Study shows why functional beverages should be targeted at specific consumers


Dive Brief:

  • Functional beverages are popular, but should not be lumped into a single category, according to a study by Brightfield Group’s Evergi platform. Consumers of different functional beverages have very different reasons for the drinks they choose.
  • According to Evergi’s December 2020 survey, the most popular functional beverages are energy drinks — purchased by 15% of consumers in the previous three months — and sports drinks — purchased by 13% in the same time frame. The report looks at the differences between the consumers of these two beverages, as well as differences between kombucha and turmeric tea drinkers, and oat milk latte and nitro or cold-brew coffee drinkers.
  • Even before the coronavirus pandemic, many consumers were looking for food and drink that had benefits. A 2019 study from Kerry found 65% of consumers looked for function in what they eat and drink. The pandemic has supercharged the drive for functional food and drink, with Research and Markets estimating that the global functional beverage market will be worth $158.3 billion in 2023.

Dive Insight:

While “functional beverages” is an accurate catch-all term for drinks that have specific ingredients or chemical components to help the body do something, this study shows it may be too broad.

After all, there are functional beverages to help wake up and others to help relax. There are drinks to boost immunity and others to improve digestion. Some help boost vitamin intake while others help the body recover from exercise. Consumers don’t have a clear consensus of what makes a drink functional. The Evergi study examined social media to see what ingredients consumers mentioned when talking about functional drinks. The top two were probiotics, with 25% of mentions, and turmeric with 22%. Vitamin C, ginger, CBD, elderberry and collagen all had between 10% and 3% of social mentions, and then other separate ingredients made up 22% of the mentions.

Despite the variety of functions and ingredients, Brightfield found that many of the same consumers gravitated toward individual drinks. Sports drink consumers tend to be looking for healthy hydration and are more interested in drinks with less sugar, more natural ingredients and fewer preservatives. They also tend to care about health claims.

Energy drink consumers, on the other hand, are focused on drinking something that will make them feel energized. Both kombucha and turmeric tea are said to improve gut health and boost the immune system, but kombucha drinkers are more interested in relaxation and focus, while turmeric tea drinkers are looking for greater immunity and holistic wellness.

While oat milk lattes and nitro or cold-brew coffee all contain caffeine, oat milk lattes are purchased more often by consumers who care about sustainability, wellness, exercise and holistic wellness, and are willing to pay more for a premium brand. Cold-brew and nitro coffee drinkers just want a kick.

While this may seem to be veering too far into niche category, learning the traits of functional beverage consumers can truly help brands grow. Unlike major beverage categories such as soda or water, the target consumer for these beverages isn’t necessarily everyone. Taste, which is often the most important aspect of a product to a consumer, isn’t mentioned anywhere in the Evergi report. For these functional drinks, taste seems to be more of an afterthought, while function is at the center of consumer decisions. Targeting the ideal consumer with a drink that could meet their needs might prove to be more of a success than a tastier version of the same beverage.

As fragmented as the space may be, it’s clear that functional drinks are important to the future of the beverage sector. Big Soda has been moving into the space rather quickly. PepsiCo has had classic sports drink Gatorade in its portfolio since 2001. It bought Rockstar last year for $3.85 billion, and acquired fermented probiotic and kombucha brand KeVita in 2016. And it’s launching relaxation beverage Driftwell this year. Coca-Cola is also gaining a foothold in the functional space. The company created and launched Powerade in 1988 as a competitor to Gatorade. In 2019, it launched Coca-Cola Energy and made a $20 million investment in Health-Ade Kombucha.