The contested future of the energy drinks market
With worldwide sales generating revenues of no less than 38.2 billion euros in 2015, the energy drinks market is doing quite well. In fact, according to Euromonitor International, things will only improve in the near future. Euromonitor International predicts a worldwide growth in the revenue of energy drinks of 15.2 billion euros, which will be achieved in 2020.
The question, however, is whether this prediction is plausible. There are significant threats to the market’s expansion, which is being shaped by governmental restrictions in an increasing number of countries. This causes tension and an almost unpredictable future for energy drinks. It is remarkable that a large part of the expected growth is in China. In China, the most spectacular rise is expected, with the doubling of the national revenue from 6 billion euros to a staggering 12.4 billion euros in 2020.
In addition, the expected growth is based on the development of an entirely new group of users: older consumers. Howard Telford, senior beverages analyst at Euromonitor International, says: "An increasing number of older consumers bought increasingly larger quantities of the products. Manufacturers of energy drinks and the rest of the functional drinks are becoming increasingly interested in reaching these older consumers. They see new flavours and ingredients as a way to interest these new consumers in this category.”
However, not only older consumers will contribute to the potential growth. We are seeing that many brands are positioning themselves differently. They are positioning themselves as “lifestyle drinks for Millennials.” With this, energy drinks are trying to remain appealing to the “old, trusted consumers,” the older consumers and the consumers who are looking for something new or healthier. Additionally, there is the innovative combination between energy drinks and health trends, which seems to be working out positively for the energy drinks. The energy function of drinks with a healthy image resonates with consumers across the globe.
The question that is on everyone’s mind, however, is what kind of role the growth of government restrictions will have on this success story. In China, as the country that constitutes the largest potential growth for the energy drinks market, there is an increasing threat of imposed government measures. In Latvia and Lithuania, measures have already been taken. Here, it has recently become illegal to sell energy drinks to consumers below the age of 18. There are also heavy restrictions on the marketing of energy drinks. These are not the only countries that have sought to combat the use of energy drinks. In the Netherlands and the United Kingdom, the drinks are now being sold with warning texts. These texts advise children below the age of 16 and pregnant women not to consume the drinks.
Will these measures have negative consequences for the potential growth of the energy drinks market? Perhaps they will work counterproductively and make energy drinks more interesting to young consumers. It could go both ways.