Renewed appetite for functional beverages seems to stem from the belief, now scientifically validated, that these beverages do have healing and health-giving properties.
With the COVID-19 crisis reinforcing the importance of health and wellness, consumers have been clamoring to have a daily dose of functional beverages. Renewed appetite for functional beverages seems to stem from the belief, now scientifically validated, that these beverages do have healing and health-giving properties.
Although the popularity of functional beverages picked momentum in the Covid-19 era, consumers were already developing an appetite even before the pandemic struck. A recent global market report found that between 2016 and 2019, launches of products with an immunity claim grew by 9% in the juice category, 43% in flavored bottled waters and 32% in energy drinks.
COVID-19 further increased awareness resulting in over 400 launches of refreshing beverage products with immune health benefits in 2020, according to an Innova report. In this issue, we explore how the pandemic and desire for healthier nutrition have resulted in new developments in the functional beverages scenes and opportunities for beverage manufacturers.
Coffee and tea keep getting better
Coffee and tea are arguably some of the oldest beverages to be enjoyed by man. Consumers today however want more than just the kick of energy that the caffeine in these drinks offers. To keep up with consumer preferences, the art of tea and coffee brewing is getting better and better, often incorporating new styles and ingredients to produce the same old tea drink but with improved taste profiles and added functionality.
Tea, which was formally enjoyed alone is now being incorporated with other ingredients to boost its taste and functionality. At Virginia Dare, dark berries like acai, elderberry and goji are trending tea add-ins thanks to their established antioxidant content. Kericho Gold, a leading Kenyan tea brand, has also been experimenting with tea, recently launching cold brew teas that feature other ingredients like lemon, orange, and ginger. This is in addition to its elaborate “Attitude Teas” that include unique combinations such as passion and lime, green tea and lemon, and pineapple and mango. Other trending functional ingredients finding their way into tea include CBD, matcha and added vitamins and minerals.
US multinational beverage company Coca-Cola also joined the RTD tea band wagon, launching its iced tea brand known as Fuze Tea that features tea combined with other ingredients such as chamomile, hibiscus, mango and peach. Innovations around tea seem to have handed the centuries-old beverage a new lease of life, with Grand View Research projecting the global tea market, worth US$12.63 billion in 2018 is set to expand at a CAGR of 5.5% through 2025.
In coffee, Nitrogen infusions have become popular in brewing because they add a creamy, velvety mouthfeel that can enhance the perception of sweetness and add textural complexity without adding calories. Another common coffee add-in, creamers are also getting a makeover with dairy-based milk and cream replaced by plant-based versions, perfect for the growing number of consumers avoiding dairy for ethical, environmental or health reasons. Almond, cashew, macadamia, coconut and, increasingly, oat are all popular bases for nondairy creamers, sold both separately for at-home occasions and in RTD coffee beverages.
As more people recognize the importance of proteins in the diet, Kerry notes that super charged coffee brews fortified with proteins are becoming daily specials in today’s new normal. As a result, ingredients like barley are also popping up in coffee drinks as a source of added protein. In addition, for a boost of mental clarity, nootropic ingredients like omega-3 fatty acids, L-theanine and lion’s mane mushrooms are gaining traction.
Taking notice of the coffee craze, Coca-Cola also expanded its Coke portfolio to include one that fused the cola drinks “with real Brazilian coffee”. The drink has already been rolled in more than 50 markets globally, with January 2021 launch in the US being among the latest.
Coffee may be the oldest functional beverage, but recent innovations are proof that the beverage isn’t going anywhere any time soon. Research and Markets even projects that in the short term, the global coffee market will grow at a CAGR of 5.3% to reach US$134.25 billion in 2024. Alex Smolokoff of Food Beverage Insider however notes that brands would be well served to ensure any coffee beans used in their products are fairly grown, either through Fair Trade certification or other programs.
Functional waters become more personal
Functional waters, viewed as a premium – and healthier – alternative to soft drinks, are also evolving to catch up with ever changing consumer demands.
Personalisation and customisation of drinks is among trends quickly gathering momentum in this space. US online soft drinks company uFlavour is among a growing number of companies that is giving customers the freedom to design their beverages. According to the company, users can craft drinks with specifications, such as sweeteners, acids, and flavouring agents. Bevi, a Boston-based start-up, merged personalization with sustainability and the result was a smart water dispenser that provides customisable flavours using filtered tap water and natural ingredients to reduce plastic waste.
In an Interview with Nutritional Outlook, Limitless co-founder Matt Matros noted that the functional water market is trending toward a “water-plus” format – a hybrid format that seeks to add another function to water than just hydration. He noted that his company was producing a water-plus-caffeine, targeting the diet cola drinkers. “With a lightly caffeinated sparkling water, consumers can get their kick while staying hydrated,” he added.
Apart from these, manufacturers are also experimenting with water-plus-fiber, water-plus-fats, and even water-plus-hydrogen. Interesting combinations such as Pervida that combines sparkling water with pomegranate seed oil are also coming to the market to provide consumers with gut health boost. The strategy of highlighting the key functional ingredients in these beverages is expected to continue even as manufacturers work hard to link their products to health and beauty regimes.
This strategy seems to be working, as functional water segment, which generated a revenue of US$29.11 billion in 2018 is expected to reach US$54.48 billion by 2025, recording a CAGR of 9.4%, according to data from Reportlinker.
Protein enters health and wellness space
Protein’s role in maintaining good health, particularly among older adults and families, has made it to be a popular ingredient in today’s functional beverages.
Ingredients maker Volac notes that in the first six months of 2021, about a quarter of all consumers in Europe bought a protein RTD (ready to drink) beverage, which indicates the high level of penetration that these beverages have. As demand grows, Kerry notes that the market is advancing from classic protein powder drink mixes and the ubiquitous “protein shake” to a range of enticing new formats, tastes and textures of functional high protein beverages. High protein yogurts have for instance become mainstream with companies from General Mills to Chobani all launching products in this space.
Although the demand for proteins is high, not all protein sources work well in beverage applications. Each protein source provides a different taste, texture, and protein quality that affects the overall acceptability of these products. To overcome these challenges, manufacturers have developed new protein solutions that can work in a wide array of applications. Food ingredients manufacturer Volac has for instance launched Volactive Pro2O, a whey protein ingredient, specifically designed for clear drinks. “It can make a drink look as clear as water and it tastes delicious with very little astringency,” says Alan Johnstone, Business Development Manager at Volac. Kerry’s ProDiem™ Refresh also works in a similar way and can be used to create refreshing and transparent low-pH protein waters, juices and energy drinks. With these developments, companies like Protein2o have been able to produce protein infused water with fewer calories than traditional drinks.
Sweet but without the calories
The rising cases of obesity and type 2 diabetes across the world have also made consumers wary of their calorie intake. Standard table sugar may once have been a go-to sweetener, but those moments are long gone, and with sugar taxes spreading across jurisdictions, manufacturers have been left with no option but to drop the sweetener from their list of ingredients.
The same consumers agitating for low sugar levels in their beverages are also not willing to compromise on taste. A Kerry study found that just over 70% of consumers rank flavour and taste as the “most important” factor in a beverage purchase.
Artificial sweeteners such as aspartame, saccharin and sucralose were once popular because they are sweeter than sugar but lower in calories. However, artificial sweeteners are no longer desirable in production of functional beverages due to uncertainty around their long-term impact on human health. To achieve consumer demand for low sugar but still produce a beverage that does not compromise on taste and flavour, natural sweeteners like honey and agave are starting to gain prominence. Because these ingredients can have their own limitations, such as increased bitterness and metallic off-notes, Kerry advises manufacturers to use taste modulators to preserve the overall taste profile in the finished product.
Untapped areas for beverage manufacturers
The functional beverages market is still an expansive area that offers many beverage manufacturers opportunities for new growth. Mordor Intelligence projects the global functional beverage market’s CAGR at more than 8% by 2024, with Asia Pacific at 7.5% CAGR between 2020 to 2025.
Developing new functional beverages with plant proteins is an area that holds immense potential, according to recent research by Kerry. More than two-thirds of consumers view protein from plant sources as “healthy” compared to the 42% that take the same view of animal protein, making any new products with plant-based clams highly sought after. Additionally, advances in technology have led to great innovations in plant-based proteins ingredients and technologies that mask flavour and smoothen texture. Manufacturers can now play with exciting new sources such as canola (also known as rapeseed), sunflower and flax in addition to established plant protein sources including soy, pea and rice to produce beverages that pack a healthy halo in the areas of fibre, mineral and vitamin content.
Functional fortification is another area that beverages makers can exploit to differentiate their products. “Adding ingredients such as probiotics and prebiotics, fibre and flavonoids to beverages can be an effective way for manufacturers to differentiate their products and attract new consumer segments,” notes Kerry. Calcium is another in-demand ingredient which can become an important addition to lactose-free products, which normally do not contain as much calcium as their full-lactose versions. With the clean label quickly gathering momentum in the Asia Pacific, Middle East, and Africa (APMEA), shoppers are now preferring to buy foods and beverages that contain natural, familiar, and simple ingredients. These presents new opportunity to either create new products or reformulate existing ones in line with clean label demands.
Consumer communication key
Finally, communication with a consumer is key if producers are to thrive in this thriving market. With so many options available, your product- although superior from the functional point of view – may be lost in the wall of choices that face consumers every time they visit the grocery store. This makes it is especially important that manufacturers clarify the benefits offered by their products.
A recent report found that half 49% of global consumers want more information about the nutritional value of products, while Kerry has through research shown that many people now make purchase decisions by looking for ingredients they recognize or ones that are supported by scientific data. Food and beverage brands that effectively communicate how their products support immune system health are predicted to flourish as the pandemic continues to unfold and will have lasting demand post-COVID-19.