Functional Food and Beverages Market

Market Definition

The functional food and beverages market encompasses food and drink products that provide additional health benefits beyond basic nutrition. Formulated with bioactive ingredients like probiotics, vitamins, and antioxidants, these products support overall health, enhance bodily functions, and aid in disease prevention.

Growing consumer awareness, demand for natural and fortified foods, and a focus on preventive healthcare drive the market. As individuals seek functional solutions for specific health needs, the industry continues to evolve through innovation and product development.

Functional Food and Beverages Market Overview  

The global functional food and beverages market size was valued at USD 388.23 billion in 2023 and is projected to grow from USD 418.44 billion in 2024 to USD 761.96 billion by 2031, exhibiting a CAGR of 8.94% during the forecast period. The market is driven by increasing consumer awareness of health and wellness, a growing preference for natural and fortified products, and an emphasis on preventive healthcare.

Advancements in food technology and product innovation are further contributing to market expansion by enhancing the nutritional value and functional benefits of these products.

Major companies operating in the functional food and beverages industry are Nestlé, Danone, PepsiCo, The Coca‑Cola Company, General Mills Inc., Glanbia PLC, Kellanova, Monster Energy Company, Arla Foods amba, Tyson Foods, Inc., Cargill, The Campbell's Company, The Kraft Heinz Company, FrieslandCampina, and Raisio Oyj.

Rising disposable incomes, urbanization, and shifting dietary habits are fueling the demand for functional food and beverages globally. Consumers seek products with probiotics, plant-based ingredients, and adaptogens, driving innovation. E-commerce expansion and strategic partnerships further accelerate market growth and product accessibility.

• In November 2023, Nestlé launched N3 milk in China, featuring prebiotic fibers, reduced lactose, and 15% fewer calories. Clinical studies show that it triples bifidobacteria growth, supporting gut health. Available in full cream and skimmed powdered forms, it promotes bone health, muscle strength, and immunity. Nestlé plans to expand N3 into other product categories soon.

Key Highlights

1. The global functional food and beverages market size was valued at USD 388.23 billion in 2023.
2. The market is projected to grow at a CAGR of 8.94% from 2024 to 2031.
3. North America held a market share of 39.12% in 2023, with a valuation of USD 151.88 billion.
4. The hypermarket/supermarket segment garnered USD 178.20 billion in revenue in 2023.
5. The vitamins & minerals segment is expected to reach USD 450.02 billion by 2031.
6. The market in Asia Pacific is anticipated to grow at a CAGR of 9.81% during the forecast period.

Market Driver

"Shift Toward Preventive Healthcare"

The growing focus on preventive healthcare is driving the functional food and beverages market, as consumers prioritize nutrition to prevent illnesses. Rising chronic diseases, aging populations, and government initiatives promoting healthier eating fuel the demand for products enriched with probiotics, antioxidants, and essential nutrients. E-commerce and digital marketing further boost accessibility, ensuring continued market growth and innovation. 

• In June 2024, Nestlé Health Science launched a digital platform, glp-1nutrition.com, offering nutritional support for individuals using GLP-1 medications for weight management. The platform provides personalized guidance, expert insights, and product recommendations on areas like muscle preservation, gut health, hydration, and weight rebound management. This initiative supports the shift toward preventive healthcare by empowering consumers to manage their health through tailored nutrition.

Consumers are increasingly seeking functional foods that support long-term health, driving innovation in the industry. Companies are developing products with plant-based proteins, fiber, and essential vitamins to address wellness concerns. Personalized nutrition trends and scientific advancements further enhance product effectiveness, making preventive healthcare more accessible through convenient, health-focused food & beverage options.

Market Challenge

"Regulatory Compliance"

Regulatory compliance is a significant challenge in the functional food and beverages market, as agencies like the FDA, EFSA, and FSSAI enforce strict guidelines on health claims, ingredient approvals, and labeling. Scientific validation through extensive research increases costs and delays product launches.

Varying global regulations complicate market entry, and non-compliance can lead to legal repercussions and reputational damage. Companies must ensure compliance while maintaining effective marketing and consumer trust as consumer demand for transparency grows. 

Companies must invest in scientific research to validate health claims and meet stringent regulations. Early engagement with regulatory authorities ensures compliance and expedites approvals.

Developing region-specific formulations, adopting transparent labeling, and collaborating with regulatory experts help streamline market entry, maintain consumer trust, and uphold industry standards while fostering innovation.

Market Trend

"Growth of Personalized Nutrition"

Personalized nutrition is an emerging trend in the functional food and beverages market, focusing on products tailored to individual health needs, lifestyles, and genetic profiles. Advances in nutrigenomics, AI-driven recommendations, and microbiome analysis enable brands to develop customized functional foods that support gut health, immunity, cognitive function, and fitness goals.

The increasing demand for personalized supplements, meal plans, and smart food innovations reflects a shift toward targeted health solutions. This trend is driving industry innovation, product development, and consumer engagement, shaping the future of functional nutrition. 

• In October 2024, Smoothie King introduced its GLP-1 Support Menu, designed for individuals using GLP-1 medications for weight management and diabetes. Developed with dietitian Molly Kimball, the menu features five high-protein, no-added-sugar smoothies tailored to support balanced nutrition. This launch reflects the growing trend of personalized functional nutrition in the health and wellness industry.

Companies are increasingly utilizing scientific innovations and consumer data to develop tailored dietary solutions. The integration of AI, biotechnology, and functional ingredients is enhancing product efficacy and accessibility. This evolving trend is poised to reshape the future of health-focused food innovations.

Functional Food and Beverages Market Report Snapshot

 Market Segmentation

• By Active Ingredients (Vitamins & Minerals, Probiotics and Prebiotics, Amino Acids & Proteins, Herbs and Botanicals, Others): The vitamins & minerals segment earned USD 136.23 billion in 2023, driven by the growing consumer awareness of nutritional deficiencies and the rising demand for fortified foods. Increasing adoption of vitamin- and mineral-enriched products to support immune health, bone strength, and overall wellness is fueling the market.
• By Sales Channel (Hypermarket/Supermarket, Convenience Store, Specialty Store, Online Retail, Others): The hypermarket/supermarket segment held 45.90% share of the market in 2023, driven by wide product availability, competitive pricing, and consumer preference for in-store shopping experiences.
• By Nature (Organic, Conventional): The conventional segment earned USD 217.02 billion in 2023, driven by cost-effectiveness, wider availability, and strong consumer demand.
• By Type of Product (Functional Beverages (Energy drinks, sports drinks, dairy-based functional beverages, plant-based functional beverages, enhanced water & RTD beverages, functional teas & coffees), Functional Foods (Fortified dairy & dairy alternatives, fortified bakery products & cereals, functional snacks, functional confectionery, functional meat, fish & plant-based alternatives)): The functional food segment is expected to reach 496.66 billion in 2031, driven by the increasing demand for health-enhancing products like fortified dairy, snacks, and cereals.

Functional Food and Beverages Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

North America accounted for a significant functional food and beverages market share of around 39.12% in 2023, valued at USD 151.88 billion. The dominance of the market in the region is driven by rising health consciousness, high consumer spending on wellness products, and a strong presence of key industry players. The region benefits from advancements in food innovation, increasing demand for protein-rich and fortified foods, and a growing preference for plant-based and clean-label products.

Additionally, government initiatives promoting healthy eating and regulatory support for functional ingredients contribute to market growth. The expansion of e-commerce and retail distribution channels has also enhanced product accessibility, fueling the market.

• In January 2025, FlavorSum expanded its solutions portfolio with Flavor Modulating Properties (FMPs). These advanced flavor systems optimize taste by masking bitterness, enhancing mouthfeel, and reducing off-notes. This innovation aligns with the functional F&B market’s demand for improved sensory experiences in health-focused and reformulated products.

The functional food and beverages industry in Asia Pacific is poised to grow at a CAGR of 9.31% through the projection period. Driven by increasing consumer awareness of health and wellness, the demand for fortified foods and beverages is rising as people seek products that support overall well-being and prevent lifestyle-related diseases.

The expansion of e-commerce platforms has enhanced accessibility, further accelerating market growth. Growing concerns over chronic illnesses and the shift toward preventive healthcare are also driving the adoption of functional foods and beverages across the region.  

• In January 2025, the Ministry of Commerce & Industry reported that India is poised to achieve USD 100 billion in combined exports from the Food & Beverage (F&B), agriculture, and marine sectors within the next five years, driven by expanding global demand, enhanced supply chain efficiencies, and supportive government policies fostering growth and competitiveness in these industries.

Regulatory Frameworks

• In the U.S., the FDA regulates dietary supplements under the Dietary Supplement Health and Education Act (DSHEA) of 1994, which defines dietary supplements as products intended to supplement the diet and contain ingredients such as vitamins, minerals, herbs, amino acids, or other dietary substances. Unlike drugs, dietary supplements do not require pre-market approval by the FDA, but manufacturers are responsible for ensuring product safety and truthful labeling.
• In the European Union (EU), nutrition and health claims on food products are regulated under Regulation (EC) No 1924/2006, known as the Nutrition and Health Claims Regulation (NHCR). This legislation ensures that any claims made about food products are clear, accurate, and scientifically substantiated, thereby protecting consumers from misleading information.
• In Australia and New Zealand, functional food and beverages are regulated under the Australia New Zealand Food Standards Code, overseen by Food Standards Australia New Zealand (FSANZ). The Code establishes food safety, labeling, and composition requirements to ensure transparency and consumer protection. It regulates additives, processing aids, and novel foods, including genetically modified organisms (GMOs). Strict scientific assessments are required for health claims, ensuring compliance with evidence-based regulatory standards.
• In India, the regulation of functional foods and beverages is governed by the Food Safety and Standards Authority of India (FSSAI), established under the Food Safety and Standards Act, 2006. FSSAI consolidates various food-related regulations to ensure the availability of safe and wholesome food for human consumption. The authority is responsible for setting science-based standards for food products and regulating their manufacture, storage, distribution, sale, and import.
• The Food Safety and Standards Authority of India (FSSAI) provides regulatory guidelines for nutraceuticals, functional foods, and dietary supplements under the FSS Act, 2006, and subsequent regulations. The document outlines licensing, labeling, ingredient approvals, and restrictions on certain compounds. It also discusses the prohibition of specific ingredients due to safety concerns and mandates compliance for food business operators. Proper labeling and adherence to quality standards are emphasized to ensure consumer safety.

Competitive Landscape

Companies should focus on innovation, consumer needs, and strategic positioning to gain a competitive edge in the functional food and beverages market. Developing unique, science-backed formulations, offering personalized nutrition, and addressing health concerns like gut health and immunity can enhance appeal. Catering to niche markets, ensuring sustainability, and building trust through transparency further strengthen brand loyalty and long-term success.

• OLIPOP has emerged as a leading functional beverage brand by combining prebiotics, botanicals, and plant fiber to promote gut health. OLIPOP has successfully positioned itself in the wellness beverage market by addressing consumer demand for healthier soda alternatives, using clean ingredients, and leveraging transparent marketing. Its focus on taste, science-backed benefits, and engaging storytelling has driven strong brand loyalty and rapid growth.

List of Key Companies in Functional Food and Beverages Market:

• Nestlé
• Danone
• PepsiCo
• The Coca‑Cola Company
• General Mills Inc
• Glanbia PLC
• Kellanova
• Monster Energy Company
• Arla Foods amba             
• Tyson Foods, Inc.
• Cargill
• The Campbell's Company
• The Kraft Heinz Company
• FrieslandCampina
• Raisio Oyj                

Recent Developments (Partnerships, M&A, Collaborations)

• In January 2025, PepsiCo acquired Siete Foods for $1.2 billion, expanding its portfolio with grain-free, health-conscious Mexican-American foods. Siete gained popularity for simple, dietary-friendly ingredients. PepsiCo aims to grow the brand using its distribution network while maintaining its commitment to nutritious and culturally inspired offerings.
• In November 2024, Puratos partnered with Burcon NutraScience to innovate using canola protein, enhancing solutions for the bakery, patisserie, and chocolate sectors. This collaboration aims to create sustainable, healthy food products that exceed consumer expectations in taste and nutrition. Burcon’s Puratein canola protein offers functional versatility, aiming to replace eggs in formulations.
• In November 2024, NutriFusion announced a supplier partnership with UMMY Kids Superfood Shakes. NutriFusion will provide nutrient-rich ingredient blends, enhancing the nutritional profile of UMMY’s shakes. These blends, derived from fruits and vegetables, are designed to boost essential vitamins and minerals without affecting taste, making them ideal for kids.
• In December 2024, Tate & Lyle partnered with BioHarvest Sciences to develop plant-based sweeteners using botanical synthesis technology. This collaboration aims to create sustainable, non-GMO sweetening solutions that mimic sugar without an aftertaste. The initiative supports affordability and sustainability by reducing land and water use.