Trends—Increased Demand for Functional Beverages

The recent trend involving nutritional and functional drinks has resulted in increased demand for beverage additives, according to a recent study by The Freedonia Group.

It is anticipated that US demand for beverage additives by drink manufacturers will grow 3.4% per year. This will accrue to $1.7 billion in the year 2006. This demand is a result of strong gains in sales of products such as sports and energy drinks, fruit beverages, ready-to-drink tea and coffee as well as flavored milk. For example, PepsiCo reports that Tropicana’s recent launch of Healthy Kids is one of the most successful launches in company history.

These advances are likely to prompt growth in the demand for flavors, texturizers and preservatives. Smaller volume additives, such as nutraceuticals and texturizers, are also expected to have strong gains with annual growth of about 6%. The best advances are anticipated for bulk nutraceuticals used as beverage additives. Flavors and flavor enhancers will remain the largest segment of the industry as they continue to post strong gains. Advances will be boosted= by consumer demand for higher value natural products, which are perceived as being healthier. The energy drinks, ready to drink beverages, sports drinks and flavored milk are expected to grow fastest because of new product introduction offering innovative flavors and a large array of nutraceutical additives.

A barrage of new nutritionally enriched product introductions will propel growth as food companies target aging and health conscious consumers. At present, the neutraceutical industry is under pressure to verify the safety of ingredients, which can only be determined by rigorous evaluations.