US energy drinks market set for continued growth as shake up continues

12 Sep 2022

The lucrative US energy drinks market is set to reach $21 billion by 2026, as rapidly increasing demand for energy drinks leads to a continued shake-up of the CPG marketplace, say experts.

Rapid growth of the US energy drinks market is fuelling a ‘game of musical chairs’ between brands and distribution partners, warns Joshua Schall, owner and president of JS Consulting.

US energy drinks market set for continued growth as shake up continues
© AdobeStock/Dave Willman

The United States energy drinks market was valued at $14.3 billion USD in 2020 and is forecast to hit $21 bn by 2026, with a compound annual growth rate (CAGR) of 6.9% predicted as consumer demand for healthy and functional energy continues to grow, according to a recent report by ResearchAndMarkets.

“It cannot be stated enough, just how important the energy category is – and will continue to be – within the beverage world,” said Schall in a recent video analysis on YouTube.

“Change is really the only constant in life, especially when we’re talking about the energy drinks category,” he noted. “I almost guarantee more large mergers and acquisitions will happen, that will inevitably cause further disruption to the category.”

Bang out, Celsius in: PepsiCo shifts focus

PepsiCo’s recent $550 million investment in fitness energy drinks company Celsius Holdings, as part of a deal that will see the PepsiCo gain 8.5% ownership of Celsius and forge a long-term strategic distribution arrangement, came just days after its previous distribution deal with Bang Energy came to an end.

In April 2020, Bang Energy entered into an exclusive distribution agreement with PepsiCo, which saw the Pepsi become the exclusive distributor for Bang in the US. However, the deal quickly turned sour, with Bang Energy owner Vital Pharmaceuticals Inc (VPX) filing a lawsuit that accused PepsiCo of intimidation tactics and of ‘gross misconduct’ in the distribution of Bang.

Bang Energy CEO Jack Owoc said all disputes with PepsiCo had been fully settled and resolved at the time that the deal ended.

“Our primary objective is to effectuate a smooth transition that best serves both Bang Energy’s and PepsiCo’s highly valued retail customers,” he added.

Schall added that after the announcement that PepsiCo and Bang Energy would end its partnership, it was clear that PepsiCo would need to seek another strategic partner or potential M&A transaction to fill its open energy drink slot within its distribution system.

He noted that Celsius was the most impactful and disruptive deal for PepsiCo and the wider energy drinks market, adding that the fact that Celsius is defined as being ‘healthy’ and ‘functional’ in the consumer mind means it is more differentiated than the other PepsiCo energy drink offerings.

“The fact is that the Celsius consumer does not cross over much with the Rockstar Energy or Mountain Dew Energy offerings,” he added. “That lessens cannibalisation risks that were more pronounced with Bang Energy.”

Bang Energy drinks © AdobeStock/Steve Cukrov© AdobeStock/Steve Cukrov

Continued shake-up: GHOST Energy to benefit?

Schall also suggested that the deal between PepsiCo and Celsius will lead to an inevitable market shake-up with direct store delivery (DSD) partners, as they look to replace the Celsius brands being taken into the new deal.

Indeed, he predicts that the deal between PepsiCo and Celsius means that the company’s former distribution partner Bang Energy will have a somewhat easier time re-securing some of the original DSD partnerships it lost in 2020 when it entered into its now defunct agreement with PepsiCo, while C4 Energy and Alani Nu may also see further growth opportunities as DSD partners look to reshuffle offerings.

“Arguably the biggest indirect winner of the PepsiCo and Celsius Holdings deal is GHOST Energy,” said Schall, noting that a lot of DSD partners that Celsius will be forced to leave are part of AB InBev.

“AB InBev just so happens to be the joint venture partner on the GHOST Energy product,” he said, adding that GHOST has quickly become the fastest growing energy drink in the US market.

“With Celsius Holdings leaving those AB InBev DSD partners that were shared by both brands, even more attention and resources will be given to GHOST Energy,” he suggested.

Related categories

Related tags

Beverage Blogs Market News

Related news

Capri Sun adds monk fruit to US juice drinks to reduce sugar by 40%

Capri Sun adds monk fruit to US juice drinks to reduce sugar by 40%

15 Aug 2022

With parents increasingly focusing on reducing their children’s sugar intake, Kraft Heinz is using monk fruit to cut sugar in US Capri Sun products to deliver on both taste and health credentials.

Read more 
How plant-based milk brands can address taste and texture challenges

How plant-based milk brands can address taste and texture challenges

12 Aug 2022

Today’s consumers want plant-based milk products that mimic the desirable sensorial attributes of their non-dairy alternative counterparts. In response, brands and manufacturers are focusing on taste, texture, education and sustainability.

Read more 
Diageo unveils plans for €200 million carbon-neutral brewery in Ireland

Diageo unveils plans for €200 million carbon-neutral brewery in Ireland

1 Aug 2022

Diageo has unveiled plans for a €200 million carbon-neutral lager and ales brewery in Ireland – the country’s first.

Read more 
Shifting trends: Analysing the impact of high inflation in India

Shifting trends: Analysing the impact of high inflation in India

25 Jul 2022

Despite food and beverage categories in India feeling the pinch of increasing inflation, the overall outlook remains upbeat as governmental support steps in and evolving consumer purchasing patterns shape the sector.

Read more 
Gen Z consumers are thirsty for variety in beverages

Gen Z consumers are thirsty for variety in beverages

31 May 2022

As Gen Z consumers gain disposable income, they are looking to quench their thirst with beverage brands that are clean, sustainable and socially responsible, according to a report from the global consumer trend forecaster WGSN.

Read more 
Tea flavour innovation in China unites tradition with modernity

Tea flavour innovation in China unites tradition with modernity

13 Apr 2022

Chinese tea brands are innovating with new flavours, blends and formats, and even making a foray into food with tea-flavoured food and drink launches.

Read more 
Low- and no-alcohol beverages see significant growth globally

Low- and no-alcohol beverages see significant growth globally

11 Apr 2022

Alcohol-free and low-alcohol beverages are helping drive growth for many alcohol manufacturers that have been struggling to adapt to the changing tastes of the market in recent years.

Read more 
Brand licensing deals rise post-pandemic as consumers seek familiar and healthier products

Brand licensing deals rise post-pandemic as consumers seek familiar and healthier products

8 Apr 2022

Longer-term brand licensing deals between food companies have become more popular in recent times – a trend set to continue and flourish, partly thanks to the pandemic, licensing experts told Ingredients Network.

Read more 
Baby formula brands innovate with clean label launches

Baby formula brands innovate with clean label launches

7 Apr 2022

Clean label baby food is receiving a significant amount of development, with two recent brands ByHeart and Bobbi launching formulations certified by the Clean Label Project with a Purity Award.

Read more 
Consumers seek ashwagandha-fueled relaxation in beverages

Consumers seek ashwagandha-fueled relaxation in beverages

28 Mar 2022

Ashwagandha has been used in India for centuries, and it is only in recent years that consumers in the US and now Europe are realising its health benefits, with manufacturers starting to add this adaptogen to beverage formulations.

Read more