Energy Sales Hold Strong

Familiarity with shifting consumer attitudes amidst a turbulent economy–and the willingness to make changes in the cooler if need be–could help retailers cash in big with isotonics and energy drinks this year.

“If you’re intent on raising your share in that marketplace then I think you have to get in touch with who that user is,” suggested Doug Stephens, president of Retail Prophet Consulting. “You have to understand who that target segment truly is. Is the move from soda to energy drinks still valid? Or was that something that was being fueled by a different time and state of mind?”

In general, Stephens posited, “The idea of a $4 soft drink may be something that we have to reconcile might have been from a time when we were flush with cash and giddy with credit. Going from a 79-cent soda to a $3 or $4 energy drink is a pretty big step up, so from a pure price standpoint the customer is going through a whole new rationalization process. He’s thinking, ‘Could I use that $3 or $4 in a more responsible way?’

Sales numbers from 2009 seem to confirm this. According to IRI, energy drink sales were flat with .05% sales growth. While flat, the category still rang up $4.02 billion in sales for 2009. The average price for an energy drink was relatively unchanged in U.S. convenience stores in 2009 at $2.51.

Sports drinks had a tough year, according to IRI. Sales dollars fell nearly 11% in U.S. c-stores to $1.78 billion. Units sold were also down, falling 14.75% to 1.02 billion. The average price for a sports drink across the industry last year was $1.73.

Smarter Category Management
To preserve sales, retailers emphasized the need to manage energy drinks and isotonics closely.

“Like any other category it’s all about staying in stock and having variety,” said Richard Shortt, director of marketing for Wayne Oil Co. in Goldsboro, N.C. “It’s always such an innovative business, with flavors changing every year, so keeping on top of that is important. Make sure you keep the varieties in stock; that’s probably one of the biggest challenges there is.”

Wayne’s 13 stores generally carry a full cooler door of Gatorade and Powerade SKUs. They come in three sizes: 32 ounces; 24-ounces, which is the top-selling size; and 20 ounces. For a new player to break into the mix, Shortt explained, they would have to show some type of historical movement. “Several players have tried to buy their way in with incentive dollars, but at the end of the day it doesn’t really pay off if it doesn’t sell.  Generally, if it’s something we’re going to pull from McLane, our grocery wholesaler, we’re kind of depending on them to show us whether the item is actually performing or not. If it’s not then it’s not considered.”

2009 energy drink sales
Total Category $4,019,715,000 0.05% 1,602,531,000
Red Bull $1,516,013,000 1.23% 529,505,300
Monster Energy $722,764,200 9.52% 310,797,600
Rock Star $299,313,400 -8.52% 133,066,200
NOS $154,931,300 23.72% 65,752,030
Monster Energy XXL $145,507,500 -22.60% 47,345,540
2009 Sports Drinks Sales
Total Category $1,775,057,000 -10.93% 1,023,713,000
Gatorade $655,134,600 -10.68% 362,574,200
Poweade Ion 4 $203,562,800 n/a 138,186,800
Gatorade G2 $1,468,777,000 2.30% 84,064,410
Powerade $102,823,300 -69.57% 69,461,710
Gatorade Fierce Bring It $102,658,400 n/a 54,641,240

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