Energy Shots Growth Slows, But Remains Steady

energy shotsSelling energy shots is highly advantageous. The small package size means retailers can place them in multiple locations without taking away from other items. Because most people drink them warm, they don’t need to take valuable cooler space. And the standard $2.99 price gives them a nice ring.

Retailers report brisk sales to everyone from truck drivers to students to busy moms who want energy in a product that offers a promise of no “sugar crash” and actually contains little or no sugar.

To date, the growth of the energy shot has largely centered around 5-hour Energy, which owns more than 90% of the two-ounce shot category.

According to IRI Convenience All Scan data for the 52 weeks ended Dec. 1, 2013, energy drinks saw dollar sales at c-stores of $8.04 billion, which was down 9.17% compared to a year ago. Unit sales for the same time period at c-stores also slipped 8.38% to 254.57 million from 2012.

Maturing Category
Gary Hemphill, managing director of research for Beverage Marketing Corp., based in New York City, noted that the energy shots category has experienced somewhat slower growth in recent years. “It may be that the category is maturing a bit,” he said, noting that 5-hour Energy continues to dominate.

While IRI numbers indicate sales have slipped, convenience store retailers remain bullish on the category.

“We expect to see continued growth in energy shots in 2014,” said Matt Clement, director of marketing for Savannah, Ga.-based Enmark. “Category growth was explosive from 2008-2013, but there is still a relatively low incidence of consumer penetration, meaning there’s a lot of opportunity for growth. There is also an opportunity to convert consumers exiting the cola category that are still looking for an energy boost without all the calories.”

Enmark, which operates 59 stores in Georgia and the Carolinas, offers a few types of energy shots, but 5-hour Energy makes up the majority of the chain’s SKUs.
Clement noted that innovation can certainly help the category. “Some of the new flavors that have been added in the last year or two have performed very well, but it will take more than that for energy shots to continue to sustain growth over time,” he said. “Each year there are more and more types of non-beverage products available that have an energy-delivering component, creating competition for energy shots outside of the beverage category.”

The biggest challenge facing the pocket-sized products is the public’s concern about health and safety. Last July, the Food and Drug Administration confirmed that investigators are looking into several cases that may be connected to the use of energy shots. Although too soon to speculate, FDA officials admitted that the cases could be due to the improper use of the product.

Moving forward, industry observers expect manufacturers to enhance the health benefits of energy products in an effort to counteract the public’s perception.
When used properly, the shots and drinks are pretty much the equivalent of a cup of coffee. Research firms Mintel and Packaged Facts both predicted that the market would benefit from more flavorful products as manufacturers work to attract the growing number of former soda drinkers. ◆

U.S. ENERGY SHOTS MARKET
The following chart from Beverage Marketing Corp. shows estimated wholesale dollars of energy shots in the U.S. from 2005 to preliminary estimates for 2013. While sales have slowed from the monumental growth the products saw in 2006 to 2007, the category remains popular with convenience store consumers. Preminary results from 2013 anticipate a 13.6% increase, whereas growth for 2012 saw a negative growth percentage. 

* 24 16-ounce equivalents,
(p) Preliminary
Source:  Beverage Marketing Corp.

Year

 

Dollars in Millions

 

Growth

 

2005

 

2006

 

2007

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013(p)

 

 

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