THE FOOD INSTITUTE: The energy drink race
Caffeine, taurine, mushrooms, adaptogens, coffee, tea, and a whole lot more
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:
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.”
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