The functional drinks market is experiencing an unprecedented boom, particularly among younger consumers like Generation Z, who are increasingly opting for health-enhancing beverages in lieu of traditional caffeinated and alcoholic options. According to data from Ocado, there has been a remarkable 54% year-on-year increase in sales of these health-oriented drinks, which include products fortified with vitamins, probiotics, and collagen. This aligns with a significant cultural shift where two in five adults now purchase functional drinks several times a month, a figure that rises to nearly two-thirds among Gen Z consumers.

The surge in popularity can largely be attributed to the growing recognition of gut health's role in overall wellbeing. Notable products such as kefir and kombucha have seen significant increases in sales—30% and 22% year-on-year, respectively—on platforms like Ocado. The beverage landscape is also changing, as many Gen Z consumers report consciously reducing their alcohol intake—60% have cut back, while over half see functional drinks as a suitable alternative for social gatherings. In fact, 49% of Gen Z respondents have completely replaced their typical alcoholic or sugary soft drinks with functional options.

Moreover, the trend extends to morning routines, with 22% of UK adults now replacing their morning tea or coffee with functional drinks, a number that climbs to nearly 40% among Gen Z. This movement towards ‘cleaner’ energy sources is indicative of a wider cultural shift, as younger consumers gravitate toward beverages that promise not just refreshment, but tangible health benefits. Notably, products like mushroom coffee—a fusion of coffee and adaptogenic mushrooms—are gaining traction, with Ocado reporting a staggering 1,552% increase in search activity for this innovative product.

In parallel, the demand for lower caffeine options, particularly matcha, has surged by 67% over the past year, with new products such as Mission Natural Energy showcasing significant week-on-week growth. Ocado's expanding range, which has increased by 11% in the past year, includes small supplier brands focusing on gut health, aligning closely with emerging consumer trends.

PepsiCo's recent acquisition of Poppi, a leading prebiotic soda brand, for $2 billion underscores the growing market for health-centric beverages. Poppi's success, driven largely by viral marketing on platforms like TikTok, reflects broader trends where gut-health products lead the charge, closely following other brands like Olipop. This acquisition not only highlights the competitive pressures in the beverage sector but also signifies the larger corporate strategy to rejuvenate declining sales in traditional drink categories.

Interestingly, while the functional beverage market flourishes, industry experts urge caution. Some claims made by these products are not always supported by robust scientific evidence, leading to occasional overconsumption risks. Nutritionists recommend consumers read ingredient labels carefully, being mindful particularly of those with specific health conditions.

Social media is a powerful force in shaping these trends, with up to 30% of consumers discovering new brands through platforms like TikTok and Instagram. This has facilitated a significant shift towards aesthetically pleasing, health-focused options that promise to align with modern wellness ideals. Furthermore, over a third of consumers are now willing to pay extra for drinks that boast additional health benefits, indicating a promising trajectory for brands catering to these demands.

As the functional beverage market continues to evolve, it not only challenges the traditional categories but also transforms consumer choices and preferences, particularly among younger demographics. With increasing awareness of health and wellness, the future appears bright for drinks that offer more than just hydration.

Do you produce a delicious functional drink, that's available to purchase here in the UK? Enter your product into this year's Quality Food Awards!

Enter here: https://uk.qualityfoodawards.com/QFA2025/en/page/2025-enter-awards 

Good luck!