In a ready-to-drink (RTD) market where soft drinks are struggling, why are energy drinks doing so well? After all, soda is demonized for being sugar-high and unhealthy—but consumers don’t necessarily consider energy drinks that much better for them.
Based on a recent survey, market researcher Mintel reported that fully two-thirds of energy drink buyers “are concerned about the negative effects of energy drinks and shots.” Even so, Mintel notes, “that doesn’t deter them from consuming energy drinks.” Sales are resilient, even amidst negative energy drink headlines—like in 2012–2013 when U.S. lawmakers began looking into safety concerns, such as marketing to children.
“Energy drinks have a very loyal consumer base,” explains Elizabeth Sisel, Mintel beverage analyst. “Even energy drinkers likely became wary of the category while there was negative media attention surrounding its safety, which is why we see the category’s sales growth was the smallest in the time when that negative scrutiny was present. However, once the spotlight was off, consumers likely returned to their normal drinking habits.”
So, why the soft spot for energy drinks?
“Energy itself is the reason,” says beverage expert James Tonkin, founder and president of consultant HealthyBrandBuilders. “We live in a stressed-out, ‘get it done now,’ ‘go go go’ environment today.”
And it’s really as simple as that. We’re tired, we need energy support, and that is why drink giants are thriving. Leaders like Red Bull (whose value last year eclipsed $7 billion) and Monster (now partially owned by Coca-Cola) report that sales are soaring. In its most recent financials, Monster cited 19% net sales growth in Q3 2015 alone—that's $757 million. With numbers like these, Mintel expects the U.S. energy drink market to grow 52% by 2019. Energy drinks are now growing at a faster clip than sports drinks and ready-to-drink tea (but slower than bottled water and ready-to-drink coffee). By contrast, growth in fruit drinks, carbonated soft drinks, and “value-added water” is on the decline, the market researcher reports.
Are there any chinks in the armor? Worries over what’s actually in these drinks are telling. Driven by concerns about popular drink ingredients like synthetic caffeine, there is a segment of shoppers looking for natural ingredients they perceive as healthier, such as natural—plant-based—sources of caffeine. Mintel estimates that 30% of energy drink users now consume “natural” energy drinks and shots.
“This is a potential growth area that we are watching, and many well-known brands, from juice to coffee to tea (V8, Starbucks, AriZona) have natural energy drink products,” Sisel says.
In a recent article for Nutritional Outlook, market researcher Innova Market Insights pointed out that Red Bull and Monster released their versions of “healthier” options, such as Red Bull’s Total Zero or Monster’s Energy Zero, both with zero calories and zero sugar. Mintel mentions Monster Energy Unleaded, which contains no caffeine. Monster is also targeting the sports nutrition market with Monster Energy Shakes with protein, Innova said.
Tonkin mentions some common energy drink ingredients that are good candidates for natural replacements. “Taurine is very overused and if folks knew more about it, they perhaps would stop drinking traditional market-leading drinks. Guarana and glucuronolactone are two other ingredients that have been in traditional energy drinks and can and should be replaced by healthier alternatives,” he contends.
Other ingredients mainstream in energy drinks are B vitamins, ginseng, Ginkgo biloba, L-carnitine, sugars, and antioxidants. Innova Market Insights says that as of October 2015, guarana is still the top-selling natural alternative for energy drinks and now in one out of every four new products launches. Ginseng is next in line. Innova says the ingredient increased market penetration nearly 10% last year. Selling farther behind for now are green tea and other tea extracts, “natural caffeine,” and yerba mate.
Whether natural sources of caffeine are more beneficial than synthetic caffeine (such as providing a more-steady supply of energy minus the energy “crash”) is up for debate, but another undeniable advantage of a holistic, plant-derived energy source is the benefit of other phytochemicals intrinsic to the plant.
Let’s look at some of the botanical-based energy options on the market today.
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