While energy drink sales continue to grow at convenience stores across the nation, the category may not be enjoying the same breakneck pace experienced in the past decade, according to reports from Beverage Digest and brandweek.com.
Energy drink volume grew 30% last year, but in June was only up single digits (7%), Beverage Digest reported. For the year through mid June, the category grew 10%.
Economic factors have helped take the charge out of many of the brands in the segment. "It’s still the healthiest beverage sector, but its prime Sun Belt market overlaps closely to the areas where the housing bust has been the most severe, so there is definitely concern," said Gerry Khermouch, editor of Beverage Business Insights.
Overall, consumers are spending less in convenience stores – energy drinks’ primary channel –thanks to soaring gas prices, brandweek.com reported. "After filling up a lot of consumers don’t have the heart to even enter the store," Khermouch said.
Red Bull stood idle for years and charged about $2 for an 8.3-ounce can while Monster Energy, Amp and others swooped in with 16-ounce cans at the same price. Today, Monster’s volume is growing at roughly the same rate while PepsiCo’s Amp grew more than 50% in volume in Q2, according to the company.
Red Bull, which now has a 16-ounce version as well as a new cola line extension, said it has no plans to change its marketing strategy. It grew only 14% last year, Beverage Digest reported.
Another factor at play: the fragmentation of the category. New entrants continue to cloud the picture, brandweek.com reported, adding that five-hour energy shots and cola giants getting into the game are causing the lines to blur.
Amp has hitched its wagon to Dale Earnhardt Jr., which has paid dividends. "He’s racing well and the way we’re activating him is really powerful," said Maurice Herrera, marketing director on Amp Energy for Pepsi-Cola North America, Purchase, N.Y. The brand has featured him in ads, limited edition cans as well as created a promo where 70,000 consumers can autograph his car.
Awareness for the brand is up 30%, according to the company, thanks to a $12.8 million marketing spend for the first five months of the year, per Nielsen Monitor-Plus.
Monster has seen continued success thanks to the launch of its Java Monster coffee-based energy drink and targeted marketing like its X Games sponsorship. "Our X Games coverage was phenomenal," said Mark Hall, president of Monster Beverage Co. "There were plenty of money shots where the guy drinks a Monster after winning a medal."
Hall said the category’s brand proliferation is a myth. " Everyone tells me there are 1,000 energy drinks, but there are only five that matter."
One of those brands is Coke’s Full Throttle, which has seen its volume fall. It has rallied behind the brand by launching Full Throttle Coffee, Full Throttle Hydration (which drinks like a sports drink) and a title sponsorship of the National Hot Rod Assn.
Rockstar, meanwhile, has a full slate of products including Rockstar Juiced Pomegranate and Energy Punch. It sponsors a variety of alternative sports including mixed martial arts and concert tours like "A Taste of Chaos."
Still, each brand will face a stiff challenge for the future.
"Energy drinks are premium priced," John Sicher, editor of Beverage Digest, told brandweek.com. "Some consumers are trading down. Others are buying them less frequently."