The functional beverage space presents significant scope for growth and premiumization of existing products. In light of this, Kerry is highlighting opportunities for collaboration and development in the beverage sector in a new e-book Creating Premium Functional Beverages.

According to Kerry, 73 percent of European consumers are interested in fortified beverage products with added nutrients. They still expect great tasting products but also consider what value a beverage brings to their overall well-being.

Across the sector, beverage creators are keen to enhance their products with supplements and offerings already on the market.

Kerry further reports that 65 percent of consumers are influenced by their health and wellness when choosing what to eat or drink.

A premium positioning 
While consumers are willing to pay more for functional beverages, they also expect more claims and benefits from their drinks. 

A gap exists between what they believe is the functional benefit versus the actual science, Kerry notes.  

Now more than ever, it is crucial for brands to effectively communicate the advantages of products and use scientifically-backed functional ingredients.

From immunity to sustainability, several trends and consumer needs contribute to the rise of premium functional beverages in Europe.

Mental well-being top of mind
Kerry also flags how ingredients such as omega 3, iodine, caffeine and L-theanine positively impact cognitive function. 

With 79 percent of consumers preferring to consume health-enhancing ingredients through foods or beverages, there is an opportunity to incorporate these into functional beverages. 

Consumers are also keen to tackle their stress and anxiety levels through what they eat. 

Brands are responding by launching formulations that claim to offer relaxation using ingredients such as CBD, chamomile and reishi. 

Health maintenance
Immunity is surging ahead as an essential claim in the European market, with a total of 68 percent of European consumers claiming they would like to consume food and beverages with immune health benefits at breakfast time. 

This presents an opportunity for outlets to create smoothies and snacks with immunity-related functional claims.

According to an Innova Market Insights consumer survey conducted in late March, there has been a particularly strong uplift in the consumption of products that boost immunity in Asia and South America. 

Over 70 percent of Indian and Indonesian consumers are eating or drinking more products that boost their immune system compared to nearly 40 percent of US consumers. Meanwhile, German and Dutch consumers have seen the lowest shift to health, according to the market researcher.

There has been a steady rise in F&B launches with immunity support claims, rising 12.9 percent in the year-to-date ending April 30, 2020, and up from 5.4 percent in the previous 12 months, according to a report recently published by Wellmune, a Kerry company.

Immunity was an important trend in the pre-pandemic world and is expected to accelerate as consumers become even more health-conscious during the COVID-19 crisis. 

Convenience prevails
The ready-to-drink (RTD) protein market is growing, and consumers are familiar with smoothies and shakes with added protein through powder. 

One of the critical challenges associated with developing products with functional benefits is that it often has a negative impact on taste, with texture and mouthfeel also playing an essential role in the enjoyment of a product. 

Taste is vital here, with 44 percent of UK sports nutrition users say that they struggle to find products that taste palatable, says Kerry. 

For energy drinks not using protein, consumers seek natural functionality rather than the conventional high-sugar formats. They want products with no or low calories/sugar, with younger consumers interested in exciting flavor combinations. 

For those in need of a more substantial boost, non-coffee caffeinated applications can work across several categories, including sparkling water and blended juice.

Gut health on trend
Meanwhile, one in four people is following or interested in the gut health trend, with many consumers taking probiotics and prebiotics. This is set to increase, with a 30 percent rise in Google searches related to gut health in the last year alone. 

Digestive health can be the next big functional crowd-pleaser, and brands can tap into this to create products consumers will pay more for. 

Fermented beverages are gaining traction in this space, with kombuchas and black tea vinegars popular among consumers.

Heart health is another important reason why consumers turn to functional food and beverages, with 39 percent of consumers in Germany and 36 percent in France utilizing products for this purpose, according to Kerry.

More moves in beverages
In September, Kerry highlighted consumer acceptance of dry-based beverages. Better-for-you, clean label and added functionality claims have driven this growth, the company noted. 

Meanwhile, in August, Kerry launched a new range of beverage concepts, including on-trend and botanical ingredients such as cardamom, cinnamon and rhubarb, designed to boost NPD this winter.

In June, Kerry released its Botanicals Collection Zero, a range of clean label, “premium” botanical extracts – containing 0 percent ethanol – designed specifically for the low- and no-alcohol beverage markets.