The energy drinks sector is set to become even more crowded as new entrants look to tap into growing demand and manufacturers offer better pricing and healthier options.
Once dominated by Austria brand Red Bull, there has been increased uptake of local brands such as MoFaya and Score, while US-produced Monster is also popular.
JSE-listed food and beverage producer Tiger Brands recently launched an energy drink called Energade Boost.
Ismail Nanabhay, the company’s MD for beverages, said the energy drink industry is the fastest-growing beverage category in South Africa and globally, appealing to consumers across age groups, starting with young adults.
According to Christopher Day, research analyst at Euromonitor International, energy drinks in South Africa saw significant growth in volume between 2021 and 2022, reaching 306-million litres this year. The industry’s value is expected to grow by 24% in 2022 to reach an estimated R12,1bn.
Day said in South Africa the top five brands in value terms are Red Bull, Monster, Power Play, Reboost and Score.
He added that brands will benefit from consumers’ purchasing power in 2021 and 2022.
“As there are several brands on offer with varying flavour profiles, consumers are also spoilt for choice in terms of affordability. South Africans are likely to see a slight decline in the average unit price as brands continue to compete in a crowded landscape to maintain demand and gain volume share, even if that means losing in value share terms.”
We expect further room for expansion from the smaller, reduced-sugar segment. With an increasing focus on health-conscious consumers’ demands, it is likely a higher number of brands, or even private labels, will aim to enter this space
— Christopher Day, research analyst, Euromonitor International
Private labels such as Robust and Spar held significant share at the end of 2021.
However, other major supermarket chains have also started to introduce offerings and are expected to see increasing demand as consumers seek more affordable alternatives to brands such as Red Bull and Monster Energy, Day said.
“We expect further room for expansion from the smaller, reduced-sugar segment. With an increasing focus on health-conscious consumers’ demands, it is likely a higher number of brands, or even private labels, will aim to enter this space.”
Energade Boost contains lutein, an ingredient found in selected green vegetables and carrots, which is said to assist in improving eye health. Tiger Brands said it worked with its brand research and development teams, its nutritionist Arthur Ramoroka and suppliers in the development of the product.
Nanabhay said a key consumer need is energy due to the fast pace of life. “The demands of ‘now’ across school, work, travel and life require us to be at our peak for longer. Sources of energy include food, snacks, confectionery and beverages, which are a very easy and on-the-go way to replenish energy.”
Suppliers to this sector are also benefiting.
During Nampak’s recent full-year results presentation, CEO Erik Smuts said there is high demand for cans, especially large sizes, from the alcohol and energy drink industries.
He said one of the company’s clients, having realised the growth potential, recently entered this market. Smuts added that energy drink companies are offering good value, with a 500ml can costing between R10 and R20.
“From a value point of view there is still a lot of benefit coming from energy drinks. Lots of consumers start the day drinking energy drinks rather than something nutritional ... It’s a reality we are seeing.”
Hulamin, which makes coated can-end coil, said can sheet demand has increased locally and internationally. “The demand is due to the can being the most effective container in terms of recyclability,” it said.
Nanabhay said cans are the preferred packaging in the energy drink category as they suit on-the-go and immediate consumption. Cans are also recyclable.
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