Research in Focus - The Evolution of Energy: How a Shift in Focus Broadens Appeal
As explored in 'Global Sports and Energy Drinks: Where Consumer Lifestyles and “Lifestyle Branding” Meet', energy drinks across the world are positioned and marketed in different ways.
For North America and much of Western Europe, energy drinks began as a lifestyle beverage that were reflective of youth culture and often mixed with alcohol. However, in recent years, energy drink manufacturers in the US, for example, have moved away from this positioning, focusing instead on the broad energy function of the beverage.
Yet, as this function becomes more commonplace, brands are now shifting their focus to flavours; highlighting taste and formulation to stand out from the growing crowd. With this shift, established energy drink brands benefit from an expanded consumer base and increased drink occasions, but general soft drink manufacturers are also more able to successfully enter the category with functional blends of their own. Regardless, the expansion of energy drinks, from purely situational to everyday consumption, represents a threat to all other beverage categories.
The energy soft drink evolution
- Youth Culture - Energy drink manufacturers initially focus on lifestyle branding to attract a small, yet important youth consumer demographic. Drink occasions mostly on-trade.
- Function - With initial users aging out of the target demographic, focus moves to function, as older consumers seek energy during workday. Usage becomes situational.
- Taste and Function - As consumers embrace function, energy brands expand on flavours, and soft drink players add energy variants to their drinks. This broadens drink occasions.
The emergence of all these beverages paints a much different picture for the future of energy drinks. BevNET.com founder John Craven said recently: “Energy drinks have never been about taste, that’s why making a better-tasting energy drink is a challenge.” But, these new products have shifted the focus of energy drinks to taste, with functionality becoming a secondary, yet important, differentiation. In the mid-2000s, Red Bull, Monster, and 5-Hour Energy pointed to the effectiveness of their energy blends to gain broader acceptance. But as new products launch, energy functionality becomes more ubiquitous – forcing manufacturers to draw in consumers by flavours and formulations that make their products unique.
This expansion of flavours has, in turn, helped brands establish their goals of broadening their consumer base and expanding drink occasions. With so many new brands, formulations, and flavours, consumers reach for energy drinks, not just because they need an energy boost, but also because they may be thirsty and looking for a refreshing beverage that just so happens to give them energy. Because of this, energy drinks are becoming more like mainstream soft drinks, while, at the same time, soft drink manufacturers are embracing energy functionality.
Fragmenting market amidst category growth
The effect of this blurring of soft drinks and energy drinks represents both an opportunity and a threat for established energy drink manufacturers. While the increase in drink occasions and broader market reach is obviously beneficial for brands with flavour extensions, the US market could become more fragmented as new players enter the field. Also, the switch in focus from function to flavour deemphasises the importance of specialised knowledge of energy blends.
Overall, the category as a whole is poised for continued growth. While flavours will continue to differentiate one brand from another, the energy drinks category benefits from consumer demand for value-added products. And, with flavours increasing use occasions to daily consumption, traditional soft drink categories could see diminished share.
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