When energy drinks began to first hit the global market in the late 1990s, their targeted demographic was those who participated in athletics. As the drinks began to thrive and grow as a market, there was a shift to the 18-34 age demographic for a number of reasons. This population group often has to balance caring for young children, working full time, and keeping a clean home. Most of this happens on less than an optimal level of sleep. The value proposition offered is that an energy drink can counter the fatigue and it is working.
In 1999, the global market size for energy drinks was $3.8 billion. In 2013, the value of the market was $27.5 billion, which accounts to a 620% increase in the energy drink market size. That amount of growth is nothing compared to what the US market has experienced since 1999: 5000% growth.
The Energy Drink Market Isn’t New
Many consider the energy drink market to be a relatively new product, but it has been around for several years. Although Red Bull was introduced in 1997, there were extra caffeinated sodas like Jolt that had already been around for several years. The difference is that beverages classified as a soda were limited by law to have a certain level of caffeine in them. Energy drinks didn’t have that stipulation.
In the US, the 5000% growth seems phenomenal, but what is truly remarkable about this growth is that two brands account for 80% of the total sales. Red Bull and Monster dominate the energy drink market. Yet for all of the explosive growth that has been seen, energy drinks have still not been able to overtake coffee as the preferred caffeinated beverage of choice in the US market.
Coffee Sales Aren’t As Dominant As Before
When the energy drink market size was first reported in 1999 with US numbers, the total sales were $350 million. In comparison, coffee sales were nearly $7 billion in value. That’s a factor of 36-1 when comparing the two markets. In 2013, coffee sales were an impressive $12 billion, while energy drink sales were 9 billion. That’s a gap that’s lower than 1.5-1.
The gap may have shrunk dramatically over the years, but it wasn’t until 2010 that energy drink sales were able to match the 1999 sales numbers of coffee. When accounting for inflation with those figures, it isn’t until right now that energy drinks have finally caught up to the overall value of the coffee market from nearly 20 years ago. Although coffee growth as stagnated in comparison, the fact that it still dominates may be limiting the impact of the energy drink market size.
What Makes Energy Drinks Different?
The difference that energy drinks bring to the market is that they can be treated as a soda in a number of different ways. They’re being mixed with alcoholic drinks, used as a sleep substitute, and some are even combining their use with coffee and contributing to both markets.
Today’s energy drink market has numerous flavors and styles of beverages because consumer tastes have changed over the years. Instead of having a drink that tastes reasonably good, consumers are looking for beverages that can provide them with certain benefits. Take Wired 344 as an example. It is often compared by consumers as looking and smelling a lot like urine, yet because it contains 344 mg of caffeine in the can and is often available for $1 or less, it is purchased.
There Is Also the Energy Shot Market To Consider
Energy drinks also inspired the spin-off energy shot market, which is often included in the energy drink numbers. This market is dominated by 5 Hour Energy, which still clears over $1 billion in revenues in the US despite having more than a dozen deaths linked to consumption of the product. The reason why this product even exists is because certain workers weren’t willing to consume a large energy drink, but the caffeinated energy shot could be taken quickly so that production could be enhanced.
The energy market is expanding into a wide variety of other products that may also affect the overall energy market size in the future. From mints to gum, water to lollipops, and even beef jerky, caffeine is being added to just about anything today. This will allow people to enhance their awake factor in their own preferred way and could potentially make the energy drink market size obsolete.