Page 20 - Food&Drink Magazine August 2019

BY ASSOCIATION
Functionality in your fluids
and many with no added sugar. Across this category and the
broader non-alcoholic portfolio, consumers are enjoying a wider range of drinks than ever before – all of which are designed to satisfy different lifestyles and different occasions.
Many in the industry are experimenting with beverages that provide certain health benefits, such as probiotic drinks and fruit drinks with protein and vitamins. It is both our time-poor lifestyles and an increase in health consciousness that are driving demand for health-related functional beverages.
Consumers are telling our member companies that they want functional beverages to meet their lifestyle needs and this is particularly acute in the sports drinks sub-category. It is also essential that manufacturers continue to innovate in this space to ensure they not only satisfy discerning consumers, but also buoy revenue growth in a challenging consumer market.
Many manufacturers are responding to changing consumer tastes, which clearly inform what food and drinks makers do, but especially in the functional beverages space. Given that innovation is particularly swift in this segment, it is important that the food regulatory system remains agile, which is evident with sports drinks and Food Standards Australia New Zealand’s current consideration of the definition of this category.
Manufacturers are also witnessing strong growth in reduced or no sugar energy
With growth in the functional beverage space showing no slowing down, Australian Beverages Council CEO Geoff Parker takes a
closer look at the sector.
WHILE the term ‘functional beverages’ may not sound particularly innovative, the products in this category – namely sports drinks, energy drinks and health beverages
– are anything but ordinary. In fact, functional beverages are showing significant growth and key economic indicators suggest a category in great shape and full of energy.
According to IBISWorld, annual revenue growth in the five years to 2018-19 notched up 3.9 per cent. This is expected to continue to 2023-24, with growth estimated at 3.5 per cent per annum. Over the ten years to 2023-24, growth of that kind would deliver a significant $155.8 million revenue boost. In 2019-20, IBISWorld anticipates total revenue will reach $447.5 million.
Currently, the biggest product category in functional beverages by revenue is sports drinks. They contribute 54.5 per
cent, followed by energy drinks at 27.3 per cent and health beverages at 18.2 per cent.
While imports have traditionally dominated the functional beverages sector, the Australian Beverages Council anticipates Australian production will increase over the next five years.
20 | Food&Drink business | August 2019 | www.foodanddrinkbusiness.com.au
“ We will see more product innovation and portfolio renovation, which will introduce additional low and no sugar products as well as unsweetened products.”
HEALTHY COMPETITION
It is clear there is strong and healthy competition in the sector, with numerous product launches in the last 12 months alone. Consumers are already benefitting from new drinks, including a swathe of products that offer functionality and refreshment,
drinks, commensurate with consumer preferences for a boost to get them through hectic days while not contributing significantly to energy intake. This trend in energy drinks
is in line with the broader industry’s move towards low and no sugar drinks.