Functional Beverages Are Big Business—Here’s What You Need to Know

These drinks contain wellness-aligned ingredients such as CBD, adaptogens, and nootropics, some claiming to enhance mood or relax the drinker—but promising any benefits is complicated

Boisson, a dry bottle shop with locations in New York City and California. Photo courtesy of Boisson.

At the brightly lit new bottle shop in Manhattan’s Rockefeller Center, the walls are lined with seductively designed beverages, and its window features a drinks trolley laden with smoked glass bottles—but what you won’t find here is alcohol. Boisson is one of a growing number of dry bottle shops, which also has an on-premise and wholesale business serving top-tier establishments including Manhatta and The Clover Club

You will find something else on prominent display: functional beverages, which contain buzzy ingredients that hint at alcohol-free health benefits, stress reduction, and pleasure. The label functional beverages has been used for decades to refer to drinks designed to have effects beyond taste and hydration, from energy drinks to vitamin-infused water, but it has recently become newly aligned with the non-alcoholic category. 

Such drinks might include CBD, adaptogens (substances used in Ayurvedic and traditional Chinese medicine to combat stress), or nootropics (substances designed to enhance brain function). Some even claim to enhance mood or relax the drinker in the moment. These include Three Spirits—their non-alcoholic aperitif, Livener, claims it can “reduce inhibitions and lift spirits”––and Kin, whose spritz contains “mood-boosting ingredients” that “stimulate clarity, creative freedom, and focus” according to the brand’s website.

A Growing Non-Alcoholic Adjacent Category

Kin was cofounded by model Bella Hadid, who has promoted the brand on Instagram to her 56.6 million followers. She isn’t the only big hitter attracted to the sector: Connect Ventures, the investment partnership led by talent agency Creative Artists Agency (CAA), and global venture capital firm New Enterprise Associates invested $12 million in Boisson in August. De Soi, a functional drinks brand cofounded by CAA client Katy Perry, also raised $4 million in seed funding led by Willow Growth; it uses ingredients including reishi mushrooms (which the brand’s website refers to as a “brain boosting botanical often referred to as ‘the herb of immortality’”).

The non-alcoholic drinks category is seeing massive expansion, as more people explore a sober-curious lifestyle. A new survey from consumer insights platform Veylinx suggests that almost half (46 percent) of U.S. drinkers are trying to reduce their alcohol consumption, and 52 percent of those people are replacing alcohol with non-alcoholic drinks. U.S. sales of non-alcoholic adult beverages grew 20.6 percent to $395 million for the year until August 2022, according to NielsenIQ. Meanwhile, the Veylinx survey suggests that canned, non-alcoholic cocktails enhanced with CBD were judged 16 percent more appealing than standard non-alcoholic cocktails, while adding what the survey described as “natural mood boosters” increased demand by nine percent.

Sunwink markets its fizzy drinks as “superfood tonics” featuring ingredients including ginger, turmeric, and lemon balm, with healthful names, like Hibiscus Mint Unwind and Immunity Berry. Eliza Ganesh, the CEO and founder, believes that functional drinks “probably have the best opportunity to be the leader of the non-alcoholic movement.” She says, “Having the double hit of something that tastes really good, coupled with that functionality, is in a way, probably more analogous to what you were hoping to get from a glass of wine to begin with. Just without the anxiety of the hangover.” 

From left to right: Sunwink, a fizzy drink marketed as a “superfood tonic.” Photo courtesy of Sunwink; Little Saints, a range of non-alcoholic, sugar-free “mocktails” boosted by reishi, terpenes, and hemp. Photo courtesy of Little Saints.

Megan Klein, the CEO of Little Saints, a range of non-alcoholic, sugar-free “mocktails” boosted by reishi, terpenes, and hemp, was inspired by her own use of reishi mushrooms in her morning coffee and CBD at night, which she found useful for managing anxiety. She worked “with a food scientist with her masters in adaptogens” and “a sacred plant medicine shaman” to create the drink with ingredients that, she says, “help us get immediately into our parasympathetic nervous system.” While there are limited, sometimes promising studies exploring both reishi mushrooms and CBD separately, she admits that they have not been studied together, and her testing has largely been through friends and family.

Tatiana Mercer and Dash Lilley, the cofounders of Three Spirits, say the idea came to them “originally from a hedonistic lens. Ultimately, you drink for feeling and flavor. And so, to really rival alcohol, can you create a third way—a new way to feel good?” says Mercer. Their three non-alcoholic “spirits” are designed to replicate moments when drinking is “culturally embedded.” They work with professor Michael Heinrich of the UCL School of Pharmacy and other independent advisors to “identify the best ingredients to use, but also to have a full understanding of their safety and regulatory status,” says Lilley. 

Many of these drinks come with a dizzying number of ingredients. Described on their website as a “mood elevator,” Three Spirits’ Social Elixir, for example, was born from “months researching how alcohol affects the human nervous system, and what gives us pleasure,” says Lilley. “We looked at how alcohol affects those receptors. And then we started looking for plants that could mimic certain responses.”

How Functional Are These Beverages?

Some of these drinks have undeniable energizing effects owing to caffeine or caffeine-adjacent ingredients like L-theanine. The other promised effects are more subjective. “If you think it’s going to compare to half a bottle of whiskey then, no, it probably won’t touch the sides,” says Mercer. “I think the minute you remove the comparison to higher volumes of alcohol, you take yourself to the right place for function.” For those customers who do feel the drink’s effects, she adds, there’s an element of faith and context. “Belief and anticipation are really important. There’s the smell, there’s sitting down with your friends—there are all these things that are contributing factors to how you feel on a Friday night.”

Heinrich says that “in the absence of evidence” he cannot say anything concrete about whether they cause a buzz but the claims are “plausible.” He points out that the drinks create sensation “not only with the physiological effect” but with a “pleasant mouthfeel.” Heinrich adds, “In this particular case, it’s really about making a healthy drink with an interesting flavor and an interesting profile and some reasonable preventive benefits without overdoing it in terms of claims.”

Knowing precisely the effect of such drinks—if any—is close to impossible. Many commonly featured ingredients have been used in traditional medicine for thousands of years (for example, turmeric and ginkgo); some use new, synthetic so-called nootropics. Some of these ingredients have promising but limited research behind them, but some of those studies may not be in humans. Even those that are, will likely examine those ingredients in isolation, at a specific dose, for a set amount of time, and not in the particular combinations in which they are offered in these products. Things get more opaque still because many brands don’t reveal the dosages of their active ingredients, rather listing them as part of a proprietary blend.

Nuage Visuals
Three Spirits’ Social Elixir, described as a “mood elevator.” Photo credit: Nuage Visuals.

Lilley says they are happy to reveal precise dosages on request but overall they are “not shy about dosing.” The idea is that “there’s lots of raw material in our drinks” and a total of three drinks would give the consumer the “recommended active dose” of a substance based on “the literature in the research that is available.”

Rashmi Mullur, M.D., an endocrinology assistant professor and associate chief of integrative medicine at UCLA Health, uses adaptogens in her practice, but has big questions about the use of the same substances within drinks designed for cocktail hour. In herbal medicine, she says, these substances—whether ashwagandha or ginseng—are not meant to be used in perpetuity. 

“These kinds of more potent herbals are given for short courses of time, while the patient works on their lifestyle with their practitioner,” says Dr. Mullur. With buzzy ingredients such as reishi mushrooms, “they are very associated with immune function.” But whether that benefit will translate to a human, in a drink, along with other ingredients which might interfere with it is difficult to say. 

Most of the drinks do say in the small print that they should not be consumed by those aged under 18, pregnant, taking SSRIs, or who have a medical condition. Nevertheless, Mullur also has concerns that consumers will not think of these drinks as supplements, and will not treat them as such, or flag them with their doctor. This could be relevant if they have ingested, for example, panax ginseng, she says, which might slow blood clotting, but fail to mention it before a simple medical procedure. Many of these drinks contain B vitamins, too: “Most B vitamins are safe but biotin can interfere with lab testing, and B-6 you can get toxic from,” she says. But it’s such a complex area even experts don’t agree.  

Regulatory Complexity

As for the regulatory side of functional beverages? “It’s complicated,” says Abraham S.Z. Cohn, Esq, a partner at Cohn Legal, PLLC. The rules are different in every country. In the U.S., “it’s important to keep in mind that there is no such category, on a technical basis, as functional beverages,” he says. The FDA’s view is that products are either “conventional beverages or dietary supplements,” says Cohn. “Each category is subject to a different set of rules, reporting requirements and regulations.” The FDA states that claims “have to be truthful and they have to be complete,” says Cohn, but it’s hard to say how things will play out in reality.

If a functional drink markets itself as a conventional food then, in the U.S., it must use ingredients that are GRAS or “generally regarded as safe.” The FDA has recently expressed concern about “novel ingredients” being added to beverages and other conventional foods—either those that are not already on the FDA’s GRAS list or those that are on there but are being used in new ways. If these ingredients were deemed “unapproved food additives” by the FDA, the products could be considered adulterated, which would make them illegal to be marketed and imported in the U.S.. 

Three Spirits does not market their drinks as supplements because, in some countries, supplements cannot be showcased “in an alcohol consumption moment,” explains Lilley. But many others, including Kin and Little Saints, promote themselves as dietary supplements, which may give them more leeway over the ingredients they include. Calling a product a supplement may not always convince the FDA, however, if they believe that, in reality, the drinks are being sold and used as beverages, says Cohn.

Either way, they cannot make specific claims about a product’s ability to prevent or cure any disease or condition without falling foul of the FDA, but they can make broader or vaguer claims, talking, for example, about the benefits certain ingredients have been seen to have on the body. Or they might simply say that they contain, say, adaptogens or nootropics, without referencing any specific effects, knowing that the wellness-inclined are likely to recognize those terms and be drawn to the product.

Three Spirits’ Livener, which claims to “reduce inhibitions and lift spirits.” Photo credit: Cameron Fielding of Smartblend.

It Comes Down to Taste

Whether all of this complexity stunts growth remains to be seen, but it’s easy to see why so many people—from investors to those who suffer from “hangxiety” after a night out—are willing the promise of the category to play out. The final, crucial, piece of the puzzle is taste. Some functional drinks do not have the best reputation when it comes to taste. Some have trouble balancing functional ingredients with flavor, especially when they avoid sugar, which is generally regarded as bad for health, and may sit uneasily with those choosing a drink for its purported health benefits. 

Julia Bainbridge, an expert in non-alcoholic drinks, likes Kin’s drinks and recommends Three Spirit’s Livener, not for its energizing properties, but because “it tastes like berries and tea up front, with some fiery heat on the back end.” These drinks “don’t make me feel anything and I don’t necessarily wish they did,” she says. As for CBD drinks, “none has ever given me a noticeable buzz of any sort.” The ones that work well, from a flavor perspective, she says, are those that “lean into the distinctive piney flavor of the plant instead of trying to mask it,” such as Flyers Cocktail Co.

As John deBary, a bartender, author of two cocktail books, and founder of zero-proof botanical drink Proteau (which is no longer operational), explains, creating good taste can be difficult. Alcohol is difficult to replicate as a solvent and in its texture; alcohol offers “a lot of raw sensory experience, like setting aside the productive physiological solution.” Functional non-alcoholic spirits aren’t easy to include in recipe books, he adds, because they are so niche and not easily substituted. Nor does he see them featured as often on bar menus as non-functional non-alcoholic products, believing bartenders may be mindful that “there are a lot of unknowns” in terms of how people may react to things. 

All of that said, he personally rates Kin, Three Spirits, and Rasāsvāda drinks, not because of any potential functional benefits but because of their flavor. He adds, “To me, as someone who’s just kind of overstimulated, thinking about cocktails and drinks for so long, I find [them] quite tasty.”


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Hannah Marriott is a New York City-based British journalist who writes about culture and lifestyle for publications including The Guardian, where she was previously fashion editor, The Times, and The Financial Times. Follow her on Instagram @maid_marriott_innit

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