Sports and energy drinks: The rise in low sugar NPD

The soft drinks industry levy – which will go into effect in April 2018 – will tax added sugar drinks with a total sugar content of 5g or more per 100ml. Consumers, too, are concerned about the amount of sugar they are drinking: adding pressure on the industry to reformulate.

With low and no sugar drinks gathering pace, there is also an opportunity for bottled water brands positioned around energy to latch onto consumers’ constant demand for energy.

Limiting impact of sugar tax​

The sports and energy drinks category in the UK has seen mixed fortunes, according to Mintel’s Sports and Energy Drink UK 2017 report. Sports drinks saw a volume decline of 24% over the period 2012-2017, dropping to 127 million liters, remaining under pressure over negative health perceptions and competition from protein-based sports nutrition.

Competition from other categories – such as those with less sugar – are also putting pressure on the category. Values are expected to fall by 3% in 2017, representing a cumulative 18% decline since 2012.

Energy drinks, however, have been ‘one of the starts in a lackluster soft drinks market’​, with 19% volume growth since 2012 to 669m liters in 2017. Value sales have grown 20% to £1.65bn. A further 10% volume growth is forecast for the energy drinks market over 2017-22 to 739 million liters.

“NPD (New Product Development) by leading players should limit the soft drink levy’s impact on energy drinks,” ​says Mintel. “However, as concerns around various ingredients linger, the ability of NPD and marketing to address these will be key to growth.”​

Launches in the no and low sugar category have included Lucozade Energy’s Zero range in May 2016, and Monster Energy Ultra in January 2016. Rockstar launched the new zero sugar Revolt sub-brand in January 2017. Meanwhile, Lucozade Energy is cutting the sugar in its core range by 50%.

Sugar: Perception and reality​

Along with reformulation, however, also comes the challenge of changing consumers’ mindsets about energy and sports drinks.

Around 41% of consumers believe sports drinks are more sugary than carbonated soft drinks, while 39% believe the same about energy drinks.

“This undoubtedly stems from ​the ingredient’s traditional role as a source of energy in these drinks,” ​says Mintel.

“However, the standard variants of most leading sports and energy drinks brands actually contain less sugar than many leading CSD brands.”​

Thus, brands can benefit from driving awareness over the reality of their sugar content, says Mintel.

On the other hand, however, many users drink sports and energy drinks specifically for their sugar content, highlighting the risks brands face in reformulating standard variants.

Energy drinks and beyond​

With energy drinks under pressure over sugar, caffeine and artificial ingredients, there is an opportunity for bottled water and other brands to take advantage of the nation’s continuous demand for energy.

Around 54% of energy drink consumers surveyed by Mintel said they would prefer to drink a fortified water that promises the same benefits as an energy drink, and 51% of sports drinks consumers would prefer a functional water drink.

Consumers are also looking for hydration, offering another advantage for functional bottled water.

“Bottled water has been the success story in a struggling soft drinks market,” ​says Mintel.

“The label ‘water’ has been adopted by a raft of products as brands from other categories have looked to tap into this growth. The label also sparks strong interest among people who have drunk sports or energy drinks over the past three months.​

“31% of the broader population would be interested in products positioned as ‘health drinks’ from sports and energy drink brands. Interest rises to 64% of sport drink users and 66% of people who drink energy drinks, suggesting marked potential for brands to unlock new occasions among existing users by adopting this label.”​