An energized category

In the U.S. retail market, sales of energy and sports drinks reached $25 billion in 2016 after rising at an annual rate of 17% over the preceding half decade, according to Packaged Facts, Rockville, Md. Consumers are seeking beverages with functional properties along with novel and healthier-seeming alternatives to carbonated soft drinks, according to Packaged Facts.

“Many consumers perceive sports drinks as healthier than sodas and other carbonated beverages due to their association with sports and physical activity in general,” said David Sprinkle, research director for Packaged Facts. “Although originally designed for athletes, these products soon garnered mainstream sales as anytime drinks, particularly among teen and young adult males. The novel flavor profile of energy and sports drinks also appealed to consumers seeking a change from sodas.”

Moody’s Investors Service, New York, said alternative beverages were taking away market share from carbonated soft drinks. Such beverages include ready-to-drink coffee and tea, energy drinks, organic juices, enhanced waters and functional beverages. Both the Coca-Cola Co. and PepsiCo were better positioned to grow their alternative beverage footprints than the Dr Pepper Snapple Group, Plano, Texas, because of their large scale, high cash balances and strong free cash flow, according to Moody’s.

Bai Brands
Dr. Pepper Snapple placed its faith in the recently acquired Bai brand, which features sparkling drinks, teas and waters with antioxidants.
 

Dr. Pepper Snapple placed its faith in the recently acquired Bai brand, which features sparkling drinks, teas and waters with antioxidants. The company wants Bai to become the leader in the healthy beverage segment, said Michael Simon, chief marketing officer for Bai brands, on March 8 at the UBS Global Consumer & Retail Conference in Boston.

“The way I would describe Bai, simply put, it’s a line of great-tasting beverages that also includes good-for-you ingredients,” he said.