The Future of Functional Beverages in Australia

Functional beverages have been taking the world by storm in recent years, with more and more people turning to them as a healthier alternative to traditional drinks.

What are functional beverages?

Functional beverages are a category of drinks that are designed to have a positive impact on the consumer's health beyond simply providing hydration. Functional beverages include ingredients such as herbs, mushrooms, electrolytes, vitamins, minerals and probiotics, and many also have low sugar content and few artificial ingredients.

Some of the most popular functional beverages include sports drinks, energy drinks, and kombucha. Sports drinks are designed to replenish electrolytes lost during physical activity and help improve performance. Energy drinks are often consumed for their caffeine content, which can provide a boost of energy and improve alertness. Kombucha, on the other hand, is a fermented tea that is believed to have probiotic properties, aiding in gut health and digestion.

But in recent years there has been an expansion to the health benefits functional drinks have been targeting, such as immunity support, mental focus, mood and skin and hair health. 

The Rise of Functional Beverages in Australia

According to Euromonitor International's data on the US beverage market, functional beverages are experiencing significant growth. In 2020, functional beverages accounted for over 44% of the US non-alcoholic beverage market, and this trend is expected to continue over the next several years. 

Euromonitor International's data suggests that consumers are becoming more health-conscious and are seeking out functional beverages as a way to supplement their diets and address specific health concerns. The COVID-19 pandemic has also driven interest in functional beverages, as consumers look for ways to support their immune systems and overall health.

In Australia, this trend is no different, and the future of functional beverages in Australia is growth. According to a report by Euromonitor International, the functional beverage market in Australia is expected to grow at a compound annual growth rate (CAGR) of 4.2% between 2020 and 2025, reaching AUD 1.2 billion by 2025. This growth is driven by a number of factors, including:

• The increasing awareness of the benefits of functional ingredients
• The rising demand for natural and organic products
• The growing interest in sports and fitness among Australians
• The increasing prevalence of chronic diseases such as diabetes and obesity

The Future of Functional Beverages in Australia

The future of functional beverages in Australia looks bright, with many opportunities for growth and innovation. Here are some of the trends that are expected to shape the industry in the coming years.

1. Increased Focus on Immune-Boosting Ingredients

As mentioned earlier, the COVID-19 pandemic has increased awareness of the importance of a strong immune system. In response, many functional beverage companies are focusing on ingredients that can help boost immunity, such as vitamin C, zinc, and elderberry.

2. Growing Demand for Plant-Based Beverages

Plant-based diets are becoming increasingly popular in Australia, and this trend is expected to continue in the coming years. As a result, there is a growing demand for plant-based functional beverages that offer the same benefits as traditional drinks.

3. Personalisation and Customisation

Consumers are becoming more interested in personalised nutrition, and this trend is expected to extend to functional beverages as well. Companies may start offering customised blends of functional ingredients based on the individual needs of consumers.

4. Functional Beverages for Mental Health

Mental health is becoming an increasingly important topic, and functional beverages may play a role in promoting mental wellbeing. Beverages containing ingredients such as adaptogens, L-theanine, and GABA may become more popular in the coming years.

What a Functional Beverages Fridge Could Look Like in Australia

A couple of months ago a friend of mine was in the USA and went to one of the amazing Erewhon stores. Erewhon is a small chain of health food stores that was founded by Michio and Aveline Kushi in Boston in 1966. The name "Erewhon" comes from the title of a satirical novel by Samuel Butler, published in 1872. The book describes a utopian society called Erewhon, which is actually an anagram of "nowhere." In this society, individuals are responsible for their own health. Erewhon currently has ten stores and has been compared to the early years of Whole Foods Market. I love the meaning behind the name.

The functional beverage fridges at Erewhon (photos above and below) gives us a sneak peak into the future of what the functional beverage fridges in Australia could look like very soon. I can remember being in the USA and shopping at WholeFoods in 2015 and there were so many options for kombucha. It was about another three years before the same could be seen in Australia as we are generally a little behind the USA when it comes to functional beverages.

In this section of the fridge below you can see some of the drinks that I have been wanting to taste for a number of years!

In this photo above amongst all the amazing functional beverages, on the top shelf in singles and the bottle shelf in four packs you can see some of the Kin Euphorics drinks range. Kin Euphorics was founded in 2018 by Jen Batchelor as a healthy alternative to sugary mocktails, infusing them with adaptogenic herbs, nootropics and botanicals. Then in 2021, Bella Hadid joined the team after trying the beverage out for herself and embarking on her own “sober-curious” journey.

Next to Kin you can also see Katy Perry's functional drinks De Soi which she launched in 2022. De Soi is a range of non-alcoholic apéritifs made with natural adaptogens.