THE FOOD INSTITUTE: The energy drink race

September 13, 2022

Innovation in the energy-drink category?

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by The Food Institute in an article — by Kelly Beaton, “Surge of Energy: Energy Drinks Market Overflowing” — regarding the crowded energy drink category and how energy drinks vie to differentiate themselves.

What are the trends in the energy drink segment?

Diversification across public and private investments allows us to see many business verticals from multiple angles and develop informed perspectives across a broad spectrum of industries. For example, we’ve looked at beverages and other consumer product goods (CPGs) through the lenses of multiple deals and companies we’ve analyzed.

Several trends in the energy drink segment stand out: a push towards natural ingredients including: coconut water for hydration; adaptogens and mushrooms that enhance energy, cognition, and immunity like reishi, lion’s mane, chaga, maitake, and cordyceps; increased use of teas such as matcha, yerba mate, and black or green tea; and pure flat or sparkling water that has been energized or caffeinated.

Additionally, energy drinks compete for their own special look to catch consumer eyes. Some use stunning graphics or wild colors, others opt for matted tones and muted hues to reflect calm, and some sport a clean, crisp, pure appearance.

Quoted article excerpts are below:

Michael Ashley Schulman, the chief investment officer with Running Point Capital Advisors, has a succinct description for the category these days, calling it “ the energy drink race.

Sparkling, energized, and caffeinated water products are becoming more prevalent, too — “Even Perrier has gotten into that race,” Schulman told The Food Institute.

PepsiCo, which owns the Rockstar brand, recently made a $550 million investment into Celsius and its healthier-for-you energy drinks. That, Schulman feels, “indicates we may see a marketing push towards more energy drinks with electrolytes, or electrolyte drinks with energy boosters like caffeine or taurine.”

“Walk into a European supermarket and the choices are astounding,” Schulman said.

“[In the U.S.] Innovation seems to be from [California-based] Monster, which has a wide selection of flavors and energy drinks with protein, hydration, juice, or coffee. Nonetheless, Red Bull is, in many ways, the most fascinating to watch since, at its heart, it’s actually a sports and entertainment company that happens to sell an energy drink.”

Photo and graphics by Yrtist.com

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Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22-54

Originally published at https://runningpointcapital.com on September 13, 2022.

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Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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Michael Ashley Schulman

Michael Ashley Schulman

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Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm