Not a new category, but certainly a booming one, energy drinks are perennially popular in the impulse-driven petrol and convenience channel, where they continue to be a best-selling product.
According to the Australian Association of Convenience Stores (AACS) State of the Industry Half Yearly Report 2022, packaged beverages, in general, enjoyed a strong start to 2022, up 5.9 per cent, with energy drinks leading the way in the category, up 8.9 per cent.
As such, the petrol and convenience (P&C) channel continues to be vital for energy drink manufacturers, as Ashleigh Taylor, Channel Category Manager, Frucor Suntory Oceania, explains: “The P&C channel is the heartland of the impulse consumer, the core group who purchases and enjoys energy drinks the most.
“Within the convenience channel, beverages are forecasted to grow by $439m into 2026, and energy will contribute 70 per cent of the growth,” she says.
Felicity Needham, Vice President of Sales Away From Home – Australia, Coca-Cola Europacific Partners, says: “The P&C channel is an incredibly important channel for our Monster Energy Company brands.
“Energy drinks are a standout non-alcoholic ready-to-drink beverage in the P&C channel, making up close to one-third (31 per cent) of total retail sales value,” she adds.
Innovation vital for growth
Such massive sales figures are hard to ignore, and Taylor says innovation is key in an already crowded segment. “Innovation is hugely important to the future success of the energy category. Our research suggests that there are more than 7.5 million people in Australia that are open to drinking energy drinks but currently don’t,” she says.
“The traditional energy drink consumer is male (74 per cent) and under 44 years old,” says Taylor. “But innovation in the low/no sugar space is bringing more women into the category who we know spend more on average at a total store level.”
For women, the perception that energy drinks are high in sugar and unhealthy is a major deterrent. Needham says innovations with low or no-sugar options are yielding great success across all consumer groups.
“In the last year, no sugar options have increased by an incredible 34.3 per cent, significantly higher than regular variants, which increased by 6.3 per cent. Despite only making up around one-fifth (21 per cent) of sales, diet energy drinks have contributed more than half (53 per cent) of total value growth in the category,” she says.
Taylor relates a similar experience with Frucor Suntory’s new low-sugar, low-calorie energy drink V Refresh. “Since launching 12 weeks ago, the new range has shown exceptional performance within the convenience channel, and as we head into the warmer months, there are no signs of slowing down.
“V Refresh has experienced the highest level of trial of any energy drink NPD in the last 12 months and has proven to be 30 per cent incremental to the total energy category,” she says.
Sam Tsagaris, Category Development Manager at Red Bull, says innovations in new flavours and packaging are also critical as they drive growth with existing and potential customers.
He says innovation increases sales by “appealing to new users who may have barriers to entry such as the taste of energy drinks”. He adds both factors are equally important for “driving incremental traffic and spending among existing energy consumers seeking exciting new flavours and offers to increase their engagement and consumption within the category.”
Flavour innovation has also been vital for new kids on the block Hype Energy, which recently won a Superior Taste Award from the International Taste Institute in Brussels for its original flavour energy drink.
Steve Haider, National Sales Manager at Boomerang Worldwide, Hype’s Australian distributor, says having a product with a unique flavour is the most significant factor setting Hype Energy drinks apart from the established brands.
“It’s a pretty big award,” says Haider, happy to acknowledge the accolade.
Advice for retailers
“While energy drink sales peak early in the morning, typically between 6am and 8am, when people need an energy hit to get their day going,” says Needham. “We are seeing an increase in shoppers purchasing throughout the day, with the biggest growth in penetration between 8am and 11am.”
As a high impulse category, Needham says retailers can help themselves capitalise on changing consumer behaviour by offering the right products to “energise”, no matter the time of day.
“One of the biggest opportunities for energy drinks is to ensure that there is enough space allocated within fridges to allow the category to grow to its full potential.
“In conjunction with this, there is also a greater opportunity to drive impulsivity at all points of engagement by working with suppliers to use eye-catching and inventive stock builds, on brand offers, with a focus on the key times of the year,” she says.
Haider says it’s all about position, position, position. “Fridge layout is one of the biggest problems we’ve encountered,” he said. Being a newer product, particularly in the very beginning, Hype was sometimes put in the wrong section of the fridge. “It just doesn’t go,” says Haider. “A consumer coming in for energy is not going to look around for the product.”
Taylor agrees, saying that space allocation matters. “In most fridges, energy drinks have maintained the same amount of space despite strong growth over the last five plus years.”
Tsagaris adds that retailers need to put forethought into their available storage space and should be conscious of space limitations in cold-vaults in-store.
“As the demand for energy drinks continues to grow driven by increased penetration and consumption year-on-year, the range and space allocated for energy drinks must also keep pace with this growth to ensure we can satisfy growing consumer demand,” he says.
It’s clear that energy drinks are a significant and growing category within the P&C sector, with sales showing no sign of slowing down any time soon.
On the contrary, projected growth over the next few years is set to increase exponentially, fuelled by ever-increasing demand and continual innovation from Australia’s leading manufacturers.
Expect to see further releases in the no and low-sugar ranges across the board and plenty of sporting partnership events, including the Red Bull Cliff Diving World Final in Sydney Harbour, the Red Bull Billy Cart in Melbourne, and Monster Ultimate Fighting Championship (UFC) competitions running in BP, Ampol, EG, and NSG.
This article was written for the December/January issue of C&I Retailing magazine.