STiR coffee and tea magazine

24 STiR coffee and tea | 2025 Quarter 3 Autumn (Sep/Oct/Nov) "Since tea is inherently a functional beverage, nearly all of our offerings are crafted to reflect this," Sharma explains. "Over 85% of our blends are infused with high-efficacy, adaptogenic, and wellness-focused ingredients. Whether it's turmeric and mint for digestion, chamomile and valerian for relaxation, or ashwagandha for focus and clarity, we designed these blends to deliver both taste and benefit." The commitment extends beyond just adding functional ingredients. Luxmi emphasizes clean-label formulations. "All our blends are made with natural herbs, fruit botanicals, and zero additives — no artificial flavors, colors, or preservatives," Sharma notes. This approach resonates strongly with consum- ers seeking transparency and authenticity in their consumables. At Finlays Solutions, the trend has driven category expan- sion. "Functionality has become such an integral discussion point at Finlays Solutions that we entered a new category this past October 2024 for the first time in decades with the launch of our botanical extract line," Collins reveals. The company's portfolio transformation is comprehensive: "Our lineup is now split equally between a variety of teas, coffee, and botanical products. Of Finlays' active innovation projects, 60% include the exploration and addition of a functional ingredient." Regulations and Health Claims The growth of functional teas has created new challenges in navigating regulations and substantiating health claims. Compa- nies must strike a balance between marketing perceived benefits — as a driver of consumer interest — and ensuring regulatory compliance. "From a regulatory standpoint, we're mindful not to make direct or clinical health claims," Sharma adds. "Instead, we high- light the functional heritage and traditional uses of ingredients that reflect centuries of tea culture." Pure mint tisanes (caffeine-free herbal teas) aid digestion and promote calmness. Photo credit: Massimo Adami Some companies are going a step further and investing in clinical validation. Sharma says that Luxmi Tea is "testing some of our products for positive effects on well-being through stud- ies that are FDA compliant, and hope to have some of our prod- ucts certified clinically for their impact." This investment could differentiate products in an increasingly crowded marketplace. The regulatory landscape is particularly complex for ingredi- ent suppliers. "This is a new and unique challenge that Finlays is still navigating," Collins acknowledges. "We have begun per- forming both internal and external regulatory reviews to sub- stantiate health claims that our customers can make with our ingredients." The regulatory requirements influence product formulation, recommendations, and decisions. "These analyses do impact our formulation decisions as there are use rate thresholds that must be met to make substantiated health claims," Collins ex- plains. "To achieve certain use rates to produce health benefits, the amount required of some ingredients in a single-serve bever- age can have a detrimental impact on flavor, stability, and cost." Market Impact The functional beverage boom is measurably impacting overall tea sales in the United States. While traditional RTD tea seg- ments have struggled, with volume declining in five of the past six years according to Beverage Marketing Corporation data, the premium and functional segments are driving growth and value enhancement. Much of the RTD tea activity has shifted to the premium tier, where companies like Pure Leaf and Gold Peak have be- come leaders. This shift represents a fundamental change in competitive dynamics, with companies now requiring expertise in high-quality ingredient sourcing, clinical research, and regula- tory compliance, in addition to traditional tea knowledge and marketing strategies. The functional beverage trend is also driving innovation in adjacent categories. Enhanced waters, protein drinks, and bo- tanical-based drinks are all part of the broader functional prod- uct ecosystem benefiting from consumer interest in wellness. Traditional wellness ingredients like turmeric have been used for thousands of years, but are now more popular than ever before. Photo credit: Tahar Bekkaye

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