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With growth in the functional beverage space showing no slowing down, Australian Beverages Council CEO Geoff Parker takes a closer look at the sector.

While the term ‘functional beverages’ may not sound particularly innovative, the products in this category – namely sports drinks, energy drinks and health beverages – are anything but ordinary. In fact, functional beverages are showing significant growth and key economic indicators suggest a category in great shape and full of energy.

According to IBISWorld, annual revenue growth in the five years to 2018-19 notched up 3.9 per cent. This is expected to continue to 2023-24, with growth estimated at 3.5 per cent per annum. Over the ten years to 2023-24, growth of that kind would deliver a significant $155.8 million revenue boost. In 2019-20, IBISWorld anticipates total revenue will reach $447.5 million.

Currently, the biggest product category in functional beverages by revenue is sports drinks. They contribute 54.5 per cent, followed by energy drinks at 27.3 per cent and health beverages at 18.2 per cent.

While imports have traditionally dominated the functional beverages sector, the Australian Beverages Council anticipates Australian production will increase over the next five years.

Healthy competition

It is clear there is strong and healthy competition in the sector, with numerous product launches in the last 12 months alone. Consumers are already benefitting from new drinks, including a swathe of products that offer functionality and refreshment, and many with no added sugar.

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