Full of energy: Rising health consciousness has boosted demand for functional beverages

Rising concerns about obesity and other health complications have increased consumer health consciousness over the past five years, driving demand for products in the Functional Beverage Production industry. This has benefited industry products that are consumed as health or dietary supplements, while sports drinks have remained popular with sports participants. However, despite rising sales of sports and health beverages, the revenue share of these drinks in the industry has fallen. This has been due to significant sales growth of energy drinks, which has overshadowed that of all other functional beverages. The energy drinks segment is expected to account for 27.3% of the industry’s revenue in 2018-19. This share has increased substantially as a portion of revenue over the past five years, fuelled by demand from time-poor consumers. Energy drinks with additives such as caffeine, taurine and guarana have been also marketed as a substitute for coffee, especially among younger consumers.

Functional beverage manufacturers have increased brand awareness by introducing new products and expanding ranges, rather than building brand loyalty. New flavours and low-sugar varieties have hit the shelves, as operators have expanded their offerings to capture rising domestic demand. The industry’s major players have also stepped up their marketing efforts to boost their brands’ exposure and popularity, with several high-profile advertising campaigns being introduced over the past five years. This has been most evident in the energy drinks segment, where several products and designs have been introduced over the period. The Functional Beverage Production industry is expected to grow at an annualised 3.9% over the five years through 2018-19, to $431.2 million.

Other beverage manufacturing industries, such as the Bottled Water Manufacturing industry, have faced similar conditions over the past five years. Increasing consumer health consciousness and the ongoing popularity of active lifestyles have aided bottled water manufacturers over the period. More Australians are now aware that the recommended daily intake of water is between eight and ten glasses. Additionally, the increasingly unhealthy image of soft drinks, largely due to their high sugar content, has shifted consumer demand to bottled water. Increasing consumer desire for lower sugar consumption has allowed bottled water to take market share from soft drinks, despite the introduction of sugar-free and low-sugar soft drink varieties. This trend has helped bottled water capture greater market share in the non-alcoholic beverages market over the past five years.

Related Industries:

Functional Beverage Production
Bottled Water Manufacturing

For a printable PDF of this release, click here.