Energy Drinks in the United Arab Emirates

PROSPECTS

Price hikes and rising health awareness curb demand for energy drinks

As was the case with sports drinks, steep declines in energy drinks off-trade volume and current value sales in 2019 were attributable to a combination of rising health-consciousness among consumers and dramatic price hikes imposed over 2017-2018 following the introduction of excise tax of 100% and VAT of 5%. The same factors will continue to have a negative impact on the category’s performance over the forecast period, with off-trade volume and current value sales projected to decline consistently.

Health-oriented products continue to gain popularity

Supermarket imports featuring claims such as “no taurine”, “reduced sugar” and “no caffeine” on packaging labels continued to gain ground in energy drinks in 2019. In particular, these products proved increasingly attractive to younger urban consumers seeking healthier alternatives to traditional energy drinks brands such as Red Bull and Monster.

Brand differentiation efforts likely to increase as competition intensifies

Competition in energy drinks will continue to intensify over the forecast period as the consumer base for the category shrinks. Price looks set to remain a key point of differentiation, as consumers have become more inclined to trade down to cheaper brands since the excise tax of 100% was imposed in late 2017, and this trend has recently become more pronounced due to worsening economic indicators.

COMPETITIVE LANDSCAPE

Red Bull remains the leading brand despite declining sales

Red Bull remained the top brand in energy drinks in off-trade value and volume sales terms in 2019. The brand enjoys a strong early mover advantage, and is synonymous with this category in the minds of many consumers.

Competitive pricing underpins volume share gains for Burn and Power Gold

Burn and Power Gold recorded the strongest off-trade volume share gains in energy drinks in 2019. While gains for both were partly driven by marketing activities and improvements in distribution, they were primarily due to the fact that these brands retail at lower price points than many competitors.

Health and wellness expected to remain a focal point for innovation

New product development activity in energy drinks over the forecast period is likely to be focused on addressing consumer demands for healthier choices. For example, more companies are expected to introduce products that are low in or free from sugar, taurine and caffeine, and instead use naturally healthy ingredients like ginseng, acai and guarana to achieve the stimulant effect traditionally associated with energy drinks.

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