Energy with a healthy halo

by Keith Nunes
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With Monster and Red Bull firmly established as leaders in the energy drink category, a race is under way by some companies to establish their products as healthier alternatives. Caffeine remains the segment’s mainstay energy ingredient, but green tea, yerba mate and green coffee beans are emerging as ingredients of differentiation.

On March 29, Beverage Digest published its annual roundup of the beverage industry in 2013. In carbonated soft drinks, the industry’s largest category, the market declined 1.6% in 2013 compared with growth of 1% in 2012, according to the newsletter.

The decline was attributed to worsening C.S.D. performance. In 2013, the C.S.D. category was down 3%. Beverage Digest includes energy beverages in the C.S.D. category and that segment grew 5% during the year.

“Without energy drinks, the C.S.D. category was down 3.3%,” Beverage Digest said.

Such energy drink companies as Monster, Red Bull and Rockstar each posted performance stronger than the overall industry and gained or held share during the year, according to Beverage Digest.

In its annual recap of 2013 liquid refreshment beverage trends, the Beverage Marketing Corp., New York, said the market was essentially unchanged in size in 2013. The flatness of the market followed three years of growth.

The B.M.C. said financial factors, such as cuts to the Supplemental Nutrition Assistance Program and the resumption of the payroll tax early in the year, affected consumers’ purchasing power, while disruptive weather events also hindered the market’s performance. But despite the flatness, niche products continued to outperform traditional mass market categories.

In fact, the R.-T.-D. coffee segment moved forward faster than all other segments with a 6.2% volume increase in 2013, according to the B.M.C. Nonetheless, the segment accounted for a relatively small share of total liquid refreshment beverage volume. Energy drinks advanced by 5.5%, but also remained fairly modest in size.

“Beverages endured a transitional year in 2013,” said Michael C. Bellas, chairman and chief executive officer of the B.M.C. “Even in the face of economic challenges, healthier products thrived and even formerly floundering segments like R.-T.-D. coffee demonstrated their potential. Certainly the state of the economy is crucial for overall beverage category success, but so are products that connect with the evolving American consumer.”

But consumers are concerned

With such a backdrop, it becomes clear why many companies are trying to establish a foothold in the energy beverage category, but as the market research firm Mintel International noted this past January consumers are concerned about the safety of energy beverages.

Research conducted by Mintel found that 59% of U.S. consumers surveyed and who are energy drink and energy shot users said they worry about the safety of energy drinks.

“Energy drinks and shots faced significant scrutiny following lawsuits and proposed legislation that began in 2012,” said Jenny Zegler, global food and drink analyst for Mintel. “The media attention publicly challenged the safety and health effects of this pick-me-up category.”

When it came to reducing the number of energy drinks consumed, health and cost were the leading reasons, according to Mintel. Thirty-nine per cent of Americans said they are not good for their health, and 35% said they had heard negative information about their health effects. Ms. Zegler said manufacturers must address the health issues in order to retain current users.

When companies market products to energy drinkers, men and women should be viewed differently, according to the research company. More than three-quarters of women aged 18-34 who drink energy beverages agreed that companies should include recommended daily consumption limits on the packaging of their energy drinks versus 71% of men.

Healthy energy roundup

The Starbucks Coffee Co. was one of the first large companies to offer an energy beverage positioned as a healthier option. In February, Starbucks introduced an addition to the Refreshers line — a blueberry acai variety. Available in supermarkets and Starbucks stores nationwide, Refreshers feature fruit juice, B vitamins, ginseng and caffeine from green coffee bean extract.

The Campbell Soup Co., Camden, N.J., also has entered the energy beverage category with its V8 Vfusion Energy products. As an extension to the company’s V8 brand, each variety in the line features a serving of fruit and vegetables, and its source of energy is green tea. In an effort to add to the product’s healthy halo, the company also is marketing the fact each product has no artificial ingredients and no added sugar. An 8-oz can has 50 calories.

The Vemma Nutrition Co., Tempe, Ariz., for example, launched Vemma Verve Mojoe on April 1. The company is positioning the coffee-based functional beverage as a healthy energy drink. The product has 60 calories, 1.5 grams of fat and 80 mg of caffeine per serving. The company said the product’s health aspects come from the additional nutrition added to each beverage, including vitamins, minerals and green tea. The coconut water company Vita Coco, New York, has its own entry into the category with Coco Café Latte, an R.-T.-D. coffee beverage that features coconut water, milk and a shot of espresso.

Hiball Inc., San Francisco, has taken a different tack with carbonated energy waters. The company markets two varieties of Hiball Sparkling Energy Water: conventional and organic. The conventional products contain no sweeteners and the energy source is a combination of caffeine, guarana and ginseng.
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