Innovation Investigation: Functional Beverages Level Up to Satisfy Evolving Needs

by | Jul 11, 2024

The demand for functional beverages is growing as more North Americans become aware of how food and beverage choices impact overall health and nutrition. A functional beverage provides health benefits beyond basic hydration by using ingredients like fruits, herbs, minerals, vitamins, amino acids, and more. The category includes energy drinks, sports drinks, sodas, waters, shakes, and teas positioned to enhance mental or physical health. NielsenIQ counted 53,000 UPCs in the U.S. functional beverage category in 2023.

Let’s explore the functional beverage landscape to discover the trends affecting new launches, what benefits North Americas want, and the flavors that align with those benefits so you can innovate with new ingredients to deliver exceptional tastes.

The Proliferation of Functional Beverages


Americans are thirsty for functional beverages. From March 2020 to March 2024, U.S. sales jumped 54% to $9.2 billion (NielsenIQ). Functional beverages now account for about 10% of the total non-alcoholic beverage market in the U.S.

Global sales of functional beverages are expected to grow 7% each year through 2027 (Euromonitor).


Some subcategories did not see positive percentage growth in 2023. According to data from the Beverage Marketing Corporation, kombucha teas, energy shots, and essence water declined in sales. Protein drinks and coffee beverages are heavy lifters with the most sales in 2023 and almost 20% growth. Smaller categories like probiotics, liquid water enhancers, and plant waters also made more modest gains.

Source: Beverage Marketing Corp (BMC)


Mintel survey results indicate that while people are focusing on health and well-being, they don’t expect functionality in beverages. The disconnect could reflect a lack of understanding or skepticism about functional ingredients. The biggest share of interest is around juice/smoothies and ready-to-drink teas (Mintel).

Functional Beverages Expanding Beyond Health

Functional drinks have additional appeal beyond the ingredients promising to address specific health goals. They can be opportunities for people to feel good about their beverage choices and have fun with creative flavors.


For some shoppers, the appeal of functional drinks resides in the more natural components and less in the active ingredients. More of the functional beverages launched in the last year claimed no additives, no artificial flavors, and completely removed sugar.

Zoa Energy Cherry Limeade Zero Sugar Energy Drink

Green tea extract for natural caffeine, naturally flavored with branched chain amino acids, 47mg L-isoleucine, 93mg L-valine, and 47mg L-leucine per can. Wild Orange and Tropical flavors launched in April. 

Canada, May 2024

Ghost Orange Squeeze Hydration Drink

Zero caffeine, zero sugar, low calories, replenishes five electrolytes lost in sweat – 500mg Aquamin, 50mg Senactiv, 100% daily vitamins B6 and B12, and 100% daily vitamin C per bottle. Also available in lemon-lime flavor.

U.S., April 2024

Sugar can be natural, too! Launches with cane sugar jumped 60% and represented 13% of innovation activity in the last 52 weeks. Mana Yerba Mate energy beverages call out cane sugar, antioxidants, and naturally occurring caffeine with “no crash” in their May 2024 launches. The Quebec-based brand is available in Melon and Mint, Grapefruit, Tropical, and Blueberry Hibiscus flavors.


Non-alcoholic drinks can give people the sensation of drinking without any of the side effects. U.K.-based Three Spirit launched in 2018 with ingredients to replicate the sense of fun, relaxation, and social ice-breaking that drinkers get from beer, wine, or spirits.

White Claw launched a non-alcoholic seltzer multi-pack in February 2024 with Lime Yuzu, Black Cherry Cranberry, Mango Passion Fruit, and Peach Orange Blossom. The brand calls out how the “refined fruit flavors elevate refreshment, and electrolytes help one feel hydrated and replenished.”

Mapping Opportunities in Functional Beverages

Launching a successful functional beverage is challenging for brands that want to go beyond the well-understood basics. Most shoppers already know to look for caffeine when they need energy or electrolytes after exercising. How do formulators create new beverages with more novel ingredients like ashwagandha, nootropics, or inulin? One avenue is to explore unmet needs that have growth potential and deliver a taste experience that leads to repeat purchases. 


FlavorSum investigated desired benefits in primary research with 800 North Americans. A significant number of people are looking for Hydration and/or Energy beverages regularly. Micro-nutrients, Immunity, and Recovery benefits represent a more occasional purchase, potentially based on current health status or the product’s availability.


Some brands are leaning into superhydration and recovery benefits, which have 18% more launches than the year before. Energy drinks are still hot, representing 32% of launches and up 29%. Micronutrients (vitamins) account for the largest number of launches.

Some ingredients are more challenging to formulate with than others. Digestive health claims are up almost 50%, but it can be difficult to include efficacious amounts of probiotics/prebiotics into a beverage without introducing bitter or off-notes.

These recent launches highlight how brands are bringing some of the fastest-growing benefits to the shelves.

Beauty: Glacéau VitaminWater Shine Zero Sugar Strawberry Lemonade Flavored Water.

Flavored with other natural flavors, 100% of biotin and vitamins B5, B6, and B12 to help support normal hair and skin health. Contains vitamins A, C, and electrolytes.

U.S., May 2023

Skin, Hair, Nails: Aura Mango Passionfruit Collagen Tea.

15g protein peptides, 2g sugar, 300mg of raw apple cider vinegar, 250mg of Vitamin C. A delicious drink packed with collagen, glow on the go for healthier skin, hair, and nails.

U.S., May 2024


Digestive: Wild Wonder Sparkling Probiotic Juice Drink w/Gut Health Immunity & Support Variety Pack.

A drink with the gut-healing ingredients you need to sparkle inside and out. Founded in 2020, the lineup now includes Raspberry Lychee and Guava Rose.

Online, 2024

Aligning Flavor with Benefits in Functional Beverages

People often associate flavor with functional benefits. Citrus fruits, for example, are linked with immunity because they are high in vitamin C, while herbs like chamomile have innate functionality that pairs well with relaxation or sleep benefits.

Our primary research asked North Americans about the types of flavors they associate with specific benefits. Indulgent flavors fit best with energy, cognition, and endurance beverages, benefits often found in coffee-based beverages. Other favorite flavor families, like tropical fruits and berry profiles, are more versatile, aligning well with most benefits. Less common beverage flavor profiles, like spice and savory, have fewer associations with functional benefits.

Our 2024 flavor predictions blog explored how flavors can enhance refreshment and delight. Refreshing functional beverages are the perfect space for creative flavors to shine!

Can’t Buy It? Finding Inspiration In Homemade Functional Beverages

When people can’t find the beverage with their desired benefits, they’ll create and share their ideas and recipes online. Exploring trending homemade beverages on social media could uncover untapped opportunities for commercialization.


Sexy water originated in October 2023 when TikToker Kelly Stranick showed her morning water doctored with everything from sliced fruit to powdered mushrooms to add visual and taste appeal. The trend is less than a year old but has had more than enough time to take off. Popular variations include electrolytes, collagen, lemon, and mint. Other recipes feature nootropics or colostrum powder to pack in benefits like boosting skin and gut health, promoting better sleep, and improving mood. Actual ingredients can vary, but the goal is to “sex up” the morning, romanticize hydration, and maximize water intake.


Another TikTok functional beverage combines coffee and protein powder. While users often add protein powder to cold coffee, hot coffee is an option along with customization like syrups, whipped cream, cinnamon, or cocoa powder. Proffee is considered a healthier alternative to a sugary latte, and the drink offers people some satiety. Some people believe the beverage can also help with weight loss by suppressing appetite, stabilizing blood sugar, burning fat, and retaining healthy muscles.


Dirty soda mixes soft drinks with flavored syrups and cream. The beverage originated in Utah in the 2010s when a Swig customer ordered a Dr. Pepper with coconut cream and called it a “dirty Dr. Pepper.” Nicole Tanner, founder of Swig, trademarked the term in 2014 to refer to any flavor added to soda, tea, or water. Dirty soda gained mainstream popularity in early 2022 when musician Olivia Rodrigo posted a TikTok of a cup from Swig. While traditional soda is often laden with sugar and empty calories, dirty soda offers a customizable alternative that allows individuals to control their sugar intake and make healthier choices. 


When TikTok user Amanda Jones posted a 50-second video mixing balsamic vinegar with ice into sparkling drink, 84 million viewers turned the recipe into a trend. Some say the drink is refreshing and tastes like a shrub (a thick syrup for cocktails made from fruit, vinegar, and sugar) while others say it’s disgusting. The balsamic vinegar could have an anti-glycemic effect, which means it might not cause blood sugar to spike as much as a sugary drink. Some people are putting their own spin on the recipe with flavored seltzers or making a fruit and balsamic syrup to stir into a seltzer.

Partner With FlavorSum On Your Next Functional Beverage Innovation

Whether you need to identify trending benefits in beverages or create a flavor system that aligns with your brand goals, the FlavorSum team is here to help you innovate with functional beverages. We’ll support your launch and speed up your time to market with unmatched formulation, flavor, and production technology expertise. Connect with our team to learn more.

You can also explore more flavorful resources by downloading our functional beverage ebook or watching episode 7 of FlavorScience to learn more about the formulation and flavor challenges of developing a functional beverage.


Phil a’Becket

Phil a’Becket is the Senior Consumer Insights Manager for FlavorSum. He has eight years of experience in food ingredient market research, focusing on both primary research and secondary data analysis. He earned his MBA from Clemson University, and joined FlavorSum in 2022.

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