The drinks market is changing – fast. Walk into any supermarket, coffee shop, or gym today and you’ll find shelves packed with beverages promising more than refreshment. From gut-friendly sodas and protein fortified waters to teas designed to support cognitive function, the functional beverages market has moved decisively from niche health trend to mainstream expectation, and it’s changing how brands think about beverage development altogether.
The numbers only tell part of the story. The global functional beverages market, valued at $213 billion in 2024, is projected to reach more than $300 billion by 2029. The real story, however, is why consumers are reaching for these drinks, and what that means for formulators trying to crack this increasingly sophisticated market.
The consumer shift: Control, not just health
For years, the functional drinks industry could rely on straightforward positioning: “good for you” was enough. Not anymore.
Today’s consumers, including Millennials and Gen Z, aren’t just health-conscious; they’re intentional about what goes into their bodies and why. They are reading labels, researching independently, questioning claims, and increasingly choosing drinks that serve a specific purpose in their daily routine.
The decline in alcohol consumption among younger demographics has been particularly telling. Research from data platform Attest shows 21% of Gen Z don’t drink alcohol at all, with 39% consuming it only occasionally. Mental health concerns and lack of interest are driving factors, but there’s a growing desire for drinks that enhance rather than impair. This change has fuelled rapid growth in the non-alcoholic beverages market, which in the US alone, grew 20% in 2023 and is projected to continue at a 17% compound annual growth rate through 2028.
But for health and nutrition formulators, it’s not just about what consumers are avoiding, it’s about offering what they’re proactively seeking. Gut health, for example, has become a clear health priority, with prebiotic beverage purchases showing significant year-over-year growth.
The formulation challenge: Balancing benefit, taste, and reality
Where it gets interesting for formulators is that consumers want multi-functionality, drinks that tick multiple boxes, but they’re also not willing to compromise on taste or experience. The challenge is that many brands lead with bold functional benefit claims but don’t include ingredients in sufficient quantities to actually deliver those benefits. This has become a sticking point in the category, most notably with prebiotic sodas facing scrutiny over inadequate dosing, where multiple drinks per day would be needed to achieve the claimed health effects.
Effective dosing, however, is only part of the puzzle; ingredient stability presents another critical hurdle. Functional ingredients that degrade during processing or shelf life can’t deliver on-pack promises, no matter how well-formulated the taste profile. For formulators, this means selecting ingredients with proven stability across different formats, pH levels, and storage conditions. This factor is non-negotiable in a market where consumer trust hinges on consistent efficacy.
Clean label formulations add another layer of complexity. Consumers increasingly prefer ingredients they recognise alongside natural flavourings. According to data from FMCG Gurus, 70% of consumers say it’s important or very important that food and drink is ‘100% natural’, while 42% check ingredient lists and nutritional information on products at least some of the time. Sugar reduction has become non-negotiable in many markets, driven partly by regulatory pressures like the UK’s HFSS (High in Fat, Sugar and Salt) regulations, but also by genuine consumer demand. The question formulators face is: how do you deliver functionality, great taste, and a clean label without compromising on any front?
Format innovation beyond the bottle
The functional beverage category is also diversifying rapidly in terms of format. Ready-to-drink beverages remain dominant, but taking a look at in store beverage aisles shows clear growth in functional shots, sparkling waters, dairy alternative drinks, and even functional teas and coffees. For example, Starbucks’ move into protein-enhanced beverages signals just how mainstream this trend has become, no longer confined to specialist health food stores.
Sports and active nutrition drinks continue to evolve beyond basic electrolyte replacement. The RTD sports drinks market saw a 20% compound annual growth rate over the past five years, with consumers seeking precision wellness. This includes targeted support for recovery, muscle building, and metabolic health. There’s also emerging interest in sleep-supporting beverages, despite relatively low current market penetration. With 40% of global consumers wanting improved sleep, this represents a significant white space opportunity for brands willing to explore this opportunity and educate the market.
Where prebiotics fit in: The gut health opportunity
Gut health remains one of the most compelling benefits driving functional beverage purchases, and for good reason. The connection between digestive health and overall wellbeing, including immunity, mood, and even cognitive function, is increasingly well understood by consumers. Fibre has emerged as a star nutrient, yet many consumers fall short of the recommended 30g daily. This is where prebiotic fibres present a dual opportunity: they contribute towards overall fibre intake whilst also offering additional functional benefits through their ability to selectively stimulate beneficial gut bacteria.
Prebiotics like galactooligosaccharides (GOS) offer formulators a genuine functional benefit with robust clinical evidence, the kind of substantiation that stands up to regulatory scrutiny and consumer scepticism alike. With over 130 publications, ingredients like Bimuno® GOS represent the type of evidence-led innovation that the market increasingly demands.
The functional beverages market isn’t slowing down. If anything, it’s accelerating and fragmenting into more specific benefits, more sophisticated formulations, and more discerning consumers. For brands and formulators, this creates both an unmissable opportunity and high pressure. Success in this space requires more than just adding a trendy ingredient and putting a health claim on the label. It requires genuine understanding of consumer motivations, rigorous attention to formulation and compliance, and partnerships with suppliers like Clasado Biosciences, who can bring not just ingredients, but market intelligence and scientific credibility.
The drinks aisle may be seeing a rapid change of pace, but for those health and nutrition formulators who can navigate this complex, dynamic market with both innovation and integrity, the opportunities are extraordinary. Get in touch with our team today to discover how Bimuno GOS can support your functional beverage innovation.
