Energy drinks — the "bad boys" of the beverage world — have become a driving force behind a resurgence in the beverage market, according to market research publisher Packaged Facts. Sales of energy drinks — along with the performance of ready-to-drink (RTD) teas and sports drinks — have helped the functional and natural RTD beverage market grow to $23 billion.
Packaged Facts' "Functional and Natural Ready-to-Drink Beverages in the U.S." study reveals that the sales growth of energy drinks isn't conjured up by counterculture or cool-hunting marketing, but instead is due to offering consumers a distinctive benefit that they want and need (i.e., more energy). The reality is that energy drinks are uniquely and provably delivering that benefit, and are at times delivering it with ingredients other than common caffeine and sugar.
"Energy drinks have been the focus of much industry discussion in recent years. That's partly because of the controversy surrounding energy drink formulations as a result of the bad boy image deliberately and very profitably cultivated by Red Bull, and then by me-too energy drink marketers in its wake in an effort to capture the attention of a youthful target market that is moving into prime consumption years," says Don Montuori, publisher of Packaged Facts. "Mostly, however, the attention to the energy drink segment is because of the sales growth energy drinks and energy shots continue to deliver."
During the height of the recession between 2008 and 2009, the three functional and natural RTD beverage categories covered by the report — energy drinks, sports drinks, and functional waters; ready-to-drink tea and coffee; and yogurt drinks and smoothies — flat-lined in sales growth, keeping with an overall slump in the beverage market due to the stagnant economy and reduced consumer spending. Nevertheless, by 2010, energy drinks/shots, sports drinks, RTD teas, and fruit/vegetable smoothies all showed renewed dynamism, signaling the onset of a new cycle of sales growth for the market. All had gains of at least 5%, with energy drinks/shots experiencing the highest gain at 10%. Sports drinks and RTD teas finished with gains of 8% and 7%, respectively. Lastly, fruit/vegetable smoothies had gains of 5%.
Packaged Facts estimates that aggregate retail sales of the three functional and natural categories exceeded $23 billion in 2010, up from $19 billion in 2006, for a compound annual growth rate (CAGR) of almost 6%, the intervening recession notwithstanding.[Source: "Functional and Natural Ready-to-Drink Beverages in the U.S." Packaged Facts. 3 May 2011. Web. 11 May 2011.]