Brands marketing drinks that contain ingredients like vitamins, mushrooms, shrubs and minerals have fueled the functional beverage craze popular among Gen Z and Gen Alpha.
Why it matters: The $50 billion U.S. functional beverage market is forecasted to increase to $70 billion by 2028 as more consumers are seeking out healthier beverages from wellness-focused brands whose products advertise improved mental or physical health.
Recent investments in the functional beverage sector include:
- Key, a Florida-based zero sugar, ketone-fueled beverage startup, raised $4 million in seed funding in April 2024.
- Culture Pop Soda, a Cambridge, Mass.-based probiotic soda brand, raised $21 million in a Series B round in March 2024.
- Roar, a Pennsylvania-based electrolyte- and vitamin-infused beverage company, in March raised $10 million in funding.
- Odyssey, a Florida-based mushroom beverage maker, raised $6 million in an equity investment in February 2024.
- Spacegoods, a London-based D2C company focused on functional mushroom powder blends, in February raised £2.5 million in seed funding.
- Nirvana Water Sciences, a New York-based company specializing in water infused with a patented muscle-wellness ingredient, raised $6 million in February, per an SEC filing.
- Cure Hydration, a functional hydration brand, raised $5.6 million in Series A funding in April 2023.
Other developments include:
- Recess, a New York City-based beverage company that infuses its drinks with ingredients like hemp herbs extracts and adaptogens, hired Stifel Financial to raise $25 million, CEO Ben Witte told Axios exclusively in March 2024.
- Poppi, an Austin-based prebiotic soda brand, is reportedly being pursued by Coca-Cola Co., which has been making acquisitions to diversify away from surgery drinks. Poppi raised a $25 million Series B in December 2022.
