Functional Beverages - Consumers
Functional beverage drinkers tend to be millennials who are well-educated and high income earners. These individuals care about their health and eat healthy - with most being on specific diets like the low-carb diet - and maintain an active lifestyle. They primarily discover new functional beverage brands or products via social media ads.
FUNCTIONAL BEVERAGE DRINKERS: DEMOGRAPHIC PROFILE
- Of note, sports drinks account for more than half of functional beverages. However, the sports drink sub-category is rapidly losing its share as plant-based nutritional drinks with benefits like weight management and digestive health gain a more significant share of the market.
- In 2018, FONA International reported that women generally consume "less nutrition and performance beverages than men." However, the report acknowledged that women are maintaining their consumption of these beverages and 25% consumed more in 2018 than they did the previous year.
- Based on the FONA report, it appears more men consume functional beverages like sports drinks, while women opt for meal replacement shakes and functional beverages with more health benefits and less sugar.
- According to Bev Industry, US consumers who are driving the movement of health and wellness trends like functional beverages are "those with annual household incomes over $100,000."
- Based on several reports, the archetypical consumer group for health and wellness products like functional beverages are well educated consumers.
- This is in line with data from the Pew Research Center showing that millennials - who are the main consumers of functional beverages - are the most educated generation. Almost 65% of this cohort value a college education and plan to get one.
Marital Status & Dependents
- Millennials parents or families with children are reportedly the most likely to buy functional beverages. They also pass this on to their centennial children.
FUNCTIONAL BEVERAGE DRINKERS: PSYCHOGRAPHIC PROFILE
- Functional beverage drinkers are interested in health and wellness, in general.
- Their health and wellness interests go beyond their choice of beverage. These individuals ensure that they eat healthy as well.
- They want to know and understand the ingredient list in whatever they consume and are most influenced by real ingredients.
- Almost 35% of these consumers follow a specific eating pattern, such as intermittent fasting, a paleo diet, a gluten-free diet, a low-carb diet, and a vegetarian diet.
- Most functional beverage consumers maintain an active lifestyle and workout several times a week. In fact, a lot of functional beverage companies target athletes or active consumers. Koios drinks (a brain health beverage brand), for example, is popular among active female consumers.
- Functional beverage consumers care about their health and most of them consider clean eating important.
- These individuals also care about the environment and are willing to spend more on sustainable brands or brands with innovative CSR strategies.
- Climate change and biodiversity are causes they prioritize.
- These individuals have progressive views. Over 60% of them believe ethnic diversity is good for the society and think more women should run for political office.
- Functional beverage consumers are optimistic about their life. They believe work ethic and intelligence have the biggest impact on their success.
- These individuals are defined by their experiences and prefer personalized products and services.
- Functional beverage consumers crave and actively seek out products that make their busy lifestyles easier.
- They are interested in products that offer a variety of wellness needs, whether that be energy drinks to aid exercise, plant-based drinks that strengthen their immune system, or vitamin water to avoid falling sick.
- They opt for and prefer things that improve their lives, which tend to be, technology that is seamless to use, workouts that offer the most benefits in a short amount of time - such as HIIT, or easy to make food.
- Functional beverage consumers are willing to spend more on comforts and experiences. About 70% will spend more to eat at trendy restaurants.
- More than 50% of them spend money on taxis and Ubers.
- They value experiences and will spend more on their hobbies, dining out, travel, and concerts. Over 70% of these individuals will rather spend money on experiences than consumer goods.
- They are big spenders at coffee shops. This explains why alternative coffee products like mushroom coffee are becoming popular among them.
FUNCTIONAL BEVERAGE DRINKERS: PURCHASING BEHAVIOR
Digital & Online Purchases
- Functional beverage consumers are the leaders in online purchases, primarily due to the fact that this is the most convenient form of shopping for them. They make 54% of their purchases online.
- More than 40% of these individuals turn to reviews or testimonials prior to making online purchases.
- Almost 70% of them complete transactions on their smartphones.
- They spend the majority of their shopping funds on products found via social media platforms like Instagram.
- Roughly 70% of them "trust brands with videos about their products more than brands without videos."
- Almost 80% of them say that a brand's social media presence impacts their purchase decisions.
- They research a brand or product before making a purchase online or in physical stores.
- Functional beverage consumers prefer brands that offer a unique experience, great customer service, and value for their money.
- They reportedly "cite an importance in giving back to the community and expect the brands they follow will do the same." Almost 85% prefer brands that publicly commit to charitable causes.
- Roughly 60% of these individuals stay loyal to brands they like.
- Authenticity and trust are qualities they seek in a brand. They prefer quality over quantity when it comes to brands/products.
- Up to 74% of these consumers will switch to a different brand if they had a poor customer service experience.
- Almost 70% are convinced it is their responsibility to share feedback with a brand about the experience they had.
- They are "more likely to share positive customer service experiences than negative ones."
How they Discover Products
- The main way these individuals discover new products is through Facebook, while YouTube helps them make purchase decisions.
- Exactly 74% of these consumers discover new products through ads on social media.
- Almost 80% find out about new brands or products through website ads like Google PPC marketing.
- Around 47% discover new products through a retailer's physical location, while 46% find out about new products or brands via third party e-commerce websites like Amazon.
FUNCTIONAL BEVERAGE MARKET: TRENDS
- Plant-based functional ingredients like mushrooms, ashwagandha herb, and turmeric, are increasingly gaining traction in the beverage industry.
- The ashwagandha herb is known as a sedative and is a category of adaptogens, making them good for stress management.
- Turmeric is known as a potent antidepressant and anti-inflammatory, while ginger has anti-nausea properties. Ginger also "fits in nicely with the growing gut health trend, where functional ingredients such as probiotics (good bacteria) and the prebiotic fibers that fuel their growth are major players."
- A lot of Americans are multitasking and need to stay energized in a fast-paced society, this is causing a growing interest in ingredients and products known to help people stay sharp and focused.
- Brands like Mamma Chia are leveraging prebiotic fiber, while Kiito develops a line of plant protein functional beverages with a lot of functional ingredients and variety, such as Vanilla Ashwagandha and Matcha Moringa.
Cannabidol (CBD) Drinks
- CBD has been called one of the "trendiest ingredients in the beverage industry as some believe it promotes relaxation."
- Despite the legality of CBD in drinks being a gray zone, this has not stopped its popularity in the functional beverage sector.
- A 2019 study revealed that there were more than 6 million searches for CBD on Google alone and industry sales surpassed $1 billion.
- One expert called referred to CBD as the "most impactful, functional ingredient for drinks since caffeine." Consumers are seeking this ingredient in functional beverages because it is known to reduce insomnia, pain, and stress.
- In the US, CBD’s "popularity has been fueled by its increasing availability paired with a growing health trend, with more and more American consumers ditching sugary drinks for “better-for-you” alternatives."
- As a result of the fact that CBD is derived "from a natural source, CBD-infused beverages of all kinds provide an excellent substitute, with health benefits to boot."
- Functional beverage brands like Innoviom are introducing CBD product lines.
- Functional brain health is reportedly the fastest-growing claim in the US beverage industry, with stress/sleep claims seeing significant growth, and bone health claims declining rapidly.
- Mood-boosting and relaxation beverages are forecast to see significant growth within the next few years.
- The fact that a lot of functional claims are on the rise has helped "further the maturation of the hybrid beverage market."
- Experts predict that the next generation of functional beverages will include several ingredient combinations, with multiple functions and needs.
- To cater to consumer demands, more brands will start offering a wide variety of functional beverage options than ever before, by addressing needs like gut health and energy.
- Caffeine is still "king when it comes to energy claims but many companies are calling out their use of L-theanine due to the amino acid's sustained energy benefits and purpose cognitive benefits."
- Due to the fact that consumers want the boost from energy drinks, without the crash and jitters, there has been an increase in the use of L-theanine in beverages.
- Functional beverage brands like Uptime Energy market L-theanine as their main ingredients.
FUNCTIONAL BEVERAGES: WHAT CUSTOMERS WANT
- The main motivating factor for consumers buying nutrition and performance beverages is health and wellness.
- Around 69% of US consumers who purchase these beverages mention that taste is their number one motivating factor.
- Roughly 43% of these consumers are concerned or check the amount of sugar when buying a functional beverage.
Preferences by Gender
- The needs of women and men differ, when it comes to what they look for in functional beverages.
- Women tend to stay away from nutrition and performance beverages with a lot of artificial ingredients and high sugar. These individuals want nutrition and performance beverages with lower sugar, clean ingredients, proven efficacy and overall natural formulations.
- The meal replacement category of nutrition and performance beverages is more popular among women, as 27% more women consume them than men and almost 50% use these beverages to entirely replace a meal.
- A survey that examined why consumers buy healthy foods and beverages like functional drinks found that the most cited reason is a strong immune support system (63%).
- Up to 59% of consumers purchase these products to stay ahead of healthy bones and joints.
- Around 50% mentioned that they buy these products for good digestive health, while 48% purchase them to improve energy levels.
- US consumers want more from their functional beverages. They are not solely seeking beverages with health benefits, they want beverages that cleanse and purify as well.
- Functional smoothies, high-pressure processed juices, and bottled water have seen significant growth recently. It appears US consumers are increasingly opting for these forms of beverages.
- As reported by Bev industry, functional bottled water is the "category that has benefited the most from [the] consumer movement to health-and-wellness beverages — so much so that it is the most popular beverage in the U.S. today."
- Ready to drink tea products like matcha and kombucha are also appealing to functional beverage consumers.