Report: Parents to Drive US Energy Drink Market to $10.8B in 2015

Despite concerns about the safety of certain ingredients, the energy drink market is anticipated to reach US$10.8 billion in 2015, driven by older Millennials (consumers aged 27 to 37 years) who may be transitioning to parenthood.

According to a new Mintel report, “Energy Drinks – US – May 2015," U.S. Millennials increased energy drink consumption from 55 percent to 61 percent from 2014 to 2015, despite the fact that 74 percent of older Millennials expressed concerns about product safety compared to 65 percent of consumers overall. In an effort to counter these concerns, 81 percent of U.S. consumers agree that companies should include recommended daily consumption limits on energy drink/shot packaging.

Further, data shows that safety concerns have had little impact on consumers. While two-thirds of all users (65 percent) worry about the safety of regular energy drinks/shots, consumption of the beverages remains strong.

Half of consumers drinking fewer energy drinks/shots agree they are concerned, compared to 68 percent who are drinking the same amount, and 41 percent are drinking more.

What’s more, consumption overall has diversified with many consumers (27 percent) drinking both regular and natural energy drinks/shots. This points to a growing popularity of natural claims in the category with 30 percent of users consuming natural energy drinks/shots, the data suggests.

According to Elizabeth Sisel, beverage analyst at Mintel, consumers are moving toward more natural ingredients, especially Millennials, yet the market remains unaffected. “The majority, a full 90 percent, of natural energy drink consumers also drink regular energy drinks," she said. “The steady consumption of both regular and natural energy products implies that U.S. consumers may not perceive energy drinks as negatively as pop culture conveys."

In addition, Millennials—the core consumers of the U.S. energy drinks/shots market—are increasing their consumption. Nearly one-third of older Millennials (29 percent) consumed more energy drinks within the past three months compared to 22 percent who consumed less.

While the same percentage of adults aged 18 to 26 years also consume energy drinks, their consumption is increasing at a pace slower than that of the Millennials—only 16 percent reported consuming more and 27 percent said they drank less.

Additionally, older Millennials strongly agree that energy drinks/shots are good substitutes for alternative caffeine beverages, including coffee (65 percent) and carbonated soft drinks (64 percent).

Sisel attributed older Millennials’ increasing consumption to shifting lifestyles common to the age group, such as getting married or having kids, and added that 55 percent of those aged 30 to 34 have kids. “As a result, their interests and priorities are shifting and individuals that require more energy are turning to energy drinks and shots," she said. “However, this goes against the grain of most energy drink advertising, which focuses primarily on young, single consumers and their active lifestyles. Our data shows the older Millennial consumer segment displays more brand loyalty and potential for long term usage."

Similarly, consumption rates of energy drinks/shots are higher than average among U.S. parents, the report noted. Households with children are significantly more likely to consume energy drinks (58 percent) and shots (48 percent) when compared to those without children (27 percent and 18 percent respectively).

Among U.S. parents, 68 percent of fathers and 38 percent of mothers consume energy drinks. In contrast, only 34 percent of non-fathers and 22 percent of non-mothers consume energy drinks.

Specifically, fathers increased their consumption rates by 28 percent, compared to only 21 percent who drank less.

Interestingly, mothers are not only heavier users than men without children (38 percent vs 34 percent), but they are also significantly more likely to drink energy drinks and shots than women without kids (22 percent).

Overall, the energy drinks/shots category saw 56 percent growth from 2009 to 2014, including a quick recovery from low sales gains in 2013 when the industry came under fire for ingredient safety (read INSIDER’s coverage in the Digital Issue, “Investigating Energy Drinks"). Mintel predicts the industry will continue to grow through 2019, increasing an estimated 52 percent from 2014 to 2019.

While parents and Millennials show increases in consumption of energy drinks, they have decreased their consumption of energy shots, which points to why the energy shot segment is spiraling. Energy drinks comprise 89 percent market share, with the segment expected to grow 10 percent in 2015 to US$10.8 billion. However, the energy shots segment is one-eighth the size and expected to decline in sales for the third consecutive year.