October 2008 Issue

European convenience retailers are well placed to exploit the growth in energy drinks, according to a new report from Business Insight.

The report, Innovation in Sports and Energy Food and Drinks, claims that the energy drinks market continues to offer significant growth opportunity and will be further boosted by the trend to natural products.

The latest product launches have shifted from stimulant, instant boost energy drinks, such as Red Bull, to drinks that offer a more sustainable, longer lasting energy lift obtained through the use of natural ingredients.

Business Insight says this trend will help fuel a compound annual growth rate of 4.5 percent in Europe up until 2011 and give a total market value of $5 billion.

Within the region, Italy is forecast to record the fastest growth rate at 10 percent, followed by Sweden at 7 percent. The U.K. market is predicted to grow by 4.2 percent.

U.K. convenience retailers have a 33 percent share of the total take-home soft drinks market, according to Britvic’s Soft Drinks Report 2008, and they are star performers.

In the year to 29 December 2007, according to Nielsen, soft drink sales through convenience stores increased by 6 percent versus 2 percent growth at out-of-town retailers and flat sales on the high street.

Business Insight’s Productscan service, which monitors all sports and energy drinks launched globally during 2007, found that 7 percent of them claimed to be natural and 12 percent claimed to be high in vitamins. These products contain ingredients such as oats and ginseng and more novel “superfruits” such as acai and gogi berries.

“By formulating drinks with such ingredients, manufacturers are not only able to make a natural claim; there is also the added benefit of positioning the product as an everyday soft drink, targeted at consumers looking for vitality and wellness benefits,” said Jessica Sadler, Business Insight’s head of publishing, consumer goods.

Sadler pointed to trends in the U.S. market. Sports drinks like Pepsico’s Gatorade, for example, are consumed for general well-being and hydration, not just for sporting activities. Sadler said manufacturers in Europe should tap into this trend and cited one recent European example: Danone Waters’ launch of Volvic Revive in the U.K. in March 2007.

Volvic Revive is a flavored water formulated with stimulating plant extracts and no added sugar. It meets consumer needs for hydration due to its association with water, as well as delivering an energy boost through the incorporation of natural ingredients such as guarana.

Sadler added that natural will continue to grow in importance in food and drinks, as consumers become increasingly aware of other issues such as food safety and the benefits of being additive-free. “Energy drinks manufacturers are developing brands to target this opportunity, appeal to consumer concern and be healthy,” she said.

“However, as the Danone example highlights, this product differentiation and movement into more mainstream markets means there will be further competition from other soft drink manufacturers as they attempt to gain share of this growing market.”

Further examples of innovative, natural energy drinks include:

• Actual is a whey-based drink launched in Russia by Kombinat Molochnykh Produktov Edelveis-M. The company claims the drink is a natural source of energy and is offered in orange/mango, apple/pear and peach/maracuja variants.
• Loka Apelsin Havtorn Flavoured Bottled Water was launched in Sweden by Spendrups Bryggeri. The product claims to be aimed at the growing market for natural fruit-based energy drinks, especially the teenage consumer segment. It is a sea buckthorn (Nordic passionfruit) flavored beverage.
• Venga Functional Infusions were launched in Germany by Beverage Innovations. The energy variety, Energize, is claimed to be made with energy-red apple, dragonfruit, sea buckthorn and yerba mate tea. The drinks are said to be free from preservatives, artificial colours, flavors and high fructose corn syrup (HFCS).
• Ocean Spray Cranergy Energy Juice Drink was launched in the United States by Ocean Spray. The drinks are said to contain real fruit juice, five B-vitamins, vitamin C, Splenda and green tea extract.
• Odwalla Nutritional Serious Energy Natural Tropical Juice Drink was launched in the United States by Coca-Cola. The company claims Odwalla Nutritional Serious Energy is “a new energy drink specially formulated to refuel and renew the body and soul.” The Natural Tropical Juice Drink, which contains vitamins B and C, 200mg yerba mate extract and 100mg green tea extract, is touted as having “a great tasting tropical fruit juice blend that combines juices — including pineapple, mango, guava and passion fruit — to refuel and renew your energy.”
• Naked Juice, an all-natural energy juice smoothie was launched in the U.K. by Naked Juice Co. The drink is claimed be an all-natural energy 100 percent juice smoothie.
• Shift, a natural energy drink, was launched in the UK by Stonyfield Farm. They are described as drinks that give you good, lasting energy and real nutrition, instead of that fleeting, unhealthy caffeine high, and are said to contain proteins, vitamin B3 and B6, acai and ginseng and are certified organic.