Emerging categories: Functional and Wellness drinks case study

The functional and wellness drinks category is at a critical tipping point.

What started as a handful of niche brands is evolving into a mainstream segment that's reshaping the entire soft drinks landscape.

But with growth comes confusion - and opportunity.

Understanding Category Evolution: From Trend to Mainstream

How many brands does it take to make a category?

There's a tipping point in the adoption curve when a group of brands go from being on-trend and ahead-of-the-curve to appealing to a more mainstream audience.

Gradually the space for one or two SKUs on the edge of a fixture turns into a shelf to cater for this emerging need.

Then a segment emerges, and before you know it, it becomes a full category.

Sometimes brands may think they're competing for share of space.

But actually, when several brands are busy talking about similar messages, their voices become heard and change starts to happen.

We've been analysing several categories to identify that tipping point so brands can adapt their approach accordingly.

One category that stands out is Functional and Wellness drinks. 

How are Functional and Wellness Drinks evolving?

Evidence #1: The Soft Drinks Category Is splitting Into New, Needs-Based Segments

Carbonates still dominate - twice the size of sport and energy drinks

But two sub-categories are emerging - driving growth and establishing presence

1. Functional and wellness drinks including CBD and mindful blends, kombucha and gut health, functional water and sodas
2. Adult low and no-alcohol soft drinks are also growing, with some brands crossing into wellness due to low sugar claims

Evidence #2: The number of brands listed in the major multiples has increased significantly over time.

• Long quiet period (1993–2009):  Just three legacy brands, mostly energy
• First wave (2010–2012): Kombucha pioneers and Vithit entered the market and the functional category started to form
• Clean energy surge (2016): Three brands in one year as natural energy becomes more mainstream
• Category explosion (2019): Five brands launched, CBD and Craft kombucha boom hit simultaneously and the category truly arrived.

The gold cumulative line shows how quickly the pace accelerated in the second half of the decade which explains why we are now seeing a change in-store.

Evidence #3: Retailers Are Naming the Category

Major retailers are recognising that functional and wellness drinks are large enough and relevant to warrant specific segments, at least online:

• Waitrose - Created a "Dietary and Lifestyle" section including high protein, vegan, free from, and functional and wellness drinks
• Tesco - Categorise wellbeing drinks within the broader "Juices, Smoothies & Wellness Drinks" category
• Sainsbury's - Have a wellbeing drinks category, grouped with energy drinks under "Sports, Energy and Wellbeing"

The Problem: Category Confusion Is Hurting Sales

The category spans four key sub-segments:

CBD & Mindful Blends, Kombucha & Gut Health, Functional Water, and Functional Energy & Sports Drinks. 

When categories evolve at different speeds within different retailers, it creates confusion for shoppers and consumers.

In an article in The Grocer, Vital Drinks founder Al Duffield referenced a survey showing that:

• 3 out of 4 shoppers find the functional drinks category confusing
• Only 1 in 20 who want to buy functional drinks actually do which is a sizeable gap

We analysed the functional soft drinks category to identify which segments are clearly defined and where there is confusion.

Key Observation: Category placement and definitions vary by retailer

Waitrose has the most developed and granular functional drinks taxonomy

• With a branded “Better for You Drinks” hub sitting under Tea, Coffee & Soft Drinks.
• It is the only retailer out of the major grocery multiples with a dedicated CBD sub-category and named Kombucha & Gut Health sub-category. 
• Some brands appear to be deliberately cross-listed under Dietary & Lifestyle presumably to reach health-conscious shoppers browsing by lifestyle rather than drink type.
  

Tesco blends functional and mainstream brands under “Sports, Energy & Wellness Drinks”

• Energy brands including Tenzing sit alongside mainstream cans like Red Bull
• Within Tesco, Kombucha has its own sub-category, but some kombucha brands (e.g. Remedy) also appear in Smoothies & Added Benefit Juices, reflecting ambiguity in the classification of fermented drinks.
  

Sainsbury’s splits functional drinks across two areas based on temperature

• Chilled kombucha and wellness drinks appear under Chilled Food
• While ambient CBD and vitamin-enhanced drinks sit under "Sports, Energy & Wellbeing" > Vitamins & Health Drinks. 
• Shoppers could encounter the same brand in two different parts of the site depending on format.

Asda uses the broadest category definition of the five major grocery multiples

• Functional drinks sit within “Sports, Energy & Health Drinks” with a Health & Wellbeing sub-category that captures CBD and functional brands.
• There is no dedicated CBD sub-category. The overall structure suggests Asda is still maturing its approach to functional drinks navigation online.
  

Morrisons has the most unusual structure, splitting functional drinks across two entirely separate departments

• General wellness drinks and kombucha sit under Drinks > Wellness Drinks
• While CBD and specialist functional items appear under Health, Wellbeing & Medicines > Functional Drinks — a section shared with protein powders and vitamins. This health aisle positioning elevates brand credibility but may reduce impulse purchase frequency compared to retailers who keep all drinks together.
  

[Note: Our analysis is based on publicly available data as of 4th March 2026, reflecting the situation at this time as retailer listings are subject to change,]

Why is this an issue?

Because when categories evolve at different speeds within different retailers, it creates confusion for shoppers and consumers which can limit trial and ROS.

3 Strategies for Brands in Emerging Categories

So what can brands do to reduce confusion and appeal to the next wave of consumers to move along the adoption curve and step-change their growth?

1. Clarify Primary Purchase Decision Needs

• Demonstrate what consumers want and which other products meet similar needs to find the right place in-store.
• Understanding shopper behaviour is key to optimal placement.

2. Test Different Locations and Adjacencies

• Just like A/B testing in marketing, brands can trial different in-store locations to find the most relevant place for target shoppers.
• Data-driven placement decisions win.

3. Evaluate Messaging for the Next Wave

• Determine which messages make sense for the next wave of consumers you're trying to target.
• As categories mature, messaging must evolve from early adopters to mainstream appeal.

The Bottom Line: Evidence Wins

Ultimately it all comes down to evidence.

Rather than just presenting buyers with problems or highlighting challenges, successful brands provide retailers with evidence and solutions.

Brands that can demonstrate clear consumer need, optimal placement strategies, and compelling messaging will be the ones that thrive as functional and wellness drinks complete their journey from trend to established category.

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Need Help Navigating Category Evolution?

If you're a brand looking to find the right placement in an emerging category, or a retailer wanting to make sense of evolving consumer needs, we can help.

Dynamic Reasoning specialises in category strategy and shopper insights - helping brands and retailers turn complexity into clarity with evidence-based solutions.

📧 Get in touch: Contact us at Dynamic Reasoning
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Let's work together to position your brand for success in the categories of tomorrow.