North America Functional Foods and Beverages Market Analysis North America - US, Canada, Mexico - Size and Forecast 2024-2028

North America Functional Foods and Beverages Market Size 2024-2028

The North America functional foods and beverages market size is projected to increase by USD 43.1 million, at a CAGR of 8.38% between 2023 and 2028

Functional beverages are a segment of non-alcoholic beverages that contain vitamins, herbs, pre and probiotic live bacteria and yeasts, non-digestible fiber, amino acids, or raw vegetables and fruits. Functional beverages also include ready-to-drink (RTD) teas that have functional benefits and non-dairy beverages that provide nutrition for lactose-intolerant individuals or those looking to cut down on dairy fats. These beverages are formulated with special ingredients to provide improved digestion, boost immunity, energy, and stamina, promote health functions (for example, the heart, bones, and joints), and provide a feeling of satiation. The functional fruit and vegetable juices segment is highly competitive and is a fast-growing segment in the functional beverages market. The high demand for different flavors of fruit and vegetable juices encourages companies to introduce new flavors. Such factors are expected to fuel the growth of the functional beverages segment in the market during the forecast period.

Market Overview

The market shows an Accelerate CAGR during the forecast period.

To get additional information about the market report, Request Free Sample

Market Dynamics

Functional foods and beverages have witnessed significant evolution in response to consumer desires for healthier eating habits and improved lifestyle and well-being. Premium products, including functional dairy items such as yogurt fortified with probiotics for digestion and immune function, have gained popularity. Mass products, like vitamin-based functional beverages, cater to a broader audience seeking to address lifestyle diseases, such as obesity and diabetes. The dairy products segment, including meat and eggs, fats and oils, and functional dairy products enriched with omega-3 fatty acids and fiber, plays a crucial role in this market. Regulations continue to shape the business landscape, ensuring the safety and efficacy of functional ingredients. Functional foods and beverages serve as essential business tools, addressing various nutritional needs and contributing to overall well-being. Subcategories, such as fiber consumption and omega-3 fatty acids, continue to gain traction as consumers seek to optimize their health.

Market Key Driver

Product innovations in flavors and functional ingredients is notably driving the market growth. Functional foods and beverages in North America are experiencing advancements through the incorporation of novel flavors and functional ingredients. Manufacturers prioritize the development of carrier materials that ensure the stability and degradation resistance of these components, enabling controlled release and targeted delivery. Balancing taste, texture, and functional benefits is crucial for consumer acceptance. Brands focus on sugar-free and low-calorie formulations, catering to economic motives and the growing demand for nutrient-rich food. The geriatric population's increasing need for functional foods and beverages is driving market growth. Functional dairy products, such as yogurt and milk drinks, are popular choices due to their high nutritional value and the availability of omega-3 fatty acids and fiber.

Moreover, vitamin-based functional foods and beverages are also gaining popularity. Meat and eggs, fats and oils, and spreads are other segments of the market. Manufacturers ensure regulatory compliance, transparency, authenticity, and traceability systems to maintain product quality and consumer trust. Adulteration is a concern, and brands must address this issue through rigorous testing and certification processes. Functional ingredients, such as omega-3 fatty acids, fiber, and vitamins, are essential for optimal health and wellness. The Dairy products segment is a significant contributor to the market due to its ability to deliver functional benefits while maintaining taste and texture. The use of innovative ingredients and formulations is key to meeting the evolving consumer preferences and demands. Such factors are expected to drive the market growth during the forecast period. 

Significant Market Trends 

Rising awareness of the health benefits of functional foods and beverages is an emerging trend shaping market growth. Functional foods and beverages, recognized for their nutritional benefits, are experiencing significant growth in the North American market. These products, marketed as carriers of health advantages, are preferred by consumers due to their potential in mitigating the risk of chronic diseases. Functional foods include oats, rich in beta-glucan, which lowers bad cholesterol, and tea, containing catechins, beneficial for cognitive health. Other functional foods are yogurt, providing calcium and probiotics, superfruits like cranberries, grapes, and pomegranate, teeming with antioxidants, and tomatoes, abundant in lycopene. The demand for functional foods is driven by economic motives, as consumers prioritize product quality, transparency, authenticity, and regulatory compliance.

Further, the geriatric population's increasing need for nutrient-rich food further fuels the market. Functional dairy products, such as yogurt and milk drinks, are popular choices due to their high nutrient content and controlled release properties. Omega-3 fatty acids and fiber consumption are key trends in the market. Vitamin-based functional foods and beverages are also gaining traction. The meat and eggs, fats and oils segment is also embracing functionalization, with spreads offering targeted delivery and controlled release of nutrients. Stability, degradation, absorption, utilization, taste, and texture are crucial factors in the development and acceptance of functional foods and beverages. Adulteration is a concern, necessitating robust traceability systems to ensure product integrity. Regulatory compliance is essential to maintain consumer trust and confidence. Such factors are expected to drive the market growth during the forecast period. 

Major Market Challenge 

Functional foods and beverages ingredient labeling is a significant challenge hindering the market growth. It enriched with essential nutrients and bioactive compounds, continue to gain popularity in the global market. Carrier materials are utilized to ensure the stability and controlled release of these active ingredients, enhancing their absorption and utilization within the body. However, concerns regarding degradation and release rates, as well as potential taste and texture modifications, can hinder market growth. Adulteration and economic motives may also impact product quality, necessitating transparency and authenticity in labeling and manufacturing processes. Regulatory compliance and traceability systems are crucial to ensure safety and efficacy, particularly in the geriatric population.

Moroever, functional dairy products, such as yogurt and milk drinks, are significant market segments, with omega-3 fatty acids and fiber consumption being key focus areas. Vitamin-based functional foods and beverages, including dairy products, meat and eggs, fats and oils, also contribute to market growth. Extensive research is ongoing to validate the health benefits and address potential health risks associated with these products. Degradation and stability studies are essential to maintain the efficacy of functional ingredients, while targeted delivery systems ensure optimal absorption and utilization. Despite these challenges, the market continues to expand, driven by consumer demand for nutrient-rich alternatives and innovative product offerings. Such factors are expected to limit the market growth during the forecast period. 

Market Segmentation

By Product

The market share growth by the functional foods segment will be significant during the forecast period. market in North America is witnessing significant growth due to increasing overweight and obesity rates. Consumers are increasingly seeking functional ingredients to support preventive healthcare and improve their overall health. Urban populations, particularly age groups with specific health concerns such as immune support, heart health, sports performance, cognitive decline, and bone health, are driving market demand. Consumer awareness and changing consumption patterns are key factors influencing market growth. Functional properties of active ingredients like omega-3, probiotics, and microscopic C72 are gaining popularity for their health benefits. Holistic wellness and beauty concerns are also contributing to market expansion. Marketers face stringent regulations and approval processes to ensure compliance with health claims.

The functional foods segment was the largest and was valued at USD 40.36 million in 2018. 

For a detailed summary of the market segments Request for Sample Report

Further, high production costs and sourcing complexities add to the challenges. However, the convenience and nutritive value of functional foods, such as pre-packaged salads, smoothies, meal replacement bars, fortified food products, fortified cereals, milk, and functional properties, make them an attractive option for busy schedules and health-conscious consumers. Functional foods and beverages cater to various age groups and health conditions, offering improved digestion, enhanced immunity, better cognitive function, and more. Despite these benefits, market growth is hindered by the high production costs and complexities associated with sourcing active ingredients. Nonetheless, the market's potential for innovation and the growing demand for healthier alternatives make it an exciting space for investors and manufacturers alike.

Market Segmentation by Distribution Channel

Supermarkets and hypermarkets are the most popular and preferred distribution channels for the market in North America, given the convenience of availing a wide assortment of products under one roof. Furthermore, factors such as discounts and an enhanced shopping experience enabled by attractive shelf displays entice consumers to purchase functional foods and beverages from supermarkets and hypermarkets. Another advantage of supermarkets and hypermarkets is that they offer high product volumes that give them greater buying power. Convenience stores and discount stores, situated in accessible locations and offering low-priced products, are increasing in number across the US, Canada, and Mexico. These stores provide easily accessible functional foods and beverages, suitable for on-the-go consumption. On-trade channels like bars, pubs, gyms, and restaurants are also expanding, driven by the young partying culture. Hence, the abovementioned factors are expected to drive the growth of the offline segment in the foods and beverages market in North America during the forecast period.

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market forecasting growth and analysis.

• Key Offering- Archer Daniels Midland Co: The company offers a diverse assortment of products, including nutrition bars, cereals, snacks, baked goods, and more. These offerings cater to consumers seeking to incorporate health-promoting ingredients into their diets. The functional foods and beverages industry continues to expand, driven by increasing consumer awareness and demand for convenient, nutritious options. These products often contain added nutrients, vitamins, minerals, or other beneficial components, making them an attractive alternative to traditional food and beverage choices. The market's growth is further fueled by advancements in food technology and innovation, enabling the development of new and improved functional food and beverage offerings.
• Key Offering- Campbell Soup Co:  Campbell Soup Company and its subsidiaries, including Pacific Foods and Swanson, spearhead the provision of functional foods and beverages. These brands offer consumer products that go beyond basic nutritional needs, integrating health-promoting components into their offerings. Functional foods and beverages are distinguished by their ability to provide additional health benefits beyond those typically associated with their nutritional content. The Campbell Soup Company's extensive portfolio in this sector caters to diverse consumer preferences and dietary requirements, making it a significant player in the market.

The market growth and forecasting report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including Archer Daniels Midland Co., Arla Foods amba, Campbell Soup Co., Danone SA, Fonterra Cooperative Group Ltd., General Mills Inc., Glanbia plc, Hearthside Food Solutions LLC, Kellogg Co., Keurig Dr Pepper Inc., Monster Beverage Corp., Nestle SA, PepsiCo Inc., Red Bull GmbH, Suntory Holdings Ltd., The Coca Cola Co., Tyson Foods Inc., Unilever PLC, Yakult Honsha Co. Ltd., and The Kraft Heinz Co.

The market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The market research and growth report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Million" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.

• Product Outlook
  • Functional foods
  • Functional beverages

• Distribution Channel Outlook
  • Offline
  • Online

You may also interested in below market reports:

• Functional Foods and Beverages Market: Functional Foods and Beverages Market by Product, Distribution Channel, and Geography - Forecast and Analysis
• Functional Food Market: Functional Food Market Analysis APAC, North America, Europe, South America, Middle East and Africa - US, China, Japan, Germany, UK - Size and Forecast
• Functional Food Ingredients Market: Functional Food Ingredients Market Analysis APAC, North America, Europe, Middle East and Africa, South America - US, China, India, Germany, UK - Size and Forecast 

Market Analyst Overview

Functional foods and beverages have gained significant attention in the global market due to their health benefits. These products are fortified with essential nutrients, vitamins, minerals, and other functional ingredients that provide additional health benefits beyond basic nutrition. The market for functional foods and beverages is driven by various factors, including increasing health consciousness, growing awareness about the benefits of functional ingredients, and the rising demand for convenient and on-the-go food and beverage options. The market for functional foods and beverages is diverse, encompassing various categories such as dairy and soy products, baked goods, cereals and snacks, beverages, and others. Some of the popular functional ingredients include probiotics, fiber, protein, omega-3 fatty acids, and antioxidants.

Also, the market is segmented by region, with North America and Europe being major markets due to high consumer awareness and disposable income. The future of the market looks promising, with innovations in product development and the increasing adoption of functional ingredients in mainstream food and beverage products. The market is expected to grow at a steady pace, driven by consumer preferences for healthier options and the increasing availability of functional foods and beverages in various channels.

Buy Full Report Now

What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2024 and 2028
• Precise estimation of the market size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across North America
• Thorough analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

We can help! Our analysts can customize this market research report to meet your requirements. Get in touch