Energy drinks outperform soft drinks despite higher price

By Helen Glaberson

- Last updated on GMT

Related tags Energy drinks United states Soft drink

Energy drinks have managed to maintain their popularity during the economic downturn, despite their higher price per litre and negative publicity, according to market analyst Canadean.

Canadean’s latest report “Emerging Trends & Growth Opportunities in Energy Drinks: Shots, Flavour Trends & Forecasts to 2015” ​claims that​whilst the rate of growth for performance enhancing products has slowed since 2008, many consumers are still prepared to pay the price premium for functional benefits.

Global growth

The market research firm said energy drinks are forecast to continue to outperform the soft drinks market average in 2010 (6-7 per cent compared to 3 per cent).

Latin America is expected to top the growth league with impressive double-digit gains in the majority of markets, driven by growing consumer uptake and new multinational and regional entrants,”​ said Canadean.

Further growth is also forecast in Asia, where the volume increase is expected to represent around 50 per cent of the total extra growth of energy drinks volume globally forecast in 2010. According to the researchers, this trend is expected to continue past 2010.

In North America, Canada is expected to return to growth on the back of increasing competition between the multinationals and strong innovation. Progress in the US is predicted to be driven by a pick up in convenience store sales, said Canadean.

In East and West Europe, ongoing developments such as packaging upsizing, shots, flavour extensions in both the branded and private label segments and a widening consumer base, are all expected to drive up sales.

New entrants are also predicted to contribute to sales, for example Monster by Hansen Natural has started moving in on Red Bull’s dominance in the European market.

In terms of growth, Latin America is expected to continue to lead the league; with Brazil accounting for 45 per cent of the region’s incremental volume increase.

Product development

Canadean said the speed of new product development in energy drinks compared to other soft drinks categories was notable, particularly in the current economic climate.

Price premiums on energy drinks have allowed small producers in particular to invest in developing niche low volume products due to high margin returns.

In terms of ingredients, Canadean said exotic herbs and substances such as ginkgo biloba, ginseng and milk thistle are commonly present in energy drinks, and that the fat-burning compound L-carnitine is increasingly appearing in formulations.

Other key findings from the report include the increasing focus on attributes such as ‘juice’, ‘natural’, or ’low /no carb’.

The report also said there is an anti-energy and relaxation drinks counter trend growing in US and emerging in Europe.

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