Sports and Energy Drinks:
Facts vs. Fiction
The new year, and the natural slowdown of foodservice sales in January allows us time to re-focus our product offering and re-think about which items are optimal to drive sales and maximize margins. Because out of home beverage sales continue to be the industry’s leading revenue categories, it is important we have the right mix of hot and cold beverages, the right brands, and the right options to maximizing profitability of our available shelf space.
Sports and energy drinks are two product categories that many operators often second guess their value for a variety of different reasons. Sports drinks (used to re-hydrate, help with thirst, and restore electrolyte balance) often get a bad rap for simply being “overrated coloured water” with minimal health benefits. It is estimated the sports drink market in Canada is in excess of $700M and growing at just under 5% per year. Sports drinks are popular with key demographics; in fact, it is estimated almost 35% of Canadians between 20 - 34 consume them daily!
Energy drinks (a functional beverage containing some sort or stimulant), helps to increase either mental or physical energy or alertness and have been around in Canada for almost 50 years. The energy drink market is in excess of $1B annually and growing at strong mid-single digits, this is definitely a category we have to pay attention to! Some market segments (in particular education) continue to be overly cautious about offering energy drinks. This was perpetrated when the influx of energy shots hit the consumer market over 10 years ago. At that time, several deaths were contributed to young people consuming large quantities of these products. Unfortunately, energy drinks were all lumped together under this broad category as a stimulant, and as a result, many consumers do not understand the ingredients, the risks associated with over consumption, and what makes these a healthy or unhealthy beverage item.
While caffeine is the first thing Canadians think of as an energy drink, other ingredients such as guarana, green tea extract, and yerba mate also provide caffeine like stimulants. In addition, sugar, ginseng, vitamins and other ingredients are sold for their health benefits and the ability to provide quick energy. While most people associate energy drinks to an alternative for caffeine and a quick buzz, there are many consumers who will reach for these products for other ingredients which they believe provide them with physical energy, or a mental uplift.
Are Sports and Energy Drinks Trending Downwards?
Not at all, according to recent ISPOS REID research data. Sports drinks continue to be strong performers in many channels but in particular colleges and universities, workplaces, and sports and leisure environments. Energy drinks are also continuing to see continued growth in Canada and are actually outpacing other beverage categories including traditional carbonated soft drinks and some waters.
In the workplace, these options provide a mental uplift, the leading reason people purchase a beverage at work, according to Foodservice Monitor. They also help provide physical energy, the fifth reason why consumers purchase a beverage at work. In short, now is the time to review your offerings to ensure you are tapping into these growth categories.
What is Next for this Category?
Lower calorie options continue to see strong sales, it would be a good idea to make sure you have a sugar free, zero-based, and a full or reduced calorie option. Sparking energy drinks (such as Celsius) have exploded in the US markets in 2023 and the expectations are high as this line of product comes to Canada in 2024. If you have not had the opportunity to try this product yet, make sure you give it try it at the upcoming shows for CAMA or NAMA!
About the Author:
Brian Emmerton, RD is a CAMA board member and President of Complete Purchasing Services Inc, a leading supply chain solutions provider for hospitality and non-commercial clients in Canada. Brian has been researching and educating about trends in consumer behaviours for many years in the North American foodservice marketplace. Learn more about Complete Purchasing Services by visiting eCPS.ca.
