Functional beverage

Functional beverages are commonly consumed among people attempting to gain health benefits from their foods and beverages. Both convenience and health have been identified as important factors in consumers' decision-making about food and beverage purchases. Functional drinks are advertised as having various health benefits. For example, some claim to improve heart health, immunity, digestion, and joint health, while others promote themselves as satiating and energy-boosting.[1][2]

The functional beverage industry is a subsector of the functional food and non-alcoholic beverage industry. It is the fastest-growing sector of the industry, partially due to the maturity of the carbonated soft drink sector and heavy investments by major food and beverage companies.[3] Another reason for the industry's growth may be the consumer-oriented market scheme whereby innovative ideas come from consumers. By 2008, in the U.S., the market share of functional beverages accounted for 48.9% of the non-alcoholic industry, which is worth $118 billion.[4]

Functional beverage industry players are generally categorized into four types:[5]

1. Traditional non-alcoholic beverage companies, like PepsiCo, Fuze Beverage, and The Coca-Cola Company.
2. Major food companies, such as Nestlé, Altria, Kraft Foods, General Mills, and the Campbell Soup Company.
3. Smaller-scaled private companies and specialized companies like POM Wonderful.
4. Agricultural cooperatives, such as Ocean Spray and Sunsweet Growers.

The functional beverage industry encompasses a wide range of varieties targeting different health-related concerns.[3] One trend has been toward hybrid drinks, which are marketed as having benefits like thirst-quenching ability, with daily dosages of vitamins or other nutrients.[4] Another trend is the rise of probiotics, exemplified by Activia yogurt, marketed for intestinal and immune health. Other beverages, like Function: BRAINIAC, a carambola punch energy drink in the Function Drinks line, advertise improved memory and mental sharpness. Functional drinks marketed to children have also been developed, and received attention with Nestlé's Boost.

A 2005 trend toward single-serve functional beverages was fueled by consumers' demands for convenience. According to Campbell's director of single-serve beverages, "People know they will be seen when they are drinking single-serving beverages, so the package is critical."[6] Drinks marketed toward weight loss, health, and beauty (like Nova the Essential Drink) account for a considerable market share. Lastly, "energy-boosting" functional beverage products, such as Red Bull and 5-Hour Energy, have been rated fastest in growth in the functional beverage market.

The functional beverage industry generally competes using four primary strategies:[5]

1. Promote their own products as healthy and unique, by clearly distinguishing their health claims from similar products, and by specifying naturally healthy ingredients.
2. Consider extensions of existing brand lines. For example, Nestle extended their Boost product line by adding Kids Essentials to the line, thereby extending the adult-focused Boost line to a new market (children).
3. Larger companies compete for market share by acquiring smaller companies that may own a particular market sector.[5] For example, Coca-Cola purchased Glaceau from Energy Brands, and Odwalla and Fuze Beverage from their respective founders, in order to increase Coca-Cola's market share.
4. Explore new functional brands by identifying new markets and demands.

Market segments of the functional beverage industry are divided mainly into four parts.[3] Those include hydration; energy/rejuvenation; health and wellness; and weight management.[3] Each segment has its own target market and consumers. Overlapping of target consumers does occur—not because of undefined market needs, but due to consumer acceptance of functional beverages.[5]

According to a 2006 article, the functional beverage market's consumer group is characterized as well-educated females aged 35–55, belonging to the upper middle, middle, and lower middle classes.[7] This is thought to result from this group's perceptions that functional drinks produce positive health beliefs, as well as their relatively high disposable income.[7] A 2002 article stated that within the energy and stimulant drink sector, young adults aged 18 to 34 are considered to be the main target market, as evidenced by high consumption rates.[9] However, due to constant changes in attitudes about different types of functional beverages, these target markets could change.[10]

Health experts are concerned about the increased consumption and popularity of functional beverages. Although these beverages may serve to hydrate the individual, they may not mitigate or even address today's major health issues, such as obesity, heart disease, and cancer.[1][2] Most functional beverages are sweetened, and consumption of sweetened beverages is associated with higher levels of obesity and heart disease.[1][2] Most of these drinks contain significant amounts of sugars and hence calories, which would add to discretionary and total caloric intake. As such, these ingredients pose health risks because of what they contain (sugar and caffeine) or what they replace in the diet (vitamin and mineral-rich foods).

• Functional food