Last month, beverage giant PepsiCo launched a very different kind of soda: Prebiotic Cola. With 30 calories, no artificial sweeteners, and three grams of prebiotic fibre, it’s the company’s response to a boom in functional drinks over recent years, as brands respond to a consumer base that’s increasingly interested in convenient, flavourful products that promise to optimise their health.
PepsiCo is the latest in a string of big-brand investments in the functional drinks space. Ahead of its Prebiotic Cola launch, the company acquired prebiotic soda company Poppi in May this year for $1.95 billion. Celsius Holdings — owners of Celsius energy drinks — acquired Alani Nu nutrition drinks for $1.8 billion in February. Nestlé acquired Nuun electrolyte tablets and Danone released Evian+ water for cognitive support, both in 2021. Challenger brands like nutrition drink AG1 and Bella Hadid’s Kin Euphorics have seen exponential growth since launching a few years ago. Continued development is expected across the board, with the market for functional beverages, already valued at $149.75 billion in 2024, projected to reach $248.5 billion by 2030.
So what’s driving the trend? Jennifer Creevy, food and drink director at WGSN, believes that the rise of functional beverages is an extension of the general trend for products that promise high-impact, low-maintenance solutions to overall well-being. “In the same way functional snacks are continuing to rise, consumers are now looking for their drinks to be convenient and health-led, too,” says Creevy. “These drinks are crossing categories, everything from tea and coffee to RTDs [pre-mixed cocktail-like beverages with reported health benefits].”
The popularity of drinkable wellness solutions also coincides with the rise of what WGSN termed ‘soft wellness’ in its recent 2026 Health and Wellness Forecast. “Many consumers are seeking products and practices that allow them to take pleasure from healthfulness, both physically and mentally, and escape the anxiety of an uncertain world,” WGSN noted. As a result, consumers are moving away from ‘hardcore’ wellness solutions like biohacking interventions and strict diets — but whether or not these functional drinks actually stand up as health supplements is yet to be proven, and brands should be cautious in how much they embrace them.
Cutting through a saturated space
The language and marketing around health benefits is not the only challenge brands face. While the fast-paced development of this market presents a number of opportunities, it also makes it more difficult for brands to stand out.
As consumers are presented with a growing number of options, it is up to brands to find ways to stand out online and on shelves. As insight firm EY’s recent Future Consumer Index reveals, brand loyalty in consumer products (like food and drink) is more fluid than ever, with consumers consistently finding new options to try and switching between them. The challenges, however, are not over once a brand breaks through.
As EY’s global and Americas consumer products sector lead Rob Holston notes, in an era of endless choice, consumers are more discerning about how they spend their money and less loyal to brands, with factors like lower pricing or product innovation leading people to switch from one brand to another. “Consumers are much more willing to sample, and whether there’s true functional benefits or not, there’s a perception that they are making better choices,” says Holston.
For brands, then, the key to success is offering products with clean ingredients that substantiate their claims with science-backed results and recommendations from real-world consumers. Framing these drinks as a daily health ritual, with benefits increasing through continued use, is a helpful strategy for maintaining consumer loyalty.
A focused offering with layered benefits
AG1 has employed this strategy. The brand hit $600 million annual revenue in 2024, up 300 per cent from $160 million in 2021. Since launching, the brand has positioned itself as an easy addition to customers’ daily routines, with a vegan, GMO-free and gluten-free greens powder that is taken in the morning and claims to improve energy, immune defense and digestive support.
According to AG1 CEO Kat Cole, the brand’s success is all down to its dedication to using the latest science and research to improve the one product, rather than trying to flog a million different offerings. “Our customers value that and feel their loyalty is rewarded with AG1 continuously innovating and elevating standards including rigorous testing, high-quality ingredients and investment in research,” says Cole. She also points to the fact that a majority of customer growth has been and continues to be driven by recommendations and referrals from existing customers. “All of these factors, including the simplicity of a single comprehensive scoop that tastes great and is delivered to your door each month, compounds over time and results in an extremely loyal customer base.”
‘Stacking’ benefits, or combining multiple functions into one beverage, is another effective strategy that brands like Dirtea have adopted. A coffee replacement made from functional mushroom powder, Dirtea retails in almost 2,000 UK stores, has received investment from public figures like Bear Grylls, and has secured partnerships with brands like Stella McCartney and Barry’s Bootcamp, all since launching in 2021. According to co-founder Andrew Salter, the brand’s signature formulation has been developed so that every ingredient has a purpose, from its dual-extracted mushrooms that deliver beta-glucans (known to support immunity, energy, focus and gut health) to its MCT oil, moringa and B vitamins, all included to enhance absorption and elevate function.
Educating consumers about these ingredients is also vital. “Transparency isn’t just about what’s on the label, it’s about how we educate and empower our customers,” says Salter. Through product pages, post-purchase journeys and editorial content, the brand works to clearly explain what each ingredient does and how it fits into a consumer’s broader health ritual. The brand also hosts a pop-up wellness night in London, called Dirtea Reset Club, in an effort to build a community around the brand.
“Real wellness only works if people want to stick with it,” says Salter, which is why the brand aims to make every product “taste incredible, feel intuitive and fit into everyday life” in order to keep consumers coming back.
Still, when it comes to success in the functional beverage market, there is no factor more important than flavour. As Mintel noted in its consumer report on functional drinks, brands must place a “premium on flavour, with those that taste the best not gaining consumer attention, but keeping it thereafter”. Clean ingredients and multiple benefits in a single drink will draw in consumers, but only when it tastes good.
CBD drink Trip is one brand that has always placed a premium on good taste. The UK-based company launched in 2019 and is set to generate $100 million in revenue in 2025, with its latest launch, the Wild Strawberry drink, becoming the number one food or drink launch ever on TikTok Shop UK. The brand emphasises that “exceptional taste and quality are non-negotiable for us”, with its in-house team of nutritionists and product developers spending up to six months developing flavours. Beyond the taste, the brand’s success, according to Trip founder and co-CEO Olivia Ferdi, is down to building a robust online following via TikTok and Instagram, strategic partnerships like the one they have undertaken with meditation and sleep app Calm, and securing varied and widespread distribution with venues such as Soho House globally and Target in the US.
Sourcing functional ingredients
Like Trip, Kin Euphorics — the functional drink co-founded by Hadid in 2017 — has found success with its range of flavourful, botanical sparking drinks. Pulling in a revenue of around $32 million between 2023 and 2025, Kin positions itself as an alcohol alternative that uses adaptogens and nootropics for mood-boosting and calming effects. According to Kin’s co-founder and CEO Jen Batchelor, functional beverages have staying power thanks to their ability to blend wellness culture with a fresh approach to socialisation. “Supplementation for the sake of longevity, enhanced mood, immunity, gut health and overall well-being has become an expected companion to a luxury skincare routine today, if not taken the place of it entirely,” says Batchelor. “Functional drinks transform the task of selfcare into a social ritual, which makes it infinitely more enjoyable.”
Batchelor points out that despite Kin’s success, the supply chain for both functional ingredients and packaging continues to prove a challenge. According to EY’s Holston, manufacturing and distribution is a challenge for brands across the board. “The biggest challenge [for functional beverage brands] is scale,” Holston says. “There are well-established players in the beverage space that dominate, that own the relationship with the retailers, which is why it’s good that some of these [smaller] companies are being acquired by the bigger ones that can put them into distribution.”
Still, Holston says, while wide distribution is a greater obstacle for many challenger brands, they do have a leg-up on incumbent companies when it comes to innovation. “For long-established, large-scale companies it can take two years to put a flavour variant into an established product, and that’s too long — the consumer has moved beyond that,” he says. “That means smaller brands need to continue to innovate and focus on maximising short-term distribution in order to break through.”
From here, AI-driven innovation could offer a way forward. From Holston’s point of view, brands will benefit from using AI to meet what he calls the 30-30 challenge, or using AI innovation to reduce the cycle time to market by 30 per cent, reduce costs by 30 per cent, and, consequently, achieve a 30 per cent higher consumer uptake. The idea is to use AI to streamline the product development process and get ahead on consumer trends, picking up on, for instance, the impending popularity of a flavour and creating a product that responds to that before — rather than after — it hits the mainstream.
AI innovations will be particularly useful for developing personalised products. Holston compares the rise of personalised functional beverages to the current discussion around tailored medication, with DNA testing that creates individual medicines for your unique needs. “Today, in pharmaceuticals, the doctor can take your DNA and create a specific medication that will have the highest efficacy in treating you and we are going to see that technology move into the food industry for sure,” he says.
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