Consumer demand drives explosive growth in functional foods, beverages market

Consumers are hungry for nutrition, a fact underlined by the burgeoning market for functional foods and beverages. According to Statista, the global market for functional foods and beverages is expected to reach a valuation of more than $500 billion by 2028, up from $281 billion in 2021, representing a compound annual growth rate (CAGR) of 9.5%.

While functional foods and beverages are widely accepted as a category within the broader food and beverage market, there’s no universally accepted definitions for functional food or functional beverage products.

A number of independent groups, however, have developed definitions that guide the market for functional foods and beverages.

For example, the International Food Information Council (IFIC) describes functional foods as “foods and beverages that may provide benefits beyond basic nutrition.” The organization went on to explain that functional foods, or “food for health,” may contain a “variety of food components” and provide “additional health benefits that may reduce disease and/or promote optimal health.”

The Academy of Nutrition and Dietetics considers any food that provides a physiological function to be a functional food. Under this definition, a functional food includes whole foods like fruits and vegetables. The definition also includes “fortified, enriched or enhanced foods that have a potentially beneficial effect on health when consumed as part of a varied diet on a regular basis at effective levels based on significant standards of evidence.”

In scientific literature, functional beverages are widely accepted to include nonalcoholic drinks that contain bioactive components from plant, animal or other sources and impart added health benefits.

In the United States, functional foods and beverages have not been defined by law. Functional foods and beverages, however, fall under the regulatory authority of the Food and Drug Administration (FDA) and must meet the requirements established by the Federal Food, Drug and Cosmetic Act (FDCA).

How the market defines functional foods and beverages

Without a standard definition that determines what exactly makes a food or beverage “functional,” use of market trends and insights can help to determine what health-boosting products consumers are seeking out, and for what reasons.

According to data from Euromonitor International and reported by Glanbia Nutritionals, the top functional beverage categories include energy drinks, sports drinks, ready-to-drink (RTD) sports protein and meal replacements, functional waters and alt-dairy beverages.

Leading the functional foods market are dairy products, followed by bakery items and cereals, meat/fish/eggs and soy products, according to Grandview Research. The market research firm predicts growing demand for cereal bars and functional snacks will fuel growth of the functional foods market, and points to trending products in the functional dairy category that include yogurt, cheese and frozen desserts.

According to IFIC’s 2023 Food and Health Survey, the No. 1 functional benefit consumers seek out from foods and beverages is energy/less fatigue. Other top benefits include weight management, healthy aging, digestive health and heart health.

The top functional ingredients consumers seek out in their foods and beverages, according to IFIC, include protein, fiber, vitamin D, calcium and vitamin B12.