The energy drinks market has enjoyed an impressive run in recent years and the category’s growth momentum doesn’t appear to be slowing just yet.

According to research from GlobalData, Just Drinks’ parent, energy drinks was the third-largest soft-drinks category in value terms globally in 2024, sitting below carbonates and packaged water, pulling in sales of $107.5bn.

The data analytics firm expects the energy-drinks market to reach $150.8bn by 2028, with a value CAGR of 9.1% between 2023 and 2028.

Energy continues to be dominated by big names like Red Bull and Monster but a clutch of brands are making inroads and developments over the past year suggest a feeling there’s still more growth to play for.

In July, Liquid Death, known for its canned waters, announced its move into energy, with a range of products the US company deems “better-for-you”.

Brewers have also been looking to get their foot in the door. In April, Heineken acquired a minority stake in UK-based natural energy drink maker Tenzing, while in January, Anheuser-Busch InBev revealed an energy-drinks “partnership” with sports nutrition and supplements group 1^st Phorm.

Last month, PepsiCo invested again in Celsius Holdings in a multi-faceted deal that also saw the US energy-drinks group acquire Rockstar Energy in the US and Canada from the CSD giant.

As the energy-drinks market continues to develop, industry watchers and brands see growth being driven by a growing segment of better-for-you products and demand for functionality.

Growth drivers

Part of the reason demand for energy drinks is growing is the consumer base has become more diversified.  

“If you look back fifteen years ago, the only energy drinks really out there were more core male-focused, male-dominated,” says Eric Hanson, president and chief operating officer at Celsius. “What we’re seeing is a bit more female, new consumers, younger, Gen Z but also this more active, healthy lifestyle person.”

Hanson adds the shift is partly due to changes in consumption habits. “You can attribute some to maybe switches in alcohol consumption, [or] changes from coffee and tea, and maybe traditionally, the ways that they’ve consumed or gotten caffeine,” he says. “The flavour profiles are better today on energy drinks than they’ve been in the past. There are more healthier options out there than what they’ve been in the past.”

And the Celsius executive also points to price. “From a value proposition, energy drinks used to be significantly more expensive than a lot of your other options in the door when you’re making a choice. Today, that price gap has closed quite a bit. And so I think as brands come out, like ours, with permissible, functional, healthier energy drinks, consumers are open to that”.

Energy drinks used to be significantly more expensive than a lot of other options. Today, that price gap has closed quite a bit

Eric Hanson, president and chief operating officer, Celsius Holdings

For Francois Sonneville, senior analyst for beverages at Rabobank, changes in consumption occasions have also fuelled the energy boom while he argues the drinks have also benefited from coffee’s popularity.

“Going out is still popular but not as popular as it was 30 years ago and drinks that help people when they’re gaming have become really popular, so energy drinks has benefited from that,” he says.

“[Coffee] has taken the place of juices and is consumed when people are rushing to the place they need to go, rather than… with their family at the breakfast table. Coffee shops have become more popular at the expense of juices and I think energy drinks has taken some of that, as well as taking from alcoholic drinks.”

Better-for-you options

One segment that has been gaining momentum within energy drinks is better-for-you – and the larger players within the category (and soft drinks more broadly) have acted.

In October, Keurig Dr Pepper snapped up zero-sugar Ghost and Celsius, which already sells a sugar-free brand under its namesake label, added the low-calorie Alani Nu brand to its portfolio in April.

What unites the likes of Celsius, Ghost and Alani Nu, is their use of sweeteners for flavour. “Zero sugar is important. To our folks, the flavour profiles are important, and so we do have sweeteners in both of our brands,” Hanson says. “I think the profile of Alani Nu is maybe a little bit more of a sweeter taste profile and a slightly different sweetener blend but we’ll use sweeteners to also make sure that we have drinks that taste good, that our consumers want to consume.”

Better-for-you products are core to the business of US-based brand Lucky Energy. The company claims to use 33% fewer ingredients compared to the average brands on the market. According to founder and CEO Richard Laver, Lucky Energy’s healthier focus has helped the brand broaden its consumer reach.

“It’s always been Gen Z but, really, what’s going on is an older demographic is heading into energy… and I think that’s because of one reason: they were scared of energy drinks,” Laver says.

“By having a straight up label of five super ingredients… and dose some of these ingredients down so they weren’t scary, it gave us an opportunity to tap into a major demo.”

Lucky Energy’s “super ingredients” in its drinks include maca, beta-alanine, taurine, ginseng and 200mg of caffeine. They also contain the sweetener sucralose.

Liquid Death’s Sparkling Energy drink will have a lower caffeine level (100mg) but will also be free of sucralose and aspartame sweeteners, CEO Mike Cessario said in a LinkedIn statement on the upcoming product a month ago.

UK-based Tenzing is another brand that uses natural, plant-based ingredients in its products, which founder Huib van Bockel says improves the overall “energy experience”.

“It’s natural ingredients, a combination of green tea and green coffee, so it’s a longer energy boost. Also, we took out 60% of the sugar. That means it’s kind of the same as your blood sugar level, so you don’t get that massive sugar spike and crash… the energy experience is just superior.”

Tenzing’s range is made with ingredients such as green tea and coffee extracts for caffeine, beet and fruit sugar and electrolytes sourced from Himalayan pink salt.

Better-for-you is an area that Celsius expects to continue growing. Hanson describes “the modern energy profile” as “this functional lifestyle, healthier, flavour-forward, in our case, fruit-forward on the Celsius brand”. He adds: “I think that’s where we see largely the growth that’s coming through the category.”

When it comes to better-for-you, Rabobank’s Sonneville stresses the area has potential but argues the products won’t be enough to push the high-caffeine, sugar-fuelled energy off the shelf.

“It will mean that there will be an additional niche degree that I think will have good growth prospects but will be smaller than mainstream for a very, very long time. But people will slowly try to look at those products and I think the outlook for them is good.”

Functionality

In energy drinks, the definition of functionality is broader than better-for-you. GlobalData consulting director Ivan Torossian suggests an opportunity for brands could be to bring together a better-for-you recipe with a higher dose of energy.

“In the case of Liquid Death, they’re going a bit mild with the energy, the stimulant part, which was my only doubt. It’s good to have the option but I think they should definitely have a higher dose option,” he says.

“But if someone can nail the high energy with the better-for-you ingredients positioning, I think that’s where the market’s going.”

High energy in the US is an important factor for consumers. While big players like Monster and Red Bull are developing sugar-free options, consumers still want that buzz, says Torossian. “I think that’s kind of the trend but, generally, the stimulant dose is pretty high and I’m sure it’s on the high end compared to the rest of the world. You know, it’s American.”

He also sees possible opportunities for producers in other niche areas that blur the lines between better-for-you and functionality.

Brands operating in this area include Nic & Jet Fuel, which sells energy drinks under the brand Nicotina Energy, made with small doses of natural caffeine and nicotine, and Adrafül Labs, which markets a drink called Endurance, made with 100mg of caffeine, 150mg of the stimulant adrafinil and 200mg l-theanine.

Generally, the stimulant dose is pretty high, and I’m sure it’s on the high end compared to the rest of the world. You know, it’s American.

Ivan Torossian, consulting director at GlobalData

While Torossian notes this area in the US is “very emerging”, he adds: “I think that’s where the category growth is going to be in. These innovations with other functional things like medicine and nicotine.”

However, Tenzing’s van Bockel sees consumers leaning towards functional ingredients in energy drinks that support people’s health. Tenzing’s Super Natural range has a higher caffeine level (200mg), as well as ingredients including Lion’s Mane and magnesium.

“We started launching natural energy, so that’s giving you the same energy without the crash, low calorie. And now, a second layer, we’re launching kind of ‘supernatural’ energy, so we’re looking at other benefits on top of your energy need.”

However, if a drink classifies itself as better-for-you, can it also be high in caffeine? Some players think so.

According to Celsius’ Hanson, better-for-you energy drinks can be high-caffeine but, in the US, consumers want to have these drinks in different quantities and at different times.  

“One of the things we do get a lot of feedback from consumers is, ‘I would love to have more of your drinks. Is there a lower caffeine alternative?’”, Hanson says. “I think we would explore lower caffeine alternatives, whether that’s through packaging or formulation, to try to provide more occasions for consumers over time and thinking about different day parts and different opportunities.”

Is the US still best?

The US has been a key market for energy drinks for pretty much as long as the category has existed. While the country is believed to likely remain a principal place to do business, producers looking to make headway in energy drinks may be wise to seek other markets.  

GlobalData expects energy drinks in the US will edge close to the $30bn ($29.93bn) mark in value in the US next year.

“I don’t think there’s any markets internationally that are going to surpass the US anytime soon,” says Hanson. “I think particularly as the US business grows, you know, double digits, it’s already a $20bn category and so it’s going to continue to lead the world in that respect.”

Celsius has entered several international markets over the past year, including Australia, the UK, Benelux and France.

Meanwhile, Lucky Energy started out in the US two years ago but has since expanded to destinations including Guam, Puerto Rico and Mexico. The group is entering Canada next year.

“Guam, Puerto Rico, some of these places that I’m putting the product into, they’re consuming tremendous amounts of Lucky and the orders are beating some parts the United States that are leading in energy,” explains Laver. “That should tell you that if the right product and the right company comes along with the right brand story, there’s certainly high demand.”

Down the line, Laver says he would also like to break into the EU, where the consumer, is “more and more globalised to American products”.

Unlike Celsius and Lucky Energy, Tenzing does not sell in the US. Besides its main market, the UK, it also sells to Switzerland, the Netherlands and Australia. Speaking to Just Drinks in April after announcing the investment from Heineken, van Bockel said Tenzing would continued to focus on its current markets in the near term but added: “Together with Heineken, have a good look at what other countries could be perfect for us. The focus for the next 12 months is really doubling down on the UK.”

Though the US remains a major energy playground, some argue the market is reaching a point where it might prove tricky to disrupt.

“The US has the advantage that it’s a market that’s very open to new ideas but the disadvantage that the energy category is already quite well developed over there,” says Sonneville.

“In the US it is much more innovation and transformation of the product that will drive the growth, whereas some of the other markets, there is probably still some organic growth for the category as a whole”.

Future success

Smaller brands can still do well in energy but it will be hard for them to compete with the major players.

As Sonneville says: “I think that the landscape is too far developed for someone to really go all the way on their own. If you look at Red Bull, I think that’s one of the few success stories of a company that started with an idea and then, all by themselves, made it to as large as they are right now.”

He adds: “What’s more logical is that someone will come with a product, that product will resonate well and then the temptation is to cash in.”

Tenzing expects its tie-up with Heineken to help it expand in the convenience channel in the UK, which is still dominated by the larger brands.

“There’s a lot to be won in the UK,” says van Bockel. “That’s really our first step. I mean, thinking about the market [that’s worth] £3bn ($4bn), if we get like 5-10% of that, that’s a big market of course, so that’s still our main focus.”

The landscape is too far developed for someone to really go all the way on their own

Francois Sonneville, senior beverages analyst, Rabobank

So how might the non-Red Bulls of the world succeed? Some believe brands need to carve out a niche for themselves.

GlobalData’s Torossian points to products like Nic & Jet Fuel. The drinks “have a different go to market strategy,” he explains, “similar to the vaping products, with vape shops and more of a grey market distribution. That’s where the opportunity would be for a new player that wants to position in this more niche category”.

For larger players, he adds: “The opportunity is maybe try to nail that better-for-you with the right stimulant.”

Carving out a niche – whether this is better-for-you or an element of added functionality – may prove successful. Some, however, believe it will ultimately be larger companies that will propel these newer segments to stardom.

As Sonneville explains: “If five years from now, there is this ingredient that was discovered today, and it’s in energy drinks, I would think that the chances of it being in a Red Bull product or a Monster product are larger than the chances of this product being a big success by itself and a challenger to Red Bull or a Monster.”