During the latest 52 weeks ended Jan. 27, 2013, dollar sales for energy drinks increased 13% and volume sales grew 23.9%, said Jamil Satchu, a partner with Symphony Consulting, part of the SymphonyIRI Group. Not surprisingly, he noted, Red Bull and Monster were the biggest drivers of growth in this category.
Despite widely publicized health concerns about some of the ingredients in energy drinks, Bob Falkenberg founder of Alpharetta, Ga.-based BeveragePulse.com research firm, said he expects sales to continue to increase another 10% “give or take” this year. Chicago-based Mintel forecasted that energy drink sales, which reached $7.3 billion in 2012, will grow to $11.9 billion by 2016.
The energy drinks category has been around for about 10-15 years, making the earliest adopters around 30 now, said Falkenberg. While the new cohorts of young consumers are still the major source of growth, the challenge for manufacturers is to get these early adopters to continue to choose energy drinks over coffee when they need an energy boost.
Last year, 7-Eleven designed a Black Friday promotion to offer shoppers “a one-two energy punch” by giving a free any-size cup of coffee (or other hot beverage of their choice) with the purchase of any Red Bull Energy Drink. The energy now, energy later approach did not substitute the energy drink for coffee but, rather, provided a solution to energy depletion later in the day. In its report, Mintel suggested that manufacturers emphasize the afternoon daypart, much in the way that Living Essentials’ 5-hour Energy shots does with its “What’s Your 2:30 Feeling Like” ads.
In terms of can sales, Red Bull North America grew 11.4% during the second half of last year; Monster grew by 16.7%. While Monster has added numerous line extensions with names like Khaos, Assault and Übermonster to keep its image edgy, Red Bull has focused on introducing a variety of package sizes ranging from 8-20 ounces. Red Bull is also dabbling in flavor extensions with the introduction of red (cranberry), blue (blueberry) and silver (lime) editions, currently available only in 8.4-ounce cans.
“While flavor extensions can spike trial, their popularity usually drops off pretty rapidly—remember the rash of vanilla, lime and lemon versions of colas that came out in the late ‘90s,” said Falkenberg. “Almost all of them are gone.” However, he said, offering line extensions in the sugarfree and/or zero-calorie sector, as both category leaders have done, may be an effective way to keep consumers buying energy drinks as they mature.
One major opportunity energy drink manufacturers in the U.S. market have not yet addressed, noted Falkenberg, is offering resealable PET or aluminum packages. He also cited some research his company has done in which 65% of energy drink users said they would buy energy drinks in plastic bottles. “That’s pretty significant,” he said.