Energy Drinks in South Africa

PROSPECTS

Entry of smaller brands at lower price point supports declining unit price

Energy drinks continued to record a strong performance in 2019, supported by changing lifestyles, rising urbanisation and greater product awareness amongst the target audience of millennials. Due to its higher price point compared to sports drinks, for instance, social media is therefore becoming a key platform to reach this demographic.

On-trade sales offer higher profit margins for energy drinks producers

Demand for energy drinks through on-trade continued to grow in South Africa, as players looked to weather the increasing competition through off-trade by expanding their distribution. Leading energy drinks brand Red Bull continues to dominate this differentiation strategy due to high consumer recognition.

Greater scrutiny for energy drinks likely to lead to slower demand

Energy drinks are increasingly becoming a lifestyle product, particularly as a greater proportion of the population moves towards urban areas, and are therefore viewed as a suitable product that is complementary to busy lifestyles, offering an energy boost when needed. However, intensified government campaigns and lobbying on obesity risks will continue to stimulate demand for reduced sugar energy drinks, while players are being forced to address this issue following the implementation of the sugar tax in 2018.

COMPETITIVE LANDSCAPE

New release for Coca-Cola could further strengthen its leadership

Coca-Cola South Africa (Pty) Ltd strengthened its leadership of energy drinks in 2019, with its brand Power Play continuing to gain value share, while also offering Monster Energy, and their respective reduced sugar variants, Power Play Sugar-Free and Monster Energy Zero. While the latter held marginal value share overall, they continued to record strong growth in 2019.

Smaller players to gain traction with offer of lower priced energy drinks

Smaller players continued to gain traction within energy drinks as consumers gravitated towards more affordable products. Therefore, brands such as Score from Chill Beverages International (Pty) Ltd and the newly launched Refreshh will continue to attract consumers with lower disposable incomes.

Social media engagement important strategy to attract target audience

Increased social media engagement and influencer marketing has become a key strategy with which to promote energy drinks in South Africa, targeting the busy millennial demographic. Chill Beverages International released its “Double shot guarana” promotional campaign to drive the message of its brand Score being complementary to a high impact lifestyle, using a number of well-known soccer stars.

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