Energy Drinks and Shots: U.S. Market Trends

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Published Jan 29, 2013 | 137 Pages | Pub ID: LA4873762

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Health and wellness-related beverage products are seeing increased consumer penetration. In sharp contrast to this classic beverages—especially colas—are seeing consumer attrition.  Functional ready-to-drink (RTD) beverages, namely energy drinks, sports drinks, and tea, have increased consumer penetration over the past few years.

While the energy drinks and shots market may be a small component of the non-alcoholic beverage industry, it is perhaps the most dynamic market. This market grew between 60% from 2008-2012 according to Packaged Facts estimates in the all-new research report Energy Drinks and Shots: U.S. Market Trends. In 2012, total U.S. sales for the energy drinks and shots market was worth over $12.5 billion.

Intense competition surrounds the beverage industry as marketers seek to increase market penetration and consumption frequency. This is accomplished through positive alignment as a healthy and/or functional beverage. Thirst quencher/sports drinks remain the most formidable competitor for energy drinks. This type of beverage attracts a large constituency of energy drink users. Additionally, energy drinks are subject to competition from other energy-boosting beverages such as coffee and tea beverages. An increasing number of new product innovations that tap into the energy trend but are outside of the beverage industry are also competitors in this area.

At present, energy drinks have the lowest consumption rates of any RTD beverage. This point reflects the market’s relative infancy and also its growth potential. Experian Simmons analysis shows the growth trend of this market, with the incidence of energy drink usage among adults rising from nearly 13% in 2006 to 17% in 2012. A modest segment of heavy users also exists:
5% of adults consume energy drinks 5-7 times per month and less than 2% drink energy drinks 10 or more times.
Consumers 18-34, men, Hispanics, Pacific region residents, and adults with children in the household are demographics that over index in energy drink usage.

Packaged Facts estimates that energy drinks account for a 78% market share, followed by 18% for energy shots, and energy drink mixes (roughly 4%) in 2012. A few select marketers dominate the energy drinks and shots market. This report demonstrates the first mover advantage in each category. The result is a market that is highly dependent on a handful of key brands, namely Red Bull, Monster Energy, 5-Hour Energy, and Rockstar Energy.

Retail distribution of energy drinks and shots continues to expand at a fervent pace. These products are accessible at nearly any retail outlet from major grocery outlets to dollar stores to smoothie shops to sporting goods outlets. Packaged Facts estimates that convenience stores hold the largest share of market sales (59%), followed by mass merchandisers (13%), supermarkets (10%), club stores/warehouse (5%), and drug stores (2%). In aggregate, all other retailers contribute a significant 11% to market sales.

Overall growth of energy drinks and shots is influenced positively by new product launches and expanded retail distribution. Economic factors and shifts in the U.S. adult population by age and ethnicity/race are also factors to market growth. An increasingly competitive market for “energy-boosting” products is perhaps the market’s greatest threat.

Packaged Facts projects sales of energy drinks and shots will grow to a value of $21.5 billion by 2017. This growth will be driven by continued economic recovery, expansion in retail distribution, and strong potential in new product development. Market opportunities are evident through product innovation (especially in energy drink mixes), the ability to increase consumption frequency, the targeting of older consumers, and leveraging interactive packaging.
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