Comment - Soft Drinks & Water - Energy Drinks Evolution
Do energy drinks have the bottle for future success?
After bursting onto the scene a few years back, energy drinks have lost some of their early buzz. Ray Rowlands, from market research firm DrinksInfo, examines ways that drinks makers have sought to retain consumers' interest and how innovation could shape the future of the category.
Only a few decades ago, not many of us - outside of Asia at least - had heard of energy drinks other than Lucozade, which even today is drunk more for its aid to recovery after sickness than as an energy drink in the now generally-accepted sense.
Then, savvy Austrian businessman Dietrich Mateschitz launched the now ubiquitous Red Bull brand. The rest is history: double-digit annual growth became the accepted norm for the global energy drink market.
But, then, things began to slow down. Maybe that was because of the onset of the global recession or, maybe, they would have begun to slow down anyway. All products have their life cycle, after all, and it is the very rare example that seems to enjoy success ad infinitum. Whatever the reason, it is clear that something needed to be done to add renewed vigour to the category.
That is not to say that the energy drinks category is without its endless stream of new arrivals. Every day a plethora of 'wannabes' and 'me-toos' seem to spring out of the woodwork with weird and wonderful name tags from Ace to Zombie. Often, such outlandish branding is purely there to shock. Sometimes, it is obviously targeted at a particular consumer audience, as in 'Go Girl' or 'Skaterboy' (okay, I'm not sure if the latter example is an actual product yet, but I’m sure it soon will be). But, do they get sufficient attention to guarantee that essential repeat buy? From the number of products that fall by the wayside each year, most do not.
Despite the availability of all these wild and wacky newcomers, most volume sales still lie with the category leaders, like Monster, Red Bull or Rockstar, that can afford massive promotional support.
However, marketing and distribution muscle are not always enough to guarantee long-term success of either a product or a category. Innovation is the way forward. As the energy drinks category evolves, so new concepts arise.
Flavour diversification is one option. Yet, as many successful energy drinks have their own unique appeal, flavour extensions are not always viable. Taking the low calorie route is another alternative. That has been tried with some degree of success and low calorie energy drinks have taken around a 10% share of the key US market, for example. On a global scale, though, their impact has so far been less substantial. As a main segment of the consumer audience continues to be young (macho) males, the opportunities for low calorie drinks are somewhat restricted.
Two developments that have more recently captured the industry headlines are energy shots and the 50cl can; innovation from both ends of the packaging spectrum. Energy shots were available in the US more than five years ago, but have only recently gained international acclaim. They come in a variety of sizes from 50ml upwards, often with the added advantage of being in a resealable container. These shots generally contain the same amount of caffeine, taurine, guarana and other energy enhancing ingredients as their larger counterparts.
Therefore, they can claim to be more concentrated formulations that provide an extra boost in times of increased mental and physical exertion. These attributes are, in fact, not new. In Thailand, from whence the idea of Red Bull was first conceived, most energy drinks come in small screw cap glass bottles and have done for years. A more original feature of the more recent arrivals is the PET packaging.
Shots have certainly added a new dimension to the market and they carry a high price premium, which is good news for the producer and retailer. But, whilst many are marketed by the same companies as those selling standard energy drinks, the crossover has not come easily. In actual volume terms shots' contribution to global volume was always going to be limited because of their size. But in some markets, Benelux as an instance, they have already lost consumer interest and are disappearing.
At the other end of the scale has been the movement to upsize energy drinks. Whilst other larger packs have long been available, such as the 474ml size in the US, the 250ml can has long been accepted as the international norm. Then, in 2008, The Coca-Cola Co decided it could do better, as part of its reformulation of the Australian energy drink called Mother. Soon Mother, in its new 500ml can, began to make V and Red Bull, the local brand leaders, sit up and take notice. In a defensive move Frucor Beverages, the makers of V, released their own 500ml can. Soon the movement spread and the new super can size was born.
But, do these larger packs really add to consumption or merely cannibalise on existing presentations? Or to put it another way, how fast would the market have grown in their absence? Then there are the heath considerations, especially in respect of the younger consumer. How much energy drink should an individual consume at any one time? 500ml is basically two standard servings in one. Surely, what is really needed is resealable bottles instead of standard cans?
So, we come back to the PET bottle, which has been around for a while but has not really caught on.
Maybe, though, that is about to change. After all, world leader Red Bull has adopted a 33cl PET bottle whereas it never moved into the 500ml can.
The energy drink market may have slowed, but it is far from stagnant and I am sure we will continue to see the arrival of more extreme and ever hopeful brands to swell the current multitude of offerings. Perhaps one of these will provide the next guiding light for the industry. At worst, it will keep the big players alert.
It's crystal ball time for Ray Rowlands from DrinksInfo. This month, Ray takes a guess at what future trends in soft drinks and water will shape the categories in the months and years to come....
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