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MarketsandMarkets 3

Global Sports & Energy Drinks Market By Types, Ingredients, Distribution Channels, End-users & Top Brands Trends & Forecasts (2011 – 2016)

1 INTRODUCTION

1.1 KEY TAKE-AWAYS

Define size and segments of the global sports and energy drinks market

Analyze the market structure by identifying various sub-segments of the global

sports and energy drinks market

Forecast revenue of the global sports and energy drinks market and its various sub-

markets/micro-markets with respect to four main geographies; i.e. North America,

Europe, Asia-Pacific, and Rest of the World (ROW)

Identify major trends, drivers, and restraints of the global sports and energy drinks

market

Strategically analyze each sub-market with respect to individual growth trends and

contribution to the overall market

Analyze opportunities in the market for the stakeholders by identifying high-growth

segments of the global sports and energy drinks market

Identify and profile key players in the global sports and energy drinks market

Track and analyze competitive developments such as new product developments,

partnerships, mergers and acquisitions in the global sports and energy drinks market

1.2 REPORT DESCRIPTION

The sports drinks, energy drinks, and nutraceutical drinks form a part of functional drinks;

which come under soft drinks. Sports drinks and energy drinks are very different beverage

choices that should be assessed and marketed differently and hence are described separately

in the report. Sports and energy drinks differ in their functionality as well. Sports drinks are

meant to replenish the fluid lost during exercise or any physical activity whereas energy drinks

are to give you a boost of energy. The report provides full analysis of the world's leading

energy drinks’ market, with clear insight and market commentary on the main developments

MarketsandMarkets 4


and trends. Also included is a chronology of developments by region, ensuring coverage of the

latest energy drink developments.

With the huge market potential and the growing preference, the market is likely to witness

considerable growth in the years to come. The market is anticipated to continue penetrating

the untapped markets and older population. The growth of the market is also largely attributed

to the developments such as the incorporation of the organic and natural ingredients. The

varieties of sports and energy drinks containing organic or natural ingredients are increasing

continually at present.

1.3 MARKETS COVERED

This report focuses on global sports and energy drinks market. This research categorizes the

global sports and energy drinks market on the basis of types, end-users, ingredients,

geography, top brands, and distribution channel:

On the basis of geography:

North America

Europe

Asia-Pacific

ROW

On the basis of top brands:

Sports drinks

Gatorade

Powerade

Others

Energy drinks

Red Bull

Others

MarketsandMarkets 5


On the basis of distribution channel:

Off-premise (Off trade)

Convenience stores

Supermarkets/hypermarkets

Mass merchandisers

Drug stores

Others

On-premise (On-trade)

Food service/sports nutrition chain

Vending

Others

1.4 STAKEHOLDERS

Sports and energy drink ingredients’ manufacturers/suppliers

Pharmaceutical companies

Sports and energy drink manufacturers

Sports and energy drink retailers and distributors

Research and consulting firms

1.5 RESEARCH METHODOLOGY

The basic market information was collected through secondary research from government

websites, companies’ websites and news releases; and from worldwide soft drinks associations’

websites such as U.S.-based International Council of Beverage Associations (ICBA),

Switzerland-based International Food and Beverage Alliance (IFBA), and other government

and non-government information sources. Moreover, we have used various secondary sources

such as encyclopedia, directories, and databases to identify and collect information useful for

MarketsandMarkets 6


this extensive, technical, and commercial study of sports and energy drinks. No primary

research has been done for this report.

1.5.1 MARKET SIZE

A top-down approach was used to estimate the market sizes of sports and energy drinks. The

research methodology used to calculate market size also includes the following details:

The key players in the sports and energy drinks market were identified through

secondary research and their market revenue was determined through secondary

research. It includes study of the annual reports of top market players.

The size of sports and energy drinks market was derived from the aggregation of

market shares of the major players and forecast is based on an analysis of market

trends such as pricing and consumption. The penetration of micro-markets was

established through secondary sources.

The geographical split is determined using secondary sources. It is based on various

parameters such as number of players in a particular region and the extent of

research activity occurring in that geography.

1.5.2 COMPANIES COVERED DURING SECONDARY

Beverage Marketing Corporation (U.S.)

American Beverages Association (U.S.)

The Beverage Network (U.S.)

American Dietetic Association (U.S.)

Japan Soft Drinks Association (Japan)

British Soft Drinks Association (U.K.)

Gatorade Sports Science Institute (U.S.)

China Soft Drinks Industry Association (China)

Canadian Beverage Association (Canada)

Factiva database

MarketsandMarkets 7


OneSource database

Company’s annual reports and press releases

Various soft drinks/beverages magazines

1.5.3 ASSUMPTIONS

All U.S.D. exchange rates are as of 2010.

Inflation is not the part of pricing and price has been kept constant throughout the

year for calculating market size in both volume and value.

Prices have been assumed to be constant across the globe.

The numbers may not match up due to rounding off at subsequent levels.

All major top brands are only considered and potential brands may not be covered

completely.

1.5.4 KEY DATA POINTS TAKEN FROM SECONDARY SOURCES

Past and future growth trends

Geographical segmentation and their respective growth rate

Market share of different applications and their growth rates

Developments for new ingredients

Key factors affecting the market

1.5.5 KEY QUESTIONS ANSWERED

What are market estimates and forecasts, in terms of volumes and revenue for

sports and energy drinks market?

What and where are the opportunities?

What factors are driving market growth?

Which are the key playing fields and winning-edge imperatives?

What are the competitive landscapes?

MarketsandMarkets 8


Who are the main players in the sports and energy drinks market; what are their

strategic directives, operational strengths? Who is doing what?

What is the market demand for sports and energy drinks by various types and end-

users?

What is the market size and forecast for different geographies; i.e. North America,

Asia-Pacific, and Europe?

What are the potential ingredients for sports and energy drinks?

MarketsandMarkets 9


2 EXECUTIVE SUMMARY

The global market for energy drinks has grown exponentially in the last few years and young

adults are the primary targets of the industry. Now there are hundreds of sports and energy

drinks available in the global market. The market was well-established in 2010 and is expected

to grow rapidly. The global market of sports and energy drinks is dominated by few major

companies such as PepsiCo Inc. (U.S.), Coca-Cola Company (U.S.), and Red Bull GmbH

(Germany) with exception of few regional markets such as U.K., which are dominated by

regional player such as Glaceau (U.S.). At present, youngsters are the main target customers

of the sports and energy drinks. However, the customer base is expected to widen to adults

including women and children.

TABLE 1

SPORTS & ENERGY DRINKS MARKET VOLUME, BY GEOGRAPHY,

2009 – 2016 (MILLION LITERS)

Region 2009 2010 2011 2016 CAGR%

(2011-2016)

North America XX XX XX XX XX

Asia-Pacific XX XX XX XX XX

Europe XX XX XX XX XX

Rest of the World XX XX XX XX XX

Total XX XX XX XX XX

Source: MarketsandMarkets

In the global market for retail drinks, sports and energy drinks are amongst the fastest

growing ones in the world. Sales of sports and energy drinks worth more than $XX billion were

recorded in 2010. The global market volume for sports and energy drinks is expected to grow

at a CAGR of more than XX% every year. The volume of the market was more than XX billion

MarketsandMarkets 10


liters in 2010 and is expected to cross XX billion liters by 2016. The largest share is contributed

by North America with over XX% followed by Asia-Pacific with over XX%. Europe is expected

to show a rapid growth amongst the geographies. Several markets are dominated by regional

players, but “Red Bull” and “Gatorade” are the undisputed market leaders in energy and sports

drinks respectively. The global market for sports and energy drinks is expected to cross $XX

billion in value by 2016.

Sports and energy drinks are mostly sold through different retail formats such as convenience

stores, supermarkets, and hypermarkets; followed by mass merchandisers and drug stores.

The upcoming trend becoming popular is vending machines with XX% share in the global

sports and energy drinks distribution channel.

2.1 DRIVERS

TABLE 2

IMPACT ANALYSIS OF GROWTH DRIVERS

Driver 2011-12 2013-14 2015-16

Making drinks more functional Medium High High

Health concerns and physical well-being Medium High High

Smart marketing and intelligent positioning Medium High High

Packaging innovations Medium High High




2.1.1 MAKING DRINKS MORE FUNCTIONAL

Sports and energy drinks manufacturers are contributing with new developments in energy

drinks through new flavors, and by indulging consumers in daily consumption. Re-introduction

of decadent flavors such as chocolate and fruit flavors may help brands in increasing the

functionality and to augment the indulgence of more consumers towards sports and energy

drinks. Increasing the functionality of new age beverages to target health-conscious people

would be a future trend for sports and energy drink manufacturers.

Sports and energy drinks can be made more functional in order to provide the following

benefits:

Energy

Muscle relaxation

Replenish of salt levels

Anti-aging properties

Anti-oxidation

Blood circulation

Alertness

Virility and potency



2.2 RESTRAINTS

TABLE 3

IMPACT ANALYSIS OF GROWTH RESTRAINTS

Restraints 2011-12 2013-14 2015-16

Ageing demography Low Medium High

High product prices Low High High


2.2.1 AGING DEMOGRAPHY

Economically, aging population will have an impact on economic growth, savings, investment,

consumption, and lifestyle. Socially, aging population affects health and healthcare. Japan,

Singapore, Colombia, Brazil, Thailand, Sri Lanka, Tunisia, Jamaica, China, and Chile are

amongst the countries that are aging fast. That means their XX+ population rate will be

doubled by 2025.

Global older population is increasing by XX% every year, faster than the population as a whole.

Increase in the proportion of older persons (XX+) comes with decline in the proportion of the

young persons (below XX). By 2050, the number of older persons in the world will exceed the

number of youngsters for the first time in history. Certain developed regions already have

witnessed this reversal trend in 1998.

United Nations reported that the proportion of older persons is projected to reach XX% in 2050

from XX% in 2000. More than half of the world’s XX+ population lives in six countries: China,

the United States, India, Japan, Germany, and Russia. XX+ population of the world is

projected to increase by XX% between 2005 and 2030. Nearly XX% of all the older Japanese

are expected to be at least XX years old by 2030. While Japan’s total population is projected to



decrease by XX million, the population age “XX+” is projected to increase by XX million

between 2006 and 2030. Russia’s and Japan’s population is expected to fall by XX% and XX%

respectively as these two countries witness low fertility rates.

2.3 OPPORTUNITIES

2.3.1 RISING DEMAND FROM EMERGING COUNTRIES

Emerging or developing countries such as China and India prove to be the best new markets

for sports and energy drinks. New geographies need to be tapped with favorable strategies for

that particular market. Local players in this segment have already captured the existing

market but again there is a scope for big players (due to their brand image) to invest in lesser

known territories such as South East Asian countries. Brand value of big players helps them to

augment their sales by entering newer areas. Distribution channels have to be strong enough

to cater to the wide-spread market of such drinks. Huge investments have to be made on

marketing and advertising such drinks.

Introducing old product to a new market would always be better than new product to new

market. Proven and popular brands usually do well in new markets. Certain countries in Latin

America such as Brazil are having great sales potential for such beverages. Making these

beverages more visible and accessible would help in penetrating the market to a greater

extent. That means these products should be made available at as many channels as possible.

Many manufacturers have the capability to penetrate this market successfully, as there would

be little requirement to invest in new equipment or adapt to the company's business model. An

entirely new company could enter the market on a small scale and operate a single integrated

retail outlet, particularly with energy drinks. However, to appeal to the mass-consumer

market, a company would need to be reasonably large, in order to obtain scale economies in

production. Brand building would also be a requirement if new companies want to succeed in

these emerging markets.



2.4 INTRODUCTION

Sports and energy drinks market is increasingly growing hence consumers and businessmen

have started showing interest in this market. Energy drinks market has increased because

people are working almost XX hours a day and hence an energy source is required. Hence

people made energy drinks a part of their life relying on energy from energy drinks, ultimately

contributing to the growing demand in the energy drinks market. Market players are concerned

with improving their ingredients and contents for extra stamina to work without experiencing

fatigue.

TABLE 4

COMPARISON BETWEEN SPORTS DRINKS & ENERGY DRINKS

Particular Sports drinks Energy drinks

Common brand

names Gatorade, Powerade Red Bull, Full Throttle, Monster Energy

Purpose To rehydrate the body after

intense exercise

To rapidly increase energy, endurance,

and performance

Ingredients Glucose, electrolytes Caffeine, sugar, other substances (e.g.

taurine, glucuronolactone)

Effects

Replaces lost electrolytes and

carbohydrates during sustained

strenuous exercise; prevents

dehydration

Temporarily increases heart and

respiratory rates and blood pressure; not

designed to hydrate the body, so

dehydration is possible


Sports and energy drinks entered the market with striking brand names, attractive slogans,

and expensive marketing campaigns and currently hold a significant portion of soft drinks

industry. They are available in convenience and grocery stores and are also offered alongside

soft drinks in vending machines. Sports and energy drinks are meant to supply mental and



physical stimulation for a short period of time. Energy drinks are consumed for different

reasons such as to boost energy, reduce thirst, to mix with cocktails, and as flavoring

smoothies.

Energy drinks have managed to maintain their popularity inspite of high caffeine content. Many

customers are paying higher price due to their benefits. Sports drinks provide carbohydrates

and electrolytes.

Today consumers know the need to rehydrate during exercise, but there was a time when

drinking water during exercise was thought to bring muscle cramps in the body. Sports drinks

are usually a mix of water, sodium, sugar, potassium, phosphate, and lemon juice which

provides a tasty and non-carbonated drink. A sports drink helps to reduce the risk of water

intoxication where electrolytes (sodium and potassium) are depleted but only water is

replaced. The carbohydrates supply fuel to the muscles during exercise. Sodium (the main

electrolyte) improves the rate of fluid replacement. The addition of protein is beneficial to

prevent muscle damage and improves performance.



2.5 OVERVIEW

Sports and energy drinks show well-defined consumption patterns due to its proven health and

nutritional benefits and rising fitness-freaky consumers. The main reason for the increasing

popularity of sports drinks is the long-term health implications and ease of use offered

together with packaging innovations. The worldwide economic recession affected demand of

sports and energy drinks in late 2007, with consumption patterns showing signs of distress.

The continued fall in rate of employment, reducing disposable incomes, decreasing household

wealth, and sharply dropping per capita spends, have together caused a loss in sales from the

previous levels.

Sports and energy drinks are high priced premium functional beverages market witnessing rich

growth over the last decade. The United States continues to be the largest market, followed by

Europe and Japan. Collectively, they account more than XX% of the global market. The U.S.

sports drinks market is mature while the energy drinks segment is expected to grow at a

strong rate. The European market is expected to grow at a healthy pace. U.K. and Germany

are the largest regional markets. France is the fastest growing market. Japan is projected to

see less moderate growth. The desire to lead healthy lives and the importance given to

physical fitness is a major growth driver of this segment. Sports drinks are driven by unique

product concepts, new brands, flavors, and brand extensions of popular products. This

performance beverage market is now positioned as a sophisticated specialist segment of the

sports nutrition market for professional athletes and body builders.



FIGURE 1

SPORTS & ENERGY DRINKS MARKET, BY GEOGRAPHY, 2011

XX%

XX%

XX%

XX%

North Amer

Asia-Pacif ic

Europe

ROW

XXXXX

XXXXX

XXXXX

XXXXX


Key players in this segment are Pepsi, Coca-Cola, Danone, Hansen’s Beverage Company,

Monarch Beverage Company, Red Bull, Dark Dog, GlaxoSmithKline, Extreme Beverages,

Taisho Pharmaceuticals and Otsuka Pharmaceuticals. In terms of market share, “Gatorade’’

and “Red Bull” lead the sports and energy drinks segments, respectively. The Japanese market

is dominated by regional players such as Taisho — the pioneering developer of Lipovitan

brand, Otsuka Pharmaceuticals and others.

Sports and energy drinks represent the largest market for sports and fitness nutrition. Energy

drinks that are targeted at low-income consumers suffered a slowdown. Future growth in

consumption will be concentrated in emerging markets, such as China, India, and Latin

America. The burgeoning middle-class consumers in these countries show willingness to spend

on health and wellness, and are keen to adopt Western lifestyles.

Branding activities from the major players has led to the emergence of new products offering a

greater range and variety of health benefits. Health and fitness is a major driver of this

industry. To widen the consumer base, manufacturers have also been developing products

aimed specifically towards women and children. Growth in this market will primarily be driven

by rising emphasis on health and wellness, improving income levels, rising tendency to spend,

speedy product innovations, and the adoption of westernization across Asian countries.



2.6 INTRODUCTION

Energy drinks are the most dynamic segment of soft drinks and remain niche in the soft drinks

category. Red Bull is the global market leader in energy drinks, but its share is being

decreased because of diversification of the category and rapid increase in number of other

brands. However, Red Bull has recently announced their plans to enter into the Chinese

market by 2012. Beverage industry has witnessed energy drinks becoming the fastest growing

sector over the last decade. Also, the number of new products launch with new and innovative

ingredients is on the rise.

Earlier, the energy drinks market took a highly conventional approach for new products

launched across the world. In most parts of the world, new products adopted a ‘me-too’

approach, following closely in the footsteps of the market leader. The most common

positioning strategy of energy drinks was to provide a mental boost, helping the consumer to

fight exhaustion. With caffeine and taurine as the key ingredients, other ingredients also

became standardized and synthesized. Other prominent ingredients are vitamins (A to E),

specifically vitamin B. Vitamins help to increase metabolic rates and the promotion of cell

growth and division in the body. Due to this, target audience for energy drinks became young

males.

However, the manufacturers have adopted a softer approach to the positioning, formulation,

and marketing of energy drinks rather than prescriptive approach. This shift has helped brands

to distinguish among others, but increasingly in response to consumer demand for

alternatives. This demand has come from the dislike for the highly sugared, over sweetened

taste that became the trademark for energy drinks and a growing dislike to products that were

laden with highly synthesized, but stimulating ingredients. Energy drink consumers are

choosing products which do not lead to the ‘crash’.



3 COMPANY PROFILES

3.1 ABBOTT NUTRITION INC

625, Cleveland Avenue

Columbus

OH 43215-1724

U.S.

Tel: 1-614-6247-677

Fax: 1-614-6246-057

Website: www.abbottnutrition.com

3.1.1 OVERVIEW

Founded in 1903, Abbott Nutrition is a subsidiary of Abbott Laboratories and headquartered at

Columbus, Ohio, U.S. The company is engaged in research, development, and marketing of

innovative nutrition and related healthcare products that facilitate growth, health, and wellness

of people of all ages. The company offers its products in several countries across the globe

including U.S., U.K., Japan, Germany, France, Spain, Italy, and The Netherlands. They

employed XX people worldwide as of December 2010.

3.1.2 FINANCIALS

The company reported overall revenue of $XX million in 2010, an increase of XX% over 2009.

The company reported revenue of $XX million for the nutritional segment in 2010, an increase

of XX% over 2009.



TABLE 5

ABBOTT NUTRITION INC: REVENUE GROWTH, BY PRODUCT GROUPS,

2009 – 2010 ($MILLION)

Product group 2009 2010 % Change

U.S. Adult Nutritionals XX XX XX

International Adult Nutritionals XX XX XX


3.1.3 PRODUCTS & SERVICES

Abbott Nutrition offer products in pediatric, adult, and healthy living nutritional services under

the brands such as “Similac” in infant formulae, “PediaSure” and “Pedialyte” for children,

“Ensure” and “ZonePerfect” for active adults, “EAS” for elite athletes and fitness enthusiasts,

“Glucerna” for people with diabetes. EAS is specialized within the sports nutrition category with

“Myoplex Lite Powder”, “Myoplex Lite”, “Myoplex Original Powder”, “Myoplex Original”,

“Myoplex Strength Formula”, “Pro Science ARMOR”, “Pro Science CLA”, “Pro Science

CREATINE”, “Pro Science FINISH Powder”, “Pro Science FINISH”, “Pro Science HMB”, “Pro

Science L-GLUTAMINE”, “Pro Science PUSH”, “Pro Science RELOAD” to meet the unique

nutritional needs of athletes, along with ZonePerfect all-natural nutrition bars for busy, active

lifestyles.

3.1.4 STRATEGY

Abbott Nutrition focuses on enhancing their offering within the sports nutrition category. The

company intends to intensify the penetration within the emerging markets such as China,

Southeast Asia, and Latin America.



3.1.5 DEVELOPMENTS

Date Approach Description

September

2011

Product

certification

Abbott Nutrition received certification for all of their “EAS Sports

Nutrition” products as free from all the banned substances. The

company will market its products with a qualified "tested and true"

quality assurance mark on packaging.

September

2010

New product

launch

Abbott Nutrition launched EAS Peak by using PXX technology in the

U.S.

June 2009 New product

launch

Abbott introduced new EAS Myoplex Strength Formula nutrition

shake in the U.S. It is a ready-to-drink sports nutrition drink made

for the active people to refuel or rebuild lean muscles.


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