May 2006 Edition
Energizing the Beverage Industry

Energy, mental stamina, improved concentration, boosted metabolism, enhanced performance. These may sound like the effects of a spa treatment, but they ’re actually some of the benefits touted by energy drinks: lightly carbonated, heavily caffeinated soft drinks that are often laced with herbal ingredients.

 

These pick-me-ups provide more potent fuel than coffee, but they have one other benefit: they’re also fuelling a major trend in beverages.

Although they are newcomers to the Canadian beverage market, energy drinks have actually been around for nearly 20 years. The original energy drink was launched in Austria in 1987, based on an Asian recipe. Its creator had been traveling in Thailand, where he had discovered a revitalizing drink that was said to be popular with rickshaw drivers. That drink was launched in the U.S. in 1997 and in Canada in 2004.

The first entries in the energy drink category came from small companies that marketed aggressively to young, hip consumers. Despite a relatively small demographic, they became successful enough to engender a whole beverage class. Most, if not all, major beverage companies have launched an energy drink brand, and it remains a market in which small, scrappy companies can make an impact. A couple of brands have been launched or endorsed by hip-hop artists. Some of the smaller brands are local, and are not widely distributed.

Young consumers—mostly under 30—are the key demographic. Despite the popularity of these drinks, people outside of the young target market for these products may remain relatively unaware of them. You won’t see energy drinks advertised on mainstream television. Rather than using broad advertising, energy drink companies are more likely to promote their brands by sponsoring events such as concerts and extreme sports competitions, or by tie-ins with products related to activities like snowboarding and gaming.

Some estimates indicate that the energy drink category now has more than a thousand brands, at least a dozen of which are widely available in Canada. They are now popular in many bars and clubs, and have spawned popular cocktails, often mixed with vodka (see health information, to the right).

They have also spawned healthy growth. According to Zenith International’s industry report, energy drinks enjoyed global growth of 18% in 2004. Asia still accounts for almost 60% of sales, but North America is now the second largest sector for energy drinks, with 15% of the market, and an impressive growth trend. Macleans magazine recently reported that energy drinks had become the fastest-growing beverage category in the U.S., surpassing bottled water.

Zenith suggests North American growth will continue, and that energy drinks will encroach into other beverage sectors. So expect to see customers asking for one of these products instead of iced tea, carbonated soft drinks or even smoothies as this category continues to energize beverage markets.

 

Energized

What’s so energizing about energy drinks?

Key “functional” ingredients in many brands include:

Caffeine – everyone’s favourite boost (but with fizz and lots and lots of sugar) gets extra oomph in combination with other ingredients.

Guarana – a South American bean similar to coffee, with similar stimulant effects

B vitamins – essential for breaking down carbohydrates into glucose, which provides the body with (you guessed it) energy

Taurine – an amino acid that plays a role in the absorption of fat and fat-soluble vitamins. Intense physical activity can deplete the body’s taurine levels

Glucuronolactone – a carbohydrate thought to help remove toxins from the body.

 

Many brands also contain herbal ingredients such as ginseng (often used to boost vitality) and gingko biloba (thought to enhance memory and alertness).

 

Energy and Health

Energy drinks are a growing market, but they do come with a few cautions, including concerns about high caffeine content. Because of their functional

ingredients, they are not recommended for children, or for women who are pregnant or breastfeeding. They have become a popular mixer for vodka,

but be aware that Health Canada advises against combining them with alcohol. In the wake of reports of four cases of adverse reactions to a popular

product, Health Canada issued the following advice:

 

-           limit consumption (the leading brand’s label recommends a maximum of 500ml per day)

-           don’t mix with alcohol

-           don’t confuse energy drinks with sports drinks, which rehydrate the body
            (energy drinks don’t)

-           report any adverse effects, such as electrolyte disturbances, nausea and vomiting, or
            heart irregularities