Trends in functional beverages

NATASHA D’Costa, research manager for the APAC Food & Beverage Group at Frost & Sullivan, will be speaking on market trends and opportunities in the functional beverages category at Vitafoods Asia on 3-4 September 2014. Ms D’Costa has seven years’ consulting experience and is familiar with market entry and expansion strategies, new product development, award licensing and M&A related activities. She provides an overview of the market in this conversation with FoodPacific Manufacturing Journal.

Functional beverages remain a popular segment in the industry since consumers see themselves as more health conscious. How big is the global market/Asian market?

Globally, the functional beverage segment is valued at US$68 billion, contributing to approximately 30-35% of the entire nutraceutical market. The Asian functional beverage market is worth around $18 billion.

Which beverages do well in the market?

Energy drinks while the most controversial are also the most popular functional beverages due to its immense marketing campaigns and focus on the Gen-Y population. Functional waters and fruit juices are key emerging categories being spurred by growing global awareness.

What is the Asia market like for this category?

Each country in Asia tends to look at functional beverages from a different perspective. For instance, while Indonesia focuses on fortified ready-to-drink (RTD) Tea for beverage sales, Thailand is an energy drink market. Each country in Asia tends to have a different story to tell with local ingredients (e.g. Jasmine tea in Indonesia, Cobra energy drink in Philippines, etc.)

What key trends are driving the industry in Asia?

Consumers’ awareness and concern for health and wellness are driving demands for the food industry, including that of the beverage sector. The rise of the functional beverage category indicates that it is a key growth area for beverage manufacturers.

Within the functional beverage segment, key factors such as ease of use, localisation, and price drive the market. Convenience is an important consideration and manufacturers have had to invest in smart packaging or formulations to cater to this need. For instance, in Indonesia where power shortage and lack of infrastructure is a concern, companies have provided retailers with solar-powered freezers or products that store well at room temperature. Localisation for specific country markets is also vital, tailoring product messaging clearly so that it resonates with consumers of the region. Last but not least, the price point has to be adjusted for the market, according to consumers’ willingness to pay. In general, it is a price sensitive market where consumers want value for money.

Who are the leading producers of functional beverages in Asia?

The market is highly populated both locally and regionally. Major producers are F&N, Coca-Cola Amatil, PT. Sinar Sosro, ThaiBev, OT, THP Group, RFM, and PepsiCo.

Related article:  Vitafoods Asia 2014: Hub for business and learning in Asia