The beverage industry is evolving rapidly, driven by tighter budgets, shifting social norms, and rising regulations. Growth within the sector now depends not only on portfolio innovation and brand building, but also on the ability to operate more efficiently, prove ESG performance, and manage risk across increasingly fragile supply chains.
In this environment, several key trends and challenges are reshaping the market. Younger generations are drinking significantly less alcohol than previous age groups, meaning companies are investing heavily in no and low-alcoholic beer, wines and spirit brands to stay relevant. As health-conscious consumers grow in numbers, another prominent trend is the rise of functional drinks, which have gained popularity due to their perceived health benefits.
1. Functional drinks
The market for functional drinks is expanding rapidly as consumers seek beverages that provide health benefits beyond basic hydration, whether through added vitamins, probiotics, protein, or botanical ingredients. A 2025 GlobalData survey found that 66% of respondents stated that their food and drink purchases are always, or often influenced, by a product’s impact on health and wellbeing, while 61% said that time and budget considerations shape their choices. Such beverages are particularly appealing to health-conscious consumers, particularly Gen Z and Millennials, who are drawn to products that offer both novelty and nutritional value.
A notable example is the rise of kombucha, a fermented tea known for its probiotic benefits. Companies like GT’s Living Foods have capitalised on this trend by emphasising the health benefits of their products, including improved digestion and immune support. This focus on health has allowed them to capture a significant market share in the functional beverage category.
The functional drinks and health and wellness trends are pushing manufacturers towards more complex formulations, tighter hygiene controls and more precise thermal regimes. Processes involving live cultures, sensitive actives, or carefully managed fermentation place higher demands on reliable, well-engineered heating and cooling.
2. Eco-friendly packaging
In response to increasing environmental concerns, the industry is also making strides towards more sustainable packaging solutions. Manufacturers are actively seeking ways to reduce plastic usage and improve recyclability. Coca-Cola’s ‘World Without Waste’ initiative exemplified the industry’s shift towards sustainable packaging, however the company recently scaled back and extended its sustainability targets due to high costs and limited supply of food-grade recycled plastic.
Meanwhile, schemes such as the EU Packaging and Packaging Waste Regulation (PPWR), require complete lifecycle management, from material choice to end-of-life recycling. Initiatives such as lightweight bottles, alternative materials, and redesigned packaging formats require adjustments to filling lines, cleaning procedures, and storage conditions. These changes can alter both thermal and electrical loads on site, just as companies are under pressure to reduce the embedded carbon of their products.
3. Raw material volatility
The instability of raw material prices poses significant challenges for beverage manufacturers. Fluctuations in the costs of ingredients such as sugar, fruit, and grains, as well as materials such as aluminium and glass, are squeezing profit margins. Global supply chain disruptions and climate impacts on crop yields add further uncertainty.
The volatility in sugar prices has prompted companies like PepsiCoto diversify their sweetener sources. By investing in R&D, PepsiCo has been able to introduce products with alternative sweeteners such as stevia and monk fruit, which help mitigate the impact of fluctuating sugar prices while also meeting consumer demand for lower-calorie options.
While more agile sourcing and reformulation can mitigate some supply chains risks, there is a limit to what can be achieved through procurement alone. Structural reductions in fixed operating costs, including energy, have become an important counterbalance to input volatility.
4. New sugar regulations are driving reformulation
Increasing regulations and public policies targeting sugar content in beverages are forcing manufacturers to reformulate their products. For instance, in the UK, the Soft Drinks Industry Levy (SDIL) was intentionally structured as a tiered system to incentivise reformulation. As a result, many famous brands, such as Suntory’s Ribena, slashed their sugar content overnight, and a strengthening of the legislation is due in 2028.
Companies are increasingly using alternative sweeteners to comply with such regulations and meet the expectations of health-conscious consumers. However, this invites closer scrutiny of how ‘better for you’ beverages are produced. Energy‑ and carbon intensive production increasingly sits uneasily alongside health‑led brand positioning.
Energy solutions for beverage producers
Energy cuts across all these trends and is a major driver of operating costs, a significant contributor to Scope 1 and 2 emissions, and a critical enabler of core processes such as brewing, pasteurisation, filling, and cold storage. As such, it should not be viewed as a background utility, but as a strategic focus area. Within this landscape, improving energy performance is one of the most pragmatic and impactful levers available. It delivers direct cost savings, mitigates exposure to fuel price swings, and provides a measurable route to reducing emissions in line with corporate climate commitments.
E.ON is a leading European energy company focused on low carbon energy infrastructure, from on‑site generation to energy‑as‑a‑service models. Its work with food and beverage manufacturers across Europe shows what is possible when energy systems are rethought around efficiency, resilience, and decarbonisation.
Rather than treating heating and cooling as separate, static services, E.ON approaches production sites as integrated thermal systems. In a brewery, for example, the hot side of the process relies heavily on steam and hot water for mashing, boiling, and cleaning, while the cold side demands stable, efficient cooling and cold storage.
By mapping energy flows across the site, significant volumes of low temperature waste heat can be identified from both process streams and refrigeration systems. Using a combination of heat exchangers and heat pumps, this heat can be upgraded and reused within the process, reducing the need to generate new heat from fossil fuels. Additional opportunities arise from process and wastewater streams; in some facilities, effluent has historically been actively cooled before discharge to meet temperature limits. Capturing this heat instead avoids wasted energy and the electricity used for cooling.
In addition, high temperature heat pumps capable of delivering temperatures above 120–130°C, are rapidly becoming commercially viable, opening up deeper electrification of industrial heat.
From waste to value
E.ON is also deploying biomass-based solutions where appropriate, replacing natural gas entirely. In one German brewery, a wood gasification plant integrated with combined heat and power provides both process heat and on-site electricity. The system produces biochar as a by‑product, locking in carbon and enabling carbon‑negative performance when coupled with carbon removal certificates. This approach not only decouples the brewery from fossil gas markets, but it also creates new value streams.
These examples also extend to dairies, with their combined requirements for heating, pasteurisation, and cooling, which are natural candidates for integrated heat pump and storage solutions. Many producers generate organic by‑products that can be used for onsite incineration or gasification, feeding heat or biogas back into production in a circular model.
These examples are not ‘plug‑and‑play’ projects but require high-quality engineering, a tailored approach to each site, and careful navigation of subsidy schemes and regulatory frameworks. However, the energy transition represents a tangible opportunity. By treating energy as a strategic asset rather than a passive cost, beverage manufacturers can cut operating expenses, enhance resilience, and deliver the carbon reductions demanded by retailers, regulators, and consumers.
To learn more about sustainable energy strategies for the food and beverages industry, please download the whitepaper below.
