As sports nutrition continues its push to increase its appeal beyond the bodybuilders and elite athletes that long dominated sales, companies are increasingly eyeing the most mainstream of the sports foods categories: sports and energy drinks. Representing a market opportunity of over US$50 billion in retail value sales in 2014, the category has an obvious appeal. However, with so much of the space occupied by global packaged foods and soft drinks titans, gaining an appreciable share of the sports and energy drinks market may prove to be a herculean task for even sports nutrition’s largest companies.
A massive opportunity
Within the pantheon of performance-enhancing “sports foods and drinks”, sports and energy drinks – which Euromonitor International tracks in the soft drinks industry – are more recognizable and widely available than the more mass-friendly energy and nutrition bars and far more so than sports nutrition products like protein powder and ready-to-drink/RTD’s (tracked under protein products) or creatine, amino acids or combination pre-workout supplements (tracked under non-protein products). The drinks are fairly ubiquitous across market types with emerging markets accounting for just over one-third of combined global off-trade retail value sales, which grew by 5% to US$50.1 billion in 2014.
The categories’ strong appeal to basic consumer desires has helped establish their mainstream appeal. Energy drink brands have cultivated massive growth by expanding their positioning from edgy performance boosters to basic functional drinks. The need for energy and focus is fairly universal and highly praised by consumers from all walks of life. As for sports drinks, years of extensive advertising by brands like PepsiCo’s Gatorade, Coca-Cola’s Powerade and Suntory Holdings Ltd’s Lucozade, even the least enthusiastic exercisers are aware of the important role of hydration in health and fitness. According to a late 2014 survey in the US by the trade group Council for Responsible Nutrition, “drinking enough water” was the number one health & wellness habit concerning Americans in 2015. With combined sports and energy drink sales expected to grow by nearly 30% to US$64.1 billion in 2019, consumer interest is not expected to abate anytime soon.
Sales (US$, Off-Trade RSP) and Growth of Sports and Energy Drinks and Sports Nutrition, 2009-2014
Source: Euromonitor International
Room to play for both protein and non-protein products
While energy and hydration concerns have long been of paramount importance to sports nutrition’s core user base of elite athletes and body builders, many of the products made available to date are sold in bulk powder formats that do not appeal to more casual users, including recreational athletes and fitness-focus health & wellness consumers. However, as more of these casual users enter the sports nutrition category, producers of convenience formats – most notably RTD’s – are increasingly incorporating claims around energy and endurance. Major producers have used both the protein and non-protein categories to target energy drink users, in particular, by positioning their products as more healthful versions of sugary, chemical-packed energy drinks. While companies like Glanbia Plc’s Optimum Nutrition and Vital Pharmaceuticals Inc’s VPX Bang have focused on the more athletically inclined (Glanbia launched an RTD version of its popular non-protein product brand Amino Energy in 2014, while VPX Bang is a hybrid energy drink/pre-workout supplement containing caffeine, creatine and branched-chain amino acids), traditional sports nutrition heavyweights are also targeting more everyday consumers with protein RTD’s (such as GlaxoSmithKline Plc’s MaxiNutrition Protein Milk) that present protein as an endurance booster. For their part, sports and energy drink producers have also begun experimenting with sports nutrition products, as well. Gatorade's G3 recovery series features a protein RTD and Monster Beverage Corp launched the crossover energy drink/protein RTD Muscle Monster line in mid-2014. Given protein’s global status as a healthy ingredient superstar, its sustained energy-boosting capabilities could prove to be a powerful marketing message moving forward.
Though sports drinks are not foreign to the portfolios of many sports nutrition companies, particularly those that have traditionally focused on endurance sports (including Italy’s Enervit SpA and the UK’s SiS (Science in Sport) Ltd to name a few), producers could do more to incorporate other popular non-protein product ingredients into new launches. While sports drinks are generally formulated around electrolytes and carbohydrates to provide better hydration uptake and sustained energy, innovative sports nutrition companies are beginning to expand the formulations to include popular intra-workout ingredients like branched-chain amino acids (BCAA’s). As sports drinks are designed to be consumed during exhaustive exercise, the inclusion of an ingredient like BCAA’s, which has strong clinical backing as a muscle breakdown preventer, could provide added value to the sports drinks category. In general, the RTD and shot formats have been underexploited in non-protein products and could open the category to mass consumers. Going a step beyond products like the Optimum Nutrition’s Amino Energy RTD mentioned above, Australian brand Thorzt markets an electrolyte/carbohydrate/BCAA RTD positioned as a superior rehydration product. The Thorzt drinks are particularly interesting in that their marketing targets builders, minors and other outdoor labourers, as opposed to the traditional athlete demographic. BCAA’s have seen a strong uptick in interest among sports nutrition users recently, which could lead to their inclusion in more hydration- and endurance-focused launches in the near future.
The opportunities are plentiful, but so are challenges
The sports and energy drinks categories’ consolidation poses a significant hurdle to expansion. In 2014, the top five producers (PepsiCo Inc, The Coca-Cola Co, Red Bull GmbH, Monster Beverage Corp and TC Pharmaceutical Industry Co Ltd) accounted for 67% of all global off-trade RSP sales. Not only do the companies have the massive cash flows to flood local markets with advertising, their extensive and industry-leading production and distribution infrastructure gives them go-to-market capabilities in the drinks space that dwarfs even the largest sports nutrition companies. While the smaller sports nutrition producers may be able to compete on advanced formulation expertise and authenticity as health-and-performance-focused companies, they will need to secure shelf space in major mass retailing channels nation-wide (something few sports nutrition brands have accomplished with their current portfolios) to make an impact in the much larger sports and energy drinks category.
Forecasted Sales (US$, RSP) of Sports Nutrition Products by Type, 2014-2019
Source: Euromonitor International
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