With consumers spending less on beverages, energy drink companies are doing whatever it takes to keep them coming back for more. Whether it’s packaging changes, acquiring different distribution or producing new products, the category is staying afloat through the rough waters.
According to Chicago-based research firm Information Resources Inc., energy drinks grew 3.8 percent during the year ending June 14, 2009, bringing in sales of more than $4.9 billion in supermarkets, drug stores, convenience stores and mass merchandise channels. Although Red Bull is the definitive leader, with $1.8 billion in sales, that number is down slightly from the prior year.
Taking the No. 2 spot is Monster Energy, with $830.2 million, an increase of 11 percent from the previous year. Monster Energy XXL and Java Monster also increased their sales and made IRI’s list in the No. 4 and No. 5 spots, respectively.
To keep sales growing, Monster Energy launched Monster Import, a new product packaged in 550-ml. resealable cans. Released in June, the cans feature Ball Corp.’s Resealable End (BRE). BRE is an aluminum can end with an integrated flat opening mechanism made of plastic that allows the can to retain its flat end. The cans are filled in the Netherlands and imported to the United States.
“When we saw this can, we knew it would be perfect for Monster as we continue to expand the energy drink category reach with true innovation,” said Geoff Bremer, brand manager at Monster Energy, in a statement. “Monster Import super-premium formula was developed in Europe and packaged in this unique ‘One Hand, No Hassle’ resealable can, which will create a new buzz in the energy category.”
Monster is not the only company to embrace packaging innovation. In December, Rockstar debuted Rockstar Punched in 22-ounce resealable widemouth bottles. The bottles have a 28-mm. closure, and are available in Guava and Orange, Mango, Passion Fruit varieties.
“We wanted to position something against the 24-ounce resealable cap-can,” says Jason May, executive vice president of marketing for Rockstar Energy. “We wanted to give it a solid PET [package] and see what the reaction was, and see if there was viability there.”
Red Bull replaced its 16.9-ounce Red Bull Energy and Red Bull Sugarfree cans with a 16-ounce size. The new shape is similar in profile to Red Bull’s 8.4-ounce and 12-ounce slim cans, the company says.
Packaging changes are one reason energy drink companies continue to see sales growth. Another way to bring more sales to the category is to attract new users, expanding from the typical young adult and teenage groups.
“Teens and young adults are the main consumers of energy drinks,” says Garima Goel-lal, senior beverage analyst at Mintel International, Chicago. “Energy drinks will need to expand their appeal to include more consumers.”
Energy drink-makers also have been busy expanding distribution agreements to get their products on retail shelves across the country. The Coca-Cola Co. and PepsiCo recently made individual distribution agreements with two of the leaders in the energy drink market.
Hansen Natural Corp., parent company of Monster Energy, completed an agreement last fall with The Coca-Cola Co. to distribute Monster Energy drinks in six Western European countries, Canada and selected territories in the United States. A significant portion of Monster Energy’s current North American direct-store-delivery volume will be served by Coca-Cola bottlers, primarily Coca-Cola Enterprises, the company says.
“We are pleased to be partnering with the world’s leading beverage system to expand the retail presence and penetration of our Monster Energy drinks,” said Rodney Sacks, chairman and chief executive officer of Hansen, in a statement. “We believe the relationship with The Coca-Cola Co. and Coca-Cola Enterprises will enable us to build on the success of our Monster Energy brand in North America and expand into fertile new international markets.
“In the United States, the relationship will complement our existing long-term arrangements with Anheuser-Busch distributors, which have been and we expect will continue to be very important to Hansen.”
PepsiCo then signed a multi-year distribution agreement with Rockstar Energy Drink. Rockstar products will be distributed by The Pepsi Bottling Group, PepsiAmericas, Pepsi Bottling Ventures and other independent Pepsi-Cola bottlers in most of the United States and all of Canada.
“The fact that PepsiCo and its bottlers made a substantial investment in securing the distribution rights for Rockstar shows the industry their immense commitment to eventually make Rockstar the No. 1 energy drink in North America,” said Russ Weiner, founder and chief executive officer of Rockstar. “Now that the deal is done, I can honestly say that we at Rockstar feel like we have a true home in the Pepsi system.”
Energy drinks are a luxury purchase for many consumers, and according to Euromonitor, consumers are less experimental with energy drinks and buying smaller quantities because of the price.
“People have less to spend, so people are buying less,” says Brian Morgan, senior research analyst at Euromonitor International, Chicago. “It’s been tough, especially for anyone who isn’t already established in the marketplace ... Once that shifts back toward growth and people making more money, it will move back toward 16-ounce and regular size energy drinks.”
Consumers have plenty of choices when it comes to energy drinks, but room for more new products still exists.
“This is one of the easiest categories to enter into because people want something that is unique and positioned into a particular sub-group or niche of customers,” he says.
In addition to the packaging changes from Red Bull and Monster Energy, Wet Plant Beverages also introduced its Jolt Energy product in a 16-ounce resealable can. As for flavor innovations, Crunk Energy Drink launched Citrus and Berry flavors to its line.
Some companies such as Adina for Life Inc., Starbucks Coffee Co. and Shock Coffee, traveled the coffee route with their energy drinks. Shock Coffee’s Triple Latte Energy Blend and Triple Mocha Energy Blend are available in 15-ounce cans. Adina for Life Inc. unveiled Adina Natural Highs, a coffee energy drink in Caramel Kick, Hazelnut Hook Up, Vanilla Nut Case, Mocha Madness and Double Xxpresso varieties. Starbucks Coffee Co. added Cinnamon Dulce to its ready-to-drink Doubleshot Energy + Coffee drinks.
Maurice Kanbar, founder of Skyy Vodka, introduced Rubyy Blood Orange Energy Drink in January, and in July added a diet version. The beverages combine Blood and Valencia oranges and tangerines, caffeine, taurine and guarana extract.
Keeping with the juice trend and adding a tea element, Amp Energy introduced Amp Energy Lightning, Amp Energy with Black Tea and Amp Energy with Green Tea. Amp Energy Lightning is a lemonade flavor. All three flavors were introduced in February.
Go Fast Sports and Beverage Co. released Z17, GFTea and Go Fast Light, three new flavors to the Go Fast energy drink line. Z17 provides energy with green tea; GFTea, which stands for Go Fast Tea, includes a blend of white, green and black teas; and Go Fast Light gives the benefits of Z17 but in a light formula, the company says. GFTea also includes honey, guarana, taurine and ribose.
Power Trip Beverages also introduced a Coconut flavor to its line of vitamin energy drinks. Coconut is lightly carbonated and available in 16-ounce cans.
On the flip side of energy, relaxation drinks have almost become a sub-group of the segment, which is ironic given their opposite effects. But many products in the new relaxation segment use the same edgy, urban imagery as their energy counterparts. Innovative Beverage Group Holdings Inc. launched Drank, which contains melatonin, valerian root and rose hips.
Funktional Beverages Inc. created Purple Stuff, to “calm down, relax the body and focus the mind.” Purple Stuff contains rosehips, valerian root, L-theanine and cystalline fructose. Classic Grape, Berry Calming, Sippin Citrus and Lean Apple are the available flavors. ViB Holdings introduced ViB Chill-N, which includes L-theanine to reduce stress and anxiety.
ViB Chill-N is available in a pomegranate berry flavor, and is low-calorie and lightly carbonated. The product also is caffeine free and contains antioxidants and vitamins B6 and B12.
Although energy drink concepts have continued to innovate and expand, Morgan says traditional energy drinks will remain popular. “They have such a hold on the category now, and I don’t see that changing too much going forward,” Morgan says.
Energy shots continue their growth as a variety-driven sub-category
In the movie “Austin Powers: The Spy Who Shagged Me,” Dr. Evil, played by Mike Myers, decides to clone himself in order to take over the world. The clone’s name is Mini-Me and he is the same person as Dr. Evil, only 5-feet shorter. Similarly, energy drink companies have developed mini versions of their products that are quickly taking over a large share of energy drink growth.
Living Essentials, Farmington Hills, Mich., realized the trend of compact products when it created 5-Hour Energy Drink, the leading brand in Information Resources Inc.’s measured retail channels, five years ago.
“I think being first to market and first to promote and succeed has been extremely important to us,” says Carl Sperber, spokesperson for Living Essentials. “We had a lot of time to establish ourselves as a product, establish how we were different as an energy solution for people, and to carve out a niche in what, at the time, was an underserved area in the energy drink category.”
A new 5-Hour Energy shot flavor will be introduced in September and join Berry, Lemon-Lime, Orange, Extra Strength and Decaf varieties.
NVE Pharmaceuticals, Andover, N.J., is a private label manufacturer as well as the maker of its own energy shot, Stacker2 6 Hour Power.
“Energy shots are a much more convenient vehicle for consumers,” says Karen Finocchio, director of marketing at NVE Pharmaceuticals. “They can fit in your pocket or your purse, your desk drawer, and you can carry them in your car. It’s quick and they give you a really good boost of energy.”
Stacker2 6 Hour Power is packaged in 2-ounce shots, and is available in Very Berry, Orange, Lemon-Lime, Punch, Grape and Watermelon flavors. In addition, 6 Hour Extra Strength was released in Grape.
“Our shots are two for $3.99 on the shelf, shrinkwrapped together,” Finocchio says. “It’s something that people are definitely buying. I don’t think the economic crisis has affected them at all.”
Many other energy drink companies noticed the trend and created their own energy shots as well.
This year, Monster Beverage Co., Corona, Calif., released Monster Hitman Energy Shooter. Hitman Energy Shooter is 3 ounces and contains glucose, caffeine, guarana and maltodextrin.
Red Bull, Santa Monica, Calif., created 2-ounce Red Bull Energy Shot and Red Bull Sugarfree Shot.
“The energy shot market is continuing to grow,” says Patrice Radden, spokesperson for Red Bull. “Consumer research and trade feedback confirm that the energy shots category has been waiting for a trusted premium brand like Red Bull to enter. Red Bull Energy Shot and Red Bull Sugarfree Shot are a natural extension of the Red Bull product portfolio, offering Red Bull efficacy in a concentrated form.”
The natural and organic product segment has embraced the energy shot concept as well. Guayaki Yerba Mate, Boston, launched Guayaki Organic Energy Shot in mini glass bottles. The Healthy Beverage Co. released Steaz Energy Shot, with the same ingredients as Steaz’s 12-ounce Energy Drink, including organic, Fair Trade certified green tea, Sambazon’s acai juice and Guayaki’s yerba mate.
Pricing may be one factor leading growth in the new energy sub-segment, says Brian Morgan, senior research analyst at Euromonitor International, Chicago.
“I think what has been fueling the growth of that product type has been cost,” he says. “They are small and they are cheap. They give you the same benefit as an 8-ounce or 16-ounce energy drink. In this environment where people are looking to spend less, having the same results from a much cheaper and smaller product is very appealing.”
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