October 3, 2024 – In South and Southeast Asia, consumers are increasingly turning to functional beverages, seeking drinks that offer health benefits beyond basic hydration. Innova’s 360 research into functional beverage trends highlights key trends shaping the market for functional beverages in South and Southeast Asia, from macro-level influences on category to the latest product-level trends.
Functional Beverages Product Launch Trends
The new product development in functional beverages in the South and Southeast witnessed a significant rise of 15% in launches in the past year. India is the most active market in the region for functional beverage launches, whereas Thailand is the fastest-growing country over the past year.
Dairy drinks is the largest category, with 59% of launches over five years, followed by soft drinks and sports drinks. Dairy alternative drinks, flavored milk, and unflavored milk are the top three areas of innovation. The strongest growth has been in dairy alternative drinks and iced teas, while carbonates and bottled waters are emerging in the region’s functional beverage launches.
Functional Beverages Consumer Insights
Healthy living is a major focus for modern consumers. Healthcare systems are under pressure due to expanding and aging populations, so consumers are engaging in more self-care and seeking new ways to meet their personal health needs.
In South and Southeast Asia, over 1 in 4 consumers define their approach to healthy eating as a focus on positive nutrition boosts. Meanwhile, 23% reduce unhealthy food groups to maintain wellness. More than one-third of consumers choose functional foods as part of their healthy eating strategy, preferring positive nutrition over reductive approaches.
Fresh foods have most value to Asian consumers, but many are willing to pay more for products offering physical and mental health benefits. Asians are over-indexed than the global average for their willingness to pay for positive health results. Nearly 1 in 3 consumers are ready to pay more for functional ingredients that boost their physical health or for products tailored to their individual health needs.
Functional Beverages Sales Trends
There has been a 3% CAGR rise in retail sales growth of energy and sports drinks in South and Southeast Asia over the past five years. The region accounts for 4% of global retail market value and 6% of volume in these subcategories.
In South and Southeast Asia, Thailand has the largest energy drinks market in the region, while Indonesia displays the fastest growth. Functional beverages trends research shows that both countries are in the global top 10 energy drink market values. In sports drinks, Indonesia leads in retail value growth, with India experiencing the fastest growth during the same period.
Consumers Seek Positive Health Benefits
Consumers in South and Southeast Asia are interested in many positive health benefits. Functional beverages trends research shows that consumers have purchased products to boost immunity, improve sleep, and assist gut health or digestion.
Functional health demands differ across the generations. Generation Z and Millennials are more interested in brain health and relaxation. Whereas Generation X and Boomers are interested in health issues related to aging, such as bone/joint health and heart health.
Consumer Preferences in Functional Beverages
Over the past year, energy drinks have been most widely purchased functional beverages in the South and Southeast Asia functional beverage market. This is followed closely by sports and functional drinks, and functional waters. Consumers in this region are over-indexed than the global averages for the purchase of all kinds of functional beverages. They prioritize vitamin and mineral fortification in energy drinks, juices, and bottled water. Functional ingredients and protein claims are key drivers in the popularity of sports drinks and dairy beverages. This growing demand for fortified and functional beverages reflects a strong consumer focus on health and performance in South and Southeast Asia.
Top Companies and Brands in Functional Beverages Market
The functional beverage market in South and Southeast Asia is shaped by both global multinationals and local producers. Key players include dairy companies, global energy and soft drink brands, and sports drink marketers.
The new product development in the region is fragmented, with the top 10 companies accounting for around 22% of launches over the past five years. Nestlé leads in activity, followed by dairy giants like FrieslandCampina and Fonterra. Local concerns with a significant presence, such as Vinamilk, Fraser & Neave, and Nutrifood, also hold a strong presence.
Top Claims and Ingredients in Functional Beverages Market
The top 3 claims South and Southeast Asian functional beverage trends are source of protein, energy and alertness, and immune health. Apart from these top 3 claims, source of fiber, antioxidant, and probiotic claims are growing strongly in the space.
In terms of ingredients, vitamins lead the functional beverage trends, followed by botanicals and minerals. Naturally beneficial ingredients like botanicals, herbs, spices, and herbal/fruit extracts have gained a strong presence in the market, reflecting consumer demand for health-enhancing options.
Functional Beverages Flavor Trends
Milk chocolate, strawberry, orange, mango, and lemon are the top 5 flavors in the functional beverage market. In recent years, lemon and peach flavors have experienced a significant rise, boosted by expansion in iced teas. Niche flavors like mint, watermelon, and mixed berry flavors are also growing in the market.
What’s Next in Functional Beverages Trends?
In South and Southeast Asia, immune health has become a key concern since the pandemic, driving growth in functional beverages. While vitamins lead in immune boosting products, there’s potential for brands to explore by incorporating minerals, probiotics, and natural botanicals.
Younger consumers are aware of mental health issues, opening opportunities for relaxation and calming beverages aimed at a youthful audience. Meanwhile, older consumers seek products to support healthy aging, but few options cater to this need. Brands can shift their focus from children to seniors by promoting bone healthy ingredients for aging bones and joints. As consumer awareness of health and wellness continues to rise, brands that innovate in these areas are likely to thrive in a competitive functional beverages market.
This article is based on Innova’s Now & Next in Functional Beverages in South & Southeast Asia report. Find out more about this report by booking a demo or reach out to us using our Contact Form.
