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The Future of Functional Beverages in Asia Pacific

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Consumers in Asia Pacific have a wide range of health priorities ranging from mental wellbeing to getting enough sleep to maintaining a healthy immune system. There are increasing opportunities across both physical and emotional/mental health spaces, creating potential for beverage companies to look into various functional ingredients and map these to consumers’ rising health priorities.

Beverage products predominantly positioned for immune support

Immune support and energy boosting claims remain key in beverages as their ingredients tend to be familiar among consumers and contain multiple benefits.

Vitamin C remains the most popular immune support ingredient in bottled water in China, accounting for 61% of bottled water SKUs in e-commerce

Source: Euromonitor International

This positioning is mainly seen in leading bottled water brands like Nongfu Spring and Mizone and demonstrates that consumers perceive vitamins in bottled water as a functional category with strong, well-understood health positioning.Functional Beverages Chart 1.svg

Strengthening concern for mental/emotional wellbeing creates new opportunities

Beyond physical wellbeing, the awareness of mental and emotional wellbeing has gained traction in recent years. In Asia Pacific, there is a notable increase in the proportion of consumers who are “following a special diet” to relieve stress and anxiety as well as alleviate sleep. 

37% of consumers mentioned that they are actively treating stress and anxiety, while 39% of consumers seek to alleviate sleep problems

Source: Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey in 2023

This provides opportunities for beverage companies to leverage consumers’ unsatisfied demand for improved emotional/mental wellbeing through natural ingredients. For instance, tea has traditionally been known to aid in relaxation and sleep due to ingredients such as chamomile, ashwagandha and ginger.Functional Beverages Chart 2.svg

According to Euromonitor’s Via e-commerce tracking of Asia Pacific tea brands containing health claims between January and June 2023, claims of relaxation were the second most popular, behind only antioxidant claims. This space is dominated by international brands including Twinings, T2 and Lipton as well as local brands like Phuc Long (Vietnam) and Ito En (Japan). The high number of SKUs across all tea types with these mood modulation claims highlights the enduring appeal and natural health positioning of tea brands appealing to consumers seeking to relax. This is also evident in e-commerce for Vietnam and Japan, where brands are positioning themselves with similar health claims.Functional Beverages Chart 3.svg

Opportunities aplenty for beverage companies to appeal to consumers’ physical and emotional/mental wellbeing

All in all, it is important for beverage players in Asia Pacific to constantly educate consumers about the value of functional features through active marketing, while balancing affordability to ensure consumers’ willingness to trial and purchase new products essential to meeting their physical, mental and emotional need states. This is amidst the current inflationary environment hindering consumers’ willingness to pay more for price premium functional ingredients in their beverages.

Moreover, players need to strengthen their partnerships with key retailers such as convenience stores and supermarkets to enhance wide availability and reach to consumers, as well as showcase strong product innovation in functional claims that leverage scientific and/or clinical research.

Read our article, Four Key Drivers of Consumer Need States, for more analysis on the current manifestation of need states and the drivers behind them.

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