Energy Drinks in Canada

2020 IMPACT

Energy drinks continue to be purchased for home consumption despite busy lifestyles being restricted

Energy drinks were one of the soft drinks that experienced panic-buying to some extent at the outbreak of COVID-19 in Canada in Q1 of 2020. Energy drinks had been gaining popularity pre-pandemic because of promotional activities by major players.

Health advice and confusion with sports drinks reduces potential for category

On-trade sales of energy drinks will strongly decrease in 2020 as foodservice and entertainment venues experienced temporary closures as well as following restrictions to help reduce the spread of COVID-19. However, on-trade sales maintain only a small share of energy drinks, thus total volume sales of the category will continue to grow.

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: Coca-Cola, Red Bull Canada, and PepsiCo Beverages Canada with Coca-Cola benefitting from its brand Monster Energy which is the leading brand. At the end of the review period, the intense competitive landscape encouraged players to offer attractive promotions, leading to declining unit prices.

RECOVERY AND OPPORTUNITIES

Energy drinks set to reduce sugar, caffeine and artificial sweetener content as consumers become increasingly health conscious

Over the forecast period, concerns of overconsumption of caffeine and sugar will become more widespread and will encourage manufacturers to develop products with less caffeine, less sugar, and natural ingredients. Interest in health and wellness is set to be a big trend over the forecast, given the impact of COVID-19 in 2020 with an increasing number of consumers expected to purchase brands based on health benefits over price.

Changes in regulations encouraged by health organisations set to spark innovations in new product development

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.

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.