UK Consumers Find Thirst for Functional Beverages

Consumers are opting for no-ABV beverages with health-boosting benefits.

What’s happening: CBD startup TRIP has become the fastest-growing soft drinks brand in the UK, following a 522% YoY sales increase in 2022.

Backed by a recent $12M investment, the British company plans to expand its global footprint via strategic partnerships, like membership club Soho House and meditation app Calm.

For context: Founded in 2019, TRIP has found a sweet spot by meeting consumer demand for culturally relevant drinks touting functionality and health benefits — a strategy leading to positive results:

• In the UK, it currently holds 88% of the total CBD drinks market share.
• Its distribution reaches 11K stores across the UK, including Sainsbury’s, Holland & Barrett, Boots, and Ocado, plus Carrefour in France.
• To date, it has amassed the most organic search traffic of any CBD drinks brand globally, per Semrush.

Of note, during Dry January this year, it reported 800% sales growth in its large retailer segment.

Thirsty for wellness. Signalling a broader trend, the global functional beverages category is expected to reach $279B by 2030. Running parallel, as consumers increasingly discover no alcohol is the healthiest amount of alcohol, the next generation is already exploring different tastes.

In the UK alone, adults aged between 16 and 24 are now most likely to be non-drinkers, while 56% of consumers opt for functional beverages to treat or prevent specific conditions.

Creating a Buzz

Trading hangovers and sugar crashes for functional beverages elevating mood, reducing anxiety, and boosting energy, multiple categories are enjoying an upwards trajectory.

• Leveraging CBD, UK brands OTO (£2.9M) and Goodrays ($3.31) have won investment, with the latter becoming the first CBD beverage sold in UK supermarket chain Tesco.

• Utilising adaptogens and nootropics, Bella Hadid’s Kin Euphorics recently expanded to the UK, while Denmark’s Clutch Nutrition and the UK’s Virtue and Three Spirit have completed significant raises.
• Tackling gut health with pre- and probiotics Hip Pop in the UK, Sorted and Bobby in Australia, and OLIPOP and Poppi in the US are all scaling up.

CPG giants are also getting in on the act. In 2019, Coca-Cola invested $20M in Health-Ade Kombucha. In 2021, Danone’s venture arm ploughed £2.5M into UK’s MOJU.

And following the “clean energy” boom, PepsiCo took a $550M stake in energy drink maker Celsius while Keurig Dr Pepper sunk $863M into C4 energy drink maker Nutrabolt.

Takeaway: As younger consumers continue to pivot towards drinks with benefits, the outlook appears bullish. However, whether positioning behind performance or healthy socialising, brands will need to clearly define the who, what, and when until functional drinks truly stack up against the traditional, often alcoholic ones.