced the US’s +23% growth. India topped the chart with an impressive increase of more than 49%, followed closely by Vietnam, Egypt, and several European nations.
What Does This Mean for the Growth of Functional Beverages?
Outpacing traditional beverage categories, functional beverages are at the forefront of beverage innovation, experiencing double-digit year-over-year growth. Brands that highlight functionality are positioned to attract a new wave of health-conscious consumers with wellness becoming a primary purchase motivator. Although, sports and dairy drinks dominate in functionality, they are driven by their health benefits. Despite nearly half of consumers prioritizing physical and mental well-being, only 19% of soft drink launches make functional claims, with energy drinks making up a third. Meaning that brands must communicate clearly the health benefits to remain relevant and competitive.
Soft Drinks Are Evolving but Brands Are Still Finding Their Way
The shift from sweet and flavorful to clean and functional drinks is reshaping the category. As mentioned earlier, reducing sugar and demonized ingredients are just the tipping point in redefining the category. While sodas and juices are struggling to adapt, energy drinks have since surged by tapping into consumer concerns about fatigue and focus, and kombucha gained traction through gut health benefits and the appeal of fermentation – especially among younger generations.
Energy is now the fastest-growing functional benefit in beverages, claimed in 29% of new launches. Functional beverage trends show that a third of consumers cite low energy as a physical health concern, and over half have already taken action, with 41% turning to functional foods and beverages. However, another 41% remain on the sidelines, still planning to act. Of those, 15% see functional food and drink as part of the solution. That signals a clear upside that brands that can guide and educate these consumers to convert them into buyers.
Refocusing Beverages Through the Wellness Lens
With many actively working to prevent future health issues, rising healthcare costs and increased awareness are changing consumer behavior. Nearly 60% of them take a proactive approach to health. Functional beverage trends are reflecting this shift in consumer behavior. There is a perception of food and beverages with health benefits which has doubled in significance between 2023 and 2024. There is however, a number of people that still feel stressed by a lack of offerings in healthy choices. Concerns about different categories of health are prevalent, predominantly among younger consumers. This heightened awareness, shaped by economic challenges, makes functional drinks applicable as daily health tools.
What’s Next For Functional Beverages?
There is a lot of potential growth in this space and with increased attention to wellness and proactive aids. Brands can appeal to consumers further by shifting from clean and healthy claims toward specific ones. We are likely to witness further development of dual tracks for aging Boomers. As momentum towards plant-based ingredients and other new ingredient sources continues to build. Personalized and targeted functionality will take precedence over a one-size-fits-all attitude to health. As we have seen on the market currently, energy claims are increasingly paired with hydration – and not just in energy drinks by the way. So this is an area within the category that will no doubt be further scrutinized and built upon. Elsewhere in the functional beverage category, all data suggests an expansion of cognitive and mental wellness benefits being integrated in claims across each sub category, boasting claims such as mood and mental clarity.
This article is based on Innova’s Functional Beverages – Global report. This report is available to purchase or with an Innova Reports subscription. Reach out to find out more