November, 2022

Insight: functional & plant-based beverages

The plant-based beverage market is one of the most established in the plant-based products industry segment. This segment was also already born before the current trend of plant-based proteins and animal-free food diets, such as soy milk in China. Although it is a long-established segment in the market, it recorded $17.9bn in 2021 with a projected growth to $37.2bn by 2029, with a 9.6% CAGR between 2022 and 2029. From the Beverages Deep Day panel A thirst for beverages: The plant-based trends shaping the category”, sponsored by FI Food Ingredients, in Europe, the most active Country in plant-based beverage launches in 2022 was Germany (27.3%) followed by the UK (23.0%), mainly with products such as fruit juice (29.3%), hot drinks (22.9%) and nutritional (25.0%).

But how come the plant-based beverage segment is still growing and not stagnating like, for example, the meat alternatives segment?

The answer is simple, and lies in the differentiation of products according to consumer needs. In fact, consumption of plant-based beverages is being driven by both people on dairy-free diets and those with allergies or intolerances, as well as people who choose these products because they are considered healthier. In addition, some consumers also pick plant-based beverages because of taste and diversity of choice.

The wide diversification of plant-based beverage supply is another strength in the segment, which over the years has expanded the selection from the original soy milk, to new plant matrices, such as legumes, cereals, and nuts. From Mintel GNPD, we can say that currently the most widely used sources of plant-based beverages are oats, nuts, rice, soybeans, and peas.

As a result of the COVID-19 pandemic, many new consumers have approached the consumption of plant-based beverages, as they are more concerned about their health and aware that what we eat impacts our body and organism in its totality. Therefore, the demand for functional beverages, meaning that they have some health benefits, is increasing, creating a new space for innovation in the plant-based beverage industry.

Functional drinks on the spotlight: it is worth the hype?

According to the aforementioned webinar, the demand for increased functionality in plant-based beverages impacts not only dairy alternative beverages, but the entire range from juices to energy drinks.

In detail, to succeed in the opportunity given by the demand for functional beverages, the focus should be on improving a specific area, from the immune system to the digestive system, increased focus and energy, nervous system protection, weight maintenance and immune system strengthening. According to the whitepaper drawn up by the Prinova company, titled “New opportunities in beverage market: plant-based”, the products that could be improved in terms of functionality are precisely fruit juice, a popular sector but with critical issues related to sugar content; plant-based alternatives to milk, which are often deficient in micronutrients; energy drinks, that often contain artificial ingredients; and sports drinks, now a growing segment and no longer just for athletes and bodybuilders.

All of these product groups reveal critical issues that can be addressed by making the ingredient more functional while maintaining its authenticity with the use of plant-based ingredients. One example is to supplement the drink with plant-based proteins, which can help functionalize the product with added protein, essential amino acids, and health benefits. For example, oats are shown in the whitepaper to help reduce cholesterol levels, and thus benefit the cardiovascular system. Or again, how using sunflower seeds can be beneficial for its antioxidant and anti-inflammatory properties, as well as being a source of minerals and amino acids.

Market trends by country: EMEA, APAC and USA

The use of ingredients perceived as natural is a key parameter in European consumer choice. From the Mintel study “Report a year of innovation in functional food & drink, 2022” 56% of German adults say they prefer beverages containing healthy natural ingredients (e.g., turmeric) to fortified ones (e.g., vitamins). Benefits that are perceived as a priority in Europe include improving and strengthening the immune system.

In APAC, a functional food or beverage as consumers demand, should provide a cognitive benefit. For example, 36% of adults in China agree that there is interest in having energy drinks designed not only to provide energy, but also to support mental well-being and promote concentration.

In the U.S., the functional food and beverage sector continues to target a very specific audience, attracting more consumers from Millennials and Gen Z, but not only. As in Europe, the trend in the U.S. confirms that consumers are paying more attention to the food and beverages they consume, perceiving how they affect their physical and mental health.

To this day, the functional beverage sector remains in development, showing plenty of room for innovation in terms of mainly ingredients that can support the health and wellness expectations of increasingly conscious consumers.