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Functional beverages are nothing new.

If you want to throw it way back, these started as a simple proposition: Beverage + exotic ingredient. 

This first wave — Functional 1.0 — included brands like Gatorade, Vita Coco and POM Wonderful. 

Throw in some ginseng or acai and promise a maybe-real(?) benefit. No need to overthink it, the value was in novelty. The more obscure the ingredient, the more “functional” it seemed.

Now, we’re seeing Functional 2.0 take hold. 

In an era when people wear Whoop bands, non-diabetics track blood sugar and everyone’s looking to squeeze more output from their day, approaching new product development this way makes sense.

Function has shifted from ingredient novelty to intent. It’s goal-oriented, occasion-driven and tied to specific outcomes you can actually feel — mapped to the exact moment you want them. Energy, focus, calm, recovery, libido, meal replacement.

And the exciting part for breweries? There’s opportunity around the clock — literally a beverage for every moment of someone’s day.

So in this exclusive, we’ll break down how to think about day-parts and functional opportunities so you can see exactly where your brewery can credibly show up.

(Above): OG functional beverages and claims.

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Function 1.0 vs. 2.0

Whereas Function 1.0 was ingredient led. Function 2.0 is outcome led. Less “I’ll choose this water over that one because it has antioxidants,” and more “How can I get more checked off my list before I have to grab the kids at 4pm?”

Instead of novelty driving purchase, Function 2.0 centers around: 

Clear intent: The product is built to do one thing well (energy, focus, calm, recovery, libido, gut health)

Occasion mapping: The benefit is tied to a specific time of day or moment in the consumer’s life

Perceived efficacy: Consumers expect to notice a difference — even if it’s subtle — and will drop products that don’t deliver

Familiar formats: The function is delivered in a beverage style people already know how to drink (soda, tea, coffee, beer, seltzer)

Lifestyle fit: The product feels like part of a routine rather than an “extra” supplement. (This is where beverages shine.)

And when you start looking at function based on these specific outcomes, your next step is to break the opportunities down through something called “day-parting.”

What is day-parting?

Day-parting is an old school advertising term for breaking the day up into different segments and tailoring programming and ads to the appropriate respective audience. 

This works well in the beverage context because consumers aren’t just buying a drink today. They’re buying the feeling, the function, the role that drink plays throughout their day. 

At a top line view, this trend follows other macro movements shaping the beer and beverage industry — functional beverages, lower calorie, zero sugar, low and no alcohol, cans (in general), and a deliberate move to own niche occasions (or, “micro-segmentation”).

But the value here is in zooming in and finding specific benefits. 

And day-parting is the clearest way to see spot these opportunities. Here’s an eagle eye view at the big time slots. 

Defining day-parts & beverage opportunities 

Many of these don’t fit neatly into one day-part, e.g. some people drink caffeine all day long. Others, might need an edible to face the day. No judgement in either case. My point is that your mileage may vary. 

Here’s a list of day-parts with a completely non-exhaustive list of possible benefits, outcomes and beverages you could see meeting these needs. 

Morning ( 5am–11am ): Waking up & focus

– Energy: Clean caffeine, mushroom coffee, yerba maté, green tea
– Focus: Adaptogens, nootropics, L-theanine + caffeine pairings
– Hydration: Electrolyte water, mineral boosts
– Nutrition: Vitamins, greens

Midday ( 12pm–3pm ): Fuel, function & focus

– Meal Replacements: Protein, fiber, full-calorie “drinkable meals”
– Enhanced Waters: Sparkling with vitamins, prebiotics, or cognition boosts
– Better-for-you soda alternatives: Olipop, Poppi, Sanzo

Afternoon ( 3pm–6pm ): Boost or balance

– RTD Coffee: Cold brew
– Alcohol Alternatives: NA beers, hop water, mood-lifting botanical blends
– Hop Water: Zero-calorie, NA refreshment with the familiar ritual of cracking a cold one
– Microdosed THC or CBD Beverages: Low-dose buzz (2.5mg–5mg) for mood, creativity, or sociability — without impairment

Evening ( 6pm–10pm ): Unwind, indulge, commune, zone out

– Beer & Bev Alc: Still the dominant ritual here. That glorious shift beer.
– Small Beers: Sub-4% ABV options bridging NA and traditional craft styles
– THC / CBD: Functional intoxication without the hangover
– Herbal / Sleep drinks: Magnesium, melatonin, valerian, chamomile

Late Night ( 10pm–1am ): Recovery, Wind down, libido

– Sleep aids: Recess Zero Proof, Som Sleep, Elements by Lokai
– Aphrodisiac Beverages: A small but growing niche (Free Rain, Hiyo’s nighttime SKUs)
– Post-drinking Recovery: Electrolyte + B-vitamin blends, IV-in-a-can brands

(Above): Day-parting: A different beverage for every 15 minutes of your day. 

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Six high-growth areas we’re following 

Here are half a dozen high-growth areas we’re seeing in our client work and during field visits across the country. Some of these will become long-term fixtures in the functional beverage space. Others may fade as the next big thing comes along. Either way, they offer a window into where consumer attention — and spending — is heading right now.

1 

Quelling anxiety (with a tasty beverage)

Calm is the new energy. Stress, burnout, and alcohol moderation are driving demand for drinks that take the edge off without knocking you out. 

CBD, L-theanine, Ashwaghanda and GABA are leading the charge — but it’s not just about what’s in the can. Positioning matters. “Social tonic” and “chill drink” carry different connotations than “CBD beverage.” 

Brands that deliver both a discernible effect and a clear promise will own this space.

2

Cannabis & the impending microdosing wave 

Microdosing is moving from fringe to front shelf. Cannabis has already opened the door with low-dose THC drinks in the 2.5mg–5mg range. These offer a fast-acting, controllable buzz that fits neatly into the afternoon or early evening without derailing the rest of your day.

But cannabis is only the start. In the coming years, carefully dosed psilocybin and other psychedelics will likely follow — aided by shifting public opinion, ongoing legalization efforts, and the wellness industry’s push into mood, creativity, and self-optimization.

A decade ago, the idea of CPG psychedelics would’ve been unthinkable. But today, the same cultural and regulatory tailwinds that brought THC into the mainstream are starting to shift in that direction.

It now feels like an eventuality — and early movers will shape the norms around dosing, consumer expectations, and brand cues for the entire category.

A note here: In our cannabis work, we’ve seen that 10mg is the most common dosage at dispensaries. This tracks as someone going to a dispensary would be more familiar with cannabis and how it affects them. My bet here is that the ongoing tail — as cannabis becomes fully mainstream — is that lower doses will be far and away the best selling format. Think 2.5, 5, maybe 6mg. This is more equivalent to beer and can give someone a “buildable buzz” without getting their face torn off. 

(Above): Cannabis and macrodosing as a lifestyle has a huge runway. As cannabis becomes increasingly de-stigmatized (and made legal), more adults are turning to this drug for anxiety and health management over traditional pharmaceuticals. 

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3

Everything is protein

Protein has become the most universal functional add-on in CPG. It’s in water, popcorn, cereal, coffee, cookies — even beer. 

It’s shorthand for “better for you,” and as such, has a healthy halo effect. 

It works well for those who want to get more out of everyday consumption. 

Now, this trend will cool (like everything eventually does). But it signals a bigger shift: Indulgence is becoming an occasional treat, while functional benefit is becoming the default expectation. 

My unproven theory… I think this mindset is an important part of beer’s decline. If consumers ask, “What am I getting out of this?” and refreshment or taste is the only answer, beer loses some ground to functional options that offer waaaay more perceived value.

(Above): Protein is the supplement du jour. I would also lump this in with full meal replacement drinks.

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4

Everything else is mushrooms

What was once the domain of niche supplement brands has gone mainstream. Functional mushrooms like lion’s mane, reishi, chaga, and cordyceps are showing up in coffee, tea, seltzer, and even beer. Each is tied to a specific benefit — cognitive support, immune health, stress reduction, endurance — and the appeal is twofold: mushrooms feel “natural” while still offering a measurable function. The challenge (and opportunity) for breweries is to deliver these benefits in a format people enjoy drinking, without the earthy, polarizing flavors that can turn casual consumers away.

(Above): CODO has fielded 7 projects over the last 18 months that include some sort of functional mushroom as a key ingredient. This trend is only going to grow. 

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5

Gut health goes mainstream

Gut health used to be kombucha’s niche. Now it’s in the soda aisle. Olipop and Poppi reframed prebiotic fiber — a once-fringe benefit — through familiar flavors and nostalgic branding. TikTok made it aspirational. Celebrity backing gave it cultural cachet. PepsiCo’s investment proved the model works. The lesson: When you make function obvious, approachable, and enjoyable, it can go from wellness niche to grocery staple in under a decade.

6

Sober-ish ( the case for moderation )

I hate (hate, hate, hate) the term "Sober Curious." But my baggage aside, this is a growing segment of people. 

Folks who’ve had their fun, (maybe) now have kids, and want to feel better. Or younger consumers who never caught the bug in the first place.

As the beer industry faces declining demand across the board — older drinkers cutting back, younger ones opting out — I think the future of beverage alcohol will center on moderation. Not full-on NA, not high-gravity excess, but a spectrum of options that meet people where they are in the moment. NA, mid-strength, mood-altering — all part of the same evolving ritual.

Chasing Every Day-part? Tread Carefully.

The more moments you try to own, the more your brand gets stretched across categories, need states, and consumer expectations. That’s not inherently bad, but it puts serious pressure on your Brand Architecture.

Ask yourself:

– Can this live under our parent brand?

– Should it be a sub brand, or standalone?

– Is it additive, or confusing?

– Does it dilute what we want to be known for?

We’ve seen breweries rush into hop water, kombucha, seltzer, even THC — not because it fit their vision, but because it was trending. These launches rarely stick.

Note: There will be winners and losers here. Some of these segments and occasions will become massive industries led by unicorn brands. Others will wither away. Balance taking a shot with timing the market so you’re not too early or too late — and make sure there’s a genuine need. Don’t lose sight of this: does this solve a problem for your consumers?

And don’t overlook your route to market. Can you actually get this thing onto shelves?

Being present across more occasions isn’t the same as being relevant. The challenge is knowing which moments make sense for your brand — and showing up with intention.

Beer used to own the evening. Today, it shares that ritual with THC, adaptogens, and a wave of functional drinks. That’s not a death sentence. It’s an invitation to clarify the role your brand plays — and how far it can credibly stretch.

 

Brand Architecture as a Springboard

One of the clearest advantages of getting your Brand Architecture in order now is speed. When you know which products live under your parent brand, which deserve a Sub Brand, and where a completely new identity is warranted, you can move faster when an opportunity appears.

This clarity means you can launch new products without derailing your core business, keep your portfolio coherent as it grows, and build each new entry in a way that strengthens your overall brand — not competes with it. In a fast-moving space like Functional 2.0, this can be the difference between being an early mover and playing catch-up.

Wrapping up: What are you actually selling?

The rise of day-parted, intent-driven beverages signals a deeper shift: Function is no longer a bonus, it’s the baseline.

And as beer continues to decline, breweries would be wise to explore where else in someone’s day they can slot in.

That doesn’t mean beer has to become functional, though we’ll certainly see some of that happen. But it does mean you’ll compete more often with products that are. And if your portfolio only serves one part of the day — if you’re only locked into one traditional occasion — you’ll be leaving lots of opportunity on the table.

So remember what you’re actually selling.

Harvard professor Theodore Levitt once said, “People don’t want to buy a quarter-inch drill bit. They want a quarter-inch hole.” In beer, you’re not just selling a 4- or 6-pack. You’re selling:

– Social connection (My friends like this brand)

– Identity and self-expression (I’m outdoorsy, so my beer should be too)

– Experience and adventure (I need to head to the mountains for a few days)

– Relaxation and stress relief (I just need to unplug and not think for an hour)

– A great buzz after a tough week (Oof)

– A celebration (My spouse got a promotion)

– Supporting a local business (I enjoy knowing where my money goes)

– Nostalgia and tradition (My grandpa used to drink this beer)

– Sensory pleasure (This beer tastes amazing)

– Health benefit (I can enjoy this beer without wrecking my gains)

Whether at the parent brand level or for a single product, the question is the same: When someone chooses your beer, what are they really buying? And what story do they get to tell the world about themselves in the process?

That’s the work — and the opportunity — worth chasing.