Power Plays: The Concept of an “Energy Drink” is Evolving, and Brands are Eager to Change with the Times

When it comes to getting energy from a drink, consumers aren’t exactly short on options these days. Whether its caffeinated sparkling water, enhanced coffee, a buzz-boosting sports drink or something else altogether, the lines between traditional energy drinks and new functional beverages have been sufficiently blurred as to create both opportunities and challenges for brands across the industry. Though sales keep accelerating, even the term “energy drinks” feels increasingly outdated with each passing year.

How are brands responding to this shifting dynamic? Every which way they can: integrating popular candy flavors, shifting packaging formats, adding CBD — you name it. Even as perennial leaders like Red Bull and Monster keep growing, the energy drink category is perhaps more dynamic than ever, as a confluence of issues related to ingredients, use occasion, functionality, audience and flavor are combining to create powerful momentum across different pockets of the category. Up and down the energy landscape, there’s plenty of action to be found.

The Leaders

While most of the buzz is on the emerging end of the category, Red Bull and Monster remain at the top of the pile and aren’t looking to cede that position anytime soon.

Red Bull has been able to grow steadily — posting over $6 billion in sales on a two-year stack basis during the trailing 52-week period ended April 23 — while keeping prices relatively flat. Meanwhile, Monster Energy continues to diversify its portfolio with products like True North Pure Energy Seltzer and a slew of new coffee innovations like nitro-infused, zero-sugar Java Monster Cold Brew. While Wall Street’s attention has mostly been on rumors around a potential merger with spirits giant Constellation Brands, the company also picked up a beer company and recently scored a big legal win against rival Bang (see BevScapes for details).

PepsiCo is maybe the most ambitious of the corporate players, as it seeks to marshal a diversified array of high-awareness brands into a cohesive growth strategy. That plan — dubbed “Choose Your Energy” and unveiled at last year’s NACS show — has seen the launch of several new innovations, none more splashy than the Starbucks-branded natural energy line Baya, which launched nationwide on March 1. With Baya, Pepsi is traveling down a well-worn path in the energy space; natural-focused brands like CLEAN Cause, Runa, Hiball, and Guru have seen gains from consumers switching from conventional energy beverages, but not as rapidly as many expected. Yet Pepsi CEO Ramon Laguarta is high on the line playing a key role in the company’s energy mix, offering a natural, fruit-forward play to contrast with MTN DEW’s gamer-oriented products and Bang’s fitness-focused drinks.

Within that busy mix, where does that leave Rockstar, Pepsi’s big-ticket purchase from 2020? The brand continues to experience flagging dollar sales — down 24.4% to around $231 million on a two-year stack basis, according to Goldman Sachs — and somewhat awkward attempts at innovation, as with the foodservice-exclusive Rockstar Energy Fruit Punch and Rockstar Unplugged, a three-SKU line available in Passion Fruit, Raspberry Cucumber and Blueberry that features zero-sugar, 80 mg of caffeine and hemp seed oil (not CBD, mind you) for relaxation (or at least maybe a less edgy experience). Whether any of those connect with audiences remains to be seen, but the brand nonetheless provides Pepsi with a platform to take chances; last June, the beverage giant filed an application with the U.S Patent and Trademark Office to trademark its Rockstar in the beer and “alcoholic fruit cocktail drinks; alcoholic malt beverages, except beers; hard seltzer” categories.

Yet Pepsi’s future in energy remains clouded by uncertainty over its contentious three-year distribution deal with Bang, which is set to conclude in October 2023. Some have speculated that a pricey buyout could be on the cards, a move that would free Pepsi to potentially pursue another big-ticket acquisition in the category.

The Challengers

Outside of the Red Bull-Monster-VPX trifecta sitting atop the heap, there’s an ever-growing set of fast-rising energy brands that are eagerly banging on the door and jockeying for position in hopes of entering that elite club — and, in some cases, give their strategic backers a seat a the table.

That applies to brands like Zoa, the Dwayne Johnson-created, MolsonCoors-backed brand that has quickly generated over $34 million in MULO dollar sales despite having been on the market for just over a year, according to IRI sales data through April 17, 2022. Elsewhere, GHOST, of which Anheuser Busch InBev is an investor, has enjoyed explosive sales growth (+1505% year-over-year through April 17) for its RTDs, thanks in part to its officially licensed candy flavors like Sour Patch Kids and Warheads. For both MolsonCoors and AB InBev, the broad fitness-cum-lifestyle positioning of each of their respective brands gives them strong foundations from which to branch out: Zoa has already done so with a complementary pre-workout drink and a shift to exclusively zero-sugar 12 oz. cans, while Ghost continues to do swift business with its powders and merchandise.

Both brands also have another thing in common: they each got their start in the sports and nutrition channel, a theme that also extends to some of energy’s other fastest growing companies. By focusing on a female audience, Alani Nu has somewhat quietly turned into a force to be reckoned with, rising 568% to over $209 million in dollar sales. Cellucor’s C4 line, which just deployed entertainment and brand investor Kevin Hart to lead its latest summer marketing campaign, has also impressed, with sales up 170% year-over-year.

For the latter, the success of its mental performance line SmartEnergy demonstrates how brands can use equity built in the supplement market to make the leap into other energy-adjacent need states. This spring the brand introduced a new flavor, Watermelon Burst, for SmartEnergy, and also published the results of a clinical trial conducted in partnership with the University of Iowa that backs the product’s claims for improving cognitive performance. According to the study, participants in the study, many of whom were already energy drink consumers, experienced 47% improvement in complex gaming performance, 33% improvement in energy levels and 10% improvement in mental multitasking. In a release touting the study’s results, C4 affirmed SmartEnergy’s appeal for everyone from “college students studying for exams, gamers preparing for their next e-sports match, journalists writing multiple articles at once, and entrepreneurs meeting deadlines.”

But the most sustained growth has come from Celsius, which, despite a long struggle in the fitness-energy space, has spent the last three years on a roll. The company reported over $383 million in dollar sales over the trailing 52-week period ended on April 23, according to an analysis of Nielsen data by Goldman Sachs Equity Research. The brand reported a 402% increase in dollar sales year-over-year through April 17, per IRI. The company has sought to use its current momentum to broaden its offerings — exemplified by the three-SKU, flavor-forward Vibe line co-existing alongside the fitness-oriented core SKUs and thermogenic Celsius Heat — while staying aggressive in pursuing high-visibility partnerships with influential individuals (the latest being Olympic snowboarding legend Shaun White) and events like Sun Fest and Revolve Fest, the latter an exclusive invite-only event tied to the Coachella Valley Music & Arts Festival.

The Disruptors

Launched in 2019 by beverage entrepreneur Lance Collins and former Monster Energy VP of innovation Scot De Lorme, A Shoc has been quietly seeding growth over the past two years, generating over $60 million in dollar sales over the 52-week period ended on April 17, according to IRI. Now the Keurig Dr Pepper-distributed brand is ready to come into its own with a clear standard of identity that allows it to stand out from the crowd.

According to De Lorme, even as A Shoc was welcoming a new group of star athlete investors — including New York Yankees slugger Aaron Judge, pro golfer Brooks Koepka and Freddie Freeman of the Los Angeles Dodgers — to its cap table, they remained unable to actively endorse the product “with confidence.” That sparked the decision to go after NSF Certified for Sport certification, meaning teams in pro sports leagues like Major League Baseball (MLB) and the National Hockey League (NHL) can provide the product to their players and are considered safe to use.

Securing the certification took months, and required some work on A Shoc’s core formulation itself: caffeine was dropped to from 300mg to 200mg per 16 oz. can, the maximum allowed under NSF regulations. The company must also submit to twice-annual auditing and regular ingredient screenings, but De Lorme said that’s a small price to pay for the integrity and confidence that the NSF Certified for Sport badge brings to its products.

“Quite honestly, I think for us and where we’re heading with this brand as a modern energy drink created for today’s active generation, we’re going to hit a much bigger audience as we come down to a more comfortable level on the caffeine side, because I think that’s where the category is going,” he said. “Now we have the perfect scenario where we have athlete-investors that can actually confidently and comfortably drink our products that really elevate their performance, and it’s being as authentic as we can be to our brand positioning.”

A Shoc’s embrace of NSF Certified for Sport is indicative of a category in which brands have found success in starting with a niche focus and branching out from there: see gamer-centric G FUEL, which earned a bullish response from retailers in Goldman Sachs’ most recent Beverage Bytes survey, or Uptime, which continues to generate solid numbers with limited exposure and a non-traditional bottle format. Even as other products encroach on and evolve the category’s established bonafides, consumers are still buzzing for energy drinks.