Food and Beverages

Functional Water Market

Global Industry Analysis and Forecast 2024-2031

Pages : 120

Base Year : 2023

Released Year : April 2024

Format :Pdf Ppt Xls

Report ID:KR558

Author : Mayank C.

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Base Year

2023

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Forecast Year

2024-2031

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Historical Years

2019-2022

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Market Value (2023)

USD 15.88 Billion

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Forecasted Value (2031)

USD 29.37 Billion

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CAGR (2024 - 2031)

8.0%

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Fastest Growing Region (2024 - 2031

Asia Pacific

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Largest Region

Europe

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By Product Type

Flavored, Unflavored/Plain

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By Category

Still/Regular Functional Water, Sparkling Functional Water

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By Distribution Channel

Business to Business (HORECA Sector)

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Business to Consumer

Hypermarkets/Supermarkets, Specialty Stores, Drug & Pharmacy Stores, Online Retailers, Others


Functional Water Market Size

The global Functional Water Market generated revenue of USD 15.88 billion in 2023 and is projected to reach USD 29.37 billion by 2031, depicting a compound annual growth rate (CAGR) of 8.0% from 2024 to 2031.

Growing consumer awareness regarding health and personal well-being has positively impacted the dynamics of the functional water market. The upward trend among global consumers and shoppers preferring healthier functional beverages, which encompass core ingredients such as vitamins, minerals, alkaline, anti-oxidants, and others, has augmented sales of functional water.

Furthermore, the global functional water market is foreseen to experience significant growth in the upcoming years, primarily due to evolving consumer preferences for functional beverages and ease of availability in retail markets. Another key factor supporting industry growth is the rising emphasis on beverages containing low sugar over soft drinks due to rising obesity concerns across the globe. 

Geographically, North America and Europe are anticipated to account for a substantial share of the global functional water market due to a strong preference for healthy beverages. However, Asia-Pacific and Latin America witnessed rapid growth in the functional water market, attributed to rising disposable incomes and a strong preference for convenient hydration solutions.

Analyst’s Review

The functional water market is anticipated to grow significantly across the globe as it effectively addresses specific health concerns such as improving digestion and enhancing cognitive function. In addition, products containing herbal extracts, probiotics, and adaptogens are more likely to attract modern consumers. 

The growing significance of clean labels, focus on weight management, and convenience associated with functional water are some major factors anticipated to drive market development in the forthcoming years. However, despite facing specific challenges, the functional water market offers lucrative growth opportunities to manufacturers that are willing to push the boundary of innovation for business growth.

Market Definition

Functional water is a fortified beverage that encompasses additional nutritional ingredients beyond plain water to provide health and functional benefits. This water is majorly fortified by vitamins, minerals, electrolytes, antioxidants, herbal extracts, probiotics, or other bioactive compounds. In the global market, functional water is primarily offered in flavored and unflavored/plain forms that are readily accessible across various business-to-business and business-to-consumer segments, including hypermarkets, supermarkets, online retail, and others.

Functional water helps support personal wellness goals, such as hydration, energy, immunity, digestion, cognitive function, or weight management. It is often advertised as a convenient and accessible way for consumers to integrate favorable nutrients into their daily hydration routine.

Market Dynamics

Proliferating demand for fortified beverages is anticipated to support functional water market growth. In recent years, consumers have shown a strong preference for fortified beverages, particularly functional drinks that offer more than just hydration. This implies that there is rising demand for beverages that offer value-added health benefits beyond basic refreshments.

Fortification of drinks with vitamins, minerals, and other beneficial ingredients is aimed at enhancing consumer health. The increasing concerns regarding obesity and other diseases as a consequence of poor dietary habits coupled with sedentary lifestyles are driving consumers to seek beverages with added ingredients to support overall well-being. This paradigm shift reflects an increased awareness of the importance of nutrition in combating health issues. Consumers are constantly looking for food and beverage products that possess functional benefits such as energy, relaxation, and health support. Manufacturers are responding to consumer sentiments by offering a variety of functional drinks tailored to address specific health concerns by providing enjoyable flavors and convenient options for consumers.

The availability of a variety of sports drinks, energy drinks, and health drinks in the market may hamper the sales of functional water in the forthcoming years. The strong presence of a wide variety of alternatives in retail outlets may attract consumers over functional water. Moreover, through innovative marketing strategies and widespread availability, energy drinks have captured a substantial share of the market, which may act as a potential threat to functional water manufacturers.

However, to tackle this negative factor, players in the functional water industry are focusing on product differentiation, branding, and targeted marketing initiatives to garner the attention of consumers across the globe.

Segmentation Analysis

The global functional water market is segmented based on product type, category, distribution channel, and geography.

By product type, the market is segmented into flavored and unflavored functional water. Flavored functional water dominated the market with a revenue share of 52.6% in 2023, indicating strong demand for a variety of flavors of functional water. Manufacturers are further focusing on developing and launching a wide range of innovative flavors in the market to cater to diverse consumer needs. 

By category, the functional water market is bifurcated into still/regular functional water and sparkling functional water. The still/regular functional water segment is anticipated to exhibit a significant CAGR of 7.8% over the forecast period. This growth can be attributed to the growing awareness of the negative effects of carbonated drinks and a strong preference for functional beverages among global consumers. 

By distribution channel,  the market is segmented into business to business and business to consumer. The business to consumer segment is projected to grow at a CAGR of 7.7% between 2024 and 2031. This considerable growth is mainly driven by the increasing prevalence of online shopping and the convenience offered by e-commerce platforms. Moreover, competitive pricing and discounts offered by online retailers make functional water more accessible to consumers, which contributes significantly to the growth of the segment.

Geographical Analysis

Based on region, the global functional water market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

Functional Water Market Size & Share, By Region, 2024-2031

North America emerged as the leading market for functional water, holding a substantial share of 28.1% in 2023. This dominance is driven by a notable shift in consumption patterns among consumers in the region toward healthier and functional beverage options.

In North America, the growing prevalence of obesity, diabetes, and cardiovascular diseases has encouraged individuals to seek healthier beverage options. Functional water, often fortified with nutrients and other beneficial compounds, is perceived as a healthier alternative to sugary sodas and artificially carbonated drinks, appealing to health-conscious consumers looking to make better dietary choices. Furthermore, the region's dynamic beverage market and the presence of innovative brands continually introduce new functional water products with unique formulations and flavors, thereby aiding regional market growth. 

Asia-Pacific is set to experience the highest growth rate of 9.0% over the forecast period owing to several factors such as rapid urbanization and rising disposable income. In populous countries such as India and China,  the youth demographic is experiencing rapid growth. This demographic is becoming more conscious of their dietary habits and seeking healthier beverage options such as functional water to support their well-being. Millennials and Generation Z consumers in India and China, in particular, are more inclined towards functional beverages that offer added health benefits beyond hydration. Additionally, the Asia-Pacific region is observing a burgeoning fitness and sports culture, with a rising number of individuals engaging in physical activities and exercise routines. Functional water, often marketed as an ideal hydration solution for athletes and fitness enthusiasts, is gaining significant traction as a preferred choice for rehydration and replenishment of electrolytes lost during workouts.

Furthermore, the region's dynamic beverage industry and the availability of innovative product offerings are driving consumer interest and fueling market growth. Manufacturers are introducing a variety of flavors, formulations, and packaging options to cater to diverse consumer preferences and lifestyle needs.

Competitive Landscape

The global functional water market study will provide valuable insight with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions. Expansion & investments are the major strategic initiatives adopted by companies in this sector. Industry players are investing heavily in R&D activities, building new manufacturing facilities, and supply chain optimization.

The major manufacturers in the Functional Water Market are -

  • The Coca-Cola Co.
  • PepsiCo Inc.
  • Nirvana Water Sciences Corp.
  • Beverage Corp.
  • Danone
  • Nestle
  • Trimino
  • Vitamin Well
  • Hint Water
  • The Alkaline Water

Key Developments

  • February 2023 (Product Launch) - Kyowa Hakko USA launched functional water infused with a blend of nootropic and adaptogenic ingredients, which support cognitive abilities and the overall well-being of consumers. 
  • September 2023 (Product Launch) - Pepsico launched Gatorade unflavored alkaline water, which is infused with electrolyte, supporting all-day hydration for consumers.
  • March 2022 (Product Launch)- Nirvana Water Sciences Corp. developed new functional water 'Nirvana HMB + Vitamin D3',  which is aimed at enhancing strength and facilitating muscle recovery.

The global Functional Water Market is segmented as

By Product Type

  • Flavored
  • Unflavored/Plain

By Category

  • Still/Regular Functional Water
  • Sparkling Functional Water

By Distribution Channel

  • Business to Business (HORECA Sector)
  • Business to Consumer
    • Hypermarkets/Supermarkets
    • Specialty Stores
    • Drug & Pharmacy Stores
    • Online Retailers
    • Others

By Region

  • North America
    • U.S.
    • Canada
    • Mexico
  • Europe
    • France
    • UK
    • Spain
    • Germany
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • Japan
    • India
    • South Korea
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC
    • North Africa
    • South Africa
    • Rest of the Middle East & Africa
  • Latin America
    • Brazil
    • Argentina
    • Rest of Latin America.
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  • Check Icon Additional Company Profiles
  • Check Icon Additional Countries
  • Check Icon Cross Segment Analysis
  • Check Icon Regional Market Dynamics
  • Check Icon Country-Level Trend Analysis
  • Check Icon Competitive Landscape Customization
  • Check Icon Extended Forecast Years
  • Check Icon Historical Data Up to 5 Years
Frequently Asked Questions (FAQ's)
The global functional water market is projected to reach USD 29.37 billion by 2031, growing at a CAGR 8.0% from 2024 to 2031.
The global functional water market was valued at USD 15.88 billion in 2023.
The major driving factor for the market growth is increasing health conscious consumers across the globe, on-the-go nutrition offered by functional water, and rising demand for fortified beverage among consumer is anticipated to support market growth.
Top manufacturers of the functional water market are The Coca-Cola Co. , PepsiCo Inc., Nirvana Water Sciences Corp., Beverage Corp., Danone, Nestle, Trimino, Vitamin Well, Hint Water, and The Alkaline Water among others.
Asia-Pacific is the fastest growing region with a CAGR of 9.0% in the forecast period (2024-2031).
By product type segment, flavored functional water is estimated to hold substantial value share in the functional water market by end of 2031
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