Despite slowing growth and fairly persistent negative news around health concerns, Energy Drinks have an opportunity to maintain their momentum in 2014. Users of this category tend to be young and very highly engaged, offering the opportunity to stay relevant as these customers age. In addition, there does not seem to be a relationship between wellness attitudes and Energy Drink usage – so consumers who are “getting healthy” are still promising targets.
On the down side, though, GfK research shows that a high percentage of consumers (73% across category) have passive or non-existent relationships with Energy Drink brands. So how can this smart, “fueled-up” category create stronger ties to more consumers?
One interesting source of leverage may be the level of engagement Energy Drink users demonstrate across several key touchpoints. In GfK’s Brand Benchmark study, we found that that Energy Drink users in the US are:
- 2 times more likely to visit a brand Web site, compared to users of other beverage categories (beer, carbonated soft drinks and water);
- 2 – 3 times more likely to share positive word of mouth compared to users of other beverage categories
- 3 times more likely to see online ads/videos
- 4 times more likely to be on a social network
We believe that Millennials need to see a consistent presence in social media and online generally – touchpoints where we see Energy Drinkers very engaged. We expect these online & social habits will stay with this core group as they age, suggesting a strong communications platform to keep them involved and interested in the category.
The user demographics are also positive. It’s no surprise that the customer base skews young and male; but GfK MRI’s Survey of the American Consumer also shows how changes in lifestage may impact category usage. Men 18-34 are 124% more likely than the general population to have had an Energy Drink in the last 30 days, while Millennials are 74% more likely. Consumers with children over-index, as well — suggesting that, as core customers age, they may not leave the category. Closely tracking how current Energy Drinkers are changing over time, and meeting their developing needs, will be crucial to sustaining this customer base.
Leveraging this engagement and continuing to grow the category will require more innovation then seen to date. There is good news, too, as we look at consumer trends related to willingness to try new things. Compared to non-users, Energy Drinkers tend to agree substantially more with the following statements from GfK Roper Reports® Worldwide (US 2013):
- I am always looking for novelty and fun, even in everyday products (70%, vs. 43% average)
- I’m always on the lookout for new products and services (73% vs. 44%)
Finally, as strong as Energy Drinks are in certain demos, there is ample room for growth; so Innovation should also be aimed at expanding the category and, in fact, creating relationships with consumers. For some individual brands, as many as 83% of consumers claimed to have no substantive relationship with the category, and even the market leading brands show this lack of relationship at 63%.
Building these relationships is important not only for growth, but also from a defensive position. Energy Drink manufacturers should consider functional beverages as an expansion opportunity, for example. One of the few consumer categories with which Energy Drinks under-index is those who engage in cardio activities; whether it’s bicycling, yoga, pilates, walking, or Zumba. It’s likely many regular cardio exercisers feel they already have the energy they need; so a product that better fits their needs, lifestyle and attitudes could help expand the core customer base.
The Energy Drink category is in a strong position for the future. While we see CSD declining year on year, Energy Drinks continue to grow. Given the category’s young, highly engaged customer base – a group open to innovation and still largely “uncommitted” when it comes to brand relationships — there is ample opportunity for continued success in this category.
Don Simons is Managing Director, Consumer. For more information, please contact him at Don.Simons@gfk.com.