Energy Drinks Market is Expected to Grow at a CAGR of 5.72% from 2022 to 2030

Market Research Future (MRFR) has published on the “Global Energy Drinks Market”.

Energy Drinks Market Highlights

The global energy drinks market is projected to witness significant growth during the review period, exhibiting a CAGR of 7.52%. The market was estimated to be USD 62,940.00 million in 2021 and is expected to reach a value of USD 1,19,594.27 million by the end of the forecast period (2022-2030).

Energy drinks are beverages that contain stimulant compounds, typically caffeine, and are marketed as providing mental and physical stimulation. These drinks may or may not be carbonated and often contain sugar, other sweeteners, herbal extracts, taurine, and amino acids. However, the use of sucralose and other artificial sweeteners in energy drinks may not be considered healthy. Plant-based energy drinks that use natural ingredients as stimulants are becoming increasingly popular as a healthier alternative to traditional energy drinks. The demand for non-carbonated beverages is rising, driven by increasing urbanization, rising disposable incomes, and growing consumer health consciousness. Energy drinks, which claim to improve performance, endurance, and alertness, are particularly popular among adolescents. Consumers are turning to energy drinks due to long and irregular working hours and a rise in social gatherings. Additionally, working out and exercising at home increases the need for energy drinks. 

Consumers are also seeking immunity-boosting foods and beverages containing vitamins, minerals, and other essential ingredients. As a result, many players are entering the functional energy drink market to leverage this trend. Furthermore, health-conscious consumers opt for healthy and sugar-free drinks due to increasing awareness of active lifestyles and the prevalence of lifestyle-related diseases. The energy drink market is expected to grow due to increased promotional and advertising strategies.

Market Synopsis

The energy drink industry is experiencing growth due to several factors, including changes in consumer habits and a rising interest in health and fitness. People are more aware of their health and adopt physical activities to enhance their well-being and physical abilities. As a result, carbonated drinks are being replaced by energy drinks. Soft drinks are a significant business, with the average global consumption per person being 89.9 liters per year and Americans alone consuming 47.98 billion liters annually. The rising awareness of the benefits of energy drinks and concerns about health issues such as obesity are also contributing to the industry's growth. The U.S. Department of Health & Human Services states that a small proportion of adults, less than 5%, participate in 30 minutes of physical activity each day, and just one in three adults fulfill the suggested weekly physical activity targets.

Additionally, only 35-44% of adults aged 75 or older and 28-34% of adults aged 65-74 are physically active. Although the FDA does not regulate energy drinks, it enforces a caffeine limit of 71mg per 12 ounces of soda, whereas energy drinks typically contain around 120mg per 12 ounces. However, there is growing awareness regarding the adverse effects of caffeine that could impede the growth of the energy drink market. Nevertheless, changes in consumer preferences towards beverage consumption and lifestyle are expected to create many opportunities for the further growth of the global energy drinks market. Consumers' lives have become busier due to lifestyle changes, work practices, globalization, and other factors. They often have more work to complete than the time available. Energy drinks are a popular solution to this problem, as they contain energy-boosting ingredients like ginseng, caffeine, and others that help keep the mind and body alert. Caffeine, in particular, can increase productivity by enhancing activeness and alertness. Some energy drinks contain electrolytes and various vitamins that help restore the balance of these essential nutrients after sports sessions, gym workouts, or tiring work schedules. Energy drinks can instantly replenish energy and vitamin deficits in the body. These drinks are also available in different flavors, providing consumers health benefits and good taste.

However, consumers have become increasingly concerned about unapproved colors and additives, drug residues, industrial chemicals, undeclared allergens, and heavy metals in energy drinks. The health effects caused by the consumption of these residues are likely to restrain the growth of the non-alcoholic beverages market in the Asia-Pacific region. Energy drinks containing significant quantities of caffeine, taurine, and sugar are not recommended for people with diabetes as they can cause insulin spikes. This makes them unsuitable for a large proportion of potential consumers. The suitability of energy drinks for kids is also. Some still being determined companies, like Monster Energy Drinks, state that there is no age limit for consumption while agreeing that they should not be marketed to kids below 12. The key brands in the energy drinks market include Red Bull, Monster, Red Bull Thailand, Rockstar, Eastroc Super Drink, Hi-Tiger, Lucozade, NOS by Monster, Oronamin, and Burn by Coca-Cola.

Taurine, another ingredient found in energy drinks, helps regulate muscle contractions, heartbeat, and energy levels. It is an amino acid that is naturally present in the human body. However, a very high intake of taurine may lead to heart palpitations. In addition, consumers are increasingly becoming conscious of these health risks and are opposed to consuming energy drinks containing these ingredients.

Furthermore, the emergence of alternative energizing beverages, including caffeinated waters and nootropic drinks, presents a competitive threat to energy drink brands. While energy drink consumers are typically loyal to the category, low-frequency consumers may opt for alternative options if they better suit their needs and preferences. RTD coffee, in particular, has gained popularity among Gen Z consumers and poses a significant threat to energy drink brands.

Energy drinks face tough competition from affordable alternatives such as fruit juices, soft drinks, and other flavored beverages. These alternatives lack stimulants like ginseng and guarana but contain other energy-boosting substances such as glucose, vitamins, and minerals. These substitutes have been in the market long before the introduction of energy drinks and are in high demand. Energy drink brands are often associated with sports events and have high costs due to marketing activities, making them more expensive overall. Increasing sales of energy drinks in the presence of low-cost alternatives can be daunting. Furthermore, caffeine-rich beverages like coffee and tea are already widely popular, so energy drink vendors must establish a unique image for their products in the minds of consumers

COVID-19 Impact on Energy Drinks Market

The COVID-19 pandemic has significantly impacted the global energy drinks market. With people staying at home and working remotely, there has been a decrease in demand for energy drinks, particularly in the on-the-go segment. The closure of bars, nightclubs, and sports events has also resulted in a decline in sales of energy drinks, which are often consumed as a mixer or to help boost energy during physical activity. Furthermore, the disruption of global supply chains has also affected the production and distribution of energy drinks, causing shortages in some regions and increased prices. However, the pandemic has also shifted consumer behavior, with more people seeking products supporting immune health and overall well-being. As a result, some energy drink manufacturers have pivoted their marketing to highlight the health benefits of their products, such as the use of natural ingredients and reduced sugar content. In addition, with the rise of e-commerce and online ordering, some energy drink companies have offset losses in traditional retail channels by focusing on online sales and delivery. The market growth has been positively impacted by the COVID-19 pandemic, which has led to a surge in demand for energy drinks. While the demand for these products was already increasing, it skyrocketed after the pandemic hit the world. The increased demand can be attributed to growing concerns for health, convenience, and the enhanced quality and variety of these beverages. Following the closure of restaurants and bars in March 2020, consumers turned to online platforms to purchase energy drinks, further boosting the market growth. With stay-at-home orders implemented globally, the sales of these products through e-commerce channels saw a significant increase.

The CPG industries are grappling with supply chain disruptions and inflation, but the energy drink industry faces more significant challenges. The industry faced increasing costs, including labor, transportation, input, and raw material expenses. Many industries have seen a proliferation of wellness-oriented alternatives to traditional grocery staples, including non-dairy milk, plant-based meats, and naturally sweetened treats. Energy drinks have long been associated with being high in sugar and stimulating chemicals like caffeine and taurine, which have alienated some consumers looking for holistic wellness options. Companies like Celsius have emerged to provide "clean" energy drinks for health-conscious consumers. The field of clean energy drinks is promising and continues to attract newcomers, such as No Sugar Co., which recently launched a line of natural, plant-based energy drinks called Joyburst. Despite supply chain disruptions caused by the COVID-19 pandemic, the energy drink industry still sees record profits, particularly in the natural energy drink sector.

Due to the stress and added work responsibilities brought on by the pandemic, the energy drink market experienced significant growth. As several industries, such as healthcare, logistics, construction, and manufacturing, continue to encounter a heightened demand in 2021, the need for energy among consumers is expected to remain high. Additionally, the country's reopening will benefit the energy drink market as consumers resume traveling and socializing. Consequently, the energy drink market is predicted to stay robust even after the pandemic has subsided, particularly if the country enters a phase of economic growth.

The COVID-19 pandemic has significantly impacted the supply chain of many industries, including the energy drink industry. The energy drink industry relies heavily on the availability of raw materials, transportation, and distribution channels to meet consumer demand. The pandemic has disrupted these supply chains in several ways, leading to various challenges for energy drink companies. One of the major challenges for energy drink companies has been the availability of raw materials, such as caffeine and sugar. These ingredients are sourced from different parts of the world, and disruptions to transportation and trade have affected their availability.

Additionally, the pandemic has led to a shortage of aluminum cans used for packaging energy drinks, further straining the supply chain. Another challenge has been the disruption of distribution channels, which has led to shortages of energy drinks in certain markets. The pandemic has led to restrictions on movement, including lockdowns and border closures, which have made it challenging for energy drink companies to transport their products to different regions. As a result, some markets have experienced shortages, while others have been oversupplied.

Moreover, the pandemic has also affected the demand for energy drinks. With people spending more time at home and avoiding social gatherings, the demand for energy drinks in bars and clubs has decreased. On the other hand, the demand for energy drinks has increased among consumers working from home or participating in online classes as they seek to boost their energy levels and concentration.

Competitive Landscape

The high competition among the players have encouraged the players to produce quality products in the market. In order to build new and quality products, numerous companies benefit from mergers, acquisitions, and product development. To preserve their positions and broaden their geographic reach, the players in the worldwide energy drinks market are using a variety of strategies, including expansion, mergers and acquisitions, alliances, joint ventures, and expansion. To gain the largest possible market share, new product launch was the growth strategy that was most frequently used by market participants.

The global market for Energy Drinks is moderately consolidated, owing to large regional and domestic players in different countries. Emphasis is given to the companies' merger, expansion, acquisition, and partnership, along with new product development, as strategic approaches adopted by the leading companies to boost their brand presence among consumers. Various market players are continuously innovating Energy Drinks to cater to consumer preferences. Industry participants aim to accelerate online presence through strategic partnerships with e-commerce platforms to capture the interest of online shoppers across emerging markets.

In a fiercely competitive and divided market, top brands like Red Bull and Monster are searching for ways to thrive by investing in ingredients and adopting market strategies to expand their value chain. Bioenergy Life Sciences is one such brand that has introduced Ribose, a healthy alternative to sugar that is about 60% as sweet as table sugar. Additionally, innovations in caffeine development are helping to boost the market. Future-Chemicals has created a new product that offers caffeine sourced from whole-coffee cherry, providing 70% natural caffeine and 5% antioxidant polyphenols.

Key Developments & Growth Strategies

Partnerships

• Starbucks launched a branded energy drink called Baya through its partnership with PepsiCo, according to a press release from the coffee chain. The 12-ounce ready-to-drink cans of liquid energy will come in three fruity flavors: Mango Guava, Raspberry Lime and Pineapple Passionfruit. 

Product Launches

• Red Bull has unveiled a new limited-edition beverage in the US – Red Bull Winter Edition Pomegranate. The new offering features notes of pomegranate, sour cherry and red berries. Red Bull Winter Edition Pomegranate contains caffeine, B-group vitamins, sugars, taurine and alpine water.


• Red Bull Africa launched its new exotic energy drink flavor, called Cactus Fruit Flavor. The flavor consists of cactus fruit, dragon fruit, and pitaya.


• Red Bull launched its limited-edition low-calorie drink, Coconut Edition Sugarfree, across the United States at Target and Circle K. The drink has the taste of exotic coconut and berries, providing variety and sugar-free offering.


• Japan’s Taisho Pharmaceutical Holdings has released Japan’s first caffeine-free energy drink containing the botanical ingredient, enXtra, which has been clinically proven to improve alertness and focus up to five hours with or without caffeine.


• PepsiCo unveiled a new line of Mountain Dew energy drinks with Lebron James’ endorsement. The new line is available in six flavors: Pomegranate Blue Burst, Orange Breeze, Strawberry Melon Spark, Tropical Sunrise, Berry Blitz, and Peach Mango Dawn.


• Coca-Cola Europacific Partners (CCEP) is adding two new flavors to its Monster line-up to attract more consumers. Monster Reserve White Pineapple and Monster Reserve Watermelon are new flavors added to Monster's traditional energy drink range.


• Coca-Cola Hellenic Bottling Company agreed to acquire ESM Effervescent Sodas Management (ESM) from SICC Holding, a wholly-owned subsidiary of Ideal Holdings, a publicly-listed company in Greece.

By Region

• North America: North America is a key region in the global energy drinks market. The rising demand for healthy and convenient hydration solutions propels the energy drinks market as consumers increasingly add liquid enhancers to their water. Furthermore, clean-label claims like gluten-free, sugar-free, and organic are becoming influential among teenagers and young adults, who are the major target consumers of energy drinks, especially those engaged in sports activities. In the US, companies operating in the energy drinks market implement consumer-focused advertising strategies and expand their product lines with a broad range of energy drinks. They also utilize cross-promotional tactics, such as promoting their products through sports-related events and partnering with popular sports icons to endorse them.


• Europe: The European energy drink market is rapidly expanding due to consumers' growing demand for healthier beverage options. This growth can be attributed to factors such as the younger population's inclination towards energy drinks and the overall improvement in living standards. Moreover, the increase in health consciousness among consumers and greater awareness of the benefits of active lifestyles has led to a rise in demand for sugar-free and healthy beverages. This trend is further supported by the increasing prevalence of diseases associated with sedentary lifestyles. The growth of the energy drink market is also driven by promotional and advertising tactics, with major energy drink manufacturers investing heavily in advertising to increase the popularity of their brands and products.


• Asia-Pacific: The Asia Pacific region is one of the fastest-growing markets for energy drinks. Long and erratic working hours and the prevalence of social gatherings drive consumers toward consuming energy drinks. Furthermore, energy drinks made with natural ingredients and lower sugar content are becoming more popular and attracting health-conscious consumers' attention. For instance, brands that use natural ingredients extracted from coffee beans are expected to see growth in the region. The market is also projected to grow due to manufacturers' increased promotional and advertising strategies. However, strict government regulations in some countries may hinder the market's growth. The demand for functional beverages, particularly energy drinks, is rapidly increasing in China.


• Rest of the World: Energy drinks have gained popularity among millennials and Gen Z in South America, as they meet the needs of busy and hectic individuals, such as bachelors and hostelers. This has led to potential market growth in the region, with Brazil and Argentina being the fastest-growing markets for the beverage sector. The affordability of energy drinks has also contributed to their appeal in the South American market. While the overall beverage sector is declining, there is a growing demand for energy drinks and carbonated water, with consumers increasingly seeking less sweet and naturally derived products. As a result, the energy drink market is driven by the demand for sugar-free and reduced-sugar options.