Functional Beverage Marketplace Supporting Healthy Supplements

Zenith: The road ahead for US functional drinks
By Jenny Foulds, Zenith International, 16-Sep-2009

As the US market for functional beverages continues along a path of strong growth, Zenith International suggests there may be some unexpected areas to look out for – such as ‘anti-energy’. The market researcher shares its thoughts as part of a NutraIngredients series on analyst insights.

Whereas Asia was once considered at the vanguard of functional beverage development, the US is slowly but surely taking its share of the limelight and becoming an increasingly preferred source of inspiration for other markets.

With ‘globesity’ an ever pressing concern, and with raised awareness of the implications posed by the world’s baby boomer population, functional beverage developments are delivering more and more specific health benefits.

Whilst heart health, cholesterol and weight management, as well as boosting general immunity and digestive health are hardly novel concepts in the functional beverage market, product launches to date have generally centred on these key areas, with innovation focussed on unique ways of achieving these end goals.

In consumers’ ever-changing agenda, provenance, naturalness, convenience and indulgence feature highly. Manufacturers have responded accordingly, particularly on the convenience level.

Energy shots

Within the booming energy drinks category, where growth continues unabated, the emergence of the so-called energy shots segment is big news. The market for these has reached the point where it is arguably safe to say that there is now an energy shot sibling – usually non-carbonated – for almost every US energy drink brand, including the leading brands Monster, Rockstar and Red Bull.

As Zenith International’s 2009 Energy Shot Drinks report revealed earlier this year, the US market is expected to be worth almost $750m by the end of 2009. This is a 75 percent increase on the previous year’s valuation but already a slowdown in growth from the 135 percent mark in 2008, as one would expect from such a rapidly emerging segment.

Approximately 70 percent of market value within shot drinks is generated by Living Essentials, which has dominated the market since the early inception of its 5-Hour offering in 2005.

Having commanded all the top advertising spots and distribution channels since its outset, critics argue that this category-creating brand has left no space for competitors. However, new shot drinks are continuing to appear on an almost weekly basis, as has arguably been the case for well over a year.

And developments that cater for the on-the-go and ever-discerning consumer do not stop there, with energy chews, sprays and gums also securing their hold through notable brands such as Hydrive Energy distributed by Dr Pepper Snapple Group.

In addition, there is an ever-widening choice of base applications for the delivery of active ingredients, be it a juice, dairy, water, still or carbonated drink, with a sports, energy, enhanced, wellness, nutraceutical or even cosmeceutical positioning.

Anti-energy drinks

In its revved up state, the US functional drinks category has also turned its attention to its ‘yin’ side, with a realisation that consumers need time to relax and cannot sustain such hectic lifestyles.

With this in mind, the US market has witnessed a wave of relaxation or ‘anti-energy’ drinks, triggered by brands such as Jones GABA and Drank, and continued as far north as Canada with the most recent unveiling of Slow Cow.

This trend is expected to proliferate in the near future through growing use of botanical ingredients such as melissa balm, chamomile and lavender.

Top predictions

In the same way that heart health, cholesterol and weight management, and immunity are hardly novel target functions for beverage manufacturers, superfruits are hardly novel ingredients. However their usage is also expected to continue its ascension.

Fruits such as goji berries, açaí, pomegranate and mangosteen have commonly featured in enhanced juices, however antioxidant-rich alternatives such as camu camu, yumberry, capuaçu and even cactus-derived ingredients are predicted to command further ground.

Zenith’s predictions for the US functional drinks market’s top five include:

More attention on meeting consumers’ energy requirements through a variety of different mediums, consumption occasions and need states;
An increasing use of novel superfruits to boost general immunity;
A swelling wave in relaxation drinks;
Additional focus on stevia and other natural sweeteners;
Even more specific target functions
Joint, bone, cognitive and overall health are expected to feature amongst the key concerns addressed by functional beverage manufacturers.

Examples in the first three of these categories include: Joint Juice Fitness (Joint Juice Inc); Böde Joint offering (HydroOne LLC); BeneVia Memory & Focus (Healthspan Solutions); ZUN Brain Boosting Energy (Fuzzee Bee Beverage Company); and OmegaChill (Zymes Omega Solutions).

The category will also be aided by the mainstream appeal of omega-3-enriched juice, juice drinks and milks through brands such as Tropical Essentials. Indeed, North Americans are the world's leading consumers of omega-3 beverages, accounting for over 30 percent of global volume in 2006, according to Zenith’s 2008 Omega-3 Drinks report.

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