Extra Energy

Call it energy drinks 2.0. 

When introduced in the late 80s, energy drinks were consumed predominantly by males in their late teens and early-to-mid 20s. While the primary demographic for most energy drinks remains the late teens to mid 20s, many of the original energy drinkers, as well as multiple other demographics, are also energy drink consumers. 

This attraction, from on-the-go young Millennials to suburban housewives with three kids, a full-time job and no time, has energy drink sales on the rise again. This comes after the category endured its lowest sales gains in about five years in 2014. Now, according to Chicago-based Mintel, sales growth through 2019 is expected to increase an estimated 52 percent.  

“The energy need state is quite large, “ says Gary Hemphill, managing director and COO of New York-based Beverage Marketing Corp. “While consumers have a range of beverage options that can provide them with an energy lift, increasingly energy drinks are a preferred choice. Additionally, the leading marketers have done a very good job with marketing and distribution, which has helped to drive the category’s growth.”

The leading manufacturer in the shelf stable non-aseptic energy drink category, which accounts for $2.4 billion of the $2.8 billion overall energy drink sales, according to Chicago-based IRI, is Red Bull North America. The Santa Monica, Calif.-based company controls 42.5 percent of sales, followed closely by the Monster Beverage Corp. at 40.5 percent. The two companies account for the top six brands in the category. Overall, the category is up 12.2 percent in supermarkets, drugstores, mass market retailers, military commissaries, and select club and dollar stores for the 52 weeks ended Nov. 29. 

Industry observers say that while sales have bounced back, more than half are occurring at convenience stores, leaving much room for improvement for grocery retailers. John Showalter, director, business insights for Red Bull North America, says there are several ways for supermarkets to capture the growth most effectively.  They include: 

 • Focusing on cold options at the checkout that are aimed at the top single-serve beverage brands that shoppers are looking for versus a manufacturer-driven solution. 

 • Creating a cold box section to complement the warm beverage section.

 • Featuring permanent warm fixtures to drive energy multi-pack offerings.  

 • Dedicating an energy drink warm section on shelf that follows an energy drink-specific shopper decision tree with a focus on the top brands. 

“The energy drink category within the context of supermarkets is an interesting and exciting opportunity,” says Showalter. “Grocery retailers are often faced with razor thin margins to manage, and the beverage category has often been the focal point of price wars in an effort to maintain or grow volume in the face of saturated penetration. This is where the energy drink category can be of most use—not only is it one of the fastest growing beverage segments in grocery, but also one of the most profitable as well.”  

Observers say that innovation—including the introduction of exotic flavors, lower-calorie and healthier options—has become a growing trend in the past few years. Red Bull has expanded its Red Bull Editions line with the Red Bull Orange Edition. For the summer season, a limited edition Red Bull Summer Edition will launch in May. 

As energy drink users continue to change, products are being introduced that are designed to target specific demographics and lifestyles. For example, Gerry David, CEO of Boca Raton, Fla.-based Celsius Holdings, says that older consumers tend to notice a slowing metabolism and weight gain, adding that Celsius products are a good nexus point where authenticity and nutritionals combine with healthy energy to meet these consumers’ new demands.   

“We are not a company that will target kids or extreme sports,” says David. “Our focus is to promote a healthy lifestyle and to empower adults to be their best selves. Consumers who may have been timid about trial in this category are now engaging as healthier options are being made available by retailers.”   

Chasing Rabbits Natural Energy Beverage was formulated with the healthier consumer in mind. “The original energy drink target market has grown older as early adopters of energy drinks have become a multi-faceted mix of Baby Boomers along with aging Millennials,” says Michael Musser, founder and CEO of San Rafael, Calif.-based Chasing Rabbits. “We believe the demand for refreshing and natural flavors is being fueled by an increasingly older consumer base looking for healthier choices.”

Musser adds that as obesity and diabetes are growing problems in the U.S., Baby Boomers and aging Millennials are more likely to seek lower glycemic and natural ingredient energy drinks. “To that end, our beverage company has adopted a socially responsible commitment to manufacture and market only naturally formulated, low-glycemic and healthier offerings for all ages of energy drink consumers.”

In order for supermarkets to best take advantage of the category, observers say they should pay close attention to the latest happenings, react to category reviews and make changes when necessary.  “The category has changed the past few years, giving supermarkets a bigger chance to make money and margin,” says Scott Allen vice president of sales-FDM and club, for Living Essentials, the Farmington Hills, Mich.-based maker of 5-Hour Energy products. 

For 5-Hour Energy, he says there is a strong trend toward extra strength and that energy shots has become a true category.  To help build sales at grocery 5-Hour Energy is “currently testing a Catalina program in several grocery stores with the purpose of acquiring new customers,” says Allen. “We are also looking forward to our third year of our program with the Special Operations Warrior Foundation (SOWF), where we will debut limited edition, Extra Strength Cherry flavor 5-hour Energy shots.” 

From May 1 through July 31, 5-Hour Energy will donate five-cents from the sale of every specially marked red, white and blue bottle of Extra Strength Cherry flavor 5-hour Energy to SOWF, a nonprofit organization that supports the military’s special operations forces and their families through college scholarships, family services, and financial stipends.