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VCs continue to pump millions into independent beverage startups • londonbusinessblog.com

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After seeing a ton from venture capital investments that recently flowed into independent beverage startups, it was time to step back and see if this kind of business really made sense as a venture capital investment.

First, competition for space on supermarket shelves is fierce, overshadowed only by the fact that people are picky. The US Beverage Production and Filling Locations Database contains nearly 2,500 alcoholic and non-alcoholic beverage manufacturers that make everything from beer and soft drinks to coffee and 10,000 flavors of carbonated water.

Across the beverage industry, functional drinks have grown in popularity over the past five years as consumers look for beverages that are better for you. Most contain add-ins such as vitamins, probiotics and electrolytes and have lower sugar content and more natural ingredients.

This market is also growing rapidly: Precedence Research estimated the global functional beverage market was valued at $129.3 billion in 2021 and is expected to grow at nearly 9% annually through 2030, when it is expected to be worth $279.4 billion.

These companies don’t usually go public, but often sell to another entity, perhaps a soft drink conglomerate or even an alcoholic beverage company looking to enter the non-alcoholic space.

Opening a fresh can of capital

If the amount of capital going into this area is any indication, investing in the sector makes sense. Venture capital firms pumped more than $170 million into functional beverage businesses in 2018up $111 million from 2017, according to PitchBook.

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