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    Features

    Fueling the Energy & Sports Drinks Market

    Competition continues to heat up as brands attempt to engage with time-strapped and stressed-out consumers.

    Fueling the Energy & Sports Drinks Market
    Fueling the Energy & Sports Drinks Market
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    By David Sprinkle, Publisher, Packaged Facts06.02.17
    The expanding range of food and beverage products positioned on benefits beyond basic nutrition interlocks with the consumer do-it-yourself trend of addressing health or wellness concerns (if only ephemerally, or even symbolically) with food and beverage choices.

    Packaged beverages particularly, given their relatively “tweakable” formulations, are immediately responsive to nutritional and consumer trends, as evidenced by the current wave of prebiotic/probiotic enhanced products. Refrigerated ready-to-drink (RTD) beverages with natural or trendy “superfood” ingredients especially benefit from the general association of fresh foods with healthier eating, combined with the irrepressible American consumer demand for increased convenience. Both Starbucks and Campbell Soup, for example, have offered energy drinks incorporating fruit or vegetable juice and green tea extracts.

    Packaged Facts’ “Functional Foods: Key Trends by Product Categories and Benefits” (Elaine Tecklenburg, February 2015), observed that a high percentage of U.S. adults battle to retain energy to get through the day, to manage weight and avoid feeling hungry, or to address other specific medical conditions or concerns. At the same time, performance and recreational athletes continue to seek out products to help optimize their performance and recovery. This spectrum of demand—ranging from the least to the most healthy consumers—fuels the need for scientific research that establishes the bioavailability and efficacy, at levels consistent with real-life product usage patterns, of bioactive compounds or physiologically active ingredients linked to health benefits.

    Though somewhat less important among consumers seeking to lose weight or to address medical concerns, energy is the mothership of functional beverage positioning, as implied by global coffee and tea traditions. Along with weight control, other top health and wellness concerns motivating adults to seek out functional nutrition include high blood pressure, heart health, digestive health, immune system health, and joint and bone health/mobility. At the ingredient level, fiber, antioxidants, and probiotics are top of mind, as well as natural or organic formulations.

    Nonetheless, the current regulatory and consumer attention to “no added sugars” has brought high levels of even natural/organic caloric sweeteners under the glare. Many new energy and sports drinks products highlight use of non-caloric or non-glycemic natural sweeteners such as stevia, monk fruit, and erythritol. Moreover, positioning on sustainability and claims such vegan or Fair Trade have also emerged among new energy and sports drink product introductions.

    Usage Trends
    Packaged Facts’ “Energy & Sports Drinks: U.S. Market Trends” (Erica Keenan, May 2017) projected retail sales for energy and sports drinks to rise 5.5% annually to 2021. Although sports drinks claim the higher usage rate among U.S. adults at 37%, energy drinks lead in dollar sales by a 2:1 ratio due to higher price points.

    Consumer demand for more natural food and beverage products generally, and specifically those made without artificial colors, flavors, and other additives, extends to energy and sports drinks.  This trend has created gaps in the market that several small start-ups and, increasingly, not-so-small acquirers and new entrants, are aggressively attempting to fill.

    Packaged Facts anticipates this activity will continue as long as market share is up for grabs, which reformulation and repositioning by current market leaders to both address and avoid criticism suggest is the case. 

    Ingredient Highlights
    Consumer interest in all things natural has fostered the trend of including exotic ingredients with functional properties in energy and sports drinks. Among the most prominent such ingredients is coconut water, which has gained popularity as a beverage in its own right and is increasingly included in sports drinks for its combination of carbohydrates and electrolytes. Products with coconut water have blurred the line between sports drinks and functional beverages, often intentionally.

    For example, in marketing its product, the manufacturer of Coco5 Coconut Water avoids the “sports drink” label, opting instead to call the product a “hydration beverage.” Even so, as with mainstream sports drinks, the beverage is intended to replace fluids lost during sweat and to restore electrolytes depleted during exercise. Another newer product, Coco Libre, claims to be the first certified organic bottled coconut water sourced from young green coconuts grown without pesticides, and is also certified vegan and gluten-free. One variant of Coco Libre contains added protein from grass-fed milk protein concentrate, and is sweetened with a blend of erythritol and stevia. 

    Aloe is another ingredient with functional properties that has found its way into sports drinks refashioned as “hydration beverages.” Exemplifying this trend is Phenoh 7.4, a hydration beverage featuring dipotassium phosphate and magnesium chloride as electrolytes—making it useful as a sports drink—along with organic aloe vera, which is touted as a “super nutrient” to “fight inflammation and boost the immune system.”

    Hybrid Beverages
    Released in the U.S. in 2011 and widely viewed, the documentary “Fat, Sick & Nearly Dead” put juices and smoothies on the map as a way to combat obesity and chronic health conditions. In addition, these drinks have become popular for satisfying the daily requirement for fruits and vegetables and locking in beneficial ingredients such as antioxidants. This trend has also given rise to hybrid beverages that feature fruits and vegetables but also contain ingredients such as caffeine for an energy boost or electrolytes needed for physical activity. In this vein, home recipes for “recovery smoothies” abound on the Internet.

    Consumers lacking the time or equipment to make these concoctions at home have an increasing number of RTD products to choose from, in the form of smoothie-like drinks and shots that eschew these traditional labels and are instead positioned as dietary supplements. Exemplifying this trend is BrainJuice, a shot refashioned as a “brain supplement” featuring tea-derived caffeine. Further departing from the traditional energy shot playbook, BrainJuice aims to offer something more than just a quick boost of energy; its ingredients are touted as helping to improve “focus, clarity, memory, and mood.”

    Evolving Energy
    Energy drinks can give some consumers an uncomfortable “jittery” feeling due to high amounts of caffeine rapidly consumed. Marketers have long sought formulations that deliver the buzz that consumers want without caffeine overload and subsequent withdrawal effects. One product on this frontier is AvitaeXR, an energy drink that relies on a patented bead technology to deliver a steady dose of caffeine for up to four hours. The beads are caffeine packaged in cellulose, a plant fiber.

    Packaged Facts anticipates that energy drink manufacturers will reduce their attention on short-term, caffeinated energy boosts and instead focus on specific energy needs related to time of day and to memory and cognitive ability, using ingredients other than caffeine. The Israeli company Inno-Bev’s WakeUp beverage was specifically designed to help combat fatigue experienced in the afternoon associated with the natural 24-hour circadian cycle and known as post-lunch dip syndrome. The product contains no added caffeine, chemicals, or stimulants that can increase heart rate or blood pressure, and instead contains four functional ingredients: guarana, ginkgo biloba, elderberry extract, and natural sweeteners.

    Although energy and sports drink mixes account for a minor share of retail sales within this sector of the beverage market, these products continue to evolve to meet the changing needs of committed users. Many consumers are looking for a product that delivers vitamins and minerals along with other functional ingredients such as caffeine for energy or electrolytes for body replenishment. EBOOST, for example, is a drink mix that aims to capitalize simultaneously on the popularity of products such as Emergen-C (a vitamin and mineral supplement positioned as “support[ing] the immune system, energy, and general health,”) and the appeal of traditional sports drinks. Such products may appeal especially to older energy and sports drink users, who view vitamins and minerals as important health aids and scrutinize product labels for ingredients and health claims.

    The Age of Customization
    Functional drink mixes also have an advantage in customization, another important frontier in the energy and sports drink markets, as in the food and foodservice industries as a whole. In the sports drinks category, Gatorade jumped to the forefront of this trend with the launch of its Gatorade Gx Personalized Hydration System in 2016. The technology features a “digital sweat patch” that monitors electrolyte loss and a “smart cap” on the beverage bottle that “utilizes fluid intake tracking and provides visual feedback directly to the athlete to pace hydration.”

    This product is in sync with the larger trend of biometric tracking of vital signs and exercise habits, and more generally in consumer interest in personalized health and nutrition. While Gatorade Gx and similar products may not reach the same level of market penetration as the Fitbit, this product illustrates the potential for drink makers to cater to more individualized needs and preferences in a broader fashion.

    Expanding the Base
    Young males are the predominant users of energy and sports drinks. While white non-Hispanics account for the majority of users, African Americans and Hispanics over-index in usage. A tradition and criticism of energy and sports drinks laden with sugar, excessive levels of caffeine, and/or artificial additives and colors has hindered adoption beyond this core consumer base, though a new generation of products is making a case for these functional beverage types.

    Concern about the safety of energy drinks focuses on levels of caffeine, and there has been a push to establish safe intake levels for children and adolescents, along with calls for additional study of exotic ingredients frequently found in energy drinks. Although caffeine labeling is not mandatory, many leading energy drink brands are following the recommendations of the American Beverage Association calling for the identification of the amount of caffeine and a health warning. Some new entrants to the energy drink category are forgoing caffeine altogether. 

    Sports drinks have been under attack for being marketed to and disproportionately consumed by the general population, particularly teenagers, instead of those who are physically active, thereby delivering empty calories and added sugar to the diet and contributing to obesity and related health problems in the same way as soft drinks. In addition, the blurring of boundaries between energy drinks, sports drinks, and enhanced water beverages has raised concerns among regulators, health professionals, and consumer advocates over the potential for consumer confusion and adverse health consequences.

    Underlying the opportunities for functional foods and beverages are time-strapped and stressed Americans, more health-engaged consumers, the demise of three square meals and regular meal times, and obesity. Moreover, stress often brings out unhealthy eating behaviors as a coping mechanism, and also results in fatigue. At the same time, RTD tea and coffee beverages have become popular alternatives to carbonated soft drinks and other RTD options, and represent formidable competition for energy drinks in particular. 
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