Did You Know?
By the year 2001, the U.S. energy drink market had grown to nearly $8 million per year in retail sales. Over the next 5 years, it grew an average of more than 50% per year, totaling over $3 billion in 2005. Diet energy drinks are growing at nearly twice that rate within the category, as are 16-ounce sized energy drinks. The energy drink market became a $5.4 billion dollar market in 2007, and both Goldman Sachs and Mintel predict that it will hit $10 billion by 2010.Energy drinks are typically attractive to young people. Approximately 65% of its drinkers are between the ages of 13-35 years old, with males being approximately 65% of the market.
Even though energy drink prices are lower at hypermarts and supermarkets, consumers continue to seek out energy drinks at convenience stores, where they can buy a single, cold drink.
“I think a lot of the people who drink energy drinks don’t drink coffee,” said Brad Eaton, category manager for Spartanburg, S.C.-based Spinx Cos., whose single-serve energy drink sales rose 6% for the first four months of 2009.”Energy drinks are their morning coffee.”
Like coffee, energy drinks offer strong cross-merchandising potential. “Candy, snacks and baked goods all seem to go well with energy drinks,” Eaton said. “But the one thing that proves to be extremely popular is manufacturer promotions.”
Whether it’s two-fors or sale pricing, product promotions tend to spur a run on sales for each particular brand.
But while promotions have proven to be effective, managing the category has become more complicated by the sheer number of brands on the market, said Coney Elliot, vice president of marketing at Midland, Tex.-based Kent Cos.
“There are close to 100 brands with multiple flavors available out there,” Elliot said. “We really don’t need additional brands, but we’re presented with something new in the energy category probably every two to three weeks.”
Who buys the most energy drinks? According to a report from Mintel, teens and young adults aged 18-24 are the biggest energy drink consumers, with 35% of all U.S. teens aged 12-17 partaking. In contrast, only 15% of adults aged 18 and over buy energy drinks.
From 2003-07, the number of teen energy drink users grew by four million; however, the teen population is projected to decline by almost a million by 2013, so new teen energy-drink users will not come through population growth.
In addition to their higher consumption rates, teens are also likely to drink energy drinks more frequently than adults (5.3 drinks versus 4.6 drinks in a 30-day period).
Although Red Bull is the top brand choice among teens (47% drink it), this demographic also exhibits higher penetration in other popular brands, such as Full Throttle, Monster, Amp and SoBe, the report said. Teens also tend to have a bigger repertoire of “other brands” compared to adults and are likely to be the key consumers for the ever-increasing numbers of new products.
Additional demographic figures show that Hispanics and African-American customers have a higher than average incidence of energy drink consumption among adults—27% and 21%, respectively.