Energy Drinks in Canada

PROSPECTS

Reduced sugar energy drinks are successfully generating demand

Canadians’ hectic lifestyles are fuelling continued growth in energy drinks, but concerns over their high sugar level has shifted consumer preference towards products which claim to contain less sugar. More specifically, Monster Energy and Rockstar, two of the leading brands, are investing a great deal in their low-calorie SKUs to benefit from this shift in consumer preference.

The category remains dynamic in terms of new product developments

The high level of competition inspired many new product launches during 2017 and 2018. Monster Energy introduced a smaller can format (270ml) in its effort to make the product more premium and to compete with Red Bull 250ml.

Upcoming regulatory changes are expected to impact sales

Regulatory changes to constrain calorie and sugar intake are set to impact sales of energy drinks. During 2018, some Quebec municipalities adopted a resolution prohibiting the sale of energy drinks within their institutions, and Montreal is going to follow suit and ban various categories of soft drinks from public places such as swimming pools, arenas, etc.

COMPETITIVE LANDSCAPE

The price war between the three main suppliers reduces unit prices

The three main players in energy drinks, Red Bull Canada, Coca-Cola and PepsiCo Beverages Canada, continued to use promotional activities in the retail environment to try and win the competition, which resulted in a decline in the average unit price in 2018. Even Red Bull, which is a premium brand, had to follow this strategy, because of the wide range of discounts made by its close competitors, especially Rockstar.

Clean and natural energy remains the focus for smaller brands

With the strong dominance of the three multinationals in the Canadian market, smaller brands are trying to target niche segments by positioning themselves as a source of clean and natural energy. Amongst these offerings, the GURU brand has a unique position, as it has been able to strengthen its position as an organic drink, and has taken a stronghold in areas such as Quebec, as well as expanding its distribution across Canada.

Imported brands expand their presence in Canada

Whilst domestic players are bracing themselves for competition, imported brands are also making inroads. 28 Black from Luxembourg-based Splendid Drinks has been expanding its distribution in Canada since 2015, and Epuri, a brand from Austria, started distribution through Burgundy Energy, mainly in Montreal, in early 2016.

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