Case Study by Daniela Lara

North American Market (USA)– Energy Drinks Brands & Products Analysis
Part I – Current Market & Existing Competitors Introduction

Despite a slow growth of 7.5% in the energy drinks market in 2018 (against 6.7% five years ago), the main players
kept a strong position in the market. The slowing down of market growth is likely due to accumulating FDA scrutiny
of energy beverages.

Below are the most recent sales figures of the top three manufacturers of energy drinks (excluding Red Bull and
Monster, which hold first place and second place respectively with sales volumes of $4,685,615,913 for Red Bull,
and $4,192,281,599 for Monster).

2018 Top Selling Energy Drinks Manufacturers in USA (By Sales Volumes)

Sales Volumes (USD)

1,000,000,000
918,524,467
900,000,000

800,000,000

700,000,000

600,000,000

500,000,000 464,483,966

400,000,000

300,000,000
211,912,588
200,000,000

100,000,000

0
RockStar Inc. NOS Hig-Performace Beverage Vital Pharma Inc.
 NOS High Performance Beverage, 4% Vital Pharma Inc, 2%

RockStar Inc., 9%

Red Bull (North

America Inc), 45%

Monster Beverage
Corp, 40%

Data Source: Data from 52 weeks ended 10/07/18 Total Multi-Outlet w/ C-Stores (Groceries, Drug, Mass Market, Convenience, Military, and Select Club & Dollar Retailers) provided by “IRL, a Chicago-based market research firm”

Rockstar Inc.

As the third biggest brand by sales volume after redbull and monster, Rockstar has secured its place in the market.
Its advertising strategy includes affiliations with action sports, motor sports, live music, and models; and it has had
a tremendous influence and success amongst aged 18-35 consumers. According to Forbes, Rockstar’s annual average
sales growth has slowed dramatically in recent years, plummeting from 103% annually in the company’s first six
years to just 8% annually since then. It seems the company is the middle ground between the industry giants and
the smaller but up-coming competitors.

NOS (High Performance Beverage)

NOS Energy Drink is named after a brand of Nitrous Oxide and is popular with car and racing enthusiasts. NOS has
been involved in various forms of motorsports as its main source of advertising, and this association has allowed
them to promote themselves towards a specific market and to an important extend differentiate themselves from
competitors.

Bang Energy (Vital Pharma)

Bang, a brand of VPX Sports, saw triple-digit growth of percent and more than $687 million in sales on 2019 based
on IRI data. Its target market includes fitness enthusiasts and college students. Bang has identified and addressed
millennial’s consumer behavior changes and provided products that satisfy their need for a energy drink that is not
only a healthier choice than regular soft drinks and unique in flavor, but also has implemented an advertising strategy
that gives its consumer the sensation of a personalized experience when consuming their products. This has allowed
them to increase their sales volumes at a staggering rate (see chart below).

Brand Dollar Sales （2018） Change From Prior Period

ENERGY DRINK TOTAL SALES $10,919,392,609 7.50%

RED BULL NORTH AMERICA INC $4,685,615,913 4.80%

MONSTER BEVERAGE CORP $4,192,281,599 10.40%

 ROCKSTAR INC $918,524,467 -1.90%

HIGH PERFORMANCE BEVERAGE $464,483,966 6.60%

VITAL PHARMA INC $211,912,588 402.20%

Data Source: Data from 52 weeks ended 10/07/18 Total Multi-Outlet w/ C-Stores (Groceries, Drug, Mass Market, Convenience, Military, and Select Club & Dollar Retailers) provided by “IRL, a Chicago-based market research firm”

As we can see from the chart, the energy drink industry in the USA is a very consolidated market, with only a handful
of players dominating the big majority of the market share. Its main players have stablished their positions in the
market through innovative advertising techniques, new product development and well-established brand value.

Despite still having a very small market shares in comparison with the 3 big player, Vital Pharma, driven by Bang
Energy has seen outstanding growth in their sales volumes. This suggest that although it is a highly competitive
market, shifting consumer behaviors have created new opportunities for new players to penetrate the market.

Part II – Energy Drinks Market: Best Selling Products

2018 Top Selling Energy Drinks in USA (By Product)

Brand Dollar Sales Change From Prior Period

ENERGY DRINK TOTAL SALES $10,919,392,609 7.5%

RED BULL ORIGINAL $2,906,001,045 1.4%

MONSTER ENERGY ORIGINAL $1,685,416,191 8.7%

RED BULL SUGAR-FREE $762,270,997 7.1%

MONSTER ENERGY ZERO ULTRA $660,371,312 14.1%

NOS $446,382,275 7.0%

MONSTER ENERGY LO CARB $286,912,823 -2.6%

MONSTER MEGA ENERGY $235,638,569 -2.8%

RED BULL THE BLUE EDITION $218,145,853 9.8%

ROCKSTAR ORIGINAL $210,716,825 -9.0%

RED BULL THE YELLOW EDITION $197,874,241 13.6%

MONSTER JUICE $188,325,365 3.4%

 ROCKSTAR PURE ZERO $164,861,172 11.8%

MONSTER ENERGY ULTRA SUNRISE $156,979,865 15.3%

Data source: Data for 52 weeks ended 10/07/18 Total US Multi-Outlet w/ C-Store (Grocery, Drug, Mass Market, Convenience, Military, and Select Club & Dollar Retailers) provided by "IRI, a Chicago-based market research firm

From the above, we notice the leading products in the market are from the big market players, particularly their
original versions. In many cases, companies innovate by developing new flavors and products, so to attract
costumers and keep an edge on the market; however, it is also a key factor to maintain a “classical flavor” in each
brand, as their “signature flavor” creates a sense of familiarity and representative experience for the consumer,
which in turn leads to the promotion of customer loyalty and engagement of high-frequency energy drink consumers.

We can also see that the sugar-free, low calorie versions of the classical flavors have a important place in the market
as well, the customers lead towards the drinks and flavors they are familiar with but they are now more health-
conscious and are willing to give up their previous preferences in order to find a product that fits their ideas for a
new lifestyle.

Amongst the key products in the market we must also note Rockstar’s drinks, that whist having experienced a big
slowdown in their sales volumes through the last few years, their dynamic and youth-oriented marketing campaigns
have successfully established their place in the market, by not only promoting a heathly, delicious and effective
energy drink, but also the idea of a very dynamic and cool lifestyle. It has an important placebo effect on customers.

Part III – Market Trends and Tendencies

We can see very important tendencies in the beverage market in the USA, for many years the most consumed
beverages in the world, like Coca-Cola and Pepsi, have experienced an important reduction in their demand and
consumption. An important reason behind this is the change in consumer’s behavior, as consumer are now much
more health-aware and have started shifting their drink preferences from Sodas to healthier options such as energy
drinks, represented by the 7.5% increase in energy sales in the USA.

Despite the fact that the energy drink market in the USA is a saturated one, there may be room for companies that
differentiate themselves from the leading players’ brands, which look remarkably similar in their advertising,
promotions, and sponsorships. Competitors face challenges such as distribution, obtaining shelf space, and generally
offering something unique from the big three players (Red Bull, Monster and RockStar)

Monster and Rockstar, and less so Red Bull, are on top of the trends in the energy drink and broader soft drink
industry and have widened their product offerings to compete with smaller players. For example, while Steaz Energy,
the most popular organic energy drink, distinguishes itself by using certified organic and Fair-Trade ingredients and
being based on green tea, Rockstar has an organic offering, and Monster has one with green tea.

Another trend is energy drinks with additional ingredients that are supposed to enhance athletic performance and
recovery. Such as Quake, 7-Eleven new launched performance drink, advertised as the healthiest energy/sports drink.

Out of the $12 billion annual sales that energy drinks have, it’s estimated that 75% of it is sold in convenience stores,
according to IRI. Much of that growth is attributed to the increase in functional or performance energy drinks. This
gives brands such as Quake a competitive edge.

Part IV– Conclusions

Red Bull and Monster are the market leaders and the competition among the smaller brands is very intense. This
means players like Rockstar have very little influence on the market and can only work on their competitive
advantage to improve its share of the market. Meanwhile, smaller brands like Nos and Bang energy are slowly gaining
momentum and using different advertising and product development strategies to differentiate themselves from
other brands and increase their market share.

Despite despite there being some controversy about how energy drinks affect health, the energy drink market is
growing steadily and there’s definitely room for new brands to penetrate it as long as the identify market trends on
time and grasp the opportunities that the new consumer behaviors bring to market.