Flavored and functional water contains added minerals, vitamins, extra and exotic flavors to provide additional health benefits and great taste. It is considered healthier than soft drinks as it contains little to no calories, caffeine or sugar. Some of the commonly used flavors in flavored water include citrus fruits, berries, herbs, and spices. The functional water segment is witnessing high demand due to the added health benefits like improved hydration, immune system boost, energy boosting, digestive health and heart health.
Global flavored and functional water is estimated to be valued at US$ 50.03 Billion in 2022 and is expected to exhibit a CAGR of 11.91% over the forecast period 2023-2030.
Key Takeaways
Key players operating in the Flavored and Functional Water Market are Nestle Waters, Danone, The Coca-Cola Company, PepsiCo, and Kraft Heinz.
Flavored And Functional Water Market Growth offers significant growth opportunities in the emerging economies of Asia Pacific and Latin America owing to rising health consciousness. Also, changing lifestyles and hectic schedules have increased the demand for functional drinks offering on-the-go hydration.
Technological advancements in flavor enhancement techniques allowing customization of tastes and functions according to consumer demands is a key factor propelling the market growth. Novel extraction techniques are enabling the addition of exotic and all-natural flavors like coconut water, acai berries etc.
Market Drivers
Growing health consciousness among consumers: Rising awareness about the ill-effects of sugar and carbonated drinks has increased the demand for low-calorie and nutrient-enriched beverage options like flavored and functional water.
Growing influence of new product launches: Introduction of innovative flavors and varied functional benefits catering to the changing tastes and wellness needs of target demographics across all age groups is fueling the market expansion.
Improved distribution networks: Availability of a wide product range through grocers, supermarkets, hypermarkets, online retailers and direct delivery channels is boosting the product visibility and consumer access.
Current Challenges in Flavored And Functional Water Market
The flavored and functional water market is facing challenges such as rising raw material costs and increasing health consciousness among consumers. Due to inflation and fluctuations in commodity prices, the prices of raw materials used in making flavored and functional water like fruits, herbs, vitamins have increased significantly. This has pushed up the production costs for companies. Further, consumers are increasingly aware about the sugar and artificial ingredient content of flavored waters. Health-conscious consumers prefer plain or lightly flavored water options and are shifting towards more natural beverage choices. They carefully check the ingredient label before purchasing flavored or functional water bottles. This changing consumer preference is a challenge for companies using artificial sweeteners or flavors.
SWOT Analysis
Strength: Wide product portfolio and innovations in flavors and functionality. Companies offer a diverse range of flavors and nutritional formulations to attract different consumer segments.
Weakness: High dependency on raw material prices and weather conditions. Raw material supply and prices heavily depend on climatic conditions which impact production costs.
Opportunity: Growth in demand from developing regions. Countries in Asia Pacific and Latin America are witnessing rising disposable incomes and health awareness driving the adoption of flavored and functional water.
Threats: Stringent regulations on ingredients and labelling. Regulators are imposing more stringent rules regarding use of artificial ingredients, nutritional labeling and packaging materials used which increases compliance costs.
Geographical Regions
North America currently holds the largest share of the global flavored and functional water market in terms of value sales. The U.S. accounts for the bulk of demand due to high per capita consumption and variety of product offerings from leading brands.
Asia Pacific region is poised to be the fastest growing market during the forecast period. Countries like China, India and Japan are witnessing rising health consciousness and increasing consumption of bottled water due to pollution and contaminated municipal water supplies augmenting sales of flavored and functional water varieties.
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