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Energy Drinks Continue to Thrive despite Controversies

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Mintel’s survey results

A recent survey by global research firm Mintel indicates that older Millennials—belonging to the 27–37 year old demographic—had a higher energy drink consumption—61% in 2015 from 55% in 2014. The higher consumption was despite growing concern about the safety of energy drinks. According to Mintel, 74% of older Millennials are concerned about the negative effects of energy drinks—compared to 65% of overall energy drink consumers.

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Monster Beverage benefits

Leading energy drink makers like Monster Beverage (MNST) and Red Bull are benefiting from the rise in energy drink consumption. Monster Beverage’s net sales in 2014 rose by 9.7% to $2.5 billion. Monster Beverage’s net sales in 1Q15 grew 16.9% to $626.8 million, from the same quarter the previous year.

With the closure of its partnership with Coca-Cola (KO), Monster Beverage now owns Coca-Cola’s energy drinks portfolio, including popular brands like NOS and Burn. Together, Coca-Cola and Monster Beverage account for ~10.3% of the Consumer Staples Select Sector SPDR Fund (XLP).

Safety concerns aren’t a major hurdle

According to the Mintel survey, two-thirds of energy drink consumers are concerned about the negative effects of energy drinks and shots. However, that doesn’t deter them from consuming energy drinks. Mintel also noticed that there’s an increase in the preference for natural energy drinks—30% of users consume natural energy drinks and shots. About 27% of consumers are drinking both regular and natural energy drinks and shots.

Recently, PepsiCo (PEP) introduced new fruit flavors under its AMP Energy drinks brand. Dr Pepper Snapple (DPS) is the third largest soda drink maker in the US. It lacks a strong energy drink portfolio. Monster Beverage has also been developing some healthier variants of energy drinks. In 2014, Monster Beverage launched Monster Energy Unleaded—an energy drink that doesn’t contain caffeine. The company also launched Monster Energy Ultra Sunrise—an energy drink that has zero calories and no sugar.

In the next part of this series, we’ll discuss the rise in energy drink consumption among US parents.

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