Functional Food & Beverage Market - Forecast(2025 - 2031)

Functional Food &Beverage Market Overview:

The Functional Food & Beverage Market size is estimated to reach $720 Billion by 2031, growing at a CAGR of 8.1% during the forecast period 2025-2031. Increasing consumer focus on health and wellness drives demand for functional foods and beverages that offer added health benefits, such as immunity-boosting, gut health and improved energy levels. Consumers are adopting functional foods and beverages as a proactive approach to managing health reducing reliance on medicines. Advances in probiotics, prebiotics, plant-based proteins and superfoods have expanded product offerings by catering to diverse consumer needs and preferences.

The Functional Food & Beverage market is driven by popularity of functional foods that support cognitive health and emotional well-being. Another trend is fortification of food. Food fortification is the process of adding vitamins and minerals to food to increase its nutritional value. Legislation requiring the fortification of non-wholemeal wheat flour with folic acid in England was approved by Parliament in January 2025. According to the Department of Health and Social Care (DHSC), fortification of flour with folic acid will prevent 200 cases of neural tube defects per year and improve the health of pregnant women. The law will take effect at the end of 2026.

Market Snapshot: 

Functional Food &Beverage Market- Report Coverage:

The “Functional Food &Beverage Market Report - Forecast (2025-2031)” by IndustryARC, covers an in-depth analysis of the following segments in the Functional Food & Beverage Market.

Key Takeaways:

Asia-Pacific Leads the Market

Asia-Pacific leads the Functional Food & Beverage market due to the increasing health awareness and growing demand for convenient, health-focused products. Most Asian countries have strong traditions of consuming herbal remedies, probiotics and nutrient-rich foods which align with the functional food trend. In November 2024, TurtleTree, a startup based in Singapore, specializing in precision fermentation of bioidentical proteins, entered into its first domestic partnership with Mad Foods, a producer of ready-to-drink coffee beverages. As part of the collaboration, Mad Foods will integrate TurtleTree's LF+ ingredient, a bioidentical lactoferrin protein, into its line of oat milk lattes. This addition is expected to enhance the nutritional profile of the beverages by providing immune support, promoting gut health and aiding in iron regulation. The launch of these functional beverages in Singapore is anticipated in Q2 2025, subject to regulatory approval. Additionally, government initiatives promoting health and wellness coupled with a booming e-commerce sector further support market growth.

Dairy Products Segment to Grow the Fastest

The dairy segment leads the functional food and beverage market due to its versatility and widespread consumer acceptance. Products such as fortified milk, yogurt and cheese are rich in probiotics, proteins and essential nutrients that cater to health-conscious consumers. Dairy-based functional foods are often positioned as solutions for digestive health, bone strength and immune support. In August 2024, The Collective in the UK launched functional yoghurt pouches. The products are targeted at both adults and kids and come in six varieties including Immunity, Kickstart, Restore, Invigorate, Gut Feel and Uplift. Moreover, innovations in lactose-free and plant-based dairy alternatives also contributes to segment growth.

Probiotic and Prebiotic represent the Largest Segment

Probiotic and prebiotic products dominate the functional food and beverage market due to their proven benefits for gut health and overall well-being. These ingredients are widely incorporated into yogurt, fermented beverages, dietary supplements, and even baked goods. The growing awareness of the gut-brain axis and the role of probiotics in boosting immunity has driven demand for such functional products. Prebiotics promote the growth of beneficial gut bacteria and are increasingly popular in fiber-rich foods and drinks. In April 2023, Sunsweet Growers Inc. launched three products including Sunsweet’s Probiotic+ Prunes that is formulated with BC30 probiotics and prebiotic fiber to support consumers’ gut health as a standalone snack or meal addition.

Awareness about Immunity and Gut Health Drives the Market

The increasing awareness of immunity and gut health is a major driver for the growth of Functional Food & Beverage market. 7 out of every 10 people in urban India experience digestive or gut health issues, as per a survey conducted by Country Delight in partnership with Indian Dietetic Association. By making digestive health a priority consumers can manage their well-being and mitigate the risk of gastrointestinal disorders and associated complications. As a result, there is a growing demand for functional food and beverage that benefit gut health. Ever since the pandemic, there has been a growing interest in immunity boosting functional food and beverages which is still going strong. Salada Foods Jamaica Limited reported that in Q3 2024, the sales of its Golden Turmeric Latte product resulted in a 46% jump in revenues.

Key Market Players: 

Product/Service launches, approvals, patents and events, acquisitions, partnerships, and collaborations are key strategies adopted by players in the Functional Food &Beverage Market. The top 10 companies in this industry are listed below:
1.    Nestlé S.A.
2.    Danone S.A.
3.    PepsiCo, Inc.
4.    The Coca-Cola Company
5.    General Mills, Inc.
6.    Kellogg’s Company
7.    Unilever
8.    ConAgra Brands Inc 
9.    Arla Foods
10.    Mondelez International Inc

Scope of the Report: 

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