Energy Drinks in Canada

PROSPECTS

Stronger demand for energy drinks driven by busy lifestyles and average unit price drop

Energy drinks in Canada continued to record strong off-trade volume growth due to declining unit prices, as a result of promotional activities by major players. Energy drinks remain an impulse purchase, and are particularly popular amongst millennials as they tend to be used for an energy boost during the day, or whilst travelling.

Health concerns encourage development and greater use of natural ingredients

While Canadians’ busy lifestyles are supporting the strong growth recorded by energy drinks in 2019, a trend that is predicted to continue into the forecast period, concerns over the potential health risks of overconsumption of caffeine and sugar has encouraged producers to develop products with less sugar content or by using natural ingredients. While several leading brands such as Monster Energy and Rockstar have heavily invested in developing low-calorie variants to address this shift in consumer preference, concerns over artificial sweeteners such as aspartame is leading to further exploration of the use of natural sweeteners such as stevia, or organic ingredients as offered by dynamic brand GURU.

Changes in regulations encouraged by health organisations could pose barrier to stronger sales moving forward

While energy drinks is predicted to continue to perform well over the forecast period, any new regulations that could emerge in the future such as the introduction of a sugar tax on high sugar content soft drinks, has the potential to drive unit prices of the category back up. In addition, the negative perception that energy drinks continues to hold amongst some health organisations could lead to further restrictions in its distribution following the 2018 decision by some Quebec municipalities to prohibit the sale of energy drinks within their institutions, with Montreal adopting a similar stance.

COMPETITIVE LANDSCAPE

Dominance of three main players leads to price wars and unit price decline

Energy drinks in Canada continued to be dominated by three main players in Red Bull Canada Ltd, Coca-Cola Ltd and PepsiCo Beverages Canada with Coca-Cola’s Monster Energy continuing to gain share in 2019. The intensive competitive landscape has encouraged players to offer attractive promotions towards the end of the review period, leading to declining unit prices.

Organic brand GURU continues to gain strong share due to health positioning

GURU Beverage Inc continued to record the strongest performance in energy drinks in 2019, gaining further share and recording double-digit off-trade volume and value growth. GURU has managed to capitalise on the rising health and wellness trend in the country in addition to addressing consumers’ concerns over high sugar content and artificial ingredients, due to its organic positioning.

Coca-Cola could cause further disruption over forecast period

Following the successful roll-out of Coke Plus Coffee in markets such as Australia, a lunch in the US and Canada seems likely in the near future, particularly as Coca-Cola continued to gain share at the end of the review period with Monster Energy. This product mixes traditional Coca-Cola with additional caffeine content, which has been specifically created to release a strong coffee aroma upon opening, although it claims that its caffeine content is not as high as a regular cup of coffee.

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