Energy Drinks - US - July 2008

Table of Contents

• Scope and Themes
• What you need to know
• Definition
• Data sources
• Sales data
• Consumer survey data
• Abbreviations and terms
• Abbreviations
• Executive Summary
• Market at a glance--poised for growth
• Market cannot sustain current growth momentum--"soda syndrome" may follow
• Demographic influences
• Teens and young adults aged 18-24 are the biggest energy drink consumers
• Hispanics and blacks generate growth in the market
• Women are likely to be put off by the "girl" moniker
• Red Bull remains the market leader: Coke and Pepsi can' t catch up
• Convenience stores drive growth as "sampling ground" while supermarkets thrive on value proposition
• Value proposition through "big" format is going to drive growth
• The need for an energy boost remains the biggest reason to drink energy drinks
• Price and safety concerns are the major reasons for not drinking energy drinks
• Market Size and Forecast
• Key points
• Robust current growth but weakening momentum in the next five years
  • Figure 1: Total U.S. sales and forecast of energy drinks at current prices, 2003-13
  • Figure 2: Total U.S. sales and forecast of energy drinks at inflation-adjusted prices, 2003-13
• Wal-Mart sales
• Competitive Context
• Key points
• High prices discourage popular consumer acceptance; price decrease will likely encourage wider acceptance
  • Figure 3: FDMx prices for select non-alcoholic beverages, 2007
• Prices have declined, but not enough
• Competition from other beverages
• Coffee: efforts to target young and cool
• Natural smoothies with an energy kick compete with energy drinks
• Increasing numbers of hybrids drive growth
• Acquisitions and alliances create expansion in distribution
• Merger and acquisition activity
• Alliances
• Lack of access to an established distribution system inhibits growth through innovation
• Segment Performance
• Key point
• Non-aseptic energy drinks sales are almost absolute; other segments are to remain miniscule
  • Figure 4: FDMx sales of energy drinks at current prices, by segment, 2003-08
  • Figure 5: FDMx sales of energy drinks, by segment, 2006 and 2008
• Segment Performance--Non-Aseptic Energy Drinks
• Key points
• Price discount, compared to convenience channel, is a growth driver
  • Figure 6: Price comparison of single-serve and multipacks for top two brands, 2008
• Growing base of users will continue to drive growth
• Non-aseptic energy drinks' marketing sets it apart from the other two segments
  • Figure 7: FDMx sales of non-aseptic energy drinks, 2003-08
• Segment Performance--Energy Drink Mixes
• Key points
• Energy drink mixes could grow amid weakening economy
  • Figure 8: FDMx sales of energy drink mixes, 2003-08
• Segment Performance--Aseptic Energy Drinks
• Key point
• Aseptic energy drinks lack the "cool" image of non-aseptic counterparts
  • Figure 9: FDMx sales of aseptic energy drinks, 2003-08
• Retail Channels
• Key points
• Convenience store sales grow on the strength of new product launches
  • Figure 10: Choice of retail channels to purchase energy drinks, by age, May 2008
  • Figure 11: New energy drinks product launch at convenience stores and supermarkets, 2005-07
• Value-pricing proposition at food and other channels drives growth
  • Figure 12: U.S. sales of energy drinks, by retail channel*, 2005 and 2007
• Retail Channels--Convenience Stores
• Key points
• Convenience stores and energy drinks--perfect marriage
• Convenience store is "sampling ground" for the key consumer
• Big competition in a little bottle
• Convenience store develops own energy drink
  • Figure 13: U.S. sales of energy drinks at convenience stores, 2003-08
• Retail Channels--Supermarkets
• Key points
• Supermarkets' prime shoppers are not key energy-drink users; limited shelf space devoted to energy drinks
  • Figure 14: U.S. sales of energy drinks at supermarkets, 2003-08
• Market Drivers
• Demographic influences
• Teens drive growth through increased numbers of users; dismal future growth through population growth in teens
  • Figure 15: Personal incidence of drinking energy drinks among teens, young adults, and adults 2003-07
  • Figure 16: U.S. population of teens aged 12-17, 2003-13
• Young adults are the key demographic, but energy-drink use among 35-44s on the rise
  • Figure 17: U.S. population of adults aged 18-44, 2003-13
• Women are not likely to catch up with men' s energy-drink consumption
  • Figure 18: U.S. population of women aged 18+, 2003-13
• Hispanics and blacks--profit driving demographics in the market
  • Figure 19: Population, by race and Hispanic origin, 2003-13
• Increased scrutiny by authorities jeopardizes future growth from teens
• Proposed ban by legislators
• Future growth may halt if schools decide to ban energy drinks
• Bottom line: energy drinks are risky for teens and young adults
  • Figure 20: Attitude toward risk taking among energy-drink users and non-users February 2007-March 2008
• Energy drinks as mixer with alcoholic beverages--mixed implications
  • Figure 21: Reasons for drinking energy drinks, by race/ethnicity, May 2008
  • Figure 22: Beer and spirits consumption in the past 12 months among all adults and energy-drink users, 2006 and 2008
• Leading Companies
• Key points
• Coca-Cola and PepsiCo are not the top energy-drink sellers
  • Figure 23: FDMx sales of leading energy-drink companies, 2007 and 2008
• Brand Share--Energy Drinks
• Key points
• Leading brands will benefit by launching bigger packaging
• Hybrid line extensions--growth by expanding energy-drink usage
  • Figure 24: FDMx brand sales of energy drinks in the U.S., 2007 and 2008
• Brand Qualities
• Masculine "I dare you" image: beyond forbidden names, racy marketing
• Bigger packaging--party longer
• Innovation and Innovators
• Innovation remains strong; but many "me too" products in the market
  • Figure 25: Trends in numbers of new product introductions in the energy-drink market, 2003-08
• New product claims mimic consumer trend towards health and wellness
  • Figure 26: Trends in numbers of new product introductions in the energy-drink market, 2007-08
• Functional approach--a tool to find a profitable consumer niche amid the crowd
• Mighty Aphrodite--brands take the sexual appeal to a different level and consumer
• Getting specific with cerebrum
• Organic and natural
• Energy shots: "quick rush of energy" and "no crash" claims prevail
• Energy hybrids--energy becomes part of most beverage segment
• Energy drinks and tea hybrids--growth potential in future
• Advertising and Promotion
• Grass roots marketing continues to impress the key consumers
• Red Bull
  • Figure 27: Red Bull television ad, 2007
  • Figure 28: Red Bull television ad, 2007
• PepsiCo
  • Figure 29: AMP television ad, 2007
• Usage
• Growth in the numbers of energy-drink users
  • Figure 30: Personal consumption of energy drinks, 2003-08
• Energy drinks continues to be a male-dominated market
  • Figure 31: Incidence of drinking energy drinks, by gender, 2003-07
• Age defines energy-drink users
  • Figure 32: Incidence of drinking energy drinks among adults aged 18-24 and 25-34, 2003-07
• Blacks and Hispanics are key consumers
  • Figure 33: Incidence of drinking energy drinks among blacks and Hispanics, 2003-07
• Frequency of Use
• Increase in the frequency of drinking energy drinks contribute to the market growth
  • Figure 34: Mean frequency of drinking energy drinks, by key demographics, 2005-08
• Brands
• Red Bull continues its lead among consumers
  • Figure 35: Consumption of energy drinks, by brands, February 2007-March 2008
• Teens and Energy Drinks
• Teens are more than twice as likely to drink energy drinks as adults
  • Figure 36: Energy-drink penetration among teens and adults*, 2003-07
• Male teens aged 12-14 are also key consumers; a worrisome finding
  • Figure 37: Energy-drink penetration among teens, by gender/age, January-November 2007
• Ethnic teens are growth-driving demographics
  • Figure 38: Energy-drink penetration among teens, by race/ethnicity, January-November 2007
• Teens and energy-drink brands
• Teens drink a greater variety of brands than adults
  • Figure 39: Teen consumption of energy drinks, by brands, January-November 2007
• When, Why and How Energy Drinks Are Used
• Why consumers drink energy drinks
• The need for an energy boost remains the biggest reason to drink energy drinks
  • Figure 40: Reasons for drinking energy drinks, by age, May 2008
• Energy drinks have growth potential through launching products in Hispanic-preferred flavors
  • Figure 41: Reasons for drinking energy drinks, by race/ethnicity, May 2008
• Energy-drink ingredients that consumers value most
  • Figure 42: Preference for energy-drink ingredients, by age, May 2008
• When consumers drink energy drinks
  • Figure 43: Occasions to drink energy drinks, by age, May 2008
• How consumers drink energy drinks
  • Figure 44: Energy drinks usage with food, by age, May 2008
• Understanding Non-Users and Hybrid Preferences
• Understanding the individual who does not consume energy drinks
  • Figure 45: Reasons for not drinking energy drinks, by age, May 2008
• New product preference in energy drinks
  • Figure 46: New product preference in energy drinks, by age, May 2008
• Attitudes and Behavior
• Incidence of drinking more/less compared to a year ago
  • Figure 47: Incidence of drinking more or less energy drinks compared to a year ago, by age, May 2008
• Attitude and behavior
  • Figure 48: Attitude and behavior towards energy drinks, by age, May 2008
• Appendix: Caffeine -- Content Comparison
• Caffeine content in various energy drinks brands
  • Figure 63: Caffeine content in various energy drinks brands
• Caffeine content in competitive beverages
  • Figure 64: Caffeine content in competitive beverages
• Appendix: Other Useful Consumer Tables
• Usage
  • Figure 65: Incidence of drinking energy drinks, by key demographics, February 2007-March 2008
• Frequency of use
  • Figure 66: Frequency of energy-drink consumption, 2005 and 2007
• Where consumers purchase energy drinks
  • Figure 67: Choice of retail channels to purchase energy drinks, by race/ethnicity, May 2008
  • Figure 68: Choice of retail channels to purchase energy drinks, by region, May 2008
• Why consumers drink energy drinks
• Purpose of drinking energy drinks
  • Figure 69: Reasons for drinking energy drinks, by gender, May 2008
  • Figure 70: Reasons for drinking energy drinks, by income, May 2008
• Ingredients that consumers value
  • Figure 71: Preference for energy drink ingredients, by age, May 2008
• When consumers drink energy drinks
  • Figure 72: Occasions to drink energy drinks, by gender, May 2008
  • Figure 73: Occasions to drink energy drinks, by presence of children, May 2008
  • Figure 74: Occasions to drink energy drinks, by region, May 2008
  • Figure 75: Occasions to drink energy drinks, by presence of children, May 2008
• Understanding the consumer who does not drink energy drinks
• Why consumers do not drink energy drinks
  • Figure 76: Reasons for not drinking energy drinks, by gender, May 2008
  • Figure 77: Reasons for not drinking energy drinks, by race/ethnicity, May 2008
  • Figure 78: Reasons for not drinking energy drinks, by income, May 2008
  • Figure 79: Reasons for not drinking energy drinks, by region, May 2008
• New product preference in energy drinks
  • Figure 80: New product preference in energy drinks, by gender, May 2008
  • Figure 81: New product preference in energy drinks, by race/ethnicity, May 2008
  • Figure 82: New product preference in energy drinks, by income, May 2008
  • Figure 83: New product preference in energy drinks, by presence of children, May 2008
• Incidence of drinking more or less energy drinks compared to a year ago
  • Figure 84: Incidence of drinking more or less energy drinks compared to a year ago, by age, May 2008
  • Figure 85: Incidence of drinking more or less energy drinks compared to a year ago, by income, May 2008
  • Figure 86: Incidence of drinking more or less energy drinks compared to a year ago, by region, May 2008
• How consumers drink energy drinks
  • Figure 87: Energy drinks usage with food, by age, May 2008
  • Figure 88: Energy drinks usage with food, by region, May 2008
• Attitude and behavior
  • Figure 89: Attitude and behavior towards energy drinks, by gender, May 2008
  • Figure 90: Attitude and behavior towards energy drinks, by race/ethnicity, May 2008
• Appendix: Trade Associations