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Energy drinks boost functional beverage category

By Caroline Scott-Thomas , 09-May-2011

Energy drinks are becoming more popular in the United States as younger consumers move into their prime consumption years – and energy drinks continue to deliver a distinctive benefit, says a new report from Packaged Facts.

The market research organization’s latest report, Functional and Natural Ready-to-Drink Beverages in the US, found that sales of energy drinks were flat at the height of recession in 2008 and 2009 – as were sales of sports drinks, functional waters, ready-to-drink tea and coffee, yogurt drinks and smoothies. However, all of these categories grew last year, and energy drinks led the way with sales growth of ten percent boosting an overall functional and natural ready-to-drink beverage market worth $23.4bn, up from $18.9bn in 2006.

"Energy drinks have been the focus of much industry discussion in recent years,” said Don Montuori, publisher of Packaged Facts. “That's partly because of the controversy surrounding energy drink formulations as a result of the bad boy image deliberately and very profitably cultivated by Red Bull, and then by me-too energy drink marketers in its wake in an effort to capture the attention of a youthful target market that is moving into prime consumption years. Mostly, however, the attention to the energy drink segment is because of the sales growth energy drinks and energy shots continue to deliver."

In addition, the market researcher found that energy drinks and shots are expanding their appeal, with usage growing from 11 percent of US adults in 2005 to nearly 16 percent by 2010. Younger consumers aged 18 to 24 are most likely to consume energy drinks and shots. Thirty-seven percent of people in this age range consume them regularly – more than twice the average rate for US adults.

According to Packaged Facts, much of the appeal of energy drinks and shots lies in their straightforward messaging.

The report said: “A marketing mantra is to focus on product benefits rather than product features, and energy drinks/shots have a laser focus on what is—as shown by a Packaged Facts consumer survey conducted in 2009—the top benefit being sought after by consumers who are purchasing food or beverage products specifically because of health interests or concerns: ‘energy levels.’”