Energy Drinks in South Africa

2020 IMPACT

On-trade closures impacts energy drinks heavily in 2020, but off-trade sales record strong growth

On-trade consumption of energy drinks was significantly impacted by lockdown, which saw bars and clubs, popular outlets for consumption of energy drinks, close entirely in spring and face restrictions on customer numbers thereafter. Social distancing measures coupled with constraints on household expenditure also had a notable impact on on-trade sales.

High visibility and new product development enable Coca-Cola to maintain its lead in energy drinks

Coca-Cola South Africa (Pty) Ltd strengthened its leadership of energy drinks in current value terms in 2020, thanks to its popular brands Power Play and Monster Energy and their respective reduced sugar variants, Power Play Sugar-Free and Monster Energy Zero. The international player also recently launched Coca-Cola Energy, which contains caffeine from naturally derived sources, in addition to guarana extracts and B vitamins.

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. Brands such as Reboost from SoftBev (Pty) Ltd, Dragon from Kingsley Beverages Pty Ltd and Score from Chill Beverages International (Pty) Ltd all continued to attract consumers.

RECOVERY AND OPPORTUNITIES

Complex factors will lead to an uncertain landscape in energy drinks across the forecast period

Lower-priced brands that offer value for money and private label are expected to outperform more expensive brands of energy drinks as consumers continue to struggle financially across the forecast period. Unemployment, a recently introduced sugar tax and a potential delay in a full-scale vaccine roll-out are all expected to play a role in the performance of this category.

Changes in consumer behaviour pose challenges for on-trade growth in energy drinks

On-trade sales are expected to recover slower than off-trade sales, as subsequent coronavirus waves are likely to be experienced in 2021 and beyond, and consumers will continue to follow social distancing restrictions while having less disposable income to spend on dining out. In the short to medium term, gym usage is also expected to be less common than pre-pandemic levels as consumers continue to socially distance.

Greater scrutiny for energy drinks likely to lead to increased activity in reduced energy drinks

As more South Africans move into urban areas, energy drinks are increasingly becoming a lifestyle product, and therefore viewed as 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, and players will be forced to address this issue following the implementation of the sugar tax in 2018.