Need States: Understanding the Future of Functional Beverages

May 2023

Functional beverages are undergoing an evolution beyond their traditional focus areas like hydration and energy to a wider array of more targeted, niche interests. The best way to understand this transition is through the need states framework, which looks first at what consumers are aiming to accomplish and then works backwards to consider how a beverage could help them achieve that.

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This report comes in PPT.

Key Takeaways

Need states are the best framework to understand the future of functional beverages

Consumers are looking to address specific functional needs and are then working backwards to find the product that best suits them. Thinking in terms of these consumer “need states” and how best to address them will be key for the success of the functional beverage segment.

A culture of self-optimisation is leading consumers to demand more from beverages

Declining trust that institutions will take care of them and the rise of DIY approaches to health that spread through the internet are pushing consumers to take more control of their own health outcomes. This has led to interest in a much wider range of potential beverage functionalities than ever before.

A stressful world is pushing consumers towards both energy and calming

The modern world is full of stressors. This is a key driver of calming beverage growth but it is also underlying many other functional spaces as well. Energy, in particular, is growing, in part because consumers feel the need to be productive in order to succeed in a stressful world, but even in areas like hydration products are trying to address this constant consumer stress.

E-commerce and digital culture are indispensable for the evolution of need states

Digital culture has cultivated interest in new functionalities, while giving consumers access to a wide variety of products aimed at very specific functional niches. Future developments in need states will therefore be inextricably tied to the internet.

The idea of “food as medicine” leads people to use beverages in place of pharmaceuticals

A general sense that society has become too reliant on medication has led many to see more natural solutions for their health issues, in which food and beverage consumption plays a leading role. This is especially true of chronic health conditions requiring constant maintenance and preventative actions, rather than dealing with short illnesses.

Key takeaways
Exploring the concept of need states
The emergence of need states in the beverage industry
Where does the need states framework come from?
Need states can be broken down into three major groupings
What is relaxation anyway? The challenge of definitions and need states
The key drivers of need states
Consumers turn to the only ones they fully trust in an uncertain world: Themselves
Hydration has become about far more than drinking enough water
Drink Alchemy aims to help consumers maximise their potential
Implications: The culture of self-optimisation
The consumer of the 2020s operates from a high baseline level of stress
The caffeine paradox: At the intersection of energy and calming
Moment and “drinking your meditation”
Implications: Mental stability in the age of anxiety
Need state-based product development requires the internet
Nootropics try to expand their circle from their core enthusiasts
Case study: Olipop leverages internet savvy into promoting its functional benefits
Implications: Digital culture and e-commerce
Pill fatigue has moved consumers to seek natural solutions to their health concerns
A new class of weight loss drugs and a possible reversal to pill fatigue
Perfectly Me and a more targeted approach to women’s health
Implications: Pill fatigue and food as medicine
Key takeaways
Need states: How to win
Evolution of need states
Questions we are asking

Soft Drinks

This is the aggregation of the following categories; Carbonates, Fruit/vegetable juice, Bottled water, Functional drinks, Concentrates, RTD tea, RTD coffee and Asian speciality drinks.

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