The future of energy drinks this summer

Considering the remarkable growth over the past few years, energy drinks are finally seeing a slump in growth, as evidenced by the slowing stocks of Hansen beverage, increased fragmenting of the market and  a volume slump over the last number of months.

The Energy drink Sector is still the highest and healthiest in the beverage world, But now there are many factors which make it a dicey time to be in the energy beverage business.  While this market is barely 10 years old, there is still major innovations to be made and change needs to happen if this drink sector is going to keep gaining revenue. 

Monster drinks were one of the big success stories of the market, growning Hansen's drink company from the brink of bankruptcy to a major player with over 50% growth for 2 years running.  The past quarter's results were so scary that, according to Fortune magazine, " investors overwhelmed the company with so many calls that the management team, led by chairman and chief executive Rodney Sacks, has stopped meeting with investors for the time being. Instead, the company is holding additional conference-call updates. Meanwhile, short-sellers have been circling the stock."

With today's economy, many consumers are now finding the 2-3 bucks a can for drinks too pricey.  Convenience stores  are seeing shrinking volume too.  Coke and Pepsi continued 24-pack discount promotions from June into July, but volumes failed to grow.  Part of this is believed to be that the cas prices are forcing consumers away from energy drinks in the stores, where most energy drinks are purchased. 

Some analysts also attribute the slump to failing innovations in the market, that so many big players have come into the market that the brands have become stale. Fragmentation has broken the category into energy shots, functional drinks, vitamin waters and many other subsets.  Even energy drink companies have broken into other sections of the beverage market, with a growing market for canned coffees and caffeinated juices.

Topics: In The News