Functional Water Continues to Inundate Beverage Category
Consumers are increasingly looking for more benefits from their beverages. Chicago-based market research firm Mintel reports that nearly one-third (31%) of bottled water users are willing to pay a premium for waters with added health benefits.
Manufacturers are happy to oblige: Innovative formulations and packaging attributes have become key drivers in the functional water category, and industry experts predict continued growth in the segment over the next few years.
“Functionality is the most prevalent trend in the water market as brands enhance water’s inherent healthfulness with other functional benefits,” says Caleb Bryant, associate director, food and drink at Mintel. Sales of flavored still water (which includes many functional water brands) increased 60% from 2016 to 2021, Bryant adds.
“We’ve seen the functional water category explode over the past 18 months,” notes Adam Gauer, co-founder of Sheridan, Wyo.-based Plus Brand Industries, maker of Agua Plus, a pH9+ alkaline water enhanced with electrolytes and minerals. “The result is a breeding ground for even more innovation.”
The popularity of functional waters is attracting major players to the category. Last year, Purchase, N.Y.-based PepsiCo introduced Soulboost, a functional sparkling water brand, in two varieties: Lift and Ease. The product contains real juice and functional ingredients. The Lift variety contains 200 milligrams of panax ginseng to help support mental stamina, and is available in blueberry pomegranate and black cherry citrus flavors. The Ease variety, formulated to help people relax, contains 200 milligrams of L-theanine, and is available in blackberry passionfruit and strawberry rose varieties.
According to Gauer, the category is expanding across age demographics. “Older consumers see the added health benefits of functional waters as an opportunity to be more efficient in their pursuit of all-around better health,” he explains. Younger consumers, meanwhile, are open to options beyond supplements.
More Than Just Your Average Water
Marketers can alter the makeup of water to increase health benefits, such as adding electrolytes to boost hydration, oxygen to increase energy, or hydrogen to ease inflammation. Increased hydration is popular with consumers: Mintel research indicates that 30% of them are interested in waters that provide superior hydration.
“The strong growth of alkaline water opened the door for other waters that claim to provide enhanced hydration using varying elements and pH levels,” says Bryant. “Oxigen water is enhanced with oxygen and electrolytes, and Jove claims its alkaline water provides ‘cellular hydration.’”
As an example of this trend, Reno, Nev.-based Takeover Industries expanded distribution of its NXT LVL Hydrogen Water this past summer to Hy-Vee stores across the Midwest.
Bryant notes that the pandemic has fueled consumer interest in immunity-boosting beverages, paving the way for waters enhanced with ingredients/vitamins with inherent immune support benefits. According to Mintel, 3.2% of waters launched in the United States in 2021 carried an immune support claim. Only 1.9% of waters launched in 2018 featured such a claim.
Pure Life + Protect, which contains zinc, is one example. “Expect to see more vitamin D waters,” says Bryant. “In 2021, Anheuser- Busch announced it would distribute ShineWater, a functional water brand enhanced with vitamin D.”
Rochester, N.Y.-based Wegmans Food Markets recently featured Karma Water, which is based in nearby Pittsford and makes wellness and probiotic varieties, on an immune health display table along with Poppi functional sodas, Olly vitamins and other immune-boosting products.
Gut health is another growth area for functional waters. According to Bryant, 24% of consumers are interested in waters that promote gut health, and Mintel research indicates that 1.8% of waters launched in the United States in 2021 carried a probiotic claim, compared with 0.3% of waters launched in 2018.
The stress associated with the pandemic has also accelerated consumer demand for beverages boasting relaxation benefits. CBD-infused products have been showing up on more shelves as states allow the products to be marketed. “CBD waters represent a fast-growing segment of the water market,” affirms Bryant.
“The amount of positive press CBD has received regarding general wellness, particularly stress relief, has driven the demand in all age groups,” agrees Ricky Wright, president and CEO of the Alkaline Water Co. The Clean Beverage Co., a division of the Scottsdale, Ariz.-based beverage manufacturer, recently launched A88CBD, a line of six natural CBD functional waters.
In 2020, mainstream brand Ocean Spray, based in Lakeville-Middleboro, Mass., launched CarryOn, a line of CBD sparkling waters, through its Lighthouse Innovation Incubator. The line consists of Elevate, a grapefruit flavor that blends choline for energy and focus with 10 milligrams of CBD, and Descend, a blueberry flavor designed for relaxation and containing L-theanine for calmness and 20 milligrams of CBD. The products are sold in Sprouts Farmers Market locations in Colorado and will likely gain wider distribution.
Among the new products introduced this year is Karma Water’s CBD Water, a cannabidiol beverage that the company just added to its portfolio of waters. Karma Culture CEO C.J. Rapp calls CBD “the next evolution of our premium infused waters portfolio.”
In addition to health benefits, consumers are using CBD beverages as a base for creating next-generation cocktails. “A lot of our flavor profiles, such as lemon lime, pineapple coconut, citrus, are being developed to meet this need,” says Wright.
Manufacturers are also positioning sparkling waters as alternatives to alcohol. “The sober-curious/mindful drinking trend is gaining speed as more consumers rethink their alcohol consumption behaviors and opt for [better-for-you] alcohol alternatives,” observes Bryant. “Sparkling waters are already popular with health-conscious consumers and waters featuring unique flavor profiles and enhanced with ingredients that provide relaxation will become alcoholic drink substitutes.”
Bryant cites Barbet, a sparkling water positioned as a nonalcoholic option for alcohol consumption occasions, with a lineup of flavors including Love Bite (grapefruit, ginger and juniper) and Wild Card (blood orange, calamansi and jalapeño), as an example of this trend.
“Recess launched a margarita flavor to coincide with Dry January, and sparkling water brand Hopwtr claims its flavor profile will remind consumers of their favorite IPA, and that its blend of adaptogens and nootropics provides a feeling of relaxation without alcohol,” says Bryant. As consumers rethink their pandemic alcohol consumption patterns, retailers can expect to see more sophisticated flavor profiles entering the sparkling water category.
The Packaging Point of Difference
Even more category innovation is coming from the packaging side, however.
Karma Water products feature a patented protective Karma Cap that helps maintain optimal potency. The Alkaline Water Co.’s new launch features first-to-market patented Freshcap, powered by Vessl, a patented technology, that stores the CBD and other active or functional ingredients in a pressurized chamber in the bottle cap until the consumer twists it open for an instant infusion of flavor and functionality.
“Freshcap not only has functional capabilities, it has a wow factor,” asserts Wright. “Unlike a lot of other functional ingredients delivered through powder packs or technology, there are no floaties or shaking required.” The company is currently developing a line of non-CBD functional Alkaline88 waters related to energy, collagen, inflammation, digestion, memory/brain/cognitive and sports performance/endurance benefits.
Agua Plus comes in a bottle featuring All-Scratch Technology, a unique patented feature that allows a user to scratch their name, initial or other identifying marks directly on their bottle to eliminate bottle confusion, a leading cause of unnecessary waste and the transmission of germs, viruses and bacteria.
Cans are becoming a more popular packaging choice, and the eye-catching graphics that have dominated cans in the craft beer category to set brands apart are moving into the functional beverage category as well. According to Mintel’s Global New Products Database, 46% of all water product launches last year were canned.
