Energy Products Rev It Up

In a recent survey, we asked consumers, “If you could design a magic pill, what would it do?” “Give me more energy” topped their wish list, and weight loss was second. And why not? In the same survey, energy ranked right behind cancer and tied with heart health on consumers’ list of personal health concerns.

Consumers are stressed—70% of young adults say they feel very/extremely stressed. They’re tired—one in five adults are so sleepy that it interferes with their daily activity a few days a week. They want to stay mentally alert, maximize memory, and improve cognition. Major food and beverage marketers are beginning to provide the reliable help that consumers want.

Last year, one in four households had someone trying to manage or treat low energy levels, according to the Natural Marketing Institute. “Boosts energy” is the second most popular reason for taking dietary supplements and the top motivation for visiting a health food store, according to Prevention last year. And as far back as 1999, two-thirds of supermarket shoppers in the Food Marketing Institute’s “Self Care” surveys said that their need for “more energy” influenced their grocery purchases at least “somewhat” or more strongly.

The demand for mainstream energy products is expected to grow, and busy women will be the likely targets. According to projections by Multi-Sponsor Survey/Gallup, 35.2 million adults suffer fatigue, exhaustion, or lack of energy—8.8 million every day. By 2005, they project an 8% increased incidence for the general population and 32% for those age 50–64. About half of all women experienced lethargy, low energy, or fatigue last year; one-third self-treated the condition, according to J&J’s Personal Products’ Healthy Woman™ brand. Men ranked energy as the most desirable benefit for functional food products, while women ranked it second to “illness protection,” in DataMonitor’s 1999 Nutraceutical Survey.

Formerly the exclusive province of athletes, energy and sports beverages, bars, candy, powders, and other food forms are fast approaching $4 billion in sales. According to the Nutrition Business Journal, sales of energy bars are approximately $500 million, while Beverage Digest estimates energy-specific drinks at $300–350 million and athlete and sports performance drinks, including Gatorade™, at $2.39 billion. Energy supplements—a very difficult category to track—are estimated at $850 million by AC Neilsen/SPINS.

A 1997 survey of the nation’s top beverage marketers by Business Communications found that nearly half planned to market functional beverages that provided energy and/or enhanced mental function by 2002. They were right on target. While Red Bull GmbH, Hansen’s, SoBe, and other cutting-edge companies have dominated the energy segment, multinational players, including PepsiCo/Quaker/SoBe, Coca-Cola, Procter & Gamble, Anheuser Busch, Kraft, and VeryFine have been testing the waters with a wide variety of new products. Gatorade™ now offers a non-herbal energy juice drink, Torq™, that provides immediate and sustained energy and has also launched a fitness water, Propel™. Competition will get tougher with Coke KMX and Anheuser–Busch’s guarana-infused 180™. P&G is testing juice-based Spire™ herbal energy beverages, and Kraft is testing Health Quenchers™.

Some provocative directions have also emerged in Europe and in the United States natural market. Energy beverages are being customized to a variety of sub-segments, e.g., gender, age, sports, etc. More nontraditional bases are being used, including energizing waters, ices, and fortified juices. In Europe, energizing, sex-enhancing beverages are proliferating among the younger club set, as are exotic “signature ingredient” drinks and alcohol-based energy beverages (not an oxymoron!).

New users of energy bars dwarf core users (see figure). Although the lines between energy and other nutrition bars are blurring, ACNielsen/SPINS reports strong sales through grocery and mass-market channels, up 53% last year. Energy is also emerging as an essential claim in other explosive bar segments, including weight, heart, diabetic, and sex enhancing. Last year, energy bars touted benefits for men/women, diabetics, active children, people living in extreme climates, and various sports. Panax and Siberian ginseng, guarana, B vitamins, and ribose were popular additions. Likewise, caffeinated candies like Java Joe and Jolt are also enjoying strong sales.

The next untapped market for mainstream marketers will undoubtedly be sports nutrition, expected to jump from $4.67 billion in U.S. sales to $7.2 billion by 2004, according to Business Communications. At present, the segment is virtually void of mega-multinational players, despite international sales of $9.96 billion. With the growing desire of mainstream consumers for benefits once of interest to “athletes only,” this sector is ripe for a wide variety of crossover products. Food and drinks are expected to grab the largest share, with sales growth projected from $3.6 billion to $5.2 billion by 2004, according to Business Communications. The crossover demand will focus on these areas: energy replenishment and protection, weight loss/energizing claims, ready-made drinks, more sophisticated bars, and alternative systems to deliver product nutrients. Today, 51 million Americans are frequent fitness participants. The Baby Boomers—key consumers of nutrition products—make up 56% of fitness enthusiasts, up from 39% in 1987, according to the National Sporting Goods Association.

Busier, more stressed consumers and older consumers, the emergence of a milder form of exercise, and a groundswell in young female participation in organized sports will open new fertile mass-market segments in the sports and energy arenas. Energy has achieved the mega-market status reserved for only a few nutraceutical ingredients/markets, including protein and calcium/bone health. It is maturing into diverse categories and is crossing over to a wide variety of product forms. In a 2000 survey for Restaurant Business, high school students ranked energy beverages first, ahead of blended coffee drinks, hot tea, and soda, as the products they planned to try in the near future! Clearly, this is a strong and sustainable market.

by A. ELIZABETH SLOAN
Contributing Editor