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Energy drinks industry pushing innovation and new product introductions

With incredible growth rates off a low base in the early 2000s, the energy drink industry has slowed down its pace over the five years to 2011. Yet the industry continues to achieve double-digit growth, according to IBISWorld, one of the US’s largest publishers of market research. As the energy drink market gradually becomes saturated it will grow only slightly in the next five years.

The energy drink industry is attracting businesses and driving industry expansion, notes IBISWorld. Over the past five years, rapid growth in the energy drinks industry stirred up interest in beverage companies, leading to an influx of producers. During the five years to 2011, a quick rise in the popularity of energy drinks such as Rockstar and Monster initially propelled growth.

Major players in the industry include Hansen Natural, which owns Monster Energy which is distributed nationwide, Red Bull, Rockstar Energy Drink and The Coca-Cola Company which produces Smartwater, which is considered a functional drink because it is enhanced with electrolytes.

According to IBISWorld analyst, Agata Kaczanowska, the success of the energy drink industry has also stimulated product innovation since 2006. “With investment by beverage behemoths like Coca-Cola and PepsiCo, hybrid drinks such as sport energy drinks have surfaced on the market in large numbers, drawing consumer interest,” says Kaczanowska. The major players have become heavily involved in the production of industry products.

As energy drinks achieve market saturation, regulators are cracking down on the marketing of these and other products. In the aftermath of several products like Four Loco and other energy beers being abruptly pulled off of shelves in several states, industry players will be more wary of potential bans or new regulations. According to IBISWorld, this will be especially true when companies deal with non-traditional content combinations like these caffeinated alcoholic drinks, which were banned in 2010.

Likewise, new products like energy pills and relaxation drinks, which promote a calmer method for people to focus at work, are increasing competition for this industry segment. As companies reclassify products, demand will shift to other industries. Similarly, marketing will be increasingly tricky as health concerns spill into public debate over the five years to 2016.

The Energy Drinks market research report from IBISWorld provides key industry analysis and industry statistics, measures market size, analyzes current and future industry trends and shows market share for the industry’s largest companies. IBISWorld publishes the largest collection of industry reports so you can see an industry’s supply chain, economic drivers and key buyers and markets.

Related reading:

Sales to stagnate for US energy drinks, survey

Sports and energy drinks sales could flatline in the US over the next 12 months, according to a new survey by AlixPartners that projects that while US spending will jump up across a number of non-alcoholic beverage categories such as juices, dairy, coffee and bottled water, sales for energy and sports drinks could be slow.

The findings come as other market research groups continue to describe energy and sports drinks as one of the most dynamic categories in the US beverage industry. For example, Packaged Facts has just published a report suggesting that despite a slowdown in 2008/2009 energy drinks sales are now taking off again. Click here to read about the report.

The time to innovate in energy drinks is now, Doehler

Beverage brand owners would be sensible to diversify within energy drinks now or risk missing out on future market share in a sector increasingly crowded with concepts, according to German ingredients firm Doehler.

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