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Buzz in the Press

Buzz in the Press

The Buzz on Energy Drinks

By Kristin V. Montalvo

JUNE 01, 2007 --
Energy drinks stormed the U.S. beverage market last year, outperforming all other categories. With energy drink sales soaring 52.1 percent higher than last year, according to market researcher Information Resources Inc. (IRI), niche-marketed energy brands targeting specific consumer interests or demographics continue to expand.

Since their emergence in the United States 10 years ago, the energy drinks category has enjoyed tremendous success, displaying a staggering 516 percent sales growth between 2001–2006, according to market research firm Mintel. In fact, energy drinks, led by the Red Bull and Monster brands, grew by more than 49 percent in 2006. With growing consumer demand and increased profit margins, it's projected to exceed $10 billion by 2010.

"Energy drinks are an interesting category because there are a ton of new product launches," explained Tom Vierhile, director of Productscan Online. "The category has a very low barrier to entry so we're seeing a lot of product innovation, a lot of smaller companies have chosen to attack the energy drink market as opposed to coming out with a soft drink to compete against PepsiCo and Coca-Cola. It's a category with a melting pot of different influences."

In 2006 in the U.S. alone, Productscan Online reported 321 new sports or energy drinks, compared to only 149 introductions in 2003. "The long-term trend is definitely up," Vierhile said.

Breaking it Down
Energy drinks tend to break down into a few distinct categories that target specific consumer interests or demographics. According Vierhile, there are celebrity-oriented energy drinks that appeal to the younger generation. "Here it's all about creativity and pushing the boundaries. There's a bit of a hip-hop, urban element that's provocative."

Then there are the energy drinks that are more functional and sports-oriented; and finally, there are the all-natural and organic energy drinks that appeal to those seeking health and wellness. It's this last category that most experts believe will be the single-biggest trend impacting sales in the beverage industry.

According to Vierhile, as more people seek out energy drinks for a myriad of reasons — a quick energy fix, improved mental clarity, health and wellness — the choices are becoming more and more broad.

Though the segment has been dominated by carbonated options that contain added sugar and synthetic ingredients such as taurine, only recently have healthier energy drink versions come to market.

"There's more of a focus on lower calorie products," explained Vierhile. "That's definitely a trend to watch. Part of the reason energy drinks give that buzz is they are loaded with sugar. We're definitely seeing more products that are getting the sugar content under control a bit."

The Energy Drink Goes Hybrid
Heeding the consumer call for healthier products, beverage manufacturers have introduced a slew of new juice-based energy drink hybrids with good-for-you ingredients like berries such as pomegranate, acai, goji and noni. There's also a sub-category of energy drinks flooding the market based on tea, especially green and white tea, herbs like yerba mate, and vitamin and dietary supplements — which are all being marketed for their antioxidant content and associated health benefits.

"Many companies are introducing combo-type products which combine some of the ingredients of the traditional type Red Bull energy drinks, but with a healthful twist," said Vierhile.

Anheuser-Busch, for example, recently introduced its 180 Red with Goji. The Goji berry, a small red fruit from Tibet, is said to contain high antioxidant levels and is believed to increase energy, according to the company. Targeting active adults who want an extra boost, 180 Red with Goji contains Goji berry juice, acerola juice, guarana for natural caffeine, vitamins B-6, B-12 and C, and natural lychee flavor. There's also a 180 Blue with Acai, a purple berry from Brazil. Considered another superfruit, this purple berry from Brazil is said to promote greater energy, stamina and better mental focus. In addition to juice from the Acai berry, 180 Blue contains guarana, red grape and blueberry juices, in addition to vitamins B-6 and B-12.

A rather interesting new product launch is 1in3 Trinity Energy Drink fused with the Fruit of the Spirit. It's marketed as a liquid companion to an active Christian lifestyle, produced from a special blend of grapes and plants that once originated from the Holy Land. The lightly carbonated beverage is said to contain antioxidant-rich pomegranate and grapes, and to be enhanced with vitamins C and B. Apparently, the target market is the healthy and the faithful.

To meet the needs of consumers seeking an energy drink with the nutrition of real juice, PepsiCo's SoBe brand developed SoBe Essential Energy, a line of juice-based energy drinks made with ginseng, guarana, real fruit juice and buzzworthy yerba mate. The drink, available in two flavors — orange and berry pomegranate — also contains vitamins B-6, B-12, C and zinc. Another introduction from PepsiCo, Fuelosophy High Protein Energy Drink, wants customers to "Rethink your energy source." The beverage is said to be a longer energy source that is high in protein, B vitamins and complex carbs. On-trend flavors include Pomegranate Berry, Pineapple Mango and Citrus Blend.

A Healthier Buzz
Capitalizing on the green and white tea health trend, beverage manufacturers —even tea manufacturers — have introduced a slew of energy drinks containing the much-hyped, antioxidant-rich ingredient. Many of these will appeal to consumers looking for an alternative to the high sugar, artificial sweeteners, and artificial flavors found in a majority of energy drinks.

Tea manufacturer Tempest Tea has introduced Green U, a sparkling green tea beverage that is said to give a natural boost with the power of green tea extract. The folks over at Inko's White Tea developed Inko's White Tea Energy, a 100 percent all-natural energy drink with 184 mg of jitter-free tea caffeine, and according to the company, a lightly sweetened, sophisticated blend of black and white teas with a hint of lemon and ginger. The Healthy Beverage Company, makers of the all-natural and certified USDA Organic Steaz Green Tea Soda brand, released a USDA Organic and Fair Trade Certified energy drink, Steaz Energy. Ingredients include Ceylon green tea, Guayaki yerba mate, Sambazon acai and guarana.

Yerba mate — a South American herbal beverage that has been praised for centuries for its health benefits which include eight to 11 times the antioxidant levels of green tea and vitamins galore — is also popping up more and more as a better-for-you alternative to energy drinks. It reportedly imparts the same caffeine boost of a morning cup of coffee minus the jitters, and the highs and lows between cups.

Sol Maté Beverage Company launched Sol Maté as the world's first certified organic sparkling maté energy beverage. The all-natural drink contains naturally occurring caffeine plus theobromine, a known mood elevator also found in chocolate. The company says the two compounds combine to provide a sustainable, longer lasting lift. Naturally high in antioxidants, a bottle of Sol Maté is comparable to a cup of green tea or a 1/2 cup of wild blueberries.

Guayaki Yerba Mate offers new Organic Yerba Mate Fusions which combine rainforest mate with potent traditional herbs from around the world such as Gingko Biloba and Siberian Ginseng, Tulsi from India, Himalayan Crystal Salt, Damiana from Central America, and Catuaba from Brazil.

Appealing more to the purists, Naked Juice recently launched a line of super-premium energy drinks, claiming to be the first all-natural, 100 percent juice smoothies featuring no added sugar, preservatives, artificial flavor or colors. According to the company, Naked Juice Strawberry Kiwi Kick and Naked Juice Orange Mango Motion provide a natural energy boost (43 mg per serving) from green tea extract and guarana, a berry grown in Venezuela and Brazil that is touted as a natural source of caffeine.

Stonyfield Farm Organic has introduced an Organic Natural Energy Drink called Shift, under the Stonyfield Farm brand name. The refrigerated beverage, promoted as the only all-natural and certified organic energy drink that provides a sustainable energy source for active teens and young adults, comes in Berry Boost, Power Punch and Strawberry Banana flavors. Some of the ingredients include acai, ginseng and vitamins C, D, B-3 and B-6.

"The astronomical growth of the energy drink category is partly because these beverages are more successfully tapping into the spirit of the age, which is characterized by a greater emphasis on functional, healthy products," said
Michael Bellas, chairman and CEO, Beverage Marketing Corporation. "Beverages offering functional benefits are growing two to three times faster than conventional refreshment beverages. As consumers increase their per capita consumption of beverages in these newer segments, they are putting pressure on carbonated soft drinks and juice as well as tap water."

Blurring the Lines
According to Vierhile, there seems to be a blurring of the lines in the energy drink category. "Take a look at bottled water, for example. There are a lot of bottled waters coming out with energy drink properties that claim to revive and energize. That might usurp some of the momentum energy drinks have had," he said.

Of course, soda manufacturers like Pepsi and Coke have gotten in on the action too, launching "functional" no-calorie soft drinks beefed up with vitamins and minerals and positioned as "better-for-you" choices. To date, the functional "soda" category has been taken up by energy drinks often marketed as lifestyle accessories for young people. As such, this represents a new functional direction in the mass market that cuts across generations and sexes.

In early December, the FDA heard views on how the federal authority should tailor regulations for the functional food and drink category, which has grown in importance, and is regarded by some to occupy a grey area between conventional foods and dietary supplements.

An Over-Caffeinated Generation?
Slick packaging, clever marketing and promises of a better buzz have certainly made energy drinks the jolt of this generation. Last year alone, teenagers and young adults — the primary consumers of energy drinks — spent almost $3.2 billion on heavily caffeinated drinks with racy names like Daredevil, Monster, Amp, Rockstar, Powershot and Full Throttle.

According to a new report from Mintel entitled Energy Drinks in the U.S., the incidence of teens' energy drink consumption has increased significantly between 2001–2006. In 2002, one in five teens was likely to drink energy drinks, compared to one in three in 2006. In addition, one in three teens is likely to use energy drinks compared to one in 10 adults. This is likely because energy drinks help them augment a rebellious image — legally.

According to Vierhile, younger consumers are gravitating toward energy drinks because they are perceived as cool, maybe a bit on the forbidden side. "Adults want to keep their kids away from energy drinks because they are afraid kids are going to get all hopped up on caffeine from them," he explained. "There's a danger element that is attractive to teens."

One of the more controversial products to hit the market recently, and likely to lure the younger consumer, was a product called Cocaine Energy Drink — The Legal Alternative. The 8.4-fluid-ounce energy booster from Redux Beverages has no actual cocaine in it, but does pack a whopping 280 milligrams of caffeine. The beverage is marketed to give a person a "high" coupled with a tingly euphoric feeling within five minutes of drinking it. That initial boost is followed 15 minutes later by an energy buzz that will last five to six hours, according to the company.
This type of beverage, and many others like it (take, for example, the new Jimi Hendrix Liquid Experience Energy Drink from Beverage Concepts which "doesn't promise to give you the juice to play guitar like Jimi Hendrix, but it does hope to give you a Liquid experience"), points at another trend in the energy drink category — the use of drug imagery as well as those risqué brand names aimed to garner notoriety in the media.

"Cocaine" attracted criticism from industry groups. For instance, Utah-based United Natural Products Alliance (UNPA) called on the federal government to take action to assure what it calls "illicit street drug sound-alike products" are not marketed as dietary supplements.

So while more and more new energy drinks are being made with juices, teas and dietary supplements, their primary attraction is caffeine. But since there is a lack of research into the long-term effects of large amounts of caffeine on adolescents and young adults, the jury is still out on this one.

More Room for Growth?
Mintel reports that future growth may not repeat the current sales momentum as energy drinks come under review for their unfavorable health effects and unregulated labeling practices. Nevertheless, growth is likely to come from the continued health and wellness trend.

"Health, natural and organic is a niche we're definitely going to see more products enter into," said Vierhile. "Manufacturers are coming out with ingredients that are high in antioxidants like berries and even chocolate. Actually, chocolate is wide open. I won't be surprised if someone comes out with a dark chocolate energy drink. Just give it time."

If you would like to comment or send us your feedback on this feature, please send e-mail to: kmontalvo@gourmetretailer.com.