The Energy Drinks Industry: An Overview
If you're looking for a pick-me-up, a coffee may give you the jolt you need. But if you're like the millions of other people who don't want a cup of java, you may end up reaching for an energy drink. These companies that produce these beverages say they increase your energy and alertness as well as provide you with a physical boost. That's because they contain significant amounts of caffeine.
Energy drinks are part of the broader soft drink category, which includes carbonated beverages, fruit and vegetable juices, bottled water, sports drinks, beverage concentrates, ready-to-drink tea, and ready-to-drink coffee. According to experts, energy drinks are the most popular supplements for teens and young adults in the United States along with multivitamins. The majority of these drinks are consumed by men between 18 and 34.
Global energy drink sales are estimated to reach $53.1 billion by the end of 2022. The industry is expected to grow by a compound annual growth rate (CAGR) of 7.1% by 2027 to an estimated $86.1 billion. This growth is attributed to rising incomes, urbanization, and an increase in health and wellness consciousness. Both the adult and adolescent populations are consuming energy drinks to support their busy and active lifestyles, due to the an increase in performance, endurance, and alertness. Due to the COVID-19 crisis, "immunity-boosting" beverage consumption is rising as consumers are searching for sources that provide vitamins and minerals.
North Americans consume more energy drinks than any other geographic market in the world, with the European market close behind. Plus, research shows that the Asia-Pacific region is expected to be one of the fastest-growing markets for the industry, with a CAGR growth of 5.1% by 2026, thanks to a more modern lifestyle and changing demographics.
Want to know more about the biggest players in this industry? Keep reading to learn about the largest companies in the energy drink market as well as some of the emerging trends.
- The energy drink industry is a booming business with several key names leading the pack.
- Red Bull, Monster, and Rockstar are among the biggest names in this saturated market.
- Red Bull is a privately-owned company and the dominant force in the market.
- Monster is publicly traded and entered into a strategic partnership with Coca-Cola in 2014.
- Rockstar was sold to PepsiCo in 2020.
- Global energy drink sales are estimated to reach $53.1 billion by the end of 2022 and are expected to grow by 7.2% between 2022 and 2027.
Redbull is owned by the Austrian company Red Bull GmbH. The company introduced the drink in Austria in 1987, marking the beginning of the global energy drink industry. Red Bull comes in 8.4-ounce cans in a handful of varieties, including original, sugar-free, Total Zero (no calories), and the Editions (watermelon, blueberry, tropical, coconut, dragonfruit, peach, and strawberry-apricot). The drinks’ main ingredients are caffeine, taurine, B vitamins, carbonated water as well as sucrose and glucose (except for the sugar-free version).
Red Bull is sold in 172 countries, where it employs more than 13,000 people, as of the end of 2021. Sales are surging in emerging markets, such as India (up 37%), Brazil (up 30%), and Africa (up 25%). The company continues to focus on its efforts to expand in the U.S., Western Europe, and the Far East.
The company is a private company owned by chief executive officer (CEO) Dietrich Mateschitz, along with Thai businessman Chalerm Yoovidhya and his family. Because the company is privately owned, there is very little financial information available. According to the company, more than 9.8 billion cans of Red Bull were sold in 2021. That's a jump of 24.3% from sales recorded in 2020, representing the best figures in the company's history.
California-based Monster Beverage (MNST) is a holding company that was founded in 1985. It employs more than 4,000 individuals (as of May 2022) and is headed by CEO Rodney Cyril Sacks. The company began selling Monster Energy drinks in 2002, originally created under the brand Hansen's Natural. In 2020, Monster is the second largest energy drink company with a market share of 39% after Red Bull.
Monsters drinks come in over 40 varieties. The company has 18 different brands, including the original Monster drink, Burn, NOS, and Predator. One 16 fluid ounce can of Monster Energy contains 160 milligrams of caffeine (or 10 mg per fluid ounce)—considered very high—and taurine, an amino acid considered to be a dietary supplement and mental stimulant.
The Monster drink is sold in 141 countries as of 2021. The company faces stiff competition domestically and internationally from Red Bull and Rockstar. In 2014, the company entered into a long-term strategic partnership with Coca-Cola (KO), which purchased a 16.7% stake in Monster. This move made Monster the exclusive energy play for Coca-Cola. The soft drink giant's distribution network reaches more than 200 countries. The two companies have done business together since 2008.
The company's stock trades on the Nasdaq. The stock was down 1.06% on a year-to-date (YTD) basis as of June 6, 2022, with a market cap of $48.39 billion. According to year-end reporting, Monster's consolidated net sales were $5.54 billion for the fiscal year 2021—an increase of 20.5% from the previous year. The company doesn't report year-end sales per individual brand. Gross profits reported as a percentage of net sales were reported for the year at 56.1%.
Rockstar International founder and owner Russ Weiner introduced Rockstar Energy in San Francisco in 2001. Its marketing strategy includes affiliations with action sports, motorsports, live music, and models. Rockstar comes in 16-ounce cans in 30 flavors, including Rockstar original, sugar-free, pure zero line, recovery drinks, and more. Rockstar is sold in convenience and grocery stores in more than 30 countries.
Weiner sold the privately held company to PepsiCo (PEP) in 2020 for $3.85 billion. The soft drink company reaches consumers in more than 200 counties, adding Rockstar to its beverage lineup, which includes Pepsi, Gatorade, and Tropicana. The company said it planned to relaunch the Rockstar brand in the United States and internationally before integrating it into its supply chain.
Although PepsiCo doesn't release financial information about specific brands, we can make some determination about how Rockstar is poised to position itself within the company. Sales of Rockstar topped $851 million in 2019.
Top Emerging Companies and Trends
The energy drink market is saturated, making it more difficult for smaller and newer companies to compete. This means there's no real threat to energy drinks market dominance. Sales for energy shots like 5-Hour Energy or Tweaker have declined since COVID-19 reduced the "impulsive nature of energy shot consumption."
There is room in the energy drink market for companies to differentiate themselves from the leading players, which look remarkably similar in their advertising, promotions, and sponsorships. Competitors face challenges such as distribution, obtaining shelf space, and generally offering something unique to the customer.
Red Bull and Monster are on top of the trends in the energy drink and soft drink industry, allowing them to widen their product offerings to compete with smaller players, including Bang, who has been gaining market share in the past year. This brand showed significant growth in the market in 2019, faring much better than other natural energy drinks thanks to its "super-creatine."
We can expect to see the following trends in the energy drinks industry in the future:
- A boost in the availability of plant-based energy ingredients in these beverages, including guarana and maca
- Nootropic energy to help increase help the consumer's focus and mental clarity
- The reformulation of drink formulas to include kola nut and natural caffeine, and more exotic flavors
Experts warn that the sleep patterns of teenagers can be drastically altered with the excessive consumption of energy drinks.
Examples of On-Trend Energy Products
Muscle Monster Energy Shake
Java Monster; Muscle Monster Energy Shake (coffee flavor)
ORGANICS by Red Bull
Monster Energy Dragon Iced Tea in Green Tea
Red Bull Total Zero, Red Bull Zero Editions
Monster Energy Zero Sugar
Rockstar Sugar Free, Rockstar Pure Zero, Rockstar Unplugged, Rockstar Xdurance
Red Bull Sugarfree
Lo-Carb Monster Energy
Rockstar Unplugged, Rockstar Pure Zero. Rockstar Xdurance
Monster Hydro Super Sport
Red Bull Editions (seven fruit-flavored varieties)
Monster Energy Nitro (with nitrous oxide)
Rockstar Punched, Rockstar Boom
Notes: This is not an exhaustive list of product offerings that fit the categories shown. There is also some overlap between categories. For example, zero-calorie drinks also have zero carbs.
Monster Energy Drink FAQs
How Old Do You Have to Be to Drink Monster Energy?
While there is no legal age limit to how old you have to be in order to drink Monster Energy, the company agreed that it would not market any of its energy beverages to children under the age of 12 in the U.S. This includes marketing and selling drinks, coupons, and samples in and around K-12 schools, as well as advertising in areas where children are the primary audience, such as television, radio, and the internet.
How Did Monster Beverage's Stock Split Work?
Monster split its stock four times between 2005 and 2016. The company did a two-for-one split on Aug. 9, 2005, and Feb. 16, 2012. Shareholders received four shares for each share they had on July 10, 2006, and three shares for every one share held on Nov. 10, 2016.
Who Are Monster Beverage's Major Shareholders?
The company's top individual shareholders include Rodney Sacks (50.2 million shares), Hilton Schlosberg (48.9 million shares), Mark Hall (795,356 shares), Emelie Tirre (247,172 shares), Thomas Kelly (126,292 shares), and Guy Carling (90,898 shares).
What Institutional Investors Hold Monster Beverage Stock?
As of March 30, 2022, Monster's top institutional investors were FMR (25.8 million shares), Vanguard Group (30 million shares), Blackrock (24.4 million shares), Loomis Sayles & Company (18.9 million shares), State Street Corporation (17 millions shares) and AllianceBernstein (14.3 million shares). About 65% of the company's shares are held by institutions.
The Bottom Line
The energy drink industry has been growing profitably for years as other once-popular beverages have declined, and it appears on track to keep growing despite regulatory and health challenges. One of the three leading companies is privately owned, limiting options for investors who want direct exposure to Red Bull through this category. But investors can still reap the benefits of public beverage stocks like Monster along with exchange-traded funds (ETFs) that focus on the food and beverage industry.
Disclaimer: The author does not own shares of or have a financial interest in any company mentioned in this article.