The US energy drinks sector is continuing to generate ”quite remarkable” growth despite the depressing economic climate and high gas prices, according to the owner of Monster Energy drinks and Worx Energy shots.
In a conference call with analysts covering Hansen Natural Corporation’s second quarter results last week, chief executive Rodney Sacks said energy drinks and shot sales were up 15.6% in the convenience, grocery, drug and mass merchandise channel (excl Walmart) in the 13 weeks to June 25.
Energy drinks: Monster Energy beats Red Bull and Rock Star
Monster Energy – which generated sales growth of 22.3% - had outperformed both the category and rivals Red Bull (up 14.6%) and Rock Star (up 20.3%) over the period, according to Nielsen data, he added.
Sacks said: “Despite the difficult economic environment in our major markets the US and Europe, the energy drink category has continued to show growth. This is quite remarkable in the face of general consumer weakness and higher gas prices …”
He added: "Our new non-carbonated Monster Rehab energy drink with electrolytes and additional supplements, which was launched in the first quarter, has already become one of our better selling items in the convenience and gas channel ... We plan to introduce additional products in the line later this year.”
Energy shots: Red Bull exit does not mean category isn't worth exploring
While Hansen’s energy shot Worx Energy was not in the same league as market leader 5-hour Energy, it was “starting to become one of the major players in the shot category”, claimed Sacks.
Asked by one analyst whether the energy shots category was running out of steam following Red Bull's move to stop selling energy shots in the US , he said there was a "finite universe" of potential energy shot drinkers, but that the category still had great potential.
“Obviously it [Worx Energy] is very, very far away from the 5-Hour numbers, but it's starting to gain some traction… There is room for a good competitor… The margins are good, and so we believe there are still good and valid reasons for us to persist in trying to find the formula that will work to be a credible competitor in that category, as we say.”
While there was some crossover, consumers of energy shots and drinks were discrete groups, he claimed. “[The energy shot consumer] I think, is a slightly different consumer to the mainstream energy consumer.”
He added: “We believe there is a different consumer that is the principal consumer of energy shots, as opposed to energy drinks. But I think there is a sort of a limitation on how many people are going to try or be regular energy shot users, and I think there is a more finite universe.”
Net profit at Hansen surged 44.5% to $139.3m on net sales up 35.6% to $818.6m in the first half of the year.