Energy Drink Market Gets a Boost From Young Consumers
By Katherine Duncan
Whether it's synthesized caffeine in a mass-produced beverage or a naturally occurring jolt in an organic snack, energy products are lifting off.
Since flying in on Red Bull's wings in the 1990s, energy-enhancing products have grown into a multibillion-dollar industry fueled by young consumers. Sales for the industry's largest segment--drinks and shots--surpassed $8 billion last year, an increase of 124 percent since 2006, according to market research company Mintel.
Tom Vierhile, innovation insights director for Datamonitor, a business information and market analysis firm, estimates that the energy drink category will grow 8.9 percent from 2010 to 2015, while the food and beverage industry overall will increase by just 2.9 percent. He notes a recent survey in which nearly 30 percent of U.S. consumers said they are highly influenced by energy-boosting benefits when choosing a soft drink.
Supercharged food products are also on the rise. A PricewaterhouseCoopers market report on functional food divides the $20 billion-plus industry into categories according to health benefit, such as weight management, heart health and memory improvement, but the largest segment (29 percent) is made up of products claiming to boost energy.
"Looking toward the future, you're starting to see companies getting outside the beverage area and [talking] about energy as a viable benefit for food products," Vierhile says. But he isn't referring to novelty items like caffeinated waffles. "One of the trends we're seeing in food these days is [that] consumers are seeking out products on the basis of what they naturally contain," he says.
YouBar, a Los Angeles-based manufacturer of customized energy bars, has been filling that need since its 2006 launch--and has grown every year since. At YouBars.com, users build bars from scratch by selecting from a variety of natural, healthful ingredients (including those with intrinsic energy enhancers); a nutritional label on the page automatically updates to reflect their choices. Owner Anthony Flynn says sales increased 100 percent in 2011, and he expects them to double again this year.
Other companies are pursuing the all-natural energy path, too, even if it means diverging from their core business. Pyure Brands, a Naples, Fla.-based supplier of organic stevia products, branched out from the natural sweetener industry after founder Ben Fleischer saw an opportunity in energy shots. "We found a niche in the marketplace," he says. "Our product is the first certified-organic, sugar-free [and calorie-free] energy shot." Six months after introducing Pyure's Organic Energy Optimization shot to distribution channels, Fleischer anticipates selling 250,000 to 500,000 units per month.
Whatever the reason--staying awake to complete a business plan, cramming the night before a presentation or just remaining alert throughout the workday--clearly, says Datamonitor's Vierhile, "there is an interest in energy."