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The functional foods and beverages market size is projected to increase by USD 141.4 billion, at a CAGR of 7.45% between 2023 and 2028. The demand for functional foods and beverages in the APAC region is surging in developing nations like China, India, and Indonesia, driven by rising disposable incomes and health consciousness. Japan leads the APAC market due to high demand and advanced packaging. APAC is poised for significant growth, with China, Japan, South Korea, and India as key contributors. China stands out in volume production globally. Millennials are increasingly inclined towards functional products. Campbell Soup Co. offers a diverse range of sports-related functional foods, meticulously formulated to boost athletic performance and overall wellness. These offerings cater to the rising demand for performance-enhancing and health-conscious consumables, underscoring our commitment to the thriving market.
The market shows an Accelerate CAGR during the forecast period.
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The market on gut health and digestive function. Dairy products, such as yogurt, are prominent functional food categories due to their ability to provide essential proteins and fatty acids that support immunity. Functional dairy products, including those fortified with Lactobacilli, are particularly beneficial for maintaining a healthy gut. The evolving lifestyles and sedentary habits of consumers have led to an increased demand for value-added food categories. In the food and beverage sector, this trend is driving the growth of the market. The market is fueled by the sourcing of raw ingredients from farming practices and advanced processing techniques. Functional foods and beverages are not only essential for managing conditions like Type 2 diabetes but also play a crucial role in preventing infections. The retail sector is capitalizing on this trend by offering a wide range of functional food and beverage options to cater to the diverse needs of consumers.
Further, the market is witnessing robust growth, fueled by factors like the International Food Information Council (IFIC) promoting nutraceuticals. Raw ingredient sourcing, guided by the Food and Agriculture Organization (FAO), ensures quality. The Food & Beverage sector plays a pivotal role in shaping consumer choices. With the International Diabetes Federation (IDF) advocating healthier options, the market sees a rise in demand for nutritional bars and beverages. These products cater to health-conscious consumers seeking convenient yet nutritious options
Product innovations are notably driving market growth. Innovations in flavors and functional ingredients are propelling the market forward. Manufacturers are introducing new flavors to cater to evolving consumer preferences. For example, UK-based Suntory launched Tropical Fusion in 2015, replacing its reduced-sugar lemonade. This blend of pineapple and kiwifruit aligns with the growing demand for tropical flavors. Emphasis is placed on balancing functional benefits with flavor, with a focus on sugar-free and low-calorie formulations due to high demand. Technological advancements, such as microencapsulation, mask the unpleasant taste of some functional ingredients like amino acids. Packaging, design, and labeling innovations are also occurring.
Faster production processes facilitate quicker product deliveries to retailers, enhancing shelf life and meeting market demand, whether seasonal or event-driven. Improved taste, versatility, marketing, and packaging further boost demand. In recent years, the global market has seen growth due to packaging innovation. Innovative packaging materials like metals, plastics, glass, and biopolymers are gaining ground over traditional paper packaging. Vendors offer various container options, including HDPE plastic, PET plastic, and glass, along with flexible alternatives like stick packs and pouches. These innovations allow companies to market products effectively with versatile packaging designs tailored to product shapes and consumer preferences
Rising awareness of the health benefits of functional foods and beverages is an emerging trend shaping market growth. The market is witnessing a surge in demand driven by increasing consumer awareness of their health benefits. These products are gaining popularity as they are marketed to reduce the risk of chronic diseases and aid in weight management. Natural functional foods like oats, tea, yogurt, superfruits, tomatoes, and chocolate offer various health benefits such as cholesterol reduction and antioxidant properties. Functional beverages, including juices and teas infused with herbs and medicinal plant extracts, are also gaining traction for their immunity-boosting and digestion-improving properties.
For instance, yerba mate enhances energy and immunity, while hibiscus tea aids in digestion and reduces blood pressure. Lemongrass tea combats inflammation and promotes oral health, and chamomile tea aids in relaxation and sleep. As consumers become more informed about the advantages of functional foods and beverages, the market is expected to experience significant growth, driven by the demand for healthier dietary choices.
Product ingredient labeling is a significant challenge hindering market growth. Skepticism regarding the efficiency of functional foods and beverages can inhibit market growth. Extensive studies have been conducted to validate the claims made by the manufacturers of these foods and beverages regarding their effectiveness and to check for health risks associated with the consumption of these products. According to a study conducted by H. Virtanen et al., that was presented at the World Diabetes Congress in 2015, excessive energy drink consumption can impair oral glucose tolerance in adolescents. Also, some studies have shown that many of the ingredients found in popular energy drinks have side effects and contain more than the recommended amount of potentially harmful chemicals.
Studies have also stated that the mixing of functional beverages formulated to boost energy (such as those containing caffeine) with those formulated to lower blood pressure (such as those containing taurine) can cause side effects in the body. According to the Centers for Disease Control and Prevention (CDC), people who consume alcohol in combination with energy drinks that contain caffeine are three times more likely to binge drink than people who do not. Thus, the manufacturers of functional foods and drinks are required to label all products with warnings about overdose or harmful effects arising due to the mixing of one type of functional drink with another. Such factors are expected to hinder the growth of the global foods and beverages market during the forecast period.
Supermarket and hypermarket Supermarkets and hypermarkets are the most popular and preferred distribution channels for functional foods and beverages, 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. The distribution of functional foods and beverages through this channel is expected to grow going forward, with an increasing number of young people inclining toward a partying culture. As functional foods and beverages mask the effects of alcohol, they are finding growing use in pubs, clubs, and restaurants. Hence, the abovementioned factors are expected to drive the growth of the offline segment in the global foods and beverages market during the forecast period.
The market share growth by the functional foods segment will be significant during the forecast period. The market is experiencing significant growth, fueled by the increasing preference for nutrient-enriched products among consumers with hectic lifestyles. E-commerce platforms are playing a pivotal role in this market's expansion, enabling easy access to a wide range of health benefits-focused offerings. Unique promotional strategies, such as targeted marketing to fitness enthusiasts and health-conscious adults, are also driving sales. Obesity, weight management, diabetes, cardiovascular diseases, and digestive health concerns are major health issues addressed by functional foods. Probiotics, gummies, toffees, nutrition bars, and other innovative products cater to these needs.
The functional foods was the largest and was valued at USD 160.90 billion in 2018.
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Novel technologies, including encapsulation technology, enzyme technology, vacuum impregnation technology, and edible coating technology, are employed to enhance the nutritional value and shelf life of these products. Botanical extracts and herbs are increasingly used for their health benefits, such as improving immunity and providing antioxidants. Taste and flavor modifiers are essential to ensure consumer acceptance, while fortification with essential nutrients like iodine, salt, vitamin D, milk, vitamin B, iron, and omega-3 fatty acids is crucial for catering to diverse dietary requirements. Marketers must adhere to stringent government regulations, making precise and substantiated health claims to maintain market integrity. The e-commerce boom and online retail sales have led to increased competition among mass merchandisers, supermarkets/hypermarkets, and convenience stores. As consumers seek healthy and nutrition-rich diets, the market is poised for continued growth.
APAC is estimated to contribute 34% to the growth of the global market during the forecast period
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Technavio's analysts have provided extensive insight into the market forecasting, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. The market encompasses a wide range of products that cater to consumers seeking health benefits beyond basic nutrition. Amidst hectic lifestyles, these nutrient-enriched offerings have gained significant traction. E-commerce platforms have become a preferred avenue for purchasing Functional Foods and Beverages due to their convenience and accessibility. Unique promotional strategies, such as targeted digital marketing and influencer collaborations, further boost sales. Obesity, weight management, diabetes, and cardiovascular diseases are primary health concerns driving the market's growth. Probiotics, gummies, toffees, nutrition bars, and other functional products cater to these health issues.
Fitness enthusiasts and those prioritizing digestive health also contribute to the market's expansion. Novel technologies, including encapsulation technology, enzyme technology, vacuum impregnation technology, and edible coating technology, enhance the functionality and shelf life of these products. Botanical extracts and herbs are increasingly used for their health benefits and natural appeal. Taste and flavor modifiers ensure consumer satisfaction while fortification with essential nutrients like iodine, salt, vitamin D, milk, vitamin B, iron, and flour/bread adds to their nutritional value. The E-commerce boom has led to a significant increase in online retail sales, with mass merchandisers, supermarkets/hypermarkets, and convenience stores adapting to this trend. Omega-3 fatty acids are a notable market trend, with their proven health benefits attracting a large consumer base. market is expected to continue growing as consumers increasingly prioritize healthy & nutrition-rich diets.
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.
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, Del Monte Pacific Ltd., Fonterra Cooperative Group Ltd., General Mills Inc., Hildur Functional Foods Pvt. Ltd., Kellogg Co., Keurig Dr Pepper Inc., Nestle SA, Otsuka Holdings Co. Ltd., PepsiCo Inc., Suntory Holdings Ltd., T.C. Pharmaceutical Industries Co. Ltd., The Coca Cola Co., The Kraft Heinz Co., Tyson Foods Inc., Unilever PLC, and Zbiotics Inc.
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.
The market research and growth report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
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 is driven by various factors, including increasing health consciousness, growing awareness about the benefits of functional foods, and the rising demand for convenient and on-the-go food solutions. Functional beverages, such as functional waters, energy drinks, and functional juices, are gaining popularity due to their ability to offer multiple health benefits in a single serving. Functional foods, including dairy products, cereals, baked goods, and snacks, are also witnessing a surge in demand due to their convenience and portability. The market is diverse and includes a wide range of products catering to different health needs and preferences. Some of the key categories in this market include probiotics, prebiotics, protein-fortified foods, functional waters, and functional juices.
The market is expected to grow at a steady pace in the coming years, driven by increasing consumer awareness and the rising demand for healthier food and beverage options. Ingredients used in functional foods and beverages include vitamins, minerals, fiber, protein, and various functional ingredients such as probiotics, prebiotics, and omega-3 fatty acids. These ingredients provide additional health benefits and help differentiate functional foods and beverages from traditional food and beverage products. The market is highly competitive, with numerous players operating in the market. Some of the key players include food and beverage companies, nutraceutical companies, and ingredient suppliers. These players are constantly innovating and introducing new products to meet the evolving needs and preferences of consumers. In conclusion, the market is expected to grow at a steady pace in the coming years, driven by increasing consumer awareness and the rising demand for healthier food and beverage options. The market is diverse and includes a wide range of products catering to different health needs and preferences, and is highly competitive with numerous players operating in the market.
Market Scope |
|
Report Coverage |
Details |
Page number |
178 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 7.45% |
Market growth 2024-2028 |
USD 141.4 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
6.78 |
Regional analysis |
APAC, North America, Europe, Middle East and Africa, and South America |
Performing market contribution |
APAC at 34% |
Key countries |
US, China, Japan, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Archer Daniels Midland Co., Arla Foods amba, Campbell Soup Co., Danone SA, Del Monte Pacific Ltd., Fonterra Cooperative Group Ltd., General Mills Inc., Hildur Functional Foods Pvt. Ltd., Kellogg Co., Keurig Dr Pepper Inc., Nestle SA, Otsuka Holdings Co. Ltd., PepsiCo Inc., Suntory Holdings Ltd., T.C. Pharmaceutical Industries Co. Ltd., The Coca Cola Co., The Kraft Heinz Co., Tyson Foods Inc., Unilever PLC, and Zbiotics Inc. |
Market dynamics |
Parent market growth analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the market forecast period. |
Customization purview |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Product
7 Market Segmentation by Distribution Channel
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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