Energy Drinks Chugging Along

On-the-go consumers—who make up the bulk of c-stores’ customer base—show no sign of slowing down, which means energy drink sales will continue to grow.
The reason is obvious: Americans crave energy.

According to a projection by Packaged Facts, sales of energy drinks and shots will grow to $21.5 billion by the end of 2017, driven by continued economic recovery, expansion in retail distribution, and strong potential in new product development.
As in other fiscal years, Red Bull and Monster continue as category leaders, with Rockstar following.

“We project mid-single-digit volume growth in 2017,” said Gary Hemphill, the managing director of Beverage Marketing Corp. “The category targets a large and essential consumer need state—energy—so it is relatively well positioned for future growth. The category has struggled somewhat to broaden demographics beyond its core consumers of youthful males, and is striving to do this by broadening its marketing.”

According to Information Resources Inc. (IRI) Total U.S. Convenience Store All Scan data for the 52 weeks ending Dec. 25, 2016, the non-aseptic energy drinks category saw a sales increase of 3.95% to nearly $8.3 billion.

According to Hemphill, energy drink sales are the “ultimate” c-store product because purchases are so impulse driven. “About half of energy drink sales are through c-stores. C-stores need to continue to capitalize on their advantage and do a great job of merchandising the product, placing it at multiple points in the store and making sure it is icy cold for consumption right away.”

DEMAND DRIVEN
Because of the aforementioned customer trends, energy drinks should remain in high demand during the next few years.

“I believe energy drinks are still growing as a category,” said David Commer, the principal of Commer Beverage Consulting in Lewisville, Texas. “My sense is the target demographic is and remains 15-to-25-year-olds, and marketing is targeted to influencers in this age demographic.”

“Energy drinks are still going strong,” agreed Kumar Assandas, a 7-Eleven franchisee in Henderson, Nev. “Last year was a good solid sales year, and it looks like it’s been steadily climbing from the end of December until now. We have increased our sales from 523 units to 711 units per week.”

Assandas has watched the customer demographic for energy drinks shift.

“It’s mainly kids, and a lot more people who go to work. There’s something about (these beverages) that keeps them awake and alert instead of coffee now. And they can take them to go; some of them are resealable.” Monster, Rock Star, Red Bull and Spike remain his top sellers—in that order.

Hemphill noted that there is an effort afoot to broaden category demographics. “This is likely to be the key to successful growth in the years ahead.”

That is borne out by research by Mintel International. As the target consumer age range of users has expanded, Mintel reported, energy drinks have begun to align with more mainstream sports such as college football, college basketball, professional baseball, professional soccer and professional golf to reach a wider range of consumers. Each presents an opportunity for savvy marketers and retailers.

 

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