Functional Water Market Size, Share & Industry Analysis, By Ingredient (Micronutrients, Botanical Extracts, Other Functional Ingredient), By Distribution Channel (Supermarkets/Hypermarkets, Convenience Stores, Online Retail, and Others), and Regional Forecast, 2024-2032

The global functional water market size was USD 15.93 billion in 2023 and is likely to grow from USD 17.12 billion in 2024 to USD 30.10 billion by 2032, at a CAGR of 7.75% during 2024-2032. North America dominated the functional water market with a market share of 42.5% in 2023. Moreover, the functional water market size in the U.S. is projected to grow significantly, reaching an estimated value of USD 9.41 billion by 2032, driven by rising demand for low-calorie, healthy drinks enriched with functional ingredients.

Healthy hydration, affordably nutritional, and refreshingly thirst-quenching attributes of functional ingredients enriched water are some of the major growth pillars in the global marketplace. There has been a rapid evolution in hydrating experience – water ensuring sleep quality and water for the body-detox are some of the interesting innovations in this category. Functional beverages as a whole have robustly emerged as a preferred drink over soft drinks due to lower sugar content and lack of synthetic additives such as colors, flavors, and preservatives.

Functional ingredients enriched water sales are thus benefiting from the overarching consumer trend to better-for-you alternatives such as unnatural and high-sugar drinks. Price still remains the major factor influencing the purchasing patterns of all the functional beverages, including enhanced water; however, brands justifying their premium offerings with the host of label claims are expected to fetch higher sales margins. The innovation in bottling (packaging) technology, coupled with a strengthening retail distribution scenario, further facilitates the market for functional ingredients enriched water.

The imposed lockdown and stay-at-home orders led people to work from home and work out at home, which initially impacted the sales of energy and sports drink. However, with more relaxations on rules, the market for the aforementioned functional ingredients added water has started gaining traction again. The demand for a product with performance enhancement, cognitive enhancement, immune boosting, and other properties is increasing, which is a positive factor for the market. The demand for natural functional drinks is growing as consumers are now more inclined towards safe, clean-labeled, and hygienic ingredients.

Functional Water Market Trends

Changing Eating Patterns and Increased Focus on Health

Consumers are looking for dietary solutions to solve stress, lethargy, and weakened immunity because of their hectic lifestyles. These solutions appear in the form of functional foods, as they have the additional function of providing nutritional and health benefits. The increasing awareness of healthy eating and drinking among individuals is one of the vital factors positively driving the product demand. As consumers are investing in fortified foods and beverages to achieve long time sustainable health, the beverages that contain ingredients with health and wellness value are becoming more popular worldwide. As consumers continue to search for complete solutions that can meet their health and wellness needs, functional beverages, especially those containing immune-enhancing ingredients, may continue to receive attention. Therefore, the changing lifestyle and eating patterns among consumers are likely to drive the global functional water market growth.

Functional Water Market Growth Factors

Proliferating Demand for Fortified Beverage to Support Market Growth

The increasing demand for fortified drinks with the inclusion of essential ingredients like vitamins, minerals, amino acids, and proteins is anticipated to drive the market for functional ingredients enriched water. As people's awareness of obesity and diet-related diseases increases, the food and beverage industry is increasingly focusing on adding more fiber to beverages to obtain benefits such as calorie reduction, weight control, and promoting digestive health.

The rising individuals' concern in health and wellness has put a spotlight on functional nutrition. They are actively seeking the food and beverage products with enhanced nutritional content, which offers energy, relaxation, mental focus, and health support. This trend has created a wide platform for industry players in product innovation and development. Manufacturers are launching products with claims that go beyond vitamin-enhanced hydration, capitalizing on the popularity of fortified waters. For instance, PepsiCo Inc. is launching a new drink that is intended to help consumers relax before bed, called Driftwell. The fortified water drink contains 200 mg of L-theanine and 10% of the daily value of magnesium. It will be easily available in North America starting December 2021.

Innovative Product Development Efforts by Manufacturers to Drive Market Growth

The global functional water market growth will be propelled by the development of innovative products and the launch of new flavors by manufacturers. Portfolio expansion, i.e., new product development, remains one of the most preferred strategies by key market players worldwide. Consumers are exhibiting an ever-growing inclination towards exotic ingredients and bold flavors that not only appeal to the palette but also are functional in terms of the overall nutritional profile. In March 2024, Essentia Water LLC, an American company, launched its new Essentia Hydroboost functional water product that contains Hydrolytes, a blend of B-complex vitamins as well as 400 mg of electrolytes. The new product is available in three flavors: Lemon Lime, Peach Mango, and Raspberry Pomegranate.

RESTRAINING FACTORS

Availability of Substitutes Including Energy and Sports Drinks to Hamper Market Growth

The emergence of sports drinks, energy drinks, and health drinks paved the way for the entire function-specific beverage movement. They have additional health benefits, and these benefits can range from increased energy to hydration and probiotic energy. The wide availability of substitutes like plant-based waters, which provide the same health benefits as functional ingredients enriched water, is anticipated to hamper the growth of this market.

Functional Water Market Segmentation Analysis

By Ingredient Analysis

Micronutrient Segment to Dominate due to Growing Consumer Inclination towards Natural Ingredients

Based on ingredient analysis, the market is divided into micronutrient, botanical extract, and others. The enhanced waters are generally micronutrients-fortified, hence a dominating segment. Nonetheless, the utilization of novel ingredients is gaining traction. The global marketplace has witnessed a growing inclination towards all-natural and plant-based ingredients that are easily recognizable and accepted owing to their widely known health benefits. The active principles from a variety of super fruits, herbal extracts, and other plant-based ingredients are known to not only serve the functional role of synthetic additives but also substantially increase the nutritional profiles of specialty water.

The botanical ingredients are associated with immune support as well as another possible physical, mental and emotional attributes. After COVID-19, consumers have become more anxious, and they have started giving priority to immune health. As a result, manufacturers are incorporating a plethora of herbs and spices in the drinks because of their inherent health benefits. Thus, the demand for drinks featuring these ingredients has grown and is expected to grow in the future.

By Distribution Channel Analysis

Supermarkets/Hypermarkets to Dominate owing to Growing Trend of Impulse Grocery Buying 

Based on distribution channel, the market is categorized into supermarkets/hypermarkets, convenience stores, online retail, and others. Consumer trends are shifting towards impulsive purchases of food and beverages. People are better able to buy bulk food and other groceries in supermarkets. This factor mainly promotes the growth of this segment. Supermarkets and hypermarkets hold sway in the distribution channels for the product sales – this retail distribution is leading based on the variety, availability, and accessibility of enhanced water. Moreover, the bundling strategy and economical pricing are responsible for higher sales of functional ingredients added water among supermarkets.

Convenience stores are expected to witness greater traction in the foreseeable future owing to their penetration and personalized purchasing experiences. Convenience stores help consumers on the go stay hydrated, and with consumers increasingly looking for healthier options, there are plenty of opportunities to promote and grow sales of functional ingredients added water.

REGIONAL INSIGHTS

The developed market of North America is a clear leading region for functional ingredients added water sales owing to its robust growth in the U.S. The bottled water sales have recently surpassed soft drinks sales in the United States The bottled water sector is thus a leading horse prompting companies to invest and expand their functional offerings. Even before the COVID-19 pandemic, functional ingredients added water had overtaken soft drinks to become the largest consuming beverage by volume in the U.S. Trends contributing to the product’s rising consumption are also its health and wellness attributes, convenience, and more low-calorie carbonated drinks than ever before. Functional ingredients added water continues on a solid growth trajectory and, in fact, grew rapidly in the first half of 2020. It's positioning as the quintessential health drink continues to resonate with consumers. The functional hydration experience has become a key focus for most soft drinks giants, which are either innovating on the composition of the product or creating a context where consumers are lured to purchase it.

Europe is the second-largest market for functional ingredients enriched water. The market is growing, owing to innovative product launches by companies and rising consumer inclination towards the product. Functional ingredients enriched with water is a delicious solution for those who are trying to achieve a healthy level of hydration but have trouble meeting the daily recommended amount of water. People also appreciate the artistic and easy-to-see bottle designs, along with attractive labels and stylish bottle shapes that set them apart from the usual water bottles they are used to seeing. For instance, a Swedish company, Vitamin Well, is asking brand ambassadors to reinforce its motto: "rich in function, low in calories." Their social media handles are filled with images of athletes (runners, swimmers, skaters, tennis players), and their cans feature striking and elegant animal prints. Thus, the consumer demand for natural and subtle flavors drinks is expected to drive the functional ingredients enriched water market in this region.

Asia Pacific market for functional water is also set to experience a significant growth rate as consumers are becoming increasingly aware of the benefits of specialty offerings. Henceforth, functional ingredients added to water are quickly emerging as a distinct and recognizable category. Consumers look for better-for-you alternatives to carbonated soft drinks (CSDs), and the innovation in flavor is driving the functional ingredients enriched water category's success. At the same time, regulations are being put in place across Asia Pacific to reduce the amount of sugar in beverages. In Asian region, Thailand, Malaysia, Sri Lanka, and the Philippines have introduced a sugar-sweetened beverage (SSB) tax in the past two years, while several other countries, including Vietnam, Australia, New Zealand, and Singapore, have also introduced a sugar-sweetened beverage. In the face of this "push" in government regulation and the "pull" of growing consumer demand for healthier options, more businesses and regulatory requirements for APAC beverage manufacturers are paying more attention to their products' functional properties.

The market in South America is expected to grow strongly, driven by strong demand for flavored, hygienic, and clean drinking water in the region. The latest growing trend in this market is the rising demand for water fortified with minerals, vitamins, antioxidants, and more. Consumer health and improved brand awareness have led to an increase in demand for premium bottled water. In addition, due to the increasing standard of living, many people switch from carbonated water to functional ingredients added water.

List of Key Companies in Functional Water Market

Regional and Private Label Brands Eye Expansions to Penetrate New Markets

The global market should be understood from its parent/related markets viz. functional beverages and bottled water – both of these sectors exhibit strong dominance of key global brands intensely seeking the consolidation of the overall market. The functional ingredients added water market is experiencing a strong emergence of small private-label brands embarking on offering enhanced convenience and value-for-money. For instance, in July 2021, National Beverage Corporation, an American beverage manufacturer, released a trio of new flavors of the sparkling water under its LaCroix brand. The Black Razzberry, Beach Plum, and Guava Sao Paulo are zero-sugar, zero-calorie sparkling waters which feature natural essences.   

LIST OF KEY COMPANIES PROFILED:

• Danone S.A. (Paris, France)


• The Coca-Cola Company (Georgia, U.S.)


• PepsiCo Inc. (New York, U.S.)


• Nestle S.A. (Vevey, Switzerland)


• Keurig Dr Pepper (Texas, U.S.)


• Hint Water Inc. (California, U.S.)


• Tata Group (Mumbai, India)


• The Alkaline Water Co. (Arizona, U.S.)


• Nirvana Water Sciences (New York, U.S.)


• Balance Water Company LLC. (New York, U.S.)

KEY INDUSTRY DEVELOPMENTS:

• July 2022 -  Aquatein (Athlex Beverages Private Limited), an Indian protein-beverages company, introduced its new product –protein water in three different flavors. The product has been formulated and tested in a European lab led by several food technologies.


• July 2022 - Flow Beverage Corp., an American beverages company, launched its Flow Vitamin-Infused Water line of products in three new organic flavors: Cherry, Citrus and Elderberry. The newly launched vitamin-infused water is available directly to U.S. consumers through its website.


• March 2022 - Nirvana Water Sciences Corp, a beverages company, expanded its product portfolio by introducing Nirvana HMB + Vitamin D3 spring water at Expo West in California. This new product supports muscle recovery while improving immunity.


• May 2021 - PepsiCo Inc., a leading global food & beverage company, launched Soulboost, an enhanced sparkling water made with functional ingredients. There are two varieties of the drink: Lift and Ease. Lift contains 200 mg of ginseng to help maintain mental stamina; Ease contains 200 mg of theanine, which helps in relaxation.


• March 2021 – F&B Giant Nestlé S.A. announced the acquisition of Essentia Water, a premium functional water brand headquartered in Washington. The company is improving its portfolio to focus on international mineral and premium water brands as well as healthy hydration products, such as functional water.

REPORT COVERAGE

The report provides qualitative and quantitative insights on the functional water industry and detailed analysis on the market size & growth rate for all possible segments in the market. The market is segmented by ingredient, distribution channel, and region. Along with this, the report provides an elaborative analysis of the market dynamics and competitive landscape. The report offers various insights on the overview of related markets, recent industry developments such as mergers & acquisitions, the regulatory scenario in key countries, and key market trends. In addition to these mentioned factors, it encompasses several other factors that have contributed to the market's growth in recent years.

Report Scope & Segmentation