India's beverage industry bets big on functional hydration

India's beverage industry is increasingly betting on functional hydration as consumers look beyond traditional soft drinks for beverages that offer health and wellness benefits. From coconut water and electrolyte drinks to kombucha, vitamin water and protein-infused beverages, brands are repositioning hydration as a daily wellness proposition.

The category is poised for significant growth. According to a Redseer Strategy Consultants report, India's ready-to-drink (RTD) non-alcoholic beverage market is expected to double from around $20 billion in 2025 to $40 billion by 2030. The report attributes this growth to a structural shift from planned stock-up purchases to immediate, need-based consumption, fuelled by the rapid expansion of quick commerce.

Redseer's report, Reinventing Packaged F&B Through Quick Commerce, also highlights rising demand for better-for-you beverages, including functional hydration, protein drinks and packaged coconut water. It notes that packaged coconut water accounts for 15-20% of the nearly $900 million category, with over 20% of sales coming through quick commerce. India's per capita RTD beverage consumption remains at 15-20 litres, well below global benchmarks, indicating significant room for growth.

Against this backdrop, beverage companies are expanding product portfolios and sharpening their marketing strategies to tap into rising demand, while competing for visibility across modern retail and quick commerce platforms.

Akshali Shah, Executive Director, Parag Milk Foods, said the rise of functional hydration reflects consumers' growing preference for beverages that offer health and performance benefits beyond refreshment. She added that while Avvatar remains focused on sports nutrition, it closely tracks the category as part of the broader wellness ecosystem.

Shah said, “Our marketing strategy has always been driven by consumer relevance rather than category noise. Over the past year, we have strengthened investments in digital-first platforms, creator-led content, sports and fitness communities, and culturally relevant partnerships that allow us to engage consumers where they are most receptive.”

Shah added that rather than increasing marketing spends, the company is focused on improving consumer engagement through sharper targeting and more meaningful storytelling.

Meanwhile, Fast&Up said the growing interest in functional hydration has reinforced consumer demand for better hydration solutions. The brand is focusing on smarter investments through digital campaigns, creator partnerships, retail visibility and on-ground activations, while prioritising consumer education as the category grows.

Rohan Manglani, Head of Brand Marketing Strategy & Implementation at Fast&Up India said, “We have increased investments in content that explains the science behind hydration, while also creating opportunities for consumers to experience the product firsthand through sporting events, fitness communities, endurance races and presence at a lot of music events and shows. Our focus remains on reaching consumers in relevant moments, wherever they make hydration decisions, while building trust and driving trial.”

Although Lahori Zeera is not positioned as a health or wellness beverage, it competes in the broader RTD beverage market. The company said growing competition from functional beverages has not altered its marketing philosophy.

“The functional hydration category is growing rapidly, but it is still largely concentrated in premium price points and channels like metros and quick commerce. Our business operates at a much larger scale with a significantly wider retail footprint and a very different consumer base and consumption occasions,” said Nikhil Doda, Co-Founder & COO, Lahori Zeera.

Doda added that the company continues to invest steadily in offline activations where its consumers are present, supported by select high-impact ATL campaigns aimed at building long-term brand equity rather than short-term visibility.

Industry experts say the momentum behind functional hydration is also being driven by changing consumer purchase behaviour, with convenience and immediate consumption becoming increasingly important.

Mrigank Gutgutia, Partner, Redseer Strategy Consultants, explained that hydration is shifting from a sports-only category to an everyday wellness habit, with consumers increasingly linking it to energy, immunity, mental focus and heat resilience. He added that demand for low-sugar, clean-label beverages, prolonged heatwaves and the rapid rise of quick commerce are accelerating growth. According to Redseer, functional beverages generate over Rs 700 crore in annualised sales on quick commerce and continue to witness near triple-digit growth. 

Gutgutia added that new entrants such as Pocari Sweat, BodyArmor Lyte and homegrown brands like Fast&Up and Storia, along with adjacent formats such as electrolyte tablets, powders and protein-hydration beverages like Amul Stamina, are further expanding the category. 

“Brands pulling ahead in the competitive market are winning through speed and channel fit rather than sheer sponsorship scale. Key winning themes include using gyms as living showrooms for product promotions, effectively using micro/mid-tier fitness influencers who has higher trust than celebrities and comprehensive leveraging of quick commerce placement/visibility which is the most important marketing surface,” he added.

Category differentiation

While brands are investing in marketing and consumer education to drive awareness, they are also looking to differentiate themselves through distinct product propositions as competition in the category intensifies.

“Consumers today are looking beyond refreshment; they expect their beverages to deliver tangible nutritional benefits while fitting seamlessly into their everyday routines. At Avvatar, our differentiation lies in combining science-backed sports nutrition with Parag Milk Foods' decades of expertise in the beverage and dairy space,” said Shah.

Shah said Parag Milk Foods has built a diverse beverage portfolio spanning buttermilk, lassi, flavoured milk and milkshakes, giving it a strong understanding of evolving consumer preferences. She added that Avvatar's 15g Protein Cold Coffee reflects the company's focus on functional beverages backed by its integrated dairy value chain.

Fast&Up said its key differentiator is its science-backed performance hydration proposition. The brand said its electrolyte-based formulations are designed to deliver functional hydration for active consumers, from everyday fitness enthusiasts to professional athletes.

Manglani said Fast&Up differentiates itself by staying true to its performance-first positioning and focusing on scientifically backed efficacy over trends. He added that the brand's credibility is built through athlete partnerships, sports nutrition expertise and engagement with fitness and sports communities.

He said, “We do not see adjacent categories as direct substitutes because each addresses different consumer needs. Our focus remains on convenient, effective hydration that fits seamlessly into an active lifestyle and reinforces our purpose beyond being just another beverage brand.”

Doda added, “While these categories are expanding, they are still relatively small and largely premium-priced. Our proposition is very different. We are not asking consumers to adopt a new beverage habit—we are bringing familiar Indian drinks and flavours that people have grown up with into a convenient, ready-to-drink format.”

According to him, Lahori Zeera differentiates itself through authenticity, convenience and affordability, offering a familiar, homemade Indian taste at an accessible price point. He said this combination of emotional connect and value sets the brand apart.

As the functional hydration market evolves, brands are adopting different strategies based on their target consumers, price points and positioning. With demand expected to rise alongside the growth of quick commerce and wellness-focused consumption, competition is likely to intensify across both emerging functional beverage brands and the broader RTD beverage market.