China Food

How to tell the story of the 45 billion energy beverage market?

there is no doubt that energy drinks will become the next hot spot in the industry. But where is the next “Red Bull”?

Text: Kelly Wang   

Source: foodaily daily food (ID: foodaily)

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On November 1, Coca Cola announced that it had acquired all the equity of bodyarmor, a sports beverage manufacturer. It is reported that this is Coca Cola’s complete acquisition after acquiring 15% of bodyarmor’s shares at a discounted price in 2018. This time, it will use US $5.6 billion in cash to win the remaining shares, or it wants to strengthen its competition with Pepsi in the field of sports drinks.
At the same time, Yuanqi forest quickly launched its second energy drink brand, the great devil, shortly after the aliens. Even Jianlibao, a classic domestic sports drink, broke the silence in the past and joined hands with China Food Fermentation Industry Research Institute to launch a new generation of “Oriental magic water” Chaodaneng… I have to admit that such frequent market actions are a sign that both international and domestic beverage giants are strongly occupying the energy beverage market.
However, when you think about it, you will find clues: why is the market so big, but few people around you consume energy drinks? Why do consumers still think of “Red Bull” when they mention “energy drinks”? Is the energy beverage market not big enough, or is the product not innovative enough? What will be the development prospect of energy drinks in the future?
The energy beverage market of China and the United States began with red bull,
Why is the growth rate of the Chinese market much lower than that of the United States?
The development of energy drinks can be traced back to the 1920s. In 1927, Lucozade appeared in Britain as the first generation of energy drinks. Red bull was born in Thailand in 1966, entered the Chinese market in 1995, and entered the American market in 1997. Since then, various energy drinks have come out one after another.
Source: pinterest
In terms of development time, China is even two years earlier than the United States, but the explosive power and growth rate of the industry growth are far lower than that of the United States. Why did the Chinese market start to prepare for continuous expansion when the new round of giant M & A has been completed in the American market? There are three reasons:
(1) Consumption environment. At the end of the 20th century and the beginning of the 21st century, the urbanization rate of the United States had reached a high level, the pace of urban residents’ life was fast, and there was a great demand for “energy supplement”; at that time, China had just entered the era of comprehensive market economy, and the urbanization level was low.
(2) Consumption capacity. At the end of the 20th century, driven by new technology and the Internet, the U.S. economy continued to grow at a high speed, and the per capita disposable income reached US $22304 in 1998 (the per capita disposable income of Chinese urban residents was only 5425 yuan in the same period). Residents’ consumption level and Consumption Willingness were at a high level, and the demand for beverages, especially non essential energy drinks, began to rise.
(3) Category selection. In “two music” Under the long-term cultivation of such giants, the U.S. soft drink industry has become more mature. At the end of the 1990s, it was in a stage where carbonated drinks were booming and declining, fruit juice sales were difficult to grow, and the diversified demand for soft drinks began to decline. At this time, energy drinks became the way for many companies to transform and seek new growth. A large number of enterprises flocked to it in just a few years At that time, a large number of categories in China’s soft drink market were in the period of introduction and growth, showing the trend of a hundred flowers in full bloom. Enterprises had a variety of choices to enter the soft drink track.
How did the energy beverage market in the United States develop?
So how did energy drinks develop in the booming U.S. market?
First of all, under the general trend of personalized and healthy consumption, carbonated drinks are declining, and energy drinks are ushering in the tuyere.
Since the 1960s, the sales volume of traditional carbonated drinks represented by Cola has accelerated in the United States, and jumped to the largest beverage category in the early 1990s. However, it will decline in prosperity. After the consumption of carbonated drinks peaked in 1998, its fatigue began to appear, and even the total consumption fell continuously after 2005. Behind the decline of the market, the change of consumer demand has gradually become the main factor Only the “invisible hand”:
(1) Since the 1980s, with the increasing urbanization rate and per capita disposable income in the United States, consumers’ pursuit of personalized attributes of consumer goods has also increased, promoting the diversified development of categories – new categories such as flavor bottled water, various functional drinks, RTD coffee and tea have been widely developed, filling the gap in the past Market vacancy, warmly sought after by consumers.
(2) The improvement of consumption level has led to the enhancement of residents’ health awareness. According to the survey of the American fitness product review committee, in the ten years from 1987 to 1997 alone, the number of people exercising with treadmill in the United States surged from more than 4 million to 36 million, “Uncle Sam” People’s attention to health has reached an unprecedented peak. With the tide of fitness sweeping, consumers pay more and more attention to “struggling + healthy eating” , the cognition of the unhealthy attribute of high sugar and high calorie of traditional carbonated drinks has also been strengthened. At the moment, sports drinks are on the top. In the few years when the sales of carbonated drinks reached the peak, American functional drinks have formed an independent category after Red Bull entered the market, quietly preparing for the outbreak.
The “branding” era of American energy drinks began with red bull.
In 1997, European red bull, headquartered in Austria, fully entered the U.S. market, first selling red bull energy drinks in Southern California, and then gradually realizing sales in the United States. It is worth noting that before red bull entered the U.S. market, there was no place for energy beverage category, and Red Bull had only one single product at the beginning. In the face of mature large-scale distribution networks such as Coca Cola and Pepsi, Red Bull focuses on convenience stores, fashionable clubs and bars, formulates sales plans according to the divided sales regions, and carries out in-depth distribution by relying on small specialized distributor warehouses and logistics vehicles with red bull brand logo, When its market is mature, it will launch media advertising to strengthen brand awareness. After this series of operations, red bull was soon accepted and popular by Americans who paid more attention to sports and health care and caffeine consumption habits.
Led by red bull, the U.S. energy beverage market began to expand rapidly. Around 2000-2002, various brands entered the track one after another, and the track slowly evolved into two categories: one is the energy beverage brands launched by traditional beverage giants through acquisition or self cultivation, such as SOBE and amp under Pepsi, Kmx under Coca Cola, orange flavor 180 of Budweiser, etc; The other is newly established or transformed from other soft drinks, such as Rockstar, monster, etc. In the seven years from 2000 to 2007, the retail sales of energy drinks in the United States increased rapidly from the initial US $310 million to US $7.76 billion, with an average annual growth rate of 58.7%.
Monster, a rising star, must be mentioned here. In just a few years, it overtook Red Bull and became the first in the share of energy beverage industry in the United States. Monster’s predecessor was Hansen natural Corporation, headquartered in California. As a local manufacturer with natural fruit juice and soda as its main business, it keenly smelled the development direction of the industry under the pressure of growth, and tried to launch energy beverage products in the early stage of market growth.
In 2002, Hansen beverage completed a comprehensive reform and officially launched monster brand. Monster has grasped the personalized development trend of the American beverage industry by focusing on young people, adhering to consumer demands and bringing forth the new, and has become the core brand of the company and the market at one fell swoop. The following year, its best-selling momentum opened a rapid growth period of nearly 10 years. During this period, the company actively carried out overseas expansion and reached in-depth cooperation with Coca Cola to strengthen product portfolio and distribution capacity, basically forming a global market coverage. By 2015, monster’s retail share in the U.S. energy beverage market had reached 43.6%, surpassing Red Bull’s 41.8%.
Break through tea and coffee wine,
How do Chinese energy drinks overtake?
Compared with other traditional categories, energy drinks are a rising star in China. Although the market scale is less than that of the United States, it is in the ascendant and has great prospects. Horizontally, tea, coffee and wine are the three hottest categories in the current market, with similar (addictive) attributes. Energy drinks themselves are also “addictive drinks”, which meet the daily needs of consumers to help refresh and supplement energy, and have the potential to take over tea, coffee and wine.
At present, the energy drink track is mainly divided into three camps: first, red bull, a giant with a market share of 55% (2020); Second, Dongpeng, Lehu, physical energy and other local brands; The third is the cutting-edge brand represented by Yuanqi forest. In addition to traditional energy beverage enterprises, cross track players such as Yili, Thomson Beijian and new hope also entered the game one after another.
Since 2016, Red Bull has been deeply involved in trademark disputes, and its market share has declined rapidly due to brand internal friction; At the same time, because the addition of synthetic caffeine requires the approval of health products, and its application cycle is as long as 4-5 years, most later entrants cut in with natural coffee extract, tea, ginseng and other plant bases, and their selling points focus on more natural and healthy new energy supply. Therefore, more attention will naturally focus on the second camp represented by Dongpeng and Lehu.
According to the data of fuel science and technology, the top three in the total online turnover of functional drinks in 2020 are red bull, pulse and Dongpeng. The overall brand effect of e-commerce sales market is obvious and the head brand position is stable. Electrolyte water has become a new growth point of the industry with a growth rate of 224%.
In this year’s double 11 tmall’s “top selling list of functional drinks”, two kinds of Red Bulls of different specifications dominate the top two, Dongpeng ranks sixth, and monster rushes into the top ten; Meanwhile, Red Bull still ranked first in tmall’s “high praise list of functional drinks”, but Dongpeng jumped to second and third place, followed by Lehu. From this point of view, consumers’ acceptance and preference for local brands are rising. Although Red Bull is still far ahead in China’s functional beverage market, the catch-up momentum of “rising stars” can not be underestimated, especially its biggest local rival Dongpeng special drink. “Head brands” are rising rapidly and have become an important driving force for the growth of this category.
The above data does not include full reduction, return and other behaviors. Photo source: official account number
Of course, even if the overall demand for functional drinks shows an upward trend, it does not mean that the market is complacent. On the contrary, brands should follow the rapid momentum, pay attention to the diversified needs of emerging consumers and carry out product innovation on the basis of stabilizing the needs of traditional consumers. Looking around the global energy beverage market, there are four significant innovation directions worthy of our reference:
First, break through the traditional consumer groups in the market and win the favor of marginal consumers. In the early stage, due to the composition, the core consumers of energy drinks were men. The consumption scenes mostly focused on sports, working overtime and staying up late to meet the functional needs of refreshing, anti fatigue and energy supplement. However, with the gradual progress of modernization, people finally realize that the functional needs of men are not just refreshing and replenishing energy. Similarly, the functional needs of women and more other consumer groups have not been paid attention to and met. In addition, under the background of “her economy” sweeping the world, it is more urgent to pay attention to the women’s market.
Go girl is a clean energy drink, which was born in California in 2005. Just look at the name. This is an herbal functional drink designed and made for women. Its ingredients include inositol and taurine required for energy, rich in B vitamins required by the human body, and mixed with mild herbal appetite inhibitors. The overall calorie content is less than 5 calories and carbohydrate is less than 1G, which fully solves the appeal of women’s love of beauty and light body. In addition, go girl also specially emphasizes “isn’t just a drink – it’s a way of life!”, gives full play to its brand purpose, and gains the love of many women pursuing a healthy lifestyle.
Source: go girl official website
Not only women, but also children have become the focus of energy beverage brands. Berri Lyte is a group of electrolyte drinks for children, which can provide natural hydration solutions for children. It is made of organic cleaning ingredients. The raw materials are natural and clean. At the same time, it reduces the calories by half and the sugar content by more than 30% compared with traditional sports drinks. And most importantly, it has passed the pediatrician certification, which fundamentally eliminates parents’ cognitive concerns that it is an “energy drink”.
Image source: Amazon
Similar products for children are also available in the domestic market. Farmer’s scream (fiber drink) is loved by many teenagers and even children because of its unique sucking bottle mouth packaging and light taste. However, considering the huge group of children in China, the current children’s energy beverage market is still promising. How to design products that meet the physiological and metabolic characteristics of children and highly match the drinking mode and amount is still a place for domestic brands to think deeply.
Secondly, energy drinks began to explore multiple circles and scenes. At present, the consumption group of energy drinks has not only broken through gender, but also extended to all ages and occupations. From the perspective of the main consumption circles, the main force has gradually expanded from drivers, blue collar workers and couriers with long working hours to white-collar workers, students and other groups; The consumption scenes are gradually expanding from various “fatigue” scenes such as overtime, staying up late and after sports to more leisure consumption scenes such as parties, travel and daily life. The energy supplement after mental work is parallel to physical work, and the energy supplement for different scenes in foreign markets is becoming more and more targeted. For example, maw é launched energy drinks specifically for outdoor tourism lovers and professionals. Its biggest feature is low sugar and decaffeinated, and it is replaced by a variety of B vitamins. It is a pure vegetarian friendly beverage.
Source: maw é official website
In addition, brands have also noticed the increasingly huge field of E-sports. Not only Dongpeng special drink exclusively sponsors E-sports events in China, but also Otsuka, a brand in Japan, invites well-known Japanese E-sports players and game characters to speak for products, so as to perfectly snipe consumer groups that need long-time mental work, such as E-sports players and daily busy shift workers.
Third, healthy lifestyle is fashionable, and natural, clean and compound energy supplement is more favored. At present, there are countless physical diseases caused by the accumulation of life and work pressure. At the same time, under the normalization of the epidemic situation, more and more people pay more attention to their own health, and people tend to choose more natural, green and healthy products. As a result, more and more “0 sugar, low calorie” drinks began to appeal to them. In the energy beverage track, the traditional raw materials are dominated by taurine and caffeine, but it has its own “addiction” “And other characteristics also deter most consumers. Even in the process of use, they will have a certain degree of psychological pressure. Up to good sparking energy beverage from the United States has noticed this gap and made a new sugar free energy beverage with the discarded coffee fruit as the main raw material and natural plant extracts such as lemon juice as the formula.
Source: Facebook
In addition, a single energy supplement is no longer the only pursuit of consumers. They hope to meet several needs in one product at the same time. Therefore, compound energy drinks are speeding up to pre divide the market share. In Santiago, an organic cashew vanilla Madai tea energy gel has realized the three in one function of “energy supply, anti-inflammatory and antibacterial, and supplement of trace elements”, which can be carried by only a bag of 30g ready to eat drinks. It is just in line with the fast-paced life of contemporary times, and it is not surprising that it can be favored by consumers.
Source: Muir official website
Finally, the traditional definition of ingredients and forms is blurred, and cross-border energy drinks are becoming a trend. There are cooperative innovations in the same category, and cross-border integration is also being tried in different tracks. In the previous article, we have analyzed that Crown Royal strongly launched the 14 level cocktail of “whisky + fruit + brewing tea” to meet the taste needs of young consumers, building a bridge between whisky and cocktail lovers. It can be seen that major beverage markets are rushing out of their own fields to seek cross-border integration, and energy drinks are naturally following. For example, the new series of energy drinks launched by revive are no different from traditional tea in terms of appearance and packaging, but in fact, the product takes traditional black tea fungus as the base material and adds ginger, green tea and caffeine. If you have a chance to taste it, you must be captured by the “strange taste” of its slightly ginger flavor and the astringency of black tea, so as to change your understanding of fermented drinks.
Source: foodaily
Vita, a coconut water giant, is also eager to try. Vita coco boosted, a coconut water based beverage, still follows its product characteristics of “natural unprocessed extract”, providing consumers with a new way to obtain energy and energy.
Image source: Amazon
The innovation of energy drinks not only actively embraces the background of increasing urbanization rate in terms of product raw materials and forms, consumer groups and scenes, but also pays attention to the development of cost-effective products.
A new round of consumption boom has come, and growth and structural opportunities coexist in China’s energy beverage industry. In the context of the continuous expansion of the consumer market, if energy beverage brands can learn from the growth experience of overseas model brands, closely support the most mainstream consumer groups, focus on their real demands, and create a brand image that can really enter the hearts of consumers, maybe the next “Red Bull” and “monster” will be born!
Reference: in depth report on China’s energy beverage industry Guotai Junan; Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
Join the community: Cherry (micro signal: 15240428449).
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