Natural Foods Merchandiser logo

Energy Drinks: Hot Category Gets Cold Shoulder

April 23, 2008

5 Min Read
Energy Drinks: Hot Category Gets Cold Shoulder

If the number of new product introductions is an indicator of hot categories, then energy drinks—an offshoot of the sports drink category—should be taking over shelf space in stores across the country. From traditional natural foods companies to conventional megabrands, producers are jumping on board. But although many of the formulations boast a boost from vitamin and herb content, natural foods retailers are wary of stocking these products. And while they are marketed to consumers as providing healthier energy boosts than coffee or carbonated beverages, some dietitians say that's not true.

Sports and energy drink sales tallied $2.92 billion in 2001, according to San Diego-based Nutrition Business Journal. And while NBJ estimates all-channel growth for the whole category at more than 12 percent last year, energy drinks alone—though only accounting for $500 million in sales—grew more than 25 percent.

Beverage Aisle magazine tracks new product introductions and lists new entrants as they appear. In the last six months, more than 10 companies have launched brands competitive with category leader Red Bull.

Conventional wisdom holds that consumer demand drives companies to launch new products. But Grant Ferrier, editor of NBJ, sees other motivations as well. "The beverage industry realizes that the connotation that Coke is bad for you is much broader than it was a decade ago," he says. "And they're all looking to launch something different."

But not many energy drinks move through the naturals channel, Ferrier says. Convenience stores sell the products, and the image marketing has helped sales in liquor stores and clubs. "It's an interesting juxtaposition that these drinks are marketed both in the club venue and also as a healthier energy boost, available in natural foods stores or the naturals section of conventional stores," Ferrier says.

Energy drinks are marketed as a quick boost during a long day or before an extreme sports activity. But Ed Burke, a professor of exercise science at the University of Colorado at Colorado Springs who consults with the USA Cycling team, says the products are nothing more than caffeinated sports drinks window-dressed with vitamins and herbs to make them appear nutritional. "The caffeine is the only thing in there in significant enough amounts to have physiological effect," Burke says, "and it still doesn't compare to a double shot of espresso."

Several companies that make energy drinks sponsor extreme athletes. "Red Bull does sponsor athletes," Burke says, "but so does the Postal Service, so what does that mean?"

The Web sites and other promotional messages from energy-drink makers are fairly benign and play up the connection to extreme sports, says Tamara Schryver, a dietitian based in Burnsville, Minn. "However, the grassroots reality of it is that the energy drinks in slick cans are being used in bars and clubs."

She counsels her clients that the drinks are safe, unless a client has a high sensitivity to caffeine. But she tells them that the delivered boost doesn't come from a nutritional source. "The vitamins were all at very safe, very low levels that would probably do nothing," Schryver says. "You would have to be severely deficient in order for this to remotely do something."

Many natural foods retailers are wary of the category and hesitate to stock even those products that come from manufacturers they recognize. Marge Roman, general manager at Spartan Health Foods in Las Vegas, where the clientele is largely comprised of the body-building crowd, is skeptical of the category. "I just don't think [energy drinks] belong in a health foods store; they're all sugar and caffeine," she says. "In the last year, I've really tried to weed out some of the things that have crept into the industry, which in my view shouldn't be there."

Customers at Cambridge Naturals in Cambridge, Mass., do ask about energy drinks, says Michael Kanter, co-owner of the 2,000-square-foot store, but so far it's short of a groundswell. He doesn't carry any right now, because none have proven that there's genuine mettle behind their message, and he doesn't see the kind of ingredients he'd expect in a quality functional food.

Kanter would recommend herbs or supplements to customers looking for an energy boost, but he leans toward a regimen of complementary herbs, not a silver bullet potion. At this point, he's not convinced the herbs on the label are present in sufficient quantities. "To me, it somewhat trivializes the power and essence of the herbs," Kanter says. "And I don't think herbs should be treated so casually."

"For the most part, Wild Oats doesn't carry those products, because [the companies] haven't been formulating to natural products industry standards," says Mary Mulry, senior director of product development and standards for the Boulder, Colo.-based chain.

But retailers realize the popularity of this product segment, and if companies do change the formulation to better match natural foods criteria and include contraindication information for consumers, many of the stores would change their tune.

The use of artificial colors and flavorings warrants an automatic rejection at Spartan. But if those were removed, and if the caffeine source was an ingredient such as green tea not guarana, Roman would consider stocking them. She carries one energy drink from Hauppauge, N.Y.-based supplements maker TwinLab that she feels is one of the "cleanest" available.

Michele Walker is manager of standards for Wild Oats. She reads the labels and evaluates products for inclusion in the national chain's product mix. Artificial flavors, colors and preservatives disqualify products for her as well. And she doesn't like to see the use of guarana without proper warnings that the herb contains caffeine and should be avoided by those who don't drink coffee. Walker says that any herb or supplement content in these products needs to be better explained, so consumers know what they're taking.

Though many energy drink producers use herbs and supplements normally found in natural foods stores, the category had its genesis in the mass market. And if its makers want to bridge the gap and be stocked in the naturals channel, some reformulation is in order. And they also need to better label their herb and supplement content.

But if consumers continue to want energy drinks, not coffee, for a quick boost, and manufacturers from this industry clean up the category, natural foods retailers will be ready for them, Kanter says. "Would I carry them if they were cleaner? Probably."

Natural Foods Merchandiser volume XXIII/number 7/p. 24, 26

Subscribe and receive the latest updates on trends, data, events and more.
Join 57,000+ members of the natural products community.

You May Also Like