Drinks and shots see energized sales
Energy category continues to appeal to a variety of consumers
“Energy drinks weathered the recession better than many other food and drink categories in the U.S.,” says Ty Law, U.S. research associate for Euromonitor International, Chicago. “The primary consumers of energy drinks in the U.S. are younger males, including teenagers, which are not as affected by unemployment as older Americans were. This is why the consumption of high-priced energy drinks was able to remain strong in times of economic recession.”
The category saw only two brands in the top 10 experience declines and it saw Rockstar Recovery post the highest gains in the category with 459 percent growth for $96.3 million in sales, according to SymphonyIRI data. Red Bull continued to lead the category in sales with more than $2.3 billion in measured channels through June 12. The company says it continues to focus on its brand and, “has ambitious plans for growth and is well-positioned to continue the momentum that has led to the brand's dominance of dollar share within the category,” according to Red Bull. “We are committed to staying ahead of the curve and building brand loyalty,” the Austrian-based company says.
Red Bull recently announced that it will discontinue production of its Red Bull Energy Shot along with its Red Bull Cola.
“Red Bull North America will focus efforts against our core brand ― Red Bull Energy Drink,” according to Red Bull. “Moving forward, Red Bull North America will sell through existing inventories of Red Bull Cola and Red Bull Energy Shot, but will not proceed with additional production.”
Hansen Natural Inc.’s Monster branded products continued to grow, led by Monster Energy, which had 24 percent growth in measured channels for $1.2 billion in sales. Monster Mega Energy, Java Monster, Monster Nitrous, Monster Khaos and Monster Assault all grew in sales. The company’s Monster Energy XXL was the only one to decline, according to SymphonyIRI data.
As products labeled as natural continue to increase, energy drinks are not exempt from this trend in the beverage industry.
“According to our survey, a lot of consumers actually show interest [in natural],” says Garima Goel Lal, senior analyst with Mintel International, Chicago. “They say they would like an all-natural aspect in energy drinks.”
Goel Lal says that some energy drinks already claim to be all natural and that the category has seen some innovation toward this claim, but that there have not been large sales so far from those brands.
Late last year, Nestlé USA partnered with Jamba Juice Co. to develop three Jamba All Natural Energy Drinks. The drinks are made with 70 percent fruit juice and contain 80 mg. of natural caffeine. Jamba Energy contains 90 calories and 20 grams of sugar in an 8.4-ounce can.
The category also saw companies turn to plants and herbs to formulate energy drinks. Higher Self LLC, Los Angeles, released its Beast Mode Energy drink, which is formulated with a distinctive blend of plants, herbs and shrubs found exclusively in certain regions of South America and Europe, the company says, which is combined with essential vitamins and minerals to increase uptake with no crash.
The promotion of minerals has become popular in new energy drink products, Goel Lal says.
“A lot of energy drinks are trying to attract customers on vitamin and mineral fortified claims or no, low, or reduced sugar and calories,” she says. “Those are the top two claims in new energy drink products in the last year between June 2010 and June 2011.”
The Campbell Soup Co. expanded its V8 franchise with the V8 V-Fusion + Energy drinks and V8 Energy Shots. V8 V-Fusion + Energy drinks are made with a blend of vegetable and fruit juices as well as green tea. Each 8-ounce slim can contains 80 mg. of caffeine and 50 calories. The V8 Energy Shots contain 100 percent vegetable and fruit juices with green tea extract. The 2.5-ounce shots include B vitamins as well as vitamins A, C and E.
Goel Lal says that in addition to some energy drinks touting all-natural claims, 64 percent of energy shots claim to be all-natural.
“I believe an all-natural factor is important and it would be more important to older consumers rather than younger consumers who are the key consumers in the market,” she says.
Although natural claims are carving their niche in the energy drink category, Goel Lal says energy drinks continue to benefit from the value-added aspect of the products.
“The biggest reason that continues to impact the energy drink market is its functional aspect where consumers continue to see it as an energy boosting beverage,” she says. “Basically there’s a value-added factor that consumers perceive in the market. For example, the top reason consumers drink energy drinks is the energy boost, and that’s why when we ask them what occasion they drink [energy drinks] most is in the afternoon to get an energy boost.”
The second biggest occasion is in the morning, but consumers also are consuming energy drinks at night, likely from college students, Goel Lal says.
“Consumers are looking for products that are convenient, taste good and make them feel good to keep them moving through their work or study time to weekend activities,” says Rich Wyatt, Philadelphia-based Cintron Beverage Group’s chief executive officer. “Energy drinks and functional nutritional drinks fill a need for consumers.”
In addition to its energy-boosting appeal, Goel Lal says she sees an opportunity for energy drinks to expand with hybrid products.
“We find that a lot of consumers who are energy drink users show interest in hybrid products like juice-based energy drinks or tea-based energy drinks,” she says. “So those kinds of products can expand the market beyond what consumers are drinking now.”
The juice and tea combinations also add flavor elements to energy drinks. Currently, the category is made up of mainly of unflavored options as well as Berry and Orange varieties, Goel Lal says.
Xyience, Las Vegas, expanded its lineup this year with a Fruit Punch variety. Fruit Punch Xenergy Xtreme does not contain calories and is made with a blend of flavors from natural sources, including Cherry, Orange and Tangerine.
Xyience posted a 57.7 percent increase in sales for $32.5 million and 66.6 percent increase in unit sales in measured channels for 52 weeks ending June 12, according to SymphonyIRI.
The company also rolled out collector cans featuring Ultimate Fighting Championship stars. Xyience recently announced its second Xenergy collector can featuring Jon “Bones” Jones, who is the current UFC light heavyweight title holder. Jones will be featured on 16-ounce cans of CranRazz Xenergy starting in September.
Jones Soda Co., Seattle, relaunched its WhoopAss Energy Drink that now has a deep purple color and subtle exotic fruit flavor with notes of dragon fruit, the company says. The formulation also features a blend of vitamins B2, B3, B6 and B12, as well as polyphenols and catechins from yerba mate, grape extracts and green tea. The energy drink also contains amino acids taurine, L-arginine, L-carnitine and L-lysine.
In addition to reaching consumers through flavor profiles, energy drinks also can target other demographics.
“I believe that the baby boomer generation provides a great opportunity for energy drinks [to] expand their consumer base,” Euromonitor’s Law says. “[Baby boomers] are used to an active and working lifestyle and it is doubtful that they will be able to slow down at a later age. This consumer group is a big influencer of social and consumer trends through their sheer volume and spending power.
“Americans are living longer and the older population will be looking toward food and beverages to improve their quality of life,” Law adds. “Energy drinks can assist in providing an extra boost, allowing them to stay up and alert as they were able to do when they were younger.”
Calling the shots
One area where the energy market is appealing to consumers outside of the 18-to-34 age group is with energy shots. Mintel’s Goel Lal says the energy shot sales leader, 5-Hour Energy, shows higher penetration among the 45-plus age group, specifically, “A lot of adults in the older age [group] who don’t want sugar in their beverages, but want the same benefit of energy boost, are going toward energy shots,” she says.
Living Essentials, Farmington Hills, Mich., continues to lead the category showcasing strong growth. The company’s flagship 5-Hour Energy shots increased 42.5 percent for more than $899.9 million in sales in measured channels through June 12, based on SymphonyIRI data. In addition, the company’s 5-Hour Energy Extra Strength grew 110.7 percent for more than $12.2 million in sales, according to the market research firm. The two products make up nearly 88 percent of the energy shot market share.
“I think that 5-Hour Energy has successfully marketed itself to working professionals,” says Jared Koerten, U.S. research associate for Euromonitor, Chicago.
NVE Pharmaceuticals saw its Stacker 2 dietary supplement increase 226.7 percent, while its Stacker 2 6 Hour Power decreased 4.3 percent, according to SymphonyIRI data.
The No. 3 player in the market, Red Bull Energy Shot sales decreased 37.4 percent, according to SymphonyIRI data.
What has helped the energy shot category grow to its $1 billion in sales, according to SymphonyIRI data, are the value-added benefits of the products.
“The appeal and benefits that energy shots offer consumers has driven sales in recent years,” Koerten says. “These products have capitalized on many consumer demands in the fast-paced global economy of today. First, these products offer extended energy to consumers who need to stay alert for long work hours. In addition, by promising ‘no crash later,’ energy shots can provide a boost of energy without the accompanying loss in productivity that often stems from drinking coffee or other sugary drinks.”
Koerten notes that the on-the-go convenience of energy shots, quantity of B vitamins and low-calorie claims, in addition to not containing excessive amounts of caffeine, have worked to generate a healthy image for these products.
In addition, he says energy shot manufacturers that focus on a flavor, marketing or brand image that resonates with Hispanics also should see success in the marketplace.
Cintron Beverage Group says the company’s energy drinks and energy shots appeal to the everyday consumers, but also have a special focus on the growing Hispanic population.
“Our recipes are developed to appeal to all consumers, but we’re inspired by the Hispanic market,” says Donna Davin, Cintron Beverage Group’s chief marketing officer. “Hispanic consumers wield a lot of influence over the entire consumer food and beverage industry when it comes to taste profiles.”
Davin notes that the company recognizes the term Hispanic is generic, but the company has isolated specific Hispanic cultural similarities such as a preference for tropical flavors, including mango, guava, pineapple and coconut. The company’s products and flavor profiles are developed to appeal to this demographic, she adds.
Cintron Beverage Group last year added Cintron Liquid Energy Shots to its product profile. Cintron Liquid Energy Shots are available in four of the same flavors as its line of energy drinks: Tropical Azul, Cranberry Splash, Citrus Mango and Pineapple Passion. The shots are sugar free and do not contain calories or carbohydrates.
Wyatt says the company continues to explore its flavor profiles.
“We see from our research and our sales numbers that taste does matter,” he says. “Additionally, choice matters, too. We’re going to continue to experiment with innovative flavors and bring variety to the market.”
Euromonitor’s Koerten says an opportunity for growth within energy shots with younger adult consumers also is available.
“I believe there is room for other brands to find success marketing to other demographics,” he says. “For example, college students represent an important group of energy shot consumers. Companies that can successfully target this demographic with its marketing should be able to grow.”
The energy shot category also saw private label products become more prominent. Private label increased 110.7 percent for more than $10.8 million in sales.
“[That] suggests that many people are drinking for the benefit rather than to be loyal to a certain brand,” Mintel’s Goel Lal says.
For the energy drink category, packaging has become part of the innovation process.
Ty Law, U.S. research associate for Euromonitor International, Chicago, notes that there have not been any game-changing innovations to the category recently, but says packaging has seen some adjustments.
“There’s always the development of different packaging shapes, sizes and re-sealable lids to help a brand stand out in the crowd,” he says.
Chicago-based Mintel International’s Senior Analyst Garima Goel Lal says Monster Mega Energy’s re-sealable cap has been one of the bigger packaging innovations to see success in the category.
Hansen Natural Inc.’s energy drinks continue to expand its packaging platform. Earlier this year, Monster Energy drinks launched worldwide commemorative cans earmarked for the U.S. armed forces. The cans feature a member of the armed forces in a neutral desert camouflage uniform. As the cans chill, the color of the uniforms transition from the neutral desert camouflage color to a cold-weather arctic blue color. Cans were available on military bases at home and abroad.
Red Bull also retooled its packaging when it released a 20-ounce can last year.
“The unique pack size is expected to energize sales for the category and brand, especially among heavy users who represent 73 percent of the energy volume and want varying sizes of the same product,” according to Red Bull. “Category research clearly shows that within energy, size variants have been more than twice as effective as flavor variants in generating incremental revenue.”
And earlier this year, Red Bull launched the Red Bull Augmented Racing 12-pack, which features a mobile gaming app where fans can create and race Red Bull cans on a custom-built digital racetrack. The packaging is available through this summer.