Consumers are chugging energy drinks like never before. Sales of the fizzy, caffeine-laden beverages reached $433 million in Canada last year, up from $347.5 in 2010, and are expected to hit $534 million by 2014, according to Euromonitor International.
Even as energy drinks come under fire over health and safety concerns, the popularity of these ice-cold pick-me- ups shows no signs of crashing.
In fact, shelves are getting even more crowded, as manufacturers roll out new products and flavours to appeal to a broader consumer base, outside of dirt-bike loving dudes.
While young males are still the mainstay, energy drinks are increasingly appealing to everyone from busy office workers to baby boomers, and even those just looking for an alternative to a morning cup of joe.
“I think consumers have seen a need met in energy drinks. They have busy lifestyles and they’ve seen energy drinks as a way to help them keep up, not unlike coffee back in the ’50s and ’60s,” says Ray Jolicoeur, co-founder of Montreal-based Guru Energy Drink.
“But the change in habit also comes from the fact that they’re consumable cold in the morning, in the afternoon and on the go, so it’s a different way of getting a little boost when you need it,” Jolicoeur says.
While sales are soaring, energy drinks still have the lowest consumption rates of any ready-to-drink beverage, with penetration at about eight per cent in Canada and 17 per cent in the U.S.
According to a January 2013 Packaged Facts report by MarketResearch.com, the low numbers reflect the category’s relative infancy and growth potential, “especially as manufacturers cross-pollinate energy drinks with other ready-to-drink beverage types to broaden their appeal.”
A new beverage from PepsiCo is a good example. In February, the cola giant launched a drink in the U.S. called Kickstart, a fruit-flavoured Mountain Dew beverage made with five per cent juice and vitamins B and C. Available in orange citrus and fruit punch, Kickstart contains 92 mg of caffeine in a 16-ounce can.
Positioned as an “entirely new way to do mornings,” Kickstart offers a refreshing alternative to coffee, whether they’re “catching the first waves at sunrise, managing bumper-to-bumper traffic on the way to the office or hitting fresh powder on the slopes at first light,” according to the company.
Red Bull, meanwhile, expanded its product offering with the launch of Red Bull Editions, available in Silver (lime), Blue (blueberry) and Red (cranberry).
“The Editions were launched to provide different taste options to consumers looking for a drink with the same functionality of the original Red Bull drink,” a company spokesperson says.
Starbucks, for its part, recently launched its Refreshers sparkling green coffee energy drinks in grocery stores at the end of February. The ready-to-drink beverages are caffeinated, lightly carbonated, and come in three flavours: raspberry pomegranate, strawberry lemonade and orange melon.
Last April, Guru redesigned the packaging for its signature energy drink. While no changes were made to the product formulation, the refresh aimed to play up the drink’s natural and organic content, including juices and botanical extracts.
“The graphics are cleaner and more streamlined, which provides a more natural feel,” says Jolicoeur.
With a target audience between 25 and 40 years old, Guru consumers “tend to be a little older than the typical energy consumer, which is anywhere from teens to early 20s,” he adds. “They’re a little more mature and also more mindful of their health.”
Energy drink marketers looking for their next sales jolt are discovering an even more mature market. According to Packaged Facts, baby boomers represent a big opportunity for energy drinks and shots.
For example, 5-Hour Energy shots, distributed by Living Essentials, show a strong uptick in usage among older adults. And, not to overlook the female market, Living Essentials launched Pink Lemonade 5-Hour Energy shots last fall, with a portion of proceeds going to the Avon Breast Cancer Crusade.
While energy drinks may slowly be shedding their bad-boy image, the sector as a whole is facing increased scrutiny. Overwhelmingly negative media reports have emerged in the U.S. and Canada, linking the consumption of energy drinks with serious side effects, increased visits to hospitals and even deaths.
The Canadian Beverage Association is trying to combat the bad press by educating consumers about who the products were designed for (not children or people with caffeine sensitivities) and how to consume them (not with alcohol).
“By not providing all of the information, people don’t know what to think,” says Stephanie Baxter, senior director of communications at the Canadian Beverage Association.
Changes to the way Health Canada regulates energy drinks may help alleviate some of the criticism. In 2011, Health Canada announced it was changing the classification of energy drinks from “natural health products” to “food.”
The change, expected to come into force this year, means the beverages will have to carry labels listing ingredients, allergens and nutrition information. Health Canada is also capping caffeine content at 180 mg per can or single-serving bottle–about the same as an eight-ounce coffee.
Grocers will no doubt be following the developments in the energy drinks sector with interest.
“If I’m a grocery chain right now, one of the biggest things I’m trying to do is to promote nutrition and food safety,” says Ken Wong, professor of marketing at Queen’s University.
“If you do that, “you cannot at the same time turn around and carry a product that you think is counter-nutrition,” Wong continues. “And to me, if nothing else, there is the incentive for everybody in the energy drinks sector to pick up and start to play the game better, because you may find that you lose your distribution.”
Then again, as long as the category is booming, that doesn’t appear likely to happen. However, given all the negative attention, the sector would be wise to continue shedding its bad-boy image. Those baby boomers need to see this isn’t their grandson’s energy drink.