Tough trading conditions may risk stifling innovation for functional drinks brands, but where there’s passion and ambition, growth is still possible reports Rosie Greenaway
It would certainly seem that the coveted ‘moment’ which all F&B categories hope to have has arrived for functional drinks.
Even the beer companies are cashing in, with the launch of Lifted’s Alcohol Free High Protein Beer and Corona’s vitamin D-infused Corona Sunbrew 0.0% bringing added health benefits to booze-free beverages.
Looking at the latest figures, the market size of the functional beverage and fruit drink production industry stood at £1.4 billion last year and it experienced a growth of 8.8% [Ibis World].
With supermarket demand growing, there’s a clear opportunity for sector growth this year and beyond. It’s something that magnesium water brand OHMG knows all about, having been included by Waitrose in a trial of its functional drinks section across 30-plus stores.
But could that growth be hampered by a suboptimal trading environment? With looming changes to important rules, ingredient and packaging supply chain limitations and eye-watering inflation, British drinks brands are enduring undeniably tough times.
Will Fugard, CEO of Gusto Organic, offers his frank take on the ‘existential pressures and threats’ currently plaguing SMEs – but he’s also here to reassure industry that despite the difficulties, all is not lost. Innovation might be impacted, but opportunity still exists.
The SME struggle
Few SMEs would rest on their laurels during times of such commercial adversity, and Gusto Organic is no exception, continually exploring ways to pivot and compensate for the ‘exponential growth in costs’ which most businesses are experiencing – from energy and ingredients to packaging and shipping.
“Packaging really is a concern. [A glass] bottle used to cost me about 8p or 9p; now it’s 21p. The cost of pasteurizing a bottle at plant has gone up. There’s only so much you can charge for cola … consumers are squirming enough as it is. Brexit has created a situation where we need to be better at manufacturing in the UK [and] start producing glass and cans. We never use plastic … but glass is becoming economically unviable. There are only really four can manufacturers in the UK and they work closely together. As an SME, are you going to be able to buy a quarter of a million cans of one SKU?”
It’s our nation’s SMEs which are ‘responsible for innovation’ he says. “This country is an absolute treasure chest of innovation. My fear is that the current climate is stifling that innovation; it’s making it very difficult for start-up brands to operate and very risky for brands such as ours … to bring out new SKUs.”
When the rules change around the importation of goods in October, Fugard predicts ingredient shortages. “For brands like us who import 12 tonnes of lemon peel … from Sicily that could become very difficult.” Solutions are never far; Gusto is future-proofing by increasing order volumes to ensure supply – what was once two palettes of blood orange peel is now 12. “It’s about being very nimble and adaptive.”
“This country is an absolute treasure chest of innovation … my fear is that the current climate is stifling that innovation
But rising costs are financially unsustainable. “It’s a tricky time. I don’t think there’s a … drink business that hasn’t looked at overheads recently. Everyone’s in survival mode. That sounds bleak but there’s also good stuff going on – but it’s tempered with the need to get through one of the most extraordinary times I’ve ever experienced in 30 years.”
The brighter side
Now for more on the ‘good stuff’. Fugard’s philosophy is that ‘sometimes you’ve got to look at what you’ve got in your stable’. For example, Gusto’s Real Cola and Cherry Cola sales have ‘absolutely rocketed’ in the UK and internationally, so Fugard’s inclination as a business owner is to take already successful SKUs to new heights, rather than pushing ahead with costly, risky NPD. “We are innovating but what we’re looking at now is alternate formats of existing [products]. With Sicilian Blood Orange and Sicilian Lemon with Yuzu we’re looking at … cans [to] open up outdoor festivals and travel – a whole bunch of destinations that glass isn’t appropriate for.
“We’re seeing a lot of interest internationally as well; the Middle East [is] a huge territory for us. We’re seeing a region that is very swiftly pivoting towards organic, pivoting away from sugar. There’s an element of policy-level sugar reduction going on, but my suspicion is it’s actually a younger generation who have better access to information, who are more global in their perspective. We just launched our entire range into one of the biggest supermarket operators in the Middle East. We make beautiful, premium organic drinks and our market is the world – by doing that it gives us the ability to survive and thrive.”
What many may not realize is that the brand was founded on a functional energy drink called Gusto Original, devised in 1987 for a Whole Earth party. “It was a very innovative cocktail of ingredients including guarana and cola nut … a natural, ceremonial ingredient that gives you a sense of wellbeing … and makes you feel really good about the world. It came out two or three years after Red Bull and presented a natural alternative to a new class of energy drinks which were far from natural. We’ve been making this drink non-stop since 1990. It’s all over the UK, Holland and Belgium. It sells itself. It’s got a very loyal following. It’s a functional drink that addresses the concerns we had around the emerging energy drink market. It tastes fantastic, which is unique in the world of energy drinks, and it’s got a lovely stimulating effect. It gives you a gradual buzz … without getting all jittery.
“We in the organic and natural world will always have an interesting story to [tell]. You’re challenging big brands, you’re challenging the conventional wisdom around how a soft drink should be made.” But, he says, as a sector we could do more to call out bad behaviour from big brands. “Talking more about … the benefits of avoiding chemical ingredients, and the greenwash that exists with a lot of drinks that look natural and simply aren’t – we need to be more campaigning as an organic movement. We’ve got to point at the phonies, make more noise.”
A thirst for function
Star Khechara, founder of the Skin Nutrition Institute, sees no reason for brands to compete in a market of soft drinks ‘when there is a new, exciting world of skin-rejuvenating infusions, mood-altering teas and gut-healing superfood juices to be a part of’. In other words, if it ain’t functional, why bother?
“One of the easiest ways to increase consumption of functional foods, phytochemicals and nutraceuticals is through nutricosmetic beverages,” says Khechara. “Juices, tonics, teas and even alcohol-free IPAs are all up-levelling their health benefits to include coveted botanicals and nutrients like lion’s mane, turmeric, ashwagandha, l-tyrosine and probiotics. Drinks are no longer just for fun or hydration, they’re a serious therapeutic intervention targeting three main health trends: brain, beauty and bowels.”
Mushroom brand DIRTEA knows just how much medicinal mushrooms appeal to Gen Z in particular. Hailed as ‘the beauty mushroom’, tremella proclaims ‘endless benefits’; DIRTEA’s new launch, Tremella, allows beauty aficionados to achieve glowing skin, a reduction in fine lines, and improved skin elasticity, hyaluronic acid and collagen levels – all via a ‘delicious daily drink’.
DIRTEA has seen a rise in the popularity of functional drinks among Gen Z consumers, who are routinely ‘adopting them and incorporating them into their lifestyle’. “Gen Z are thirsty for functional drinks which can help everything from boosting energy to clearing skin, enhancing focus, easing anxiety and supercharging immunity, and by 2030 the [global] category is expected to reach $279 billion,” says the brand.
Drinks are no longer just for fun or hydration, they’re a serious therapeutic intervention
Another brand addressing a variety of needs is functional ‘super shots’ company Unrooted Drinks which harnesses the benefits of baobab to improve energy and aid digestion. Founder Nathan Clemes grew up in South Africa surrounded by the famous trees which bear this prized superfruit, and in 2017 he decided to turn this nutritional powerhouse into a drinks line. “We mix this ancient, powerful superfruit into all our functional shots because it tastes great, is good for you and helps support rural communities in Southern Africa,” says the brand. Its latest release is Punchy Turmeric, which blends the signature baobab with turmeric, orange, carrot, ginger and black pepper to create ‘a delicious shot that’s high in fibre, vitamin C, antioxidants and anti-inflammatories to support your immune system and give you a boost of natural energy’.
Putting the fun in functional
The definition of functional – ‘designed to be practical and useful, rather than attractive’ – does an injustice to modern, design-led brands. Today’s market is blessed with numerous stylish labels which answer a subset of functional necessities, from mind and mood to gut health and good vibes.
Flying the flag for nootropics is Nexba which last summer added three new Sparkling Nootropic SKUs to its collection to support healthier skin (GLOW), settle nerves (CALM) and boost brain function (FOCUS).
London Nootropics, whose stand was never short of a crowd at NOPEX, proudly sampled its Flow, Zen and Mojo coffees, creating lattés to bring mental clarity, balance and vitality to visitors as they sipped and strolled up and down the aisles.
Other mood-managers include Peak Mood Drinks’ latest creation, Unwind (available as Peach Rose or Blackberry Hibiscus) – a sparkling beverage which raises serotonin levels to leave consumers feeling clear and calm, and regulates stress and cortisol levels with magnesium; Vitamin Well’s Focus Blackcurrant, which offers low-calorie, high-caffeine content to increase alertness and concentration; Rokit Health which makes Mind Boost Coffee in recyclable Nespresso-compatible pods; and Three Spirit which uses botanical alchemy to ‘enhance your night from start to finish’ with a trio of sophisticated alcohol-free spirits: Livener and Social Elixir (designed to energize and elevate) and Night Cap (a calming after-dinner option), to be poured over ice or added to tonic.
Marketed as energy drinks, Tenzing Natural Energy blends British apples and Cornish seaberry with acerola, green tea and lemon juice for a plant-based uplift; Buzzed Energy Tonic Water partners natural caffeine with pure blossom honey; and The Horny Goat ‘keeps the energy flowing’ with a sparkling infusion of pomelo, mango, B vitamins, zinc and CoQ10.
Away from mood, digestive health is well represented in the functional drinks space: MOMO Kombucha is brewed and bottled in London the old-fashioned way – organic and unfiltered to ensure its four flavour-ways bring maximum gut benefit; Fibe Soda (in Zesty Orange, Fruit Punch and Lush Lemonade) provides 5g of prebiotic fibre per can for happy tums and taste buds; and Fhirst Living Sodas boast two billion live cultures and 5g of prebiotics per serving, helping the Belgian brand develop a reputation – and win awards – for ‘guilt-free soda’ which ‘overdelivers on taste and health’. ‘It’s more than a party for your taste buds,” says Fhirst. “It’s a serious pampering for your immune system.”
Trends can come true
In Holland & Barrett’s (H&B) The Wellness Trends Report 2023, the retailer predicted a ‘surge’ of mushroom-based drinks, citing Cheerful Buddha Lion’s Mane Latte as an already popular shelf-filler. This trend is now coming to life, and interest in mushrooms is booming. “There has been a 157% increase in [searches for] the term ‘mushroom’ on the H&B website,” says the retailer. “Lion’s mane has had 630 million views on TikTok with almost 26,000 searches for lion’s mane this year alone.”
Digestive wellness has become ‘the phrase on everyone’s lips’, says H&B, with searches up by 114% in Q1 and Q2. “Good digestive health has truly come into customer consciousness,” it says, highlighting Glow Kombucha, plus its own new three-strong line of kombuchas, as popular choices. H&B’s own-brand range serves functionality across a number of key consumer concerns beyond gut health, including tiredness, skin and joint health and brain function: energy-boosting Mango & Yuzu includes vitamin B12 to reduce fatigue; glow-enhancing Apple, Cucumber & Mint features vitamin C for collagen formation; and focus-boosting Pineapple & Ginger contains iodine for normal cognitive function.
Also addressing tiredness and fatigue is H&B’s Expert Sleep Unwind Ashwagandha Drink which ‘helps you take back control of your sleep routine naturally’.
FHIRST Living Soda
FHIRST
Tel: 07872 469350
E-mail: [email protected]
www.fhirst.com
FHIRST Living Soda is the NEW all-natural, zero sugar living soda that combines the immunity and gut-loving benefits of both probiotics and prebiotics. Backed by science, FHIRST has a unique, fhirst of its kind formula. Each serving offers 2 billion live probiotic cultures which are micro-encapsulated for stability, plus 5 grams of dietary plant fibre from chicory inulin, helping to stimulate the growth of good gut bacteria.
Winner of the BEST NEW DRINK PRODUCT AWARD 2023, FHIRST is available in 3 lip-smacking flavours….it’s the soda on everyone’s lips right now. Visit www.fhirst.com for more information.
NutraLiver – Liver Detox Tea
NutraTea
Tel: 020 3146 7150
E-mail: [email protected]
www.nutratea.co.uk
NutraLiver® by NutraTea® is 1 in a range of 22 functional herbal teas that has been purposefully formulated by pharmacists and nutritionists to support and maintain liver health and contribute to liver protection. Containing only 100% active botanicals that have been sustainably sourced, this well-balanced herbal blend includes Milk Thistle, Turmeric and Fennel to contribute to the detoxifying potential of the liver. Each biodegradable tea bag contains no flavours, oils or excipients allowing for it to be reused throughout the day, offering a delicious cup of herbal tea that helps maintain liver function.
OHMG Magnesium Water
OHMG Brands Limited
E-mail: [email protected]
www.ohmgwater.com
With ‘Relaxation Drinks’ experiencing rapid growth in the functional drinks category, OHMG is the first ‘Relaxation Drink’ in the UK to use Magnesium as its USP. And with every can containing as much Magnesium as an Avocado, OHMG helps support Relaxation, Balance, and promotes Mental Well-being. Our deliciously fruity drinks are made using our unique TripleMg® formula (three of the most bioavailable forms of Magnesium), 100% Natural fruit extracts, flavours and botanicals and no sugars or artificial sweeteners. ‘Unwind Your Mind’ with OHMG. Now available on www.ohmgwater.com, Amazon, Whole Foods, John Bell & Croyden, Planet Organic, Waitrose and other leading independent stores nationwide.
Ditch the plastic drink the juice
WFBM Healthcare Ltd
Tel: 01782 528611
E-mail: [email protected]
www.wfbm.co.uk
New from the Ginger People is the amazing Fijian Turmeric juice which provide 99% pressed juice in an eco friendly glass bottle.
Unlike many other brands who use as little as 10% juice we think if you’re buying Turmeric thats what you want.
Each bottle provides up to 20 shots at under £0.50 each and as a launch we’re offering a 3 for 2 offer while stocks last. Later this year the Turmeric will be joined by the Ginger shot bottle.
Contact WFBM Healthcare for a free point of sale pack
