Functional Food and Drink in 2025: Why Gut Health and Cognitive Performance are Driving UK M&A

If you are investing in or building a UK food and drink brand, functional food and drink should already be on your agenda. Products designed to deliver specific health benefits, from digestive support to mental clarity, have moved from a niche corner of the market to the centre of the M&A conversation. Through 2025 and into 2026, functional food and drink is one of the most dynamic categories in UK food and beverage.

Key takeaways from this article:

• The UK healthy snacks market is projected to approach £6.5 billion by 2030, with functional products driving the strongest growth.
• Consumer behaviour has shifted from "avoiding the bad" to "actively seeking the good," creating a structural tailwind for functional brands.
• M&A activity is intensifying - recent deals such as Mondelēz's acquisition of Grenade and Citation Capital's $480 million investment in Cibo Vita illustrate the trend.
• Brands that combine great taste, credible health claims, clean labels, and scalable operations will be best positioned to attract investment.

How did functional food and drink reach the UK mainstream?

The idea of food as medicine is ancient, but the modern functional food movement in the UK has more recent roots. For decades, fortified cereals and vitamin-enriched drinks were the extent of the mainstream offer. The real shift began in the 2010s, when the gut health conversation entered popular culture. Probiotics moved from supplement shelves into yoghurts and fermented drinks like kombucha and kefir, and terms like "microbiome" started appearing in weekend newspaper supplements rather than just academic journals.

By the early 2020s, the wellness-focused snack movement was gathering pace. Paleo, keto, and high-fibre diets each brought their own wave of products, and brands began marketing snacks not just as "less bad" but as actively beneficial, using terms such as gut-healthy, immunity-boosting and energy-sustaining. Despite this progress, functional food and drink remained largely the preserve of early adopters, wellness enthusiasts, and the Instagram generation. It had not yet crossed into the everyday shopping basket.

Why the Sudden Rise?

What distinguishes the current wave is not novelty, but scale: for the first time, functional food and drink aligns consumer demand, regulatory policy and economic incentives.

The COVID-19 pandemic was a watershed

It forced millions of consumers to think more seriously about their health, immunity, and what they were putting into their bodies. Snacking habits changed almost overnight, becoming far more health-focused.

Generational change accelerated the trend

Gen Z and Millennials, who now dominate food spending growth, treat what they eat and drink as part of a daily wellbeing routine rather than mere sustenance. According to the Mondelez 2024 State of Snacking Report, 71% of Gen Z and Millennials prefer to eat many small meals throughout the day, and 78% of global consumers now prioritise overall nutritional value over simple calorie counts.

Consumers focus has shifted

Rather than focusing on what to avoid, more people are actively seeking beneficial ingredients. 38% look for ingredients they believe are good for their health, compared with 25% who are trying to avoid certain inputs. This represents a fundamental shift from defensive eating to proactive nutrition, and it plays directly into the hands of functional brands that can offer clear, credible benefits.

Regulation has quietly accelerated the shift

UK Government restrictions on junk food advertising, effective from October 2025, build on earlier rules that reduced the in-store prominence of products high in fat, salt, and sugar (HFSS). These restrictions are already influencing brand reformulation and retail shelf strategy, nudging both consumer spending and brand reformulation towards "better-for-you" alternatives.

The economics of traditional snacking have shifted

Rising input costs for cocoa, sugar, and potatoes have squeezed margins and volumes in chocolate and crisps. Chocolate purchases are reported to be 11% down from 2021, clearing shelf space and consumer attention for healthier, functional challengers.

Rules around health claims are tightening

Any health and nutrition claim made on a food or drink product in the UK must comply with retained EU Regulation (EC) No 1924/2006, which restricts the claims that can be made in advertising, in commercial communications and on product packaging. Only claims that appear on the GB Nutrition and Health Claims Register may lawfully be used, and any claim must be supported by generally accepted scientific evidence and presented without exaggeration. The Advertising Standards Authority (ASA) is actively policing unauthorised, vague and exaggerated claims, and recent rulings show that it will ban ads that cross the line.

Where are the fastest-growing UK functional food and drink opportunities? - Functional Beverages, Protein, and Beyond

The UK healthy snacks market was worth approximately £4.5 billion in 2023. It is projected to approach £6.5 billion by 2030, representing a compound annual growth rate of around 5.5%.  But within that broader market, functional products are the standout growth story. Within this landscape, growth is not evenly distributed. A small number of functional categories account for a disproportionate share of momentum and investor interest.

• High-protein products: Yoghurts, bakery, ready meals, savoury snacks - 37% of UK consumers now prioritise daily protein intake.
• Functional drinks: Sales up 54% year-on-year; two in five consumers purchase several times monthly.
• Gut health: Prebiotic fibre, probiotic snacks, kombucha, and fermented formats.
• Cognitive performance and brain health: An emerging category with growing consumer interest - including nootropic drinks and adaptogen-infused snacks.

Protein has moved decisively from the gym to the mainstream

The 2025 wave of high-protein products extends far beyond shakes and bars into yoghurts, bakery items, ready meals, and savoury formats. In the US, volume growth in protein-labelled products hit 4.8% year-on-year to March 2025, and the UK mirrors this trajectory. 

HRA research indicates that 37% of UK consumers now actively prioritise their protein intake daily. Over 75% report eating more protein than they did a year ago. Tesco's egg protein pot becoming the highest-purchased meal deal item is a telling sign of just how mainstream the protein push has become.

For investors, protein’s appeal lies less in trend‑driven novelty and more in repeat purchase, format flexibility and mainstream consumption occasions.

Functional drinks are the most dramatic growth area

Sales have surged 54% year-on-year, with two in five consumers now purchasing functional drinks several times a month. Among Gen Z, that figure rises to nearly two-thirds.

Ocado's search data reveals that searches for "protein drink" and "protein shake" are up 140% and 68% respectively. As Edward Horne, buying manager for chilled drinks at Ocado Retail, has observed, Gen Z shoppers are choosing functional drinks as part of their daily routine, swapping regular coffee for mushroom blends or substituting alcohol with healthier alternatives. This shift from occasional supplement to daily habit is what makes functional drinks particularly attractive from an M&A perspective.

Gut health and broader functionality sit at the frontier

The growing scientific evidence linking the microbiome to overall health is driving consumer demand for prebiotic fibre, probiotic-containing snacks, and fermented products. Kombucha, kimchi-based snacks, and fibre-rich formats are carving out durable market niches.

Meanwhile, Mintel's 2025 UK Consumer Snacking Report notes that of snack launches with functional claims, digestive health, energy, bone health, immune system support, and weight or muscle gain feature most prominently, with brain health and cognitive performance also emerging.

Clean-label credentials tie all of these trends together

Consumers want short ingredient lists, recognisable inputs, and minimal processing. They want to read the back of pack and understand what they are eating. For functional brands, this means that credible science, transparency, and great taste must go hand in hand -  and increasingly underpin valuation.

How are investors approaching functional food and drink M&A in the UK?

Functional food and drink are attracting significant M&A interest because the fundamentals are compelling: rising demand, strong repeat purchase, and regulatory changes that favour healthier products. Recent deal activity illustrates the trend.

• Mondelez's acquisition of Grenade, the UK protein-bar brand, showed how global players are buying into performance and high-protein snacking to reach younger, health-minded consumers.
• In January 2024, Citation Capital acquired a majority stake in Cibo Vita for $480 million, signalling continued private equity appetite for nutrient-dense propositions.
• Large food groups continue to rebalance their portfolios towards wellness and sports-nutrition assets, with repeat activity around high-protein, low-sugar, and functional brands. Charles Russell Speechlys recently advised long-standing client Puma Growth Partners on its investment in LOVE CORN, a fast-growing savoury snack brand in the better-for-you space.

Tips for brands joining the functional food and drink market

For brands looking to position themselves in this market, the signals are clear:

Taste remains non-negotiable

Consumers will not compromise on flavour, regardless of how compelling the functional benefit.

Claims must be credible and compliant

Overpromising on health benefits risks both regulatory action and consumer trust. The ASA is increasingly banning ads (including on social media) that make unauthorised claims such as “low in fat”, “reduces anxiety” or “boosts immunity” without proper scientific evidence to support the claims.

Clean labels and transparent sourcing are now a minimum requirement

These are no longer differentiators.

Repeat purchase matters more than hype

Brands that can demonstrate strong repeat purchase and scalable operations will be the most attractive to acquirers and investors.

However, food and drink products with health and nutrition claims will be the subject of consumer and regulatory scrutiny, where Trading Standards is likely to look closely and potentially investigate and prosecute misleading product claims (and other breaches of food labelling regulations), so it is very important that those claims are accurate, tested, and can be readily supported by evidence.

The UK functional food and drink market is no longer an emerging category. It is an established growth engine attracting serious capital. Looking ahead, the next wave of consolidation is expected to follow proven scale stories in protein-rich dairy alternatives, functional drinks, and gut-health-led products, with bolt-on acquisitions that expand flavour and format. The bottom line is that consumer behaviour, regulation, and capital are all moving in the same direction. The UK's functional food and drink ecosystem is set for another significant leg of growth, and the brands that win will be those that taste great, deliver real benefits, and tell a story consumers can believe in.