The Functional Revolution

The functional drinks revolution is reshaping what consumers expect from every bottle, can, and carton. For brands, the question is no longer whether to play in this space; it's whether you can do it credibly and what it means for design. 

The category shift: from niche to normal 

The demand for drinks that do more than flavour and hydration didn’t happen overnight. Functional drinks have existed for years, what once was niche and limited to a few specific need-states has now been normalised as an everyday option. 

Over the years Lucozade has gone from hospital beds to the sidelines. Red Bull has evolved from a late-night (or early-morning) hero to a lunchtime favourite (1). And new market entrants, like Liquid I.V. has reframed electrolyte powders, which were once reserved for athletes, to being part of your daily wellness ritual. These brands don’t exist in a vacuum: together they’ve changed the nature of the soft drinks category.  

Today, the global soft drinks market is worth approximately $135 billion and is projected to reach $208 billion by 2035 (2). And the growth isn’t coming from the usual suspects: 46% of brand investment is directed at low-sugar and functional innovation and 36% of new product launches include functional ingredients (like electrolytes, vitamins, botanicals). In a category that used to be dominated by flavour and refreshment, consumers now demand efficacy. 

The consequence of more choice: a confused shelf Functional drinks span multiple need-states, each with their own specific set of ingredients and formats. The expansion of functional drinks means more options for consumers. But where the soft drink aisle was once clearly codified, it’s now confused. The mixture of new design codes, blending of existing codes and out-of-category codes (like Liquid Death’s heavy metal aesthetic) has created a self-referential soup. A non-alcoholic beer could easily be mistaken for a prebiotic soda, or vice versa.

 
The issue isn’t that more brands are entering or extending into the functional space. The issue is doing so without a clear point of view that’s anchored within the broader brand proposition, equity and association.  

Two strategic considerations before extending into functionality 

1. Thinking portfolio first

Don’t think of functionality as a key product, think of it as a way to organise your portfolio. The brands capitalising on this demand space have created a permission scale within their portfolio: with indulgent, core products at one end, and more permissible variants at the other.

2. Defining brand fit 

Not every brand should enter every functional space. The ones that work feel obvious in hindsight, because the functional benefit supports the broader brand proposition. Greek yogurt brand, Chobani, launching an RTD protein product builds on the brand’s existing equity and product intrinsic (an extension strategy that has been credited for 30% in growth) (3). Powerade extending into energy is a natural fit for a brand built on performance. Innocent launching an immunity shot enables them to extend into a new juice-first occasion and reinforce juice as a ‘better-for-you’ choice.  

By contrast, it should be obvious as to what feels wrong for your brand. Taking Red Bull as an example, it’d feel disingenuous for them to launch a calming, CBD range.  

Three principles to follow in design

1. Lead with emotion, then familiarity, then proof

In a category cluttered with functional claims and reasons to believe (RTBs), it’s reasons to care (RTCs) that are invaluable. The brands cutting through aren't leading with their most innovative ingredient. Instead, they lead with what the product offers emotionally, then substantiate it with a familiar ingredient that adds instant credibility. For example “sustained energy, with caffeine” or “for a quieter mind, with chamomile”. The technical proof comes third, whether that’s specialist ingredients like nootropics or clinical data. It’s there for those who are looking for it, instead of a way to navigate the shelf. 

2. Use pack structure to reinforce your proposition

Format isn’t just a production decision, it’s a way to reinforce your product proposition. The form your product appears in signals what it is, before any words are read on the label. The structure can tell you the category, like a carton for juice. But it can also tell you the usage occasion with a sports cap, or the variant with a slim, low-sugar can.  

Better yet, format innovation can unlock new shelf space. Many incumbents are fighting for shelf space in fridges, but a sachet or tablet can take your brand out of its regular arena and into a new, more credible space like the supplement aisle. This isn’t just a product extension decision, it’s a distribution strategy. Being featured in these aisles can reinforce your brand’s overall functional credentials.  

3. Think brand, not category first 

Extending into a new need-state, functional or otherwise, demands adoption and implementation of your Distinctive Brand Assets to create the connection necessary between where you already are and where you’re going next. Anchoring your new products within your existing brand assets stops your innovation or reformulation from looking like a copycat offering. You need to stay true to what you offer as opposed to blindly following category conventions, especially when those conventions continue to become blurred.  
 
If you’re launching an energy proposition for example, don’t feel the urge to rely on lightning bolts as a shortcut. Whilst a certain symbol or aesthetic might signify the category you’re extending into, if it’s at odds with what your broader brand stands for then you risk creating a disconnect between your audience’s needs and emotional brand connection. 

In summary 

The demand for functionality in soft drinks isn’t a passing trend. In fact, it’s always been a demand space; it’s just graduated from niche to normal. As marketers, we need to anchor any new products in what a brand already stands for, define the functional need-state(s) that most effectively reinforce the brand proposition, and then develop a design system that is coherent with what already exists. Getting that right provides you the opportunity to speak to new audiences and unlock new usage occasions. 

References 1. https://www.independent.co.uk/life-style/food-and-drink/tesco-meal-deal-red-bull-drink-b2896863.html 
2. https://www.globalgrowthinsights.com/market-reports/soft-drinks-market-121968?utm 
3. https://www.fooddive.com/news/chobani-posts-red-hot-growth-as-food-rivals-languish/804283/