Category leaders are ushering energy drinks into new directions with packaging and flavor innovations.
Top Energy Vendors by Segment
View interactive charts showing dollar sales and unit sales percent change of top vendors of energy drinks and shots.
Energy drink dollar sales grew 14.6% to $1.9 billion in U.S. food, drug and mass channels for the 52 weeks ending Dec. 2, compared to the prior year, according to SymphonyIRI Group, the Chicago-based market research firm.
Energy drinks were about 5% of total DSD beverage sales and 8% of DSD beverage profits for the last six months of 2012 for Niemann Foods’ 40 County Market-banner stores, based in Quincy, Ill.
“The energy category is a positive category, and I do anticipate we’ll continue to grow the sales forward,” said Martin Miller, category manager at Niemann. “I think they’re going to continue to be a bright spot for the DSD beverage category.”
The category ranked as the second fastest-growing Center Store category (after coffee), with 17.7% dollar sales growth in food, drug, mass and convenience channels for the 52 weeks ending Sept. 9 compared to a year ago. In unit sales, which increased 18.7% for the same period, it’s the fastest-growing Center Store category, according to “Center Store: Driving Growth From the Inside Out,” a SymphonyIRI report.
Red Bull was the first energy drink to enter the U.S. market in 1997, said Gary Hemphill, managing director for information services, beverage consultancy Beverage Marketing Corp., New York.
“It’s still relatively early in [the category’s] development, about 15 years at this point,” said Hemphill.
But the category’s growth might slow, Hemphill said.
“It’s getting to be a fairly sizable, at least from a dollar perspective, category, so we’re likely to see growth moderate to some extent,” he said. “My expectation is that it will continue to be among the fastest growing, if not the fastest growing, of the major refreshment categories.”
But signs of momentum slowing have begun to show at Niemann’s 40 County Market stores. Energy drink sales finished 2012 with a 3% growth in dollar sales at the chain, down from about 10% annually in previous years, Miller said.
“They’ve kind of plateaued a little bit,” said Miller.
Monster and Red Bull combined make up 60% to 70% of supermarket energy drink sales. Coca-Cola Co.’s NOS brand also sells well. Sales of Coca-Cola Co.’s Full Throttle and PepsiCo’s Amp have slipped at Niemann.
Read more: FDA Investigates Energy Drink Reports
“Monster and Red Bull, through all the years of their growth, have taken a more grassroots approach to gain loyal customers. I think that’s paying off for them today,” Miller said.
Energy shots and mixes continue to have strong sales. The energy shots category grew 5.8% to $434.1 million for the 52 weeks ending Dec. 2 in food, drug and mass. The biggest brand, 5-Hour Energy, captured 86.2% of shots’ market share, with $374.3 million in sales, SymphonyIRI reported.
The number of new energy drinks and shots increased in 2011 after two years of steady decline, according to a Mintel report. Both forms of energy products saw an uptick in new releases in 2011, with 155 hitting the market that year. That accounts for nearly double that of 2010’s 80 new energy drinks and shots.
Monster Rehab ranked as the third top-selling energy drink brand, following Red Bull and Monster Energy, for the 52 weeks ending Nov. 4. The line consists of five tea-blend flavors, four of which contain 10 calories per serving. The fifth contains 15 grams of protein per can.
The popularity of Monster Rehab illustrates consumers’ desire for flavored and enhanced energy drinks.
Niemann’s Miller said Monster Rehab caters to people who don’t like the medicine-like taste of an energy drink.
Monster is the category leader at Jungle Jim’s International Market, said Jim Beckett, specialty foods manager, in an email interview. “We think it’s because of the variety, the names and how unique they are.”
Red Bull had stuck to its core flavor since its introduction to the U.S. market, expanding its brand with sugar-free and cola varieties, an energy shot and various packaging sizes. Even while sticking to its core taste, Red Bull had its highest growth rate last year since 2007, approaching the yearend up 17% in sales, said Guy Wootton, director of category insights for Red Bull North America, in an email interview.
Red Bull will introduce Silver, Red and Blue Editions in March, providing the same functional benefits as the original Red Bull but in lime, cranberry and blueberry flavors. “The Red Bull Editions were created by consumer demand — research tells us that taste is a barrier to entry to the category,” Wootton said. “Therefore, launching Red Bull Editions will help us to expand the consumer base of energy drinks.”
Niemann’s Miller cited the upcoming launch of NOS Active — a line extension of Coca-Cola’s NOS brand — as another new direction in which the category might expand. That’s because Miller described NOS Active as the first “energy-isotonic crossover.” NOS Active contains natural caffeine, electrolytes and B-vitamins — offering elements of a Powerade or Gatorade drink with energy ingredients in a low-calorie, flavored drink. The product was presented to Miller in December. Coca-Cola has not announced an official launch date.
Meanwhile, other beverage categories are mixing energy into their formulas. Products such as Kraft MiO Energy, Vitaminwater Energy and Rockstar Energy Water created a hybrid of enhanced water and energy drink beverages.
Niemann stocks energy drinks in a New Age beverage section in its supermarkets. This section also includes tea and coffee drinks. Miller said that Niemann plans to start testing a separate energy drink section within the soda aisle this year in a new store in Springfield, Ill.
Niemann also merchandises the drinks in Red Bull or Monster coolers, often placed near the front ends, in about three-fourths of its supermarkets. The availability of cold energy drinks influences 73% of energy drink buyers’ purchase decision, according to Mintel’s report.
Both Miller and Beckett said single-serve cans sell better than multipacks at their stores. “But the multipack, take-home packages are so important to us that we continue to promote them as four-packs in our grocery stores,” Miller said. “Monster and Red Bull do well. The other ones struggle as take-home packages.”
Price ranked as the most influential factor when deciding to purchase energy drinks, as indicated by 78% of consumers surveyed in Mintel’s report. Energy drinks are one of the most expensive beverages available, a benefit for retailers.
Single-serve can prices range from 99 cents for private-label options to $3.99 for a 20-ounce Red Bull at County Market. Multipacks range from $5.99 to $19.99.
Consumers are willing to pay a higher price point for that functional benefit of energy, Hemphill said. “Brands that are at a higher price point than, say, competitive refreshment products are in demand with both distributors and retailers because there’s more money to be made off of them.”
WH Refresh blog: Keeping Up with Energy Drinks
However, the category experienced a 7.6% decline in price per volume last year. Expanding distribution played in a role in this decline. Mass merchandise and dollar channels generally cater to value-conscious shoppers, causing lower price points than found in convenience stores, according to SymphonyIRI’s Center Store report.
Key energy drink consumers, such as teens, Hispanics and blacks, still had higher-than-average unemployment rates last year, according to Mintel. Hispanics, blacks and Asians, all of whom exhibited high consumption rates, offer growth potential for the category, however, as populations grow and manufacturers seek to increase usage occasions.
Niemann runs standalone promotions on different energy drink brands throughout the year, discounting them based on ad schedules with manufacturers.
Niemann also promotes the drinks through a text-messaging program in its college town stores. Through this program, subscribers receive offers for a 99-cent Red Bull 8.4-ounce can, for example. “We get really good redemption from the college kids on a promotion like that and get them into our stores,” Miller said.
Jungle Jim’s doesn’t merchandise energy drinks or run promotions for the category. The store simply stocks the beverages in its international department. “They seem to be selling well without our help or interference,” Beckett said.
Recent controversies involving the category, including an FDA investigation into safety concerns and inquiries into marketing claims, haven’t affected energy drink purchases at Jungle Jim’s. “The sales are not dropping,” Beckett said.
Nor has the controversy affected sales at Niemann, Miller said.
Energy shots and mixes held a 19.6% and 1.9% share, respectively, of the energy market in 2011,
according to a Mintel Group report.
The category leader, Living Essential’s 5-Hour Energy, grew 31% during 2009-11 in food, drug and mass channels, excluding Wal-Mart.
Penetration of 5-Hour Energy, however, increased from 22% in 2009 to 35% in 2011.
New types of shots have recently entered the market. The Hain Celestial Group, Boulder, Colo., has a new line of all-natural energy shots featuring green tea. Celestial Seasonings Enerji Green Tea Energy Shots are available in citrus, berry and pomegranate Xtreme flavors. The shelf-stable energy shots combine green tea with a blend of B-vitamins and ginseng. Energi is packaged in 2.5 fluid ounce bottles.
WH Refresh blog: Measuring Caffeine in Energy Drinks
Meanwhile, energy shots pose merchandising challenges because of their small size — about 2 fluid ounces.
“They’re high theft because they’re so small,” said Miller. “We’re always being cautious where we’re offering those up in our stores.”
The most effective place to merchandise energy shots is near the checkout, said Gary Hemphill of Beverage Marketing Corp.
“Often when people buy an energy shot they are purchasing it to consume immediately,” Hemphill noted.
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