The Top 5 Trends rising up in the Functional Drinks Market

Over the last decade, the demand for healthy food and beverages has increased in many parts of the world, including Asia-Pacific. Factors can be attributed to this, from deteriorating health – in part due to increasingly hectic lifestyles which no longer afford consumers the time to focus on nutrition and exercise as a priority – to rising health care costs. The growing desire to self-medicate, coupled with healthy eating firmly cemented on the public and political agenda across the globe, has resulted in a mass movement to better nourish their bodies and strive towards a more nutritious and healthy existence – a perfect example is the recent decision of the UK government to implement a tax on sugared drinks by 2018.

It is true that the health benefits of certain food groups and super foods is well documented, many Asian cultures have used plant based minerals for hundreds of years to cure ailments, but where the functional drinks category comes into play it has been dominated by the US, with the UK and Europe closely behind.

Asia Pacific, however, has been lagging behind when it comes to this category but has now become one of the fastest growing markets for fortified/functional (FF) drinks with demand from China and Japan acting as the driving force behind this. According to Euromonitor, the FF beverages market in China had a growth of 13% in value in 2014 to USD 14 billion with a compound annual growth rate (CAGR) of 9% predicted over the forecast period until 2019.

The functional drinks market can be segmented into energy drinks, sport drinks and nutraceutical drinks. As functional drinks are used for a specific purpose and to fulfill a certain performance or nutritional need, the category has become very specific and targeted, promising to help with any need and prompting a wealth of new startup companies looking to serve specific niche markets.

Here we take a look at some of the top trends affecting the functional beverage space. Although Hong Kong has experienced a growth of 6% to reach USD 167 million in 2014, these trends are expected to boost exponentially in the coming years as the Asian functional beverage market grows. The 5 essential trends we are seeing in the functional drinks market:

Clear Label/Natural drinks

No matter what category of functional drinks, there is a definite shift in the types of products used, with natural, quality ingredients taking precedent over the usual artificial culprits. Clear and transparent labeling became a key trend throughout 2015 with a focus on simple products packed with fewer artificial additives.

This change in consumer demand has not only put pressure on companies to remove artificial ingredients, but has opened up doors for natural manufacturers to capture consumers seeking cleaner, safer and lower calorie options – and many are leaping at the chance.

Protein Drinks

The current protein craze and popularity of protein-rich diets like Atkins and Paleo has boosted demand for protein-enriched beverages. Growing consensus on the importance of getting enough protein in one’s diet in order to keep the body strong and healthy has meant that the appeal of protein as a functional component has expanded beyond the domain of weight trainers and those who are concerned about muscle loss. Genie Juicery, a Hong Kong fresh juice startup company, offers ready- to-go raw vegan protein shakes ($75) that are naturally sweetened with the likes of banana and medjool dates.

Energy drinks

Like protein drinks, energy drinks have been looking to expand their customer platform beyond the fitness community, marketed as being able to improve performance, concentration and endurance in all areas of life. Their aim is to be the first option considered when people feel overworked or are staying up late. While a huge market in the US, they have largely been seen in Asia besides Japan and Korea but have been evolving and rapidly expanding in recent years. However, the inherent safety risks of overly

 Clarity Smart Energy products in Hong Kong on 18 November 2015. Photo by Moses Ng/ illume visuals

Clarity Smart Energy products in Hong Kong on 18 November 2015. Photo by Moses Ng/ illume visuals

caffeinated beverages, high sugar contents and prominence of artificial ingredients in popular brands has by no means made history in health stakes. Which is why new entrants such as clarity/smart energy ($35-39) are giving energy drinks a new image, focusing on all natural ingredients without artificial additives, and sourcing caffeine from natural sources.

Recently launched in Hong Kong, clarity comes packaged in 60ml bottles for on-the-go convenience and is loaded with vitamins, antioxidants and fermented papaya, providing a healthy energy boost for a clear mind and an energised body to help stay alert.

Premium Hydration

The premium hydration segment has gained increasing popularity as health and wellness orientated consumers seek out beverages which provide increased hydration. While it is not a new phenomenon, with Gatorade and Vitamin water dominating the market, today’s enhanced and functional waters are far superior to previous products, which were often high in calories and sugar. High-alkaline water has been one of the fastest-growing segments in this category and is created by the removal of low pH ions. The result is a cleaner, less bitter, tasting product that can be absorbed into the body more quickly and effectively. An example is Anything But Salads, a Hong Kong startup café, which has their own brand of Alkaline Water’s ‘Joy’ ($25). The product has been cleansed with sacred herbs and was activated by healing crystals in the holy waters of Tirta Empul, the sacred water temple in Bali.

Probiotics/Kombucha

Probiotics broadly refers to the positive microorganisms in the human body that aid in digestion and general gut health. Studies have shown that the state of your gut health is a determinant of your overall health. Common benefits include the prevention of disease, alleviation of symptoms of inflammable bowel disease (IBS), and enhancing immune system. While dairy-based beverages have been the most common vehicles for probiotics, intolerances to lactose and cholesterol content has paved the way for other bases such as tea and fruit juices to be an alternative medium for probiotics. Taboocha is a new Hong

 Image Credit: justgreen.com.hk

Image Credit: justgreen.com.hk

Kong local kombucha brew, available in seven flavours, it is made from organic Chinese tea and organic raw cane sugar. Kombucha is a centuries-old Eastern beverage, made from the fermentation of beneficial bacteria and yeast in tea and has gained popularity due to its unique ability to offer probiotic benefits in a naturally carbonated tea beverage – a healthy alternative to your regular soda pop.

Driven by hectic lifestyles, as well as growing health awareness to ones general wellbeing, the FF beverage market will only continue to grow in Hong Kong. It is predicted by Euromonitor that a constant value CAGR of 2% is predicted over the next few years and we believe these will mainly be driven by beverage startup companies looking to fulfill the demand of niche markets.

By Sebastian Beer, founder/CEO of Clarity/Smart Energy Drink

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