According to the latest Nielsen figures, sports and energy is growing at 16.7% year on year – that’s significantly faster than other sectors in the soft drinks category such as cola, which is growing at 8.5% (year to December 25, 2010).
And it’s a key sector for the UK off-trade in which annual energy drinks spend has increased by 14.6% to £145.8 million (Kantar Worldpanel, year to November 28, 2010).
But, while innovation continues apace in the sector, retailers only have so much shelf space. And the huge variety of brands, flavours, prices, formats and sizes can make it tricky to know what to stock. So it’s more important than ever to understand the latest trends in the market.
The category can be defined by three areas, says Red Bull trade communications manager Tom Smith – sport, refreshment and functional.
He adds: “When you look at the make-up of sports and energy you can see where the growth and added value is coming from.With sport in decline, it’s refreshment and, even more so, functionality, that are proving to be the winners for both shoppers and retailers. Shoppers are realising when and where to consume these products to get the most from their day.”?According to Smith, while there have been plenty of flavours launched in the past year, new can and bottle sizes are delivering more value to the category.
As well as its classic 25cl, Red Bull has 33.5cl and 47.3cl products.
Smith explains: “The coffee market has become an area where consumers decide on the size and type of their purchase based on their energy needs. As sports and energy shoppers now understand the category better, they’re doing the same – from energy shots all the way to big cans.”?When it comes to advice on merchandising, Smith recommends stocking the top 15 products and not cluttering chillers with too many “me too” brands which he says don’t add value. Chilled availability is also key, with most impulse shoppers consuming their purchase within 15 minutes. Red Bull suggests keeping at least three-and-a-half days of stock on shelves.
Coffee alternative?Industry organisation Can Makers says this sector is very important for the overall soft drinks market. Chairman Vince Major says: “The rise in the soft drinks market is primarily due to the growth of energy drinks and continuing promotions by the mega brands.
“Consumers are choosing these over the more costly juices, smoothies and bottled water alternatives.”?Shoppers are also increasingly buying energy drinks over coffee.
Justin Horsman, marketing manager at Global Brands, which makes Kick Energy, says: “We’ve found people have an energy drink in the car in the morning instead of a cup of coffee. This is partly due to the age group of consumers broadening. In the past, it was the younger group that consumed energy drinks, now they’ve grown up using them.” Kick will concentrate on its off-trade strategy in 2011, primarily aiming to raise awareness with its key market of console gamers.
Its £3.5 million marketing plan includes sponsoring gamers’ events and taking a branded Land Rover equipped with Xbox console to retailers and trade shows.
Horsman says Kick’s 99p rrp makes it a more accessible branded product that can add value to independents. He adds: “Our customers are mostly aged 14 to 24, so are more likely to shop in a c-store or off-licence than anywhere else.”?To promote products, Horsman says cross-merchandising with spirits such as vodka can work well – although stressing that social responsibility is also an important consideration.
Meanwhile, CCE advises retailers to be aware that energy drinks tend to be purchased first thing in the morning or at lunchtime. The company, which has added a sugar-free variant to its Relentless range this month, also says innovation is key to the sector.
Another trend in the market is towards the use of natural ingredients.
Matt Williams, off-trade sales director at Pussy Drinks, says: “It’s all about educating consumers. Ours is a premium natural product that’s very versatile.
“Pussy can be served with a multitude of different spirits – and it’s also great mixed with white wine.”?The company started two years ago, has secured a major investor and aims to make an announcement on plans regarding the brand shortly.
Managing director of Voltz International, Rob Arnold, believes the huge range of products launched in recent years has made it a tough market, and hard for newer brands to get listed.
But he expects 2011 to bring continuing consolidation in the market.
Arnold says consumers like having a healthier choice – Voltz shots contain B vitamins and a lower amount of caffeine than the daily recommendation.
“Voltz doesn’t get you completely wired and then leave you feeling dreadful afterwards,” he adds.
“People are thinking more and more about what they’re putting into their bodies.”???