Energy Drinks in South Africa

PROSPECTS

Improved penetration will support sales of energy drinks

Energy drinks is expected to continue expanding during the forecast period. The trend will be supported by a change in lifestyles, with manufacturers benefitting from a rising urbanisation rate and higher product awareness.

Reduced sugar energy drinks will gain in popularity

Intensified government campaigns and lobbying on obesity risks will continue to stimulate demand for reduced sugar energy drinks. From a manufacturing perspective, such a move will aim to mitigate the sugar tax implemented in 1 April 2018, which charges ZAR0.

Further segmentation expected as competition intensifies

Intensified competition within energy drinks will encourage manufacturers to target more of a niche across social classes. Such a move will focus on flavour and packaging innovations aimed at differentiating their products on retailers’ shelves.

COMPETITIVE LANDSCAPE

Demand for energy drinks on the rise despite health concerns

Demand for energy drinks continued to increase in 2018, with the number of manufacturers focusing on strategic partnerships with popular sporting events to create greater brand awareness. A noticeable example was Kingsley Beverages, which in February 2018 signed a partnership with EFC Hexagon, a wrestling championship claimed to have 21 million viewers in South Africa.

Red Bull retains leadership despite challenging conditions

Red Bull remained the leading brand of energy drinks in South Africa despite facing tougher competition. Its performance was mostly affected through off-trade, with lower disposable incomes having a detrimental, influencing consumers’ loyalty.

Smaller brands focus on innovation to gain share

Flavour innovations were increasingly used by smaller brands to gain ground. An example was 7 Stars energy drink, which released a ginger beer version in 2018.

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