Market Insights | The Energy Drink Market has Wings

Market Insights | The Energy Drink Market has Wings

By Cornelius Zeeman and Thembinkosi Kweyama,
Fairtree Portfolio Manager and Equity Analyst

The non-alcoholic beverage market offers a plethora of choices, from carbonated soft drinks and concentrated juices to sparkling and still water. Among these, the energy drink category has experienced remarkable growth over the past two decades, carving out a unique path to prominence. 

Energy drinks have become a popular alternative to coffee, offering the convenience of a ready-to-drink beverage, with typically twice the caffeine content of a standard cup of coffee. According to Euromonitor, which tracks on-trade (restaurants, clubs, etc.) consumption and off-trade (retail stores) consumption, energy drinks now account for 7% of liquid refreshment beverages (LRB) sales in 2023, up from 4% in 2010, as shown in Graph 1.

Graph 1: Global energy drinks sales

Source: Euromonitor, BoFA

Increase in per capita consumption.

This significant growth is attributed to several factors, including targeted marketing towards younger demographics, increased shelf availability, and strong associations with sports and active lifestyles. China and the United States dominate this market, together representing over 40% of global volume consumption and dollar expenditure.

Graph 2: Eight-ounce servings of energy drinks per capita

Source: BofA

Youth appeal and innovation.

Energy drinks are particularly popular among younger consumers, with the average consumer age being 37 and half of all consumers under 34 years old. The category continually evolves to meet the preferences of its youthful audience, introducing low-sugar and performance-based options that appeal to health-conscious individuals.

Graph 3: Age distribution among category consumers

Source: MRI, Morgan Stanley Research

Market leaders and emerging players.

Monster Energy and Red Bull have long been the global leaders in the energy drink market, driving innovation and setting industry trends. Recently, companies like Celsius in the USA have emerged, focusing on the performance segment of energy drinks and catering to a health-conscious demographic. These ongoing innovations and product diversifications ensure continued growth for the category, maintaining its strong resonance with younger consumers.

In conclusion, the energy drink category has not only expanded its market share but also redefined consumer expectations through continuous innovation and strategic targeting of younger audiences. The future looks bright as the category continues to adapt and thrive in an ever-evolving marketplace.


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