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    Losing Power

    Energy drinks start to slow in growth, posting only single-digit gains recently.

    After almost a decade of explosive growth, the only surging category in carbonated beverages is starting to look sluggish, as $2 for an energy drink suddenly seems like a lot of money, Brandweek reported, citing data from Beverage Digest.

    Energy drinks volume grew 30 percent last year. However, for the month of June, it was up only single digits (seven percent), according to Beverage Digest, based in Bedford Hills, N.Y. For the year through mid June, volume grew 10 percent.

    Such a slowdown was inevitable, beverage veteran Ken Sadowsky told Brandweek, commenting that "trees don't grow to the sky."

    Economic factors have taken the charge out of many of the brands in the segment, including trailblazer Red Bull, the report stated. "It's still the healthiest beverage sector, but its prime Sun Belt market overlaps closely to the areas where the housing bust has been the most severe, so there is definitely concern," said Gerry Khermouch, editor of Beverage Business Insights in West Nyack, N.Y.

    Overall, consumers are spending far less in convenience stores—energy drinks' primary channel—thanks to soaring gas prices. "After filling up, a lot of consumers don't have the heart to even enter the store," Khermouch told Brandweek.

    Red Bull stood idle for years, charging about $2 for an 8.3-oz. can while Monster Energy, Amp and others swooped in with 16-ounce cans at the same price, the report noted. Today, Monster's volume is growing at roughly the same rate, while PepsiCo's Amp (also 16 ounces) grew more than 50 percent in volume in Q2, per the company.

    Red Bull, which now has a 16-ounce version and a new cola, said it has no plans to change its marketing strategy. It grew only 14 percent last year, per Beverage Digest.

    Another factor at play is the category’s fragmentation. New entrants continue to cloud the picture. "There is a five-hour energy shot," said Sadowsky. "And the cola giants are blurring the lines. What's the difference between Amp and a new SKU of Mountain Dew?"

    Still, every brand will face a stiff challenge for the future, according to the report.

    "Energy drinks are premium priced," said John Sicher, editor of Beverage Digest. "Some consumers are trading down. Others are buying them less frequently."

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