With the ongoing development of the health and wellness trend, local consumers were already showing a growing interest in beverages that claim to offer them some level of functionality such as boosting performance or concentration levels. The response to COVID-19 with various measures in place meant that on-the-go consumption occasions were greatly reduced in 2020, resulting in declines for FF soft drinks which benefit from impulse purchases, while FF hot drinks, driven by FF plant-based and malt-based hot drinks, benefited from the home seclusion trend and demand for comforting beverages.
Before and during the pandemic, due to the consumer trend that increasingly favours products with fortified/functional claims, beverage players have been responding by continuously seeking to add health supplements to their product offerings such as water soluble vitamins, minerals and Chinese wellness elements including goji berry as part of new product development efforts. These health-positioned functional drinks have successfully gained the attention of consumers, thereby boosting sales.
The competitive landscape of fortified/functional drinks in Hong Kong is set to remain fairly consolidated in 2021, led by Otsuka Holdings Co Ltd and Red Bull Co Ltd due to their strength in the largest category of FF soft drinks. Both players are set to gain further value share and record improving growth rates due to increasing on-the-go consumption occasions as restrictions relax.
Fortified/functional beverages is expected to record a stronger performance over the forecast period in retail volume terms compared with the review period, driven by the ongoing health and wellness trend, more frequent out-of-home consumption occasions, and the likelihood that an increasing number of local consumers will be even more concerned about their health and wellbeing.
After a notable absence in 2021, players are likely to focus new product development on diversifying various health elements and benefits in terms of fortification and functionality. The latest focus to be added to this long list of health-positioned attributes will be immune system support, which is yet to significantly materialise in the beverage space in Hong Kong.
Despite the continuous growth observed within the e-commerce channel in terms of groceries in Hong Kong, the lack of promotion and marketing activities of fortified/functional beverage brands is resulting in low exposure in the e-commerce space, and hence negligible share in 2021. Nevertheless, the active development of major grocery players such as Wellcome and ParknShop as well as the rise of grocery delivery platforms such as Ztore and Pandamart offer potential for a greater shift within retailing from offline to online.
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Fortified/Functional Beverages
This category includes fortified/functional beverages. When identifying fortified/functional products, we focus on products to which health ingredients or/and nutrients have been added as well as brands that are positioned to deliver a certain functionality. To be included here the enhancement has to be highlighted in the label or hold a health claim/nutritional claim. Fortified/functional food and beverages provide health benefits beyond their nutritional value and/or the level of added ingredients wouldn’t normally be found in that product. To merit inclusion in this category, the defining criterion here is that the product must have been actively fortified/enhanced during production. As such, inherently healthy products such as 100% fruit/vegetable juices are only included under "fortified/functional" if additional health ingredients (e.g. calcium, omega-3) have been added. To be included, the health benefit needs to form part of positioning/marketing of the product.
See All of Our DefinitionsThis report originates from Passport, our Fortified/Functional Beverages research and analysis database.
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