As the energy drink category continues to flex its strength, experts highlight how brands can remain relevant in a competitive market by responding to consumers’ growing need states.

In Mintel’s 2023 report “Energy Drinks – US,” the Chicago-based market research firm notes that loyalty from energy drink consumers has helped this market thrive.

“Energy drinks remain a growing segment of the wider beverage industry, its growth attributed to core category loyalists as well as category newcomers attracted by [better-for-you] (BFY) energy drinks,” said Caleb Bryant, associate director of food and drinks reports at Mintel, in the report. “The energizing beverage landscape is rife with competitors, but energy drink brands can remain relevant by addressing consumers’ interest in health while also responding to consumers’ shifting energy needs.”

Although strongly supported by its loyalist consumers, analysts note that newcomers to the category are helping with the continued strong performance.

“This combination of category loyalists and category newcomers will drive the market’s growth,” Mintel’s report states. “The market benefits from favorable conditions such as low unemployment and demographic shifts … indicating opportunities for energy drink brands to develop products for specific audiences such as older millennials and older Gen Alpha consumers.”

Top energy drink mixes (Individual brands)

*Includes brands not listed
Source: Circana, Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 19.

Sally Lyons Wyatt, global executive vice president and chief adviser for consumer packaged goods and foodservice at Chicago-based Circana, noted in Beverage Industry’s August 2023 issue that consumer interest in the energy category has not abated, especially when compared with other functional beverages.

“Overall, the energy drinks category continues to have positive growth across dollars, units and volume showing consumers interest has not waned,” she said. “They have been outperforming other functional beverage categories as well.

“All segments within the category are growing in sales with the exception of energy shots, which has suffered declines,” Lyons Wyatt continued. “Energy drink mixes are demonstrating strength and growth across the metrics due to affordable price, convenience and flavors. These products are also fan favorites for Gen Alpha.”

Arielle Rose, senior analyst at IBISWorld, New York, also noted energy drinks’ positive performance in comparison with other functional counterparts.

“Over the past year, the energy drinks and energy shots market has remained strong compared with other functional beverage categories that have sustained varied levels of demand,” she said in Beverage Industry’s August 2023 issue. “The steady market for energy drinks and energy shots is mainly driven by factors like strengthening consumer focus on fitness, busy lifestyles and the boost of eCommerce platforms. In particular, as more people return back to the office post-COVID-19, more have been seeking beverages that provide them with a boost of energy.”

Yet, Rose noted that as consumers’ focus on health and functionality has risen, various functional beverage categories are gaining traction.

“Therefore, energy drinks and shots, while still popular, have faced strengthening competition from these emerging functional beverage categories,” she explained. “Also, negative publicity surrounding caffeine relating to safety concerns and poor ingredient content have given energy drinks and shots somewhat of a bad reputation. Brands are responding to this trend by reformulating their products with natural ingredients, reduced sugar and added functional benefits to cater to consumers’ evolving preferences.” 

Recent data from Circana show dollar sales for the overall energy drinks category as $21.8 billion, up 10.8%, for the 52 weeks ending May 19, in total U.S. multi-outlets. Meanwhile, unit sales increased 7.7% for the same time period.

Top non-aseptic energy drinks (Individual brands)

*Includes brands not listed
Source: Circana, Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 19.

Among the various segments, non-aseptic energy drinks held the lion’s share of sales, $20.7 billion, up 11% for the 52 weeks ending May 19. Meanwhile, unit sales for the segment saw an increase of 8.2% for the same time period, according to Circana.

The Top 5 brands in the non-aseptic segment for the 52 weeks ending March 19, are as follows: Red Bull, Monster, Celsius, Rockstar and C4, respectively. Although ranking third of the Top 5, Celsius saw a dollar sale increase of 101.4%, with unit sales increasing 91.9%.

Experts note that, with the increased competition from functional beverages, performance beverages now are blurring the lines.

“Traditional energy drinks such as Red Bull and Monster dominate the energy drink market, yet segments such as fitness energy drinks and gamer energy drinks have successfully carved niches within the highly competitive energy drink market by catering to the health needs, energy needs, and interests of specific consumer groups,” Mintel’s report states. “For example, Celsius’ focus on healthy energy and aspirational fitness lifestyle marketing has made it one of the fastest-growing energy drink brands and has become popular among younger female consumers.”

Consumer research also shows that although consumers turn to energy drinks for the energy aspect, additional attributes are sought from these beverages.

“In Circana’s 2023 Snacking Survey, 53% of consumers stated that energy drinks provide energy/fuel,” Circana’s Lyons Wyatt said in Beverage Industry's August 2023 issue. “In addition, 35% of consumers stated that energy drinks helped support their mental well-being, while 31% of consumers stated they help support immunity.

“Energy drinks that contain certain ingredients, such as L-citrulline, have been stated to not only help give you a more effective workout (accelerating metabolism and burn body fat), but also reduce high blood pressure, etc.,” she continued. “There are side effects as well to some ingredients, so experts are encouraging parents to look at the ingredients and monitor intake of younger consumers.”

IBISWorld’s Rose also noted in Beverage Industry's August 2023 issue how health consciousness has impacted the energy category.

“As consumers have become more health-conscious and wary of consuming large doses of caffeine and sugary beverages, the bubbles have begun to fizzle out,” she said. “This negative perception is expected to persist over the five years to 2028, which will likely slow the consumption of more traditional energy drinks goods, while even more consumers will look to consume ones with all-natural ingredients.

“That’s why manufacturers will introduce a larger variety of all-natural, non-GMO, preservative-free and organic energy drinks, appealing to consumers wary of the potential negative health consequences associated with artificial ingredients,” Rose continued. “More energy drink producers will continue to market brands to specific consumer groups and introduce new products, driving up the general population’s acceptance of energy drinks.”

Yet, fitness and health-focus are not the only avenues that energy drink manufacturers are taking to address consumer need states.

“Gamer energy drinks, while currently a small segment of the total market, are poised for strong growth considering gaming’s ubiquity among young consumers; 94% of teens aged 10-17 play video games, and playing video games is the top after-school leisure activity among males aged 10-17,” Mintel’s report states, citing data from its 2022 report “Teen & Team Gaming – US.”

Although taste and flavor are important to all beverage categories, analysts highlighted the novel approach that energy drink manufacturers are willing to take to engage with consumers.

c4 hawaiian punch energy drink
C4 recently unveiled its C4 x Hawaiian Punch, available in a variety of Pre-Workout Powders, as well as the cult-favorite C4 Performance Energy. Image courtesy of Nutrabolt

“Consumers seek out fun flavor combinations that are either favs from another category extending into energy shots (like co-licensed confection brand flavors) or whimsical flavors like Blue Blush, Peach Vibe, etc., that bring excitement and are a hit with consumers,” Circana’s Lyons Wyatt said in Beverage Industry’s August 2023 issue.

IBISWorld’s Rose noted that energy drink manufacturers aren’t afraid to experiment with flavor combinations, but also are turning to natural solutions to help address sugar content.

“Ever-changing consumer preferences have led energy drink and energy shot producers to experiment with different flavors,” she said in Beverage Industry's August 2023 issue. “Examples of these flavors include tropical fruits like coconut-lime and mango-pineapple, mixed berries and citrus blends like lemon-lime, as well as spiced flavors like cayenne and turmeric.

“As demand for healthier options swells, energy drink flavors that use natural sweeteners like stevia or sugar alternatives are also becoming more prevalent in the market,” Rose continued. “Over the coming years, energy drink and shot producers will continue to evolve and introduce new and innovative flavor combinations, offering consumers a wider range of choices. These unique flavors appeal to the taste buds and seek to pique additional consumer interest.”