The buzz in the energy drinks world: that there is no buzz

The future of energy drinks may be limited, according to a new report on the energy food and drinks market by Business Insights.

"The category has simply been unable to extend beyond its core consumer group of young men, aged 18-30," said Mark Tallon, Business Insights. "A slowdown in the growth rates of global energy food and beverage markets is occurring, making it important for manufacturers to direct their attention toward emerging economies. There, growth is still strong and the demand for energy drinks is set to increase."

The U.S. market is currently the largest in the world in terms of energy foods and beverages, and its success comes down to its long history of sports drinks being used not only for sport but also for general hydration. Similarly, energy and sports bars are widely accepted as snack food items for general consumers, and not only for the sports nutrition market.
The drinks category has recorded a relatively stable rate of growth (above 6.5 percent year-on-year), which has been helped with the launch of new energy drink formats, such as shots and different can sizes.
The energy food and drinks market in Europe, meanwhile, is much more tightly enforced, especially in relation to product claims. The fact all ingredients must be approved for use in foods, beverages and dietary supplements has also kept a cap on innovation.

If sales are beginning to stall out in the U.S. and Europe, though, how can energy manufacturers find their niche – and their profits?

"With an increasing number of countries banning or considering a ban on caffeine-laden energy drinks, noncaffeinated versions are likely to grow in popularity, especially in mainstream outlets," Tallon said.

In addition, energy foods remain a relatively small and unexplored arena.

"Energy foods claim a significantly smaller portion of the energy market," Tallon said. "But as the media pushes the importance of a balanced diet for better health and wellbeing over a quick-fix pill or dietary supplement, functional foods will become an increasingly important option for those looking for an energy boost."

The developing world is a third option.
Two particular areas of potential growth are South Africa (market value of $97 million forecast by the end of 2010) and Venezuela, where energy drink sales are growing.

For energy foods, Argentina ($109 million) and Saudi Arabia ($89 million) are experiencing greater than double digit growth rates, Tallon said.

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