Functional beverages, as described by IBISWorld, are non-alcoholic drinks that contain non-traditional ingredients such as vitamins, minerals, fibre, probiotics and added fruit (IBISWorld, ‘Functional Beverage Production in Australia’, September 2020).
According to the research company, “increasing demand” for functional beverages, particularly enhanced water, nootropic drinks, and sports, energy and health drinks, such as kombucha and kefir, has driven industry growth.
At the time IBISWorld’s ‘Functional Beverage Production in Australia’ report was published, industry revenue was estimated to have been growing at an annualised 2% over the five years to 2020-21, to be worth $445.6 million.
“Rising health consciousness has driven demand for health and sports drinks, while energy drinks have become popular with time-poor consumers and those leading an active lifestyle,” says the company.
“Despite the outbreak of Covid-19, industry revenue is anticipated to rise by 0.4% in the current year.”
Functional and fermented
The fermented beverages segment, which includes kombucha, kefir and kvass, has benefited from “significant growth” over the past five years (IBISWorld, ‘Functional Beverage Production in Australia’, September 2020).
Discussing kombucha with Convenience World, Mojo Beverages Sales Director Natasya Wright notes a recent “slight decline” in the category in P&C, with value decreasing by 5% (MAT 29/3/20 versus 28/3/21) as pricing becomes more competitive.
“However,” she says, “the kombucha category has experienced volume growth of 2% versus last year, indicating there are further opportunities for growth in recruiting new customers to the category [IRI, Total Kombucha Category, litre (000s) MAT 28/3/21 vs LY].”
Other health beverages
Beyond the key subcategories of functional beverages, IBISWorld notes “other health beverages”.
Products in this segment include nootropic drinks, enhanced tea drinks, probiotic drinks, fruit juices containing functional ingredients such as goji or acai berries, and other plant-based drinks, such as chlorophyll or wheatgrass juice.
The ‘other’ segment, according to IBISWorld, also includes energy and sports drinks that are considered to be health beverages, containing additives such as vitamin C, and drinks containing less than 145mg per litre of caffeine.
Read about what brands are getting up to in the functional beverages category in the July/August issue of Convenience World.