Energy drinks are no longer a niche product and they now form one of the fastest growing segments in the drinks market across the globe. Part of this change has come from an increasing focus on health and fitness by consumers. Last year the worldwide energy drinks market was worth approximately $55 billion. In the period between 2018 and 2023 the worldwide energy drinks market is expected to grow at a compounded annual growth rate of 3.7%.

Due to the fact that energy drinks are advertised as alternatives for carbonated drinks there is a significant number of consumers who are moving to them from the latter. Another reason that is responsible for the increasing consumption of energy drinks are the changing lifestyles in the APAC (Asia-Pacific) region including urbanization, rising sports activities and increasing income.

Branding and marketing

For energy drinks brands to continue on their path of growth clever branding and marketing will be essential though. With the number of people suffering from diabetes rising and consumers reducing consumption of sugar-added drinks there is a big market opportunity for sugar-free energy drinks. Additionally the low-calorie energy drinks market will be driven by the obesity pandemic.

Trends in the energy drinks market indicate that consumers want variations in their daily drinks too. There is thus a demand for drinks offering hydration on top of performance and also those which possess preventive measures to act against specific health conditions. The energy drinks that have caffeine are also popular with consumers as they assist in regaining energy while increasing stamina. For energy drinks the competition is coming from malted health drinks, aerate beverages and packaged juice. One advantage that these drinks have over energy drinks is that they are cheaper.

Health concerns

Energy drinks have not been without health concerns though. The presence of caffeine in energy drinks has for instance been linked to such health risks as abnormal heart rhythms, sleeplessness and frequent urination.

Across the globe majority of the energy drinks market is held by those that contain caffeine. As a result of awareness and health concerns the biggest market for energy drinks in the world is North America. The Asia Pacific region is also a growing market as a result of rising disposable incomes and changing demographics. Currently Europe is considered an emerging market which is expected to enjoy a healthy growth rate especially following increased marketing and advertising players by the various players in the sector. Manufacturers are especially targeting children and adolescents.

Product differentiation

Some of the leading companies in the energy drinks market include PepsiCo, Rockstar, Coca-Cola, Red Bull and Monster Beverage Corporation. In the future manufacturers of energy drinks are expected to rely on product innovation in order to gain first mover advantage.

Manufacturers are also expected to focus on product differentiation in order to penetrate the existing markets. Red Bull for instance tries to stand out using ingredients such as taurine. It also positions itself as a high-end product which is sold at a high price. Additionally Red Bull as well as Monster Energy have used their sponsorships of premium sports events to market themselves and this is expected to continue being the case.