Energy Drinks, Finding a Niche within a Niche

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Energy drinks, lightly carbonated beverages loaded with caffeine, herbal extracts, B12 and a lot of other cool sounding ingredients, are hoping to become the next major brand within the highly competitive carbonated beverage market. Now that this niche beverage sector has been created, marketers for the products at the moment face the challenges of finding ways to get maximum exposure and rise to the top of the category.

The energy drinks sector is estimated to be a $190 million market in the U.S. Ironically, the target audience for these beverages are young male teens and twentysomethings who should have enough natural energy to get them through the day in the first place. You need an extra energy rush while skydiving, base-jumping, skateboarding, motor crossing, and bungee jumping, right?

Austria based Red Bull Incorporated, a privately held company, has emerged as the market leader with roughly a 60% share of the market during its 18 years of existence. Today, an additional 1,000 smaller players have entered the market and are attempting to build product loyalty through niche marketing.

Red Bull claims the use of their product during moments of physical and mental stress improves endurance, alertness, concentration, reaction speed, and stimulates the metabolism. That could appeal to a large group of consumers young and old. Rockstar is geared towards the Hollywood crowd and if Paris Hilton is seen drinking one, market shares could double for them overnight. Monster is marketing to more of the rebel, dark and extreme crowd. You may try ten different brands until you find the one that appeals to both your lifestyle and taste buds.

The major beverage players aren’t ignoring this new trend either. Both Coca-Cola and Pepsi have countered with KMX and SoBe and even Anheuser-Bush has launched 180 energy and sports water brands. But just like great ideas of the past, the big boys will acquire the stronger brands and utilize their distribution power to grow market shares following a similar path the bottled water market took about ten years ago.

The real winners in all of this may be the beverage co-packers. Since product volumes are relatively low, it would make no since to invest $20 to $30 million in a new manufacturing plant for a product with untested staying power. Industry players are formulating product in small labs and having their concoctions blended and canned by contract co-packers who can set up production and batch runs for a relatively low cost.

More than likely, energy drinks will prove to have staying power because of their "something for everyone" appeal. You will find low carb, high glucose, sugar-free, low calorie, and a wide variety of ingredients and flavors are available. Energy drinks have even found a niche in bars and clubs as the preferred shot chaser that gives you a little extra boost. How producers and marketers manage their niche within the niche will determine who stays and who goes in the future.

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Industrial Information Resources (IIR) is a Marketing Information Service company that has been doing business for over 22 years. IIR is respected as a leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.