Energy Drinks in the US

2020 IMPACT

Reduction in consumption occasions hampers growth

After a year of double-digit total volume growth in 2019, energy drinks has turned to decline in 2020, due to COVID-19. Although the on-trade channel is small, it has seen a significant volume decline in this year due to temporary outlet closures and consumer caution about visiting busy venues.

Sales of Bang threatened by its maturing market

Over the period 2017-2019, the Bang brand from Vital Pharmaceuticals experienced success rarely seen by any other food or drinks brand. Within those few years Bang was able to attain sales in excess of USD1.

On-trade closures lead brands to shift their focus

The loss of on-trade consumption occasions has not had as much of an effect on energy drinks as on many other soft drinks categories, due to the limited distribution of such products in this channel. Whilst the rate of on-trade decline the category has incurred in 2020 is similar to all other soft drinks categories, it is a relatively small loss due to the comparative magnitude of the off-trade channel.

RECOVERY AND OPPORTUNITIES

On-trade sales not expected to make a full recovery in the forecast period

After seeing a slight total volume decline due to COVID-19 in 2020, energy drinks is set to rebound to growth in 2021, with a continued although slowing rate of growth expected for the rest of the forecast period. This return to growth will be due to a return to on-trade volume growth and higher off-trade volume growth.

Energy drinks will need to rethink distribution and packaging mix moving forward

To some extent, convenience stores and forecourt retailers are set to see a bounce back in their shares of distribution moving into the forecast period, as consumers gradually return to impulse purchases in such outlets. However, as concerns over the pandemic are expected to continue into 2021 and maybe even 2022, consumer behaviour will be slow to adapt, and supermarkets and hypermarkets are still expected to account for a higher share of sales than before the pandemic.

Sugar is not always considered a drawback, and more niche launches could be seen

One of the most sought-after features in functional beverages is energy, which has led to the success of energy drinks. It also largely insulates it from concerns over sugar content and artificial ingredients.