In today’s functional CPG market, how would you categorize what is (or isn’t) a beverage? There’s a growing format expansion trend within key functional beverage categories that's causing most consumers to provide a widening variance in definitions. But the mainstreaming version of the “beverage identity crisis” was something I started talking more about publicly during the “Great Shutdown” period because there was this perfect storm of converging factors that provided an extra tailwind for this format expansion trend within key functional CPG categories. Yet, it’s that reversed format expansion playbook direction of “ready-to-mix (RTM) powder to ready-to-drink (RTD) beverage” that I want to unpack some more for you. That’s primarily because it could very well become the dominant build model process amongst functional CPG entrepreneurs…one that we will begin seeing play out repeatedly within other growing functional CPG categories, thus causing more “beverage identity crisis” scenarios in the future. The massive mainstream success of Bang Energy consciously (or subconsciously) inspired many sports nutrition brand entrepreneurs to take the leap from pre-workout powders to energy drinks. See…those tens (or hundreds) of millions in high-margin energy drink adjacent categorical retail sales were now seen as more than numbers in a spreadsheet or bank account, but members of an audience. And it’s those powerful audiences that have become defensible competitive moats and valuable business assets for CPG brands. Admittedly, sports nutrition brands (like C4 Energy, GHOST, and Alani Nu) didn’t invent the “build an audience first strategy,” but they’ve perfectly leveraged it by also operating within the shadows of harder to track sales channels like specialty and ecommerce…where they can incubate powdered pre-workout energy supplement platforms that can then be extended into the beverage format. And the proof is in today’s retail sales data for just how disruptively successful this “build process” has become within the energy drinks market. And what should be even more scary (for at least categorical incumbents), is that below the Top 10 energy drink brands, there’s many more strong powdered pre-workout energy supplement platforms that are in different phases of beverage commercialization strategies. Oh…and surprise-surprise, this “changing of the guard” isn’t just isolated to the energy category. Albeit a few years behind, the same thing is starting to play out within the hydration category. Beyond energy and hydration, I'll also cover the last of the “Big 3” mainstream functional beverage categories because protein is a bit different. While sports drinks and energy drinks are several multiples larger in total market size compared to hydration and energy powdered supplements, ready-to-mix protein powders outsell RTD protein beverages when you consider the entire multichannel sales landscape. So, it probably begs the question…why don’t we then see the highest number of “powder to liquid” format swapping sports nutrition brand disruptors in the protein category? I'll explore those differing barriers-to-entry considerations...but explain why 2024 and 2025 could end up being filled with impressive launches by sports nutrition brands “protein powder market leaders” that have strong audiences of loyal customers. Finally, I'll analyze three other functional CPG categories (greens, relaxation, and gut health) that each should see similar blurring of categorical definitions in the next handful of years.

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