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Beyond basic hydration and satisfaction—”functional beverages” offer health benefits, communicate values, and promise enjoyment in profitable, new ways. Today, the shift toward wellness and inclusion is changing bars at their core.
To help you rise to this occasion, consider the functional beverage market as a unique set of non-alcoholic beverage opportunities. Adding health-boosting benefits could mean shifts for your brand, additions to staff training, and a whole new menu that speaks the “functional” language.
You’ll see what drives this change, and some of the most important facts to know about where functional beverages will be in the next 10 years. Understanding these facts will help you strategize your next step to snag customer spend.
Key Takeaways
Functional beverages represent a compelling opportunity for bars to meet changing consumer needs, differentiate their offerings, and boost profitability. By pricing for value, investing in technology, and embracing new customer needs, you can profit from the next big thing in beverage service.
- Functional beverages are a high-growth, high-margin opportunity for bars.
- Memorable, health-forward experiences really matter to guests.
- BinWise inventory management and automations help these menu-adds.
- Staff training and consumer research can help management choose health drinks.
Function Beverage Market Growth
The functional beverage trend is expected to be valued at more than $50 billion in the US by the end of 2025, reaching $62 billion by 2027. Its current growth rate compounds by 4.5% these days.
Beyond the US, this category grows at an 8% rate, but all this should tell you is that wellness, stress relief, and cognitive enhancement are on almost everyone’s radar. This means hospitality is putting effort into RTD beverage options, especially healthy, NA drinks. Socially and globally, health and inclusivity are alive and well.
Functional beverages help bars communicate these shared values, attract customers, and satisfy their favorite, mood-boosting, low-effort options.
5 Reasons Bars Add Functional Beverages
23% of Millennials and Gen Z Prefer Functional Drinks
Younger generations are more interested in “mindfulness” than drinking for drinking’s sake. Surveys continue to prove that Gen Z drinkers and Millennials are ordering non-alcoholic beverages more often than any past cohort. In fact, 23% of Gen Z and Millennial buyers prefer these drinks.
They also work for “flexitarian” cultures who want Manhattans one night and wheatgrass shots the next. The issue is inconsistency and uncertainty. But, it’s clear that menus may not be making the best check averages when it comes to NA options.
Functional beverages can broaden your customer base.
Functional beverages are like a branch that can help bars extend their reach. Think about those ordering tea cocktails and biodynamic wine compared to prohibition era cocktails.
By looking at the broader trends in their total audience, managers and owners have noticed that non-alcoholic beverages are eating alcohol sales—but they can be even more premium and marketable than merely “taste-good” drinks.
Profitability is much better looking at alcohol pour costs.
Premium pricing can easily rival cocktails with new functional drinks. They can exceed alcohol sales by virtue of this: they can order as many as they want. Specialty ingredients often mean these drinks have standard pour costs around in a range as low as 15% to 20%. Compared to alcoholic drinks (like beer’s 24% before alcohol price inflation), the numbers definitely look good.
Functional beverages are low-skill and high-speed with less waste.
Ready to drink cans, kava tea, mocktails, hard kombucha and functional beverages have an operative advantage over alcoholic beverages too. During busy periods and events, these drinks are easier to prepare (or snap open), creating less waste and reducing the skill level needed for more complex bartender drinks.
Creating Beverage Experiences with BinWise
BinWise, known for luxury inventory management, assists restaurants, bars, cafes, and more with the incredible challenge of ever-changing inventory. In addition to following outside-world trends and keeping up with customer standards—functional beverage programs present similarly profitable with a few unfamiliar names in the US “speakeasies”—like adaptogen, nootropic, and countless blends of proprietary ingredients.
It’s hard to keep track of beverages—alcoholic or non-alcoholic beverages, unhealthy and healthy drinks, new or classic cocktails. But, Binwise means you can easily track, scan, and report on real-time inventory levels, needs, etc. Clients use our dedicated system to ensure beverage offers stay streamlined and simple, despite seasonal menu management, promotional periods, and political pressures (like changes to whisky and wine tariffs).
Frequently Asked Questions: Functional Beverages for Bars
With additional inventory management and supplier features, bars can stock trending items and ingredients without breaking a sweat and while maintaining quality. But, management should still have a couple questions before going out to buy these niche yet profitable bar drinks.
What types of functional beverages are most popular?
Adaptogen-infused mocktails, CBD seltzers, kombucha, and nootropic "focus" drinks are in high demand. RTD (ready-to-drink) functional beverages and wellness-oriented mocktails attract both sober-curious and health-focused guests.
Recent market research shows that adaptogenic drinks containing ingredients like ashwagandha and rhodiola are seeing particularly strong growth, with sales increasing 45% year-over-year. Many bars are also reporting success with seasonal functional beverage menus that rotate based on wellness trends and customer feedback.
How do margins on functional beverages compare to alcohol sales?
Functional beverages typically have pour costs in the 15–20% range, comparable to or better than spirits-based cocktails, especially when priced as premium offerings. This allows bars to achieve gross margins similar to, or higher than, traditional alcoholic beverages.
The key to maintaining these attractive margins lies in strategic sourcing and efficient preparation methods. Many bars are finding success with house-made functional beverage bases that can be prepared in batches, reducing labor costs while maintaining quality and uniqueness.
Can inventory tools help manage additional, functional beverages?
BinWise enables precise tracking of specialty ingredients, helps minimize waste by monitoring shelf life, and streamlines purchasing from multiple suppliers. Its analytics help managers identify best sellers and optimize reordering.
The platform's real-time inventory tracking is particularly valuable for functional beverages, as many ingredients have shorter shelf lives than traditional bar stocks. Users can set up automated reorder points and receive alerts when specialty ingredients are approaching expiration dates.
What are effective ways to market functional beverages?
Successful strategies include menu placement in a dedicated section, engaging descriptions that highlight health benefits, in-venue tastings, digital marketing campaigns, and staff education to confidently explain product benefits.
Social media has proven particularly effective for marketing functional beverages, with many bars seeing success through Instagram-worthy presentations and educational content about ingredients. Partnering with local wellness influencers and hosting themed events can also drive awareness and trial.
Can training help staff sell more functional beverages?
Staff should be educated on the functional benefits of each drink, taste the offerings, and learn how to communicate these benefits to guests. BinWise clients often use training materials and reference guides to support this process.
Regular tasting sessions and ingredient workshops help staff develop genuine enthusiasm for these products. Many successful bars are also implementing role-playing exercises to help staff practice answering common customer questions about functional ingredients and their benefits.
