Energy Drinks and Shots - US - July 2010

About this report

This report focuses on the energy drinks and shots market. While energy drinks have enjoyed significant popularity since their inception during the late 1990s, category growth appears to have cooled off during 2007-09. The current economic upheaval has negatively influenced the category, and a lack of universal appeal for energy drinks has failed to bring in new consumers to the market. This reports presents an in-depth analysis of the current issues and opportunities in the markets, including absence of new consumers and the growing appeal of energy shots. Besides presenting sales data on a segment-by-segment basis, the report considers a range of topics, including the following:

* What manufacturers and retailers can do to expand the market to new users
* The importance of modifying new product positioning in an industry that currently focuses on young male consumers
* Key brands’ performance in each segment, challenges they face and how private label manufacturers have an opportunity to fulfill an unmet need in the market
* The impact of demographic shifts on product needs during 2004-09 and how 2009-14 population projections will affect the market growth
* What innovative product positioning and attributes would best attract the increasingly health- conscious society; how marketers can modify current attributes to address fears concerning product safety
* A detailed discussion of attributes that can attract non-energy drink users to the market
* Consumer behavior in purchasing energy drinks and shots at retail; strategies to grow sales through product presentation at retail

Table of contents

Scope and Themes
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Executive Summary
Energy drinks’ growth slows; unable to attract new consumers
Over half of all adults aged 18+ are not interested in trying energy drinks/shots; free sample, low price keys to attract non-users
Energy drinks’ high price a hurdle in expanding user base; energy shots leading growth
Convenience stores command lion’s share in energy drinks market
Brands
Innovation driven by claims for purity, premium and ethical positioning
The energy drinks/shots consumer
Energy boost primary reason to drink energy drinks/shots; energy drinks need to underscore mental benefit
High price of energy drinks/shots is the biggest barrier in growing consumer base
Market Size and Forecast
Key points
Category fails to grow consumer base; future growth may stall
Safety concerns cast shadow on future growth
A majority of adult consumers are not interested in energy drinks
Ethnic consumers important for future growth
Sales and forecast of market
Figure 2: FDMx and convenience store sales and forecast of energy drinks, in current prices, 2005-15
Figure 3: FDMx and convenience store sales and forecast of energy drinks, in inflation-adjusted terms, 2005-15
Competitive Context
Key points
Energy claims in other non-alcoholic beverages threaten energy drinks’ functional platform
Figure 4: New product launches of non-alcoholic beverage beverages with energy claims, 2005-09
Enhanced water and tea
Coffee, a natural caffeine source, underscores energy claims in product positioning
Juice/juice drinks
Sugar and gum confectionery emulate energy drink positioning
Snacks
Figure 5: New product launches in food categories making energy claims, 2005-10
Rise in energy-boosting supplements
Figure 6: New product launches of supplements with energy claims, 2005-10
Rising trend toward relaxation drinks
Figure 7: New product launches of non-alcoholic beverages with relaxation or stress relief claims, 2005-10*
Figure 8: Desired psychological benefits in functional beverages, by age, January 2010
Segment Performance
Key points
Energy shots fuel growth during 2008-10
Sales of market, by segment
Figure 9: FDMx sales of energy drinks and energy shots, by segment, 2005-15
Figure 10: FDMx sales of energy drinks and energy shots in the U.S., by segment, 2008 and 2010
Segment Performance—Energy Drinks (Non-aseptic)
Key points
Higher prices push buyers to soda
High sugar content alienates consumers
Figure 11: FDMx sales and forecast of energy drinks (non-aseptic), 2005-15
Segment Performance—Energy Shots
Key points
Energy shots address consumer concerns but need to educate them
Figure 12: FDMx sales and forecast of energy drinks, at current prices, 2005-15
Segment Performance—Energy Drink Mixes
Key points
Crystal Light charts its own path to reach women seeking energy
Monster Mixxd Energy missing the “X” factor
Crystals threaten to overturn energy market
Figure 13: FDMx sales and forecast of energy drinks mixes, 2005-15
Retail Channels
Key points
Consumers shop for energy drinks in a variety of channels
Convenience stores remain the top channel but supermarkets catching on
Walmart is second only to convenience stores in selling energy shots; supermarkets lag in attracting energy shot users
Figure 14: Retail channel choice to purchase energy drinks/shots, April 2010
Sales of market, by channel
Figure 15: FDMx and convenience stores sales of energy drinks, by retail channel, 2008 and 2010
Retail Channels—Convenience Stores
Key points
Convenience stores showcase new products
Figure 16: Convenience store sales of energy drinks, 2005-10
Retail Channels—Supermarkets
Key points
Private label may give a window of opportunity for grocery channel
Figure 17: Supermarket sales of energy drinks, 2005-10
Figure 18: Supermarket sales of energy shots, 2005-10
Retail Channels—Drug and Other
Drug stores benefit from gains in energy shot sales
Figure 19: Drug store and other FDMx sales of energy drinks, 2005-10
Figure 20: Drug store and other FDMx sales of energy shots, 2005-10
Retail Channels—Natural Channel/SPINS
Key points
Sales of energy drinks in the natural channel
Figure 21: Natural supermarket sales of energy drinks and shots, at current prices, March 2008-March 2010
Figure 22: Natural supermarket sales of energy drinks and shots, at inflation-adjusted prices, March 2008- March 2010
Natural channel sales by segment
Figure 23: Natural supermarket sales of energy drinks and shots, by segment, March 2008 and March 2010
Natural channel sales of energy drinks by organic
Figure 24: Natural supermarket sales of energy drinks, by organic vs non-organic, March 2008 and March 2010
Market Drivers
Energy drinks continue to be perceived as harmful
Energy drinks have high amounts of sugar
Figure 25: Sugar content of popular energy drinks
Figure 26: Incidence of presently watching/controlling diet, May 2004-June 2009
Figure 27: Percentage of population aged 20 and over who are overweight or obese or extremely obese, 1988-2008
Young adults population growth is unlikely to contribute to energy drinks sales growth
Figure 28: U.S. population, by age 18+, 2005-15
Teen population offers better prospects in the next five years
Figure 29: U.S. teen population, 2005-15
Growth in Hispanic and black segments promises growth
Figure 30: U.S. population, by race and Hispanic origin, 2005-15
Limited disposable income contributes to lower overall category spending
Figure 31: Real Disposable Income, January 2007-January 2010
Historically low levels of confidence discourage many from spending
Figure 32: Consumer Sentiment, January 2007-March 2010
Companies and Brands
Key points
Beverages with lifestyle positioning win sales
Figure 33: FDMx sales of energy drinks and energy shots for leading companies in the U.S., 2009-10
Brand Share—Energy Drinks (Non-aseptic)
Key points
Red Bull still charging ahead
Monster Energy stomping smaller brands
Rockstar’s aspiration to climb the chart fizzles
North American Coffee Partnership’s DoubleShot a winning combination
Private label’s missed opportunity, need specific target
Other brands stealthy gaining share
Manufacturer and brand sales of energy drinks (non-aseptic)
Figure 34: FDMx brand sales of energy drinks (non-aseptic), part 1, 2009-10
Figure 35: FDMx brand sales of energy drinks (non-aseptic), part 2, 2009-10
Brand Share—Energy Shots
Key points
5-Hour Energy holds its ground
Red Bull takes its place in market
Manufacturer and brand sales of energy shots
Figure 36: FDMx brand sales of energy shots, 2009-10
Brand Qualities
Red Bull’s moderation wins a wider audience, but could foster greater loyalty with flavor extensions
5-Hour Energy: The leader in addressing concerns associated with energy drinks
Less sugar is characterizing quality
Available in decaf version
Available in five of the 10 top NAB beverage flavors
Figure 37: Top 10 flavors of non-alcoholic beverage new product introductions in U.S., 2005-10*
Has guidelines for safe use
Go Girl energy drinks: Serious about beating cancer but missing a fun factor
Innovation and Innovators
Figure 38: Number of new energy drinks and shot new product introductions in U.S., 2005-10
Innovations by segment
Energy drinks— B vitamins tops the list
Figure 39: Top ten claims in energy drink new product launches, 2005-10
Figure 40: Popular vitamin mineral fortifications in energy drink launches, 2005-10*
Energy shots—highlight on-the-go energy
Figure 41: Top ten claims in energy shot new product launches, 2005-10
Energy drinks vs. energy shots: A comparative analysis on new product trends
Energy shots—functional benefits
Energy drinks suitable for…
Energy drinks rely on flavor
Advertising and Promotion
Overview
Differentiation by addressing consumer concerns
Hydrive—Man can't be jittery when he throws 96 yard pass
Figure 42: Hydrive, TV ad, 2009
5-Hour Energy— helps you keep you cool
Figure 43: 5-Hour Energy, TV ad, 2010
5-Hour Energy: helps you keep you cool
Figure 44: 5-Hour Energy, TV ad, 2009
Acutefruit— 100% fruit juice gives all natural energy boost
Figure 45: Acutefruit, TV ad, 2009
Red Bull’s twist on classics leave memorable impression
Red Bull helps grandma ward off bad wolves
Figure 46: Red Bull, TV ad, 2010
Red Bull makes Watson more clever than Holmes
Figure 47: Red Bull, TV ad, 2010
Incidence of Use, Volume Consumption and Brand Usage
Key points
Trended energy drinks usage
Roadblocks to increasing user base
Figure 48: Consumption of energy drinks, by gender, age, education, households with children and region, January 2005-December 2009
Energy drinks volume consumption
Figure 49: Average volume* consumption of energy drinks, by gender, age, education, households with children, and region, January 2005-December 2009
Energy drink and shots usage
Figure 50: Consumption of energy drinks and energy shots, by age, April 2010
Red Bull cedes consumer base to other brands
Figure 51: Brands of energy drinks/energy shots consumed, by age, November 2008-December 2009
Volume consumption by brand
Figure 52: Average volume consumption of energy drinks, by choice of brands, by age, November 2008-December 2009
Reasons for Using Energy Drinks
Key points
Energy shots have higher functional benefit appeal to users than energy drinks
Figure 53: Reasons for drinking energy drinks and energy shots, April 2010
Impact of gender on reasons for using energy drinks
Figure 54: Reasons for drinking energy drinks, by gender, April 2010
Reasons for using energy drinks by age
Figure 55: Reasons for drinking energy drinks, by age, April 2010
Reasons For Not Drinking Energy Drinks
Price remains the biggest barrier to increasing consumer base
Health and safety concern about energy drinks keeps new users away from the category
Demystify the ingredients
Allocate resources to create awareness among non drinkers
Figure 56: Reasons for not drinking energy drinks and energy shots, April 2010
Attributes that can Favorably Influence Non-users
Key points
A majority of non drinkers are not interested in the category
Decreasing prices and free samples can grow consumer base
Natural ingredients, reducing caffeine and sugar can bring in new consumers
Flavor choice and packaging guidelines each can influence 10% of all non-energy drinks drinkers
Figure 57: Attributes that can favorably influence energy drinks/energy shots consumption among non-drinkers, by drinks vs shots, April 2010
Young adults aged 18-24 most likely to respond favorably to motivating factors
Figure 58: Attributes that can favorably influence energy drinks consumption among non-drinkers, by age, April 2010
Figure 59: Attributes that can favorably influence energy shots consumption among non-drinkers, by age, April 2010
Incidence of Drinking More or Less Energy Drinks Than Last Year and Reasons For Drinking Less
Energy drinks/shots consumption incidence on the increase after the recession
Figure 60: Incidence of using more or less energy drinks and energy shots compared to last year, by drinks vs shots, April 2010
Reasons for drinking less energy drinks than last year
Recession responsible for reducing consumption
Energy shots pose stiff competition
Too costly to drink on a regular basis
Health concerns instigate lower consumption
Competition from other non-alcoholic beverages with energy claims
Figure 61: Reasons for drinking less energy drinks compared to last year, April 2010
Attitudes Towards Energy Drinks
Flavor variety is important to a majority of energy drinks users
Caffeine and “other” ingredients— important consideration in buying energy drinks
Figure 62: Attitudes toward flavor and ingredients in purchasing energy drinks, by age, April 2010
Price is a clinching factor for a third of energy drinks drinkers
Figure 63: Attitudes towards price/economy in purchasing energy drinks, by age, April 2010
Nearly a third of energy drinks drinkers value brand as the most important attribute
Energy drinks are prized over soda for functional boost and image
Energy drinks users find energy shots a better alternative to boost energy
Figure 64: Attitudes toward “other” attributes of energy drinks, by age, April 2010
Attitudes and Behavior Toward Purchasing Energy Drinks/Shots at Retail
Figure 65: Attitudes and behavior toward purchasing energy drinks/shots at retail, by age, April 2010
Impact of Race and Hispanic Origin
Figure 66: Consumption of energy drinks, by race/Hispanic origin, January 2005-December 2009
Figure 67: Average volume* consumption of energy drinks, by race/Hispanic origin, January 2005-December 2009
Figure 68: Attitudes and behavior toward purchasing energy drinks/shots at retail, by race/Hispanic origin, April 2010
The Teen Consumer: Usage, Frequency and Brands
Key points
Trended energy drinks usage—teens
Figure 69: Trends in the consumption of energy drinks among teens, by gender, age, and race/Hispanic origin, January 2005-December 2009
Energy drinks usage frequency—teens
Figure 70: Volume* consumption of energy drinks among teens, by gender, age and race/Hispanic origin, 2005 and 2008
Brand popularity among teens
Figure 71: Brands of energy drinks consumed by teens, by age and gender, November 2008-December 2009
Volume consumption by brand
Figure 72: Average volume consumption of energy drinks among teens, by choice of brands, by age, November 2008-December 2009
Appendix: Trade Associations

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By market: United States (in North America)