Joanna Cosgrove08.19.10
When another cup of coffee or can of cola won’t cut it, consumers are quick to reach for an energy product to help them punch through hazy mornings and mid-day slumps. But what used to be a market characterized by young core consumers slamming a bitter tasting, jitters-inducing beverage has flourished into a sophisticated industry hallmarked by improved formulating, flavoring and, more notably, “no crashing” after the product has done its job.
Though the energy products landscape has evolved to include bars and bites to complement the ever-present beverages, Julian Mellentin, owner and director of London and New Zealand-based New Nutrition Business, a specialist in the business of food, nutrition and health, and publisher of the journal New Nutrition Business, noted that some of the original players are still tops in the marketplace.
“Beverages dominate and the classic Red Bull-type product is the major part of the market. In fact Red Bull is the major part of the energy drinks market, worldwide, still with a 60%+ share in most countries even though it’s now a more than 20-year-old brand in the west,” he said. “The loyalty of the core consumer has held up well in the recession with many markets still growing—and the mature Australian market (dominated by Red Bull and V) still showing an amazing 29% growth rate.”
Global energy drink sales have begun to climb again and Mr. Mellentin estimated that supermarket, drugstore and mass merchandiser sales will reflect 10% growth. The brand synonymous with starting the energy beverage craze, Red Bull, is on track to post 18% growth and rival brand Hansen Natural (Monster) is on par to do the same.
The most exciting subcategory of energy beverages is the shot segment, which Mr. Mellentin said has been experiencing “phenomenal growth.”
“Living Essentials (5 Hour) [is] up 50%, which means it must be on its way to being a $1.5 billion retail sales brand—an incredible achievement for a six-year-old brand,” he said, and added that the energy shot category is also considered to be super-premium because prices per liter average to be about four times those of regular energy drinks. “That illustrates how when you deliver an effective dose of an active ingredient that provides a benefit that consumers really need and in a convenient format people don’t look too closely at the price. Despite the big sales numbers it’s also a niche—do the math and you’ll see that volumes in liters are very small compared to many other categories. And that’s the best place to be—a high value niche with growth.”
Consumer Snapshot
From New Nutrition Business’s vantage point, the core consumer for the 250-ml (and larger) size energy beverages continues to be males, ages 18 to 25. “Of these a small percentage accounts for a major part of the volume—with one energy drink player in Europe telling NNB that 80% of consumption is accounted for by 30% of the buyers,” commented Mr. Mellentin.
And while the 18- to 25-year-old consumer has perennially been the target for energy shots the sub segment has also picked up a lot of consumers aged 25 to 45. “Older consumers were the huge untapped opportunity that shots was developed to tap into,” he explained. “According to HealthFocus, energy is one of the four top consumer needs worldwide in the 32 countries they studied. But the need for energy wasn’t being met by any products targeting the older consumer, who don’t want the big volumes of liquid you get with standard energy drinks, need the convenience and portability of the small package and don’t want to be seen carrying products branded with names like 'Power Horse’ or ‘Monster’ or ‘Freak.’”
New Product Standouts
Despite all of the energy products already on the market, each year brings a new batch that sparkles with the potential to push the bounds of the category. Datamonitor culled the most interesting of the new energy products from both the beverage and food sectors.
This past spring, Pepsi-Cola’s Amp energy brand broadened its market presence with the launch of Energy Juice. Promoted to be an alternative to morning coffee, the product is a “no sugar added” caffeinated beverage that is described on-label as being a “naturally and artificially flavored 100% juice blend from concentrate with other ingredients.” Energy Juice is sold in Orange and Mixed Berry flavors, and contains taurine, ginseng, guarana and B and C vitamins.
In tandem with the Amp Energy Juice launch, Pepsi also debuted Amp Energy gum. Billed to be high in vitamins with no sugar, the product is said to offer “the equivalent energy benefits of an 8-ounce AMP Energy drink” with a blend of B vitamins, taurine and 80 mg of caffeine per serving. Each two piece serving contains 10 calories and there are 10 pieces of gum in each pack.
In Janurary Fruitology, Inc. rolled out its new Coffee Fruit Energy. Available in White Chocolate Raspberry, Orange Caramel and Chocolate Cherry flavors, the shelf-stable beverages are sold in 2.5 fl. oz. bottles and contain a caffeine content “equivalent to a premium cup of coffee.” Made with Hawaiian coffee fruit (KonaRed) the company says the product is an all natual, excellent source of vitamin C without any preservatives. According to Fruitology, each shot-sized beverage is “hot filled, allowing the product to remain all natural and preservative free while retaining all the great nutrition.”
Anaheim, CA-based Ajmera Innovations took a decidedly natural route, having recently rolled out its all natural Coco Energy drink mix at select Whole Foods Markets. Made with natural spray dried coconut powder and sold in convenient packets, when mixed with water the product converts into a potassium powerhouse (1700 mg) with no preservatives, artificial flavors or caffeine. An electrolyte, potassium helps maintain the body’s fluid levels, while regulating blood pressure and heart function. According to Ajmera Innovations, coconut water is more nutritious than whole milk—with less fat and no cholesterol—and lower in calories than orange juice. It also has less sodium (25mg) whereas sports drinks have around 41 mg and energy drinks have about 200 mg. Coco Energy contains 50 calories per serving and costs $5.99 for 10 servings.
Though beverages capture the lion’s share of attention in the energy category, according to Datamonitor there have been a handful of noteworthy new energy food entries too.
Perky Jerky Invigorating Beef Jerky Flavored with Guarana from PEMS, LLC is said to be the first performance enhanced snack offered in the US. Each 90 calorie serving provides 22 grams of protein plus caffeine from guarana for energy. Each 2-oz. bag of Perky Jerky contains approximately 150 milligrams of caffeine, or about the amount in two energy drinks. The suggested retail price is $4.99.
The General Mills Wheaties brand recently entered the energy bar arena with its Fuel Energy Bars, which contain15 gram of protein each, and claim to deliver 100% of the daily value of five B vitamins. Double Chocolate and Chocolate Peanut Butter varieties of the 2.26 ounce energy bars are presented in plastic wrappers for the retail price of $1.89 each. They are also available in 12-count cases. Company literature indicated that the energy bars were co-created by top athletes and “renowned sports nutritionist Dr. Ivy.”
A smaller-sized alternative to energy bars, FiGo Bites Sugar Free Energy Chews from Nature’s Energy, LLC, are formulated with Acai berry, vitamin B12, green tea, resveratrol and 50 mg “natural caffeine” per chew. Packaged in a 6-count rack display laminated bag, the products bear a suggested retail price of $2.99, and according to the company deliver “a quick, convenient boost of natural energy, that can start in as little as 5 minutes, and can last for hours.”
Looking Ahead
With an eye toward the future, Mr. Mellentin likened the energy market’s forward looking potential to the digestive health market: ripe with growth possibilities. To that end, he noted three points pivotal to ensuring future category growth. The first is finding an alternative to caffeine—bonus points if the alternative is perceived as “natural.”
“Caffeine is the best way of delivering that stimulation lift, to a lesser extent, B vitamins. No-one has yet come up with a 'natural' ingredient—a key requirement for consumers—that has the same effect,” he said. “Caffeine is delivered most effectively in beverages. Beverages also are ultra-convenient in a way that solid foods are not, even snack bars, and so energy foods have scored only a tiny percentage of the sales of energy drinks, maybe 10% of the market. Energy foods usually mean high protein formulations for sports, rather than for busy people’s everyday stimulation needs.”
The second requires the industry to do a better job of targeting mature (35+) consumers and women—a potentially lucrative and virtually untapped consumer pool.
And finally, he challenged the industry to find a way to make fruit drinks a credible energy delivery vehicle. “There’s some evidence that some fruits, in combination with others, have a stimulation effect,” he said. “Blackcurrant is one where there is clinical evidence for its stimulation effect—the challenge is that it’s still way below caffeine, so some work will have to be done to create concentrates with a higher dose of the active component.”
