Talk about an energized market. Rising consumer concerns about health, growing awareness of the benefits of exercise and the perceived need to cope with increasingly busy lifestyles have combined to boost demand for performance-related foods and beverages. Moreover, these influences have effectively moved many products—once regarded as specialist nutrition lines—out into the mainstream. Meanwhile, marketers have embraced lifestyle-driven product positioning.
This growing market includes energy boosting products as well as sports nutrition lines and there is considerable overlap between the two categories. Both are characterized by the dominance of drinks in the marketplace. Likewise, both categories are pushing for mainstream use by developing and promoting products for a wider range of consumers and consumption occasions.
Consumers once considered energy products (led by energy drinks) as concentration aids while they worked or studied for long hours or perhaps drove for long distances. Likewise, they become a trendy choice for night clubbers or those on an evening out. Today, they encompass a much wider range of product types and positionings—essentially helping those looking for an energy boost for any purpose, at any time of day.
Although an established market in Japan, energy drinks only started to influence mainstream soft drink markets in the early 2000s. That’s when the pioneering Red Bull brand began heavyweight promotion and expansion. It took the concept of stimulation energy drinks to the market in the West for the first time—initially in Europe and then in North America.
Energy products initially appeared in the US isotonic/sports drinks market in the late 1990s, but then showed strong growth as a separate category within the overall performance market. This was aided by the products’ fashion image and the perceived need for products to boost energy levels for those with increasingly busy lifestyles. Although estimates vary according to definition and source, the energy drinks market is generally estimated at more than US$10 billion. And while the overall soft drink market has been relatively flat, energy drinks have posted double-digit growth rates.
Energy drinks accounted for 6.5% of total US soft drinks launches recorded by Innova Market Insights during the 12 months ending Feb. 28, 2015. That was ahead of the global average of 4%. The market is dominated by non-aseptic (primarily canned) drinks under iconic brands such as Red Bull, Monster and Rockstar.
Red Bull GmbH, Fuschl am See, Austria, continues to lead the US and indeed the global energy drinks market. More recently, some industry analysts express concern over its relatively limited portfolio and how it can continue to remain relevant to its core market when its “edgy” image has given way to its status as a major global mass market brand. New product activity has included a Red Bull Total Zero variety (2012) with no calories, sugar or carbohydrates. It’s targeted to meet diet-conscious consumers’ growing demand for healthier products.
Red Bull also moved into limited editions to maintain interest, including a Summer Edition (2014) Tropical variety. This was subsequently renamed the “Yellow Edition” and became a permanent line item in the spring of 2015 (joining the existing Blue and Red Editions). At the same time, Cherry and Orange Editions were added under the Red Bull Total Zero umbrella. This summer finds the Tropical Summer Edition rolling out in a number of European countries, including the UK and Germany.
A keen rival, Monster Energy, also launched a Zero edition in the US in 2012, with its Monster Energy Zero Ultra. It became the star energy drinks performer of 2014, with sales through multiple retailers rising to over US$360 million, making it the third largest brand overall behind Red Bull and the original Monster Energy line.
Marketed as less sweet, lighter tasting, zero-sugar and zero-calorie, the drink is sweetened with erythritol, sucralose and acesulfame-K and it joined other light varieties in the Monster stable. That larger line includes Monster Energy Lo Carb and Monster Energy Absolutely Zero. The Monster brand also has moved closer to the sports drinks market in recent years, extending its range with performance lines such as Monster Rehab for refreshment, rehydration and revitalization; and Muscle Monster Energy Shakes with protein.
Last year saw one significant development when Coca-Cola purchased a 16.7% stake in Monster Beverage. As part of the US$2.15 million deal, Coca-Cola transferred ownership of its worldwide energy drinks business—including No5, Full Throttle, Burn, Mother, Play, Power Play and Relentless—all to Monster. Meanwhile, the deal meant several of Monster’s non-energy lines—including Hansen’s Natural Sodas, Peace Tea, Hubert’s Lemonade—transferred to Coca-Cola. The deal also gives Monster access to Coca-Cola’s global distribution network. That extends its international access and potentially reduces its reliance on US business.
The US energy drink market continues to expand with new flavors, formats and functions. Greater competition is bringing more segmentation and focus on additional benefits, such as hydration, endurance, mental focus, immune support and protein content. This has resulted in the sector tending to move closer to the health and wellness category.
There’s also been a rise of hybrid products whereby other categories within soft drinks are adding energy to their positioning. One example involves Celsius Sparkling Cola, which is marketed as a “negative calorie drink” with ingredients to “increase fat loss, boost energy and burn more calories,” as well as deliver “lasting energy.”
Another interesting 2014 launch was Sunny Delight Beverages’ SunnyD X line. It uses the established Sunny D juice drinks brand but is positioned as an alternative energy drink for teens. It delivers energy from a combination of vitamins and carbohydrates rather than the more usual caffeine and taurine.
There also has activity on the organic front. New entries here include those Mamma Chia’s Chia Vitality energy drinks with chia seeds, guayusa and fruit juices; EnerBee with honey, bee pollen and royal jelly from Natural Motive; and Marquis O3 from Marquis Beverages.
The Bar Scene
Outside of drinks, the mainstream energy foods market remains largely undeveloped—other than in snack bars.
The US has a relatively long-established energy bar market, with brands such as Balance Bar, Clif Bar and Powerbar. These were originally specialized sports and energy products from independent companies, but as the market took off, several brands changed owners. Those brands since have moved more into the mainstream—all at a time when the larger cereal and snack bar market has grown and extended into convenient, portable options for general lifestyle eating occasions.
That said, traditional sports and energy bar brands still continue to compete at a fierce level with a growing range of options targeted at different need states (endurance, recovery, etc.) and health benefits (performance, added fiber, high protein, etc.). Likewise, they offer increasingly more indulgent and complex flavors.
The overall US bars market is now estimated at approaching US$6 billion a year and is a relatively mature and complex market. It includes a wide range of products such as granola or muesli bars, breakfast bars, meal replacements and nutrition bars, as well as energy and performance lines, although many products now look for points of difference by combining features and benefits and blurring definitions still further.
More than 92% of US cereal and energy bar launches recorded by Innova Market Insights (52 weeks ending Feb. 28, 2015) featured health claims of some kind. Approximately 13.5% featured claims more specifically related to energy and alertness. Energy and alertness claims are increasingly being used in combination with other benefits, relating not only to health but also to indulgence. Consumers increasingly demand a good taste profile and more upscale “treat” ingredients such as chocolate, fruit and nuts.
The market has shown good growth and includes a range of better-for-you lines, including sports and energy, weight management and meal replacement options. Key trends in the market include the rising popularity of high-protein lines in the mainstream market with greater focus on protein content and protein source. Likewise, there are growing numbers gluten-free and clean-label offerings.
New bar introductions cover a wide spectrum. Premier Nutrition Corp. recently launched PowerBar Natural Protein (12g per bar) in two varieties: Blueberry Nuts and Salted Peanut Crunch. Likewise, Quaker offers new Protein Baked Bars, offering 10g of protein for “fueling your morning to tackle the day.” Elsewhere, smaller competitors such as Bearded Brothers, Austin, Texas, offer energy bars that are organic and non-GMO; raw; vegan; gluten- and soy-free. The Bearded Brothers energy line includes varieties such as Fabulous Ginger Peach, Radical Raspberry Lemon, Outrageous Orange Kale and Bodacious Blueberry Vanilla.
For the record, there are other food and beverages marketed on an energy platform, although this involves relatively small numbers. Other product sectors featuring some activity in this area in recent months include pet foods, hot drinks (mainly teas), confectionery (particularly sugar confectionery) and bakery products (led by breakfast biscuits).
In summary, it’s clear that the sports and energy performance product categories traditionally fulfilled different needs. However, the two categories now are blurring and are competing—particularly where products take a more lifestyle positioning, offering convenient refreshment and functionality “on the go.” Moving outside the mass market, however, many companies and brands are starting to develop more specialized products, offering “professional-style” nutrition ranges alongside their standard lines.
Meanwhile, in the mainstream market, increasingly busy lifestyles are boosting demand for products offering energy—be it for an instant boost or for a sustained period. The move of energy drinks and bars into the mainstream has opened up new product opportunities. Formulators now can focus on an increasing range of consumers and usage occasions, offering tasty, nutritious and convenient options targeted at modern consumer lifestyles.