Energy Slims Down

Time was, if you wanted a diet energy drink, you had to raid Dietrich Mateschitz’s private stash. But no longer.

Although diet energy drinks are still considered something of a weak sister in the category – kind of amazing in and of itself, when one observes that they sold more than $250 million in product in convenience stores alone – the future is one in which the weak sister grows into a strong sibling in her own right.

Right now, they sit at only about 13 percent of the fast-growing category – a ratio that’s appreciably less than diet versions of CSD’s. But energy drinks are still a fairly young category, so it’s important for retailers to note that things are still changing, and there’s definitely reason to pay attention to new diet- and low-calorie options.

For example, in looking at leading diet energy brands, the West Coast is still a big indicator of where things are headed – and from that perspective, take a look at Diet Rock Star, the second-place brand. Rock Star has long been much more popular on the West Coast than out East – and its $65 million in sales in the convenience channel is about half of what its full-calorie line sold. Diet Rock Star grew by 63 percent last year, according to AC Nielsen, while the full-calorie version grew only 11 percent – lagging the category’s growth overall.

Rock Star has always had an advanced cachet with female consumers, which may explain the high uptake of its diet brand, as well. But that also speaks to the evolution of the category – as one of the first of the 16 oz. brands, it is more mature than much of its competition, and as it penetrates outside of its core demographic, it enters into even more demographic bands that are more likely to reach for a product with fewer calories.

Similarly, Sugar-Free Red Bull, which still only has 1/5 the sales of the full-calorie stuff, nevertheless grew faster than its parent brand – and 20 percent faster than the category overall. And SoBe, which has been sliding backwards in terms of sales and share – no mean trick in a category that grew by 1/3 again last year – continued to see forward progress from its diet brands.

As the category separates into a lead pack and its niche competitors, it’s going to be more important to look to diet energy as a way to keep building share, analysts say.

There are two main reasons for this:

1. The category is continuing to catch up among women and older consumers – many of whom are more calorie-conscious than the category’s longtime core consumers, young men and

2. As they get older, those longtime young men/longtime core consumers are also becoming more calorie-conscious themselves.

So what is out there for retailers to consider? For people new to the category, it’s likely that the more established brands are going to be the ones that they turn to for diet drinks.

But there are also a few products that only have diet characteristics – one of them, Xyience, has a strong base among men, and has show rapid growth since its introduction last year. Another, Tab Energy, has been slow and steady, but its growth lags the category – it may be lost in the wide number of energy SKU’s recently taken on by the Coca-Cola Co.

Still, as a sub-category it faces some challenges: the growth of teas and, even more so, yerba mate blends that may be more appealing to certain consumers because of their specific health properties; additionally, a growing number of functional waters contain caffeine and other “energy” ingredients.

Nevertheless, if you’re taking on an energy drink, chances are you’re also getting the opportunity to take on a diet brand, as well. Look at who is walking up to your cooler, look at who is shopping your aisles, and if you’re ready, expand – particularly if you’ve got the type of consumers who are trying not to.

The category is continuing to catch up among women and older consumers…