Functionality in Beverages Reaches Coffee and Tea

pouring tea

Traditions, belief in the restorative power of local ingredients and evolving lifestyles underscore new consumers expectations for favourite beverages

KerryDigest Fast Facts:
  • Functional beverages are trending, but not all opportunities in the space have been explored.
  • Functional coffees and teas may be the next area of interest for consumers who want double-duty from favourite beverages.
  • Fortifying coffee and tea with known ingredients, such as science-backed botanicals, herbs and spices or probiotics, can help build consumer trust.

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From digestive and immune health to protein fortification, functional beverages, or beverages with health benefits, feed the increasing consumer demand for healthier diets within Asia Pacific, the Middle East and Africa (APMEA). Now, in a new twist, even coffee and tea are getting functional health updates, with supercharged brews such as coffee fortified with plant-based protein or teas with antioxidants and probiotics slowly but surely becoming daily specials in today’s new normal.

Growth of better-for-you and functional food and beverages
Mordor Intelligence projects the global functional beverage market’s CAGR at more than 8% by 2024, with Asia Pacific at 7.5% CAGR between 2020 to 2025. Supporting this is a report from MarketsandMarkets, which indicates probiotics in food and beverage account for over 80% of the market, growing at 6.8% CAGR. In Asia, immune system support is the top reason for purchasing food, beverages and health supplements in all countries except Japan, where it ranks second, according to a Kerry proprietary research.

Meanwhile, people are recognising the importance of protein, which has moved beyond sports nutrition to the wellness space, in maintaining good health, particularly among older adults and families. More than 50% of consumers worldwide consume protein in both food and drink, which places the global protein ingredients market at an estimated EU€16.8b, with a CAGR of 5.3% by 2022, according to Kerry primary research and MarketsandMarkets. Fast-rising is the plant protein category, with its appeal in health and sustainability.

Not to be overlooked are spices, herbs and botanicals such as tea, which consumers perceive to be inherently healthy and deliver strong functional benefits. In fact, plant botanicals have long been associated with traditional medicine, aromatherapy and herbal infusions. When this is combined with science-backed evidence of health benefits, you get the ‘healthy halo’ effect.

Innovating better-for-you beverages in the new normal
In APMEA, to meet this demand for healthier beverages, a virtual tasting event, “Beverages in the New Normal”, was held in July. This included an interactive live tasting session among attendees of a selection of curated ready-to-drink beverages that used our functional technologies. The event was hosted by a team led by Simon Hague, Lead for Tea, Coffee and Cocoa, Kerry APMEA. Here, Simon speaks to Ming Rodrigues, of KerryDigest, about the diverse and unique demands on healthier beverages among consumers in the region and opportunities within the functional coffee and tea space.

KerryDigest: Today, innovative flavours and healthful ingredients are transforming that regular cuppa or ready-to-drink beverage. While the fallout from the pandemic has certainly made consumers more health-conscious, what else is driving this shift?

Simon: Consumers post-COVID-19 are definitely more thoughtful of their beverage choice, but not all consumers under the new normal are shifting to healthy beverages. Consumers have other considerations: income and budget for instance, and for families with kids, ‘pester power’, or the pressure of kids to get parents to buy certain products touted in the media, which is stronger than ever with the stay-home situation.

One thing that is clear and consistent is that home delivery is here to stay, and that has a huge impact on what people choose to eat and drink. Generally though, health, value and indulgence are the main drivers of this consumption behaviour emerging from the pandemic, and we need to have solutions to help our customers in all three scenarios.

KerryDigest: In APMEA, where local brewing traditions are strong, what are your views about the tea- and coffee-drinking experience today?

Simon: APMEA is a big, complex region with varying traditions. Tea is big in east APMEA, coffee in the west. We see the impact of independent stores versus chains. For example, Australia-New Zealand (ANZ) is dominated by independent stores, which make up 96% of the market. These dynamics influence the way beverages are made, sold and consumed.

We are also seeing more cross-fertilisation of cultural traditions across markets. Spanish latte, for instance, which has been a massive success across the Middle East, can be linked back to the Southeast Asia tradition of “kopi” or local coffee.

There was a time when you could say drinking coffee or tea depends on your age and gender, but this is far from true now. There are myriad reasons today: people drink them for an energy boost, to relax or for post-workout recovery.

The overriding driver is that consumers want choice, are becoming more educated about both tea and coffee, and enjoy the beverages at a very personalised level.

inspired beverage creations
As your brand considers what's next for coffee and tea products, consider these RTD drink concepts, which were created specifically for Kerry's July 2020 virtual tasting event by Simon Hague, Lead for Tea, Coffee and Cocoa, Kerry APMEA, and Gerardo Callipo, Business Development Manager, Foodservice, Kerry APMEA. 

Rooibos Ruby Tea
Caffeine-free and enjoyed in South Africa for centuries, Rooibos tea carries the soothing subtle aroma of marigold flowers with gentle notes of creamy caramel. This blend boosts good gut bacteria to support digestive health with the inclusion of BC30®

Summer Breeze
Naturally caffeine-free and a rich source of antioxidants, rosehip and hibiscus flowers combine into an appealing red infusion with a delicious fruity aroma. Tart and refreshing, Summer Breeze offers the health benefits of hibiscus with the immune-enhancing support of Wellmune®, our clinically-proven natural immunity ingredient

Protein Coffee
Protein coffee is a delicious way to support weight management, muscle health and lean body mass, while keeping you sated. The plant-based protein rich latte made with smooth 100% Arabica cold brew coffee serves up nutrition, taste and texture

Golden Latte
The golden latte—which is a latte made from turmeric milk—is a traditional Indian drink known for its health benefits. Curcumin, the active component in turmeric and a powerful antioxidant, has been used in Ayurvedic medicine for centuries. Golden Latte combines the potency of turmeric with Wellmune®

Bulletproof Coffee
Made with 100% Arabica cold brew coffee, Bulletproof Coffee is a high energy beverage. It stimulates weight loss by way of ketosis—a metabolic state where fat is burned for energy—boosts cognitive function, and clears brain 'fog' for mental clarity

KerryDigest: What are the top three reasons consumers in the region would buy a beverage with new flavours and added functionality?

Simon: Visual appeal and social media are huge consumer influencers. Today, people are excited to try new products and social media platforms like Instagram, TikTok and WeChat are where they turn for information. In these social spaces, visuals rule. The more attractive the product, the greater the potential. And so in my opinion, the top reason why people purchase a drink is because it looks good. The second is familiarity with an ingredient. To get consumers to try a product for the first time, it needs to contain ingredients consumers already know or appreciate. That means you could pair it with a popular fruit or well-known bases such as oolong tea or espresso. The third reason is when consumers understand and trust the value and benefits offered by a beverage. So a clear positioning of the brand product is key to unlocking mass market appeal.

KerryDigest: Some consumers may be sceptical of health claims from botanicals and natural ingredients like hibiscus, turmeric, cardamom or ginger. How can the industry offer beverages that are unique and differentiated while delivering on health benefits?

Simon: APMEA is a unique market with respect to the ‘health halo’ effect. Historically, many local ingredients in the region known to be powerful antioxidants have been used for hundreds and thousands of years in daily cooking. The belief is strong and has been handed down through generations among families and society. Interestingly, now we know from science that many of these ingredients actually do have healing and health-giving properties. For instance turmeric, an ingredient now more common in coffee and tea, is a powerful adaptogen known for fighting the effects of stress and re-balancing the body, among other benefits. What’s important is to meet consumer trust and understanding and their need to see research-backed data to support health claims. So products deeply rooted in health traditions but with clinically proven results will likely have the best success in the market.

KerryDigest: What are some key considerations that will direct beverage innovation?

Simon: Beverages are known to be a driver for innovation for the ease and speed of launch and testing in the market. Consumers are also more likely to experiment with beverage before food. What will shape beverage innovation today? In foodservice, these are usually driven by in-store operations, but this will change as more customers expect the same experience at home as they do in-store. With the pandemic, we have to now think about reduced sales or customer demand for certain products, delivery constraints and how a consumer receives the product amid restrictions, as well as global geopolitical situations. These will all challenge the supply chain and access to raw materials, and ultimately product innovation.

Beverages are known to be a driver for innovation for the ease and speed of launch and testing in the market. Consumers are also more likely to experiment with beverage before food.espresso being brewed

For retail, it must continue to improve on the in-home consumption experience and meet consumer desire for better tasting, more natural, sustainable and in some cases, more affordable products, such as coffee pods and capsules, for instance.

And finally, my observation is that while ‘pester power’ in the home might be on the rise, when parents grocery shop, other priorities like health and cost mean that what will end up in the cart are more nutritious items, which bodes well for functional beverages.

KerryDigest: What’s your vision of the future of tea, coffee and refreshing beverages? As a consumer, what do you look forward to experiencing some day?

Simon: I believe that customisation is the way forward as increasingly consumers want their beverage to be unique and meet their needs. For me, I love simple ingredients, so I cannot wait to return to Panama to my favourite coffee farm or collect tea leaves fresh off the bush in Japan!

To learn more about partnering with Kerry on functional beverages or other on-trend products, contact us.

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