‘Functional drinks’ are classified into nutrimental beverages, sport drinks and drinks for other special uses after adjusting the composition and content of natural nutrients for particular nutrition needs in regulating body functions instead of treating diseases. It mainly serves for anti-fatigue and energy supplement.
In terms of age, major consumers of functional drinks are the younger generation such as children, students and office workers for its energy supplement. In terms of gender, males consume more functional drinks due to their preference for sports and staying up late in China. In contrast, female consumers prefer soft drinks such as fruit juice, vegetable protein beverages or bottled water.
According to the author, the sales revenue of functional drinks increased from CNY25.71 billion (US$3.70 billion) in 2011 to CNY60.6 billion (US$8.72 billion) in 2015 with a CAGR of 23.9 percent, far exceeding the growth rate of the market size of the soft drink industry during the corresponding period. Despite this, in China, the competition in the functional drink industry is still less intense than other soft drink varieties.
According to the report, the aggregate market share of the top five functional drink manufacturers in China was about 63.5 percent of the total with a high market concentration rate.
In recent years, the resident consumption ability has improved especially in the third and fourth tier cities as well as rural areas, leading to a large growth in the beverage industry. The demand for functional drinks will continue increasing with the improvement of resident health awareness.
Existing products are small in varieties in the functional drink market, and these are mainly those with added vitamin and taurine with high retail prices. Therefore, opportunities exist for new functional drink manufacturers in segment varieties and regional markets.
The annual average consumption volume of functional drinks was less than three litres per capita in China, far inferior to the global level of seven litres. This means that functional drink enterprises need to promote the marketing for more understanding and popularity among consumers and larger consumption space of functional drinks.
The author estimates that the CAGR of the market size of functional drinks will exceed 15 percent, or even reach 20 percent in China from 2016 to 2021.