China leads global functional drinks growth

The global functional beverage market is expanding steadily, with the Chinese market emerging as a key growth driver.

Functional beverages, which contain added ingredients that provide health benefits beyond simply quenching one's thirst, are gaining popularity as consumers seek healthier lifestyle choices.

As health consciousness grows, more consumers are choosing products that enhance nutrition and support bodily functions. According to Innova Market Insights, a provider of market intelligence for industries including foods, beverages and beauty products, over a quarter of global consumers actively seek out functional beverage products such as high-protein or super food-enhanced beverages.

This trend is reshaping the beverage industry, with functional drinks becoming a major focus of innovation, said the report.

At the recent NHEC 2024 China Nutrition and Health Industry Entrepreneurs Annual Conference, Innova shared their views on global and regional functional beverage trends, the rapid expansion in the sector and factors driving consumer demand for such drinks.

China stands out in the growing functional drink market, Innova said. From June 2020 to June 2024, the Asia-Pacific region experienced steady growth in functional beverage launches, reflecting strong consumer demand and vibrant market innovation.

The global market maintained a compound annual growth rate of 7 percent, while China's new product launch index reached 253, with a CAGR of 26 percent — far exceeding Asia-Pacific's 11 percent and the global average of 7 percent.

China's rapid growth was especially evident from 2022 to 2023, when its new product launch index rose from 130 to 206 — an increase of 58.5 percent.

"This surge highlights increasing consumer interest in health-focused beverages and strong investment in innovation and marketing development among manufacturers," said the report.

Zhu Danpeng, an independent food and drink analyst, said in China the fast-paced nature of daily life, work and entertainment is driving the growth of the functional beverage market. In recent years, this market has entered a phase of rapid expansion, demonstrating immense potential for further development.

In terms of new products developed, Europe ranks No 1 at 37 percent. From growth trajectory by region, between 2020 and 2024, the Middle East and Africa market rose 15 percent, followed by 11 percent for the Asia-Pacific and 8 percent in Europe. It saw a surge in emerging markets, said the report.

In the 12 months leading up to June 2024, the United States held the largest share of global functional beverage sales at 12 percent, followed by China at 6 percent.

However, between 2020 and 2024, in terms of growth, Ireland led with a CAGR of 32 percent, while China followed closely at 26 percent, ranking third globally. Slovakia and Thailand also saw strong growth at 25 percent and 24 percent, respectively, signaling the rising importance of emerging markets, said the report.

Beverage players have banked on this category of drinks to propel their growth in the China market.

Danone's third quarter 2024 results highlighted the growing influence of functional beverages. According to Juergen Esser, deputy CEO and CFO of Danone, the company saw strong growth across all regions, particularly in North America, China, and North Asia & Oceania.

Danone's consolidated third quarter 2024 sales reached 6.8 billion euros ($7.03 billion), reflecting a 4.2 percent year-on-year increase. Growth was driven by a 3.6 percent rise in volume/mix and a 0.7 percent price increase.

Danone's functional beverage brand Mizone played a constructive role in this performance. "Mizone is going from strength to strength," Esser said, emphasizing its strong sales momentum in China.