Developments In The Sports & Energy Drinks Market

Wednesday, April 18th, 2018

Anup Suresh Gude, Senior Research Analyst/FnBA from MarketsandMarkets Research, provides insight into the industry outlook, developments and revenue opportunities in the sports and energy drinks market.


Sports drinks and energy drinks are very different beverage choices that should be assessed and marketed differently from traditional soft drinks as they differ in their functionality. Generally, 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 sports & energy drinks market accounted for around USD 65 billion in 2017 and it is projected to grow at CAGR of 8.5% till 2022.




The sports & energy drinks market is a consumer demand and lifestyle-driven market. In the last decade, the overall sports & energy drinks industry has grown exponentially to compete with the traditional carbonated beverages market. With the huge market potential and the growing preference by consumers, the market is likely to witness considerable growth in the years to come. The market is anticipated to continue to penetrate the untapped markets such as India, China, Brazil, Argentina, Chile, and South East Asian Countries. The growth of the market is also largely attributed to developments such as the incorporation of the organic and natural ingredients in these drinks. The varieties of sports & energy drinks containing organic or natural ingredients are continually increasing at present.



Sports & energy drinks manufacturers are contributing with new developments in their product lines through new flavours to encourage more frequent consumption. The re-introduction of decadent flavours such as chocolate and fruit flavours have helped brands increase functionality and attract consumers towards sports & energy drinks.

In the past, sports beverages were manufactured by mainly emphasising hydration and replenishment of electrolytes. Increasing the functionality of new age beverages to target health-conscious consumers would be a future trend for sports & energy drinks manufacturers. Manufacturers are focusing on functionalities such as nutrition, energy, and muscle relaxation, replenishment of salt levels, anti-oxidation, blood circulation, alertness, virility, and potency to make their products multifunctional and to attract consumers for daily consumption.




Incorporating yerba mate, green tea, ginseng, or pomegranate juice into sports & energy drinks have helped manufacturers increase the antioxidant and polyphenol contents to make drinks healthier. Vitamin & mineral fortification, organic options, all-natural ingredients, avoiding artificial flavours and preservatives completely, natural pigments, weight control formulations, fruit incorporations, and low carbohydrates and low sugar options are the areas where sports and energy drinks could expand. Muscle building and endurance improving ingredients are also expected to drive the demand for sports & energy drinks.


Leveraging new technology to make these drinks more functional is an important trend within the market. Products with ingredients that absorb electrolytic compounds and amino acids faster are examples of this technology. Examples of healthy innovations in the global sports & energy drinks market are antioxidant fortification and whey protein fortification in sports drinks. Sports drinks fortified with soy protein will represent an emerging trend targeting health-conscious consumers. Products with new flavours and ingredients with purported health benefits for women and children are attracting huge investments in the market. Herbal formulations will soon replace the ingredient caffeine to make drinks more functional, and this will help to target the consumers of a wider age group.

The incorporation of ingredients that release energy slowly is an important growing trend as manufacturers want to reduce the chances of ‘crash’ effect experiences upon the consumption of energy drinks. High-fructose corn syrup is being replaced with sucrose and fructose, and is marketed as a ‘no-sugar-added’ product. Some manufacturers are using crystalline fructose, agave, brown rice syrup, and cane juice as a substitute for sugar. Some brands have differentiated themselves by using all-natural ingredients such as guarana, panax ginseng, ginkgo biloba, and Echinacea.

The increasing popularity of clean label products among consumers is also likely to drive product innovations from sports & energy drinks manufacturers. Consumers are becoming more cautious about the contents of their food and beverages. Preference for all-natural ingredients, flavours, and colours is rising among modern-day consumers, and they are willing to pay more than traditional products with synthetic ingredients.




Traditionally, dairy proteins such as whey are commonly used as a protein source in sports drinks due to the convenience of easy blending and solubility even in non-creamy beverages. It is easily available and commonly acknowledged as a rich protein source by consumers. However, the demand for plant protein in beverages is increasing among modern-day consumers. Plant proteins such as soy protein, pea protein, rice protein, and canola protein are increasingly gaining popularity among modern-day consumers, hence creating opportunities for sports drink manufacturers in the plant protein-based beverages market.




Convenience plays an important role when it comes to consumers’ buying decision. Sports drinks are usually available in the form of powders and ready-to-drink (RTD) forms. The powder form is easy to carry as it can be carried in bulk without taking much space. However, the sports drinks market is dominated by RTD beverages, and this scenario is likely to remain the same in the near future as well. RTD sports drinks need not be mixed and are available at every retail store in suitable bottles, thus making them easy and convenient for consumption.




The target clientele energy drinks are usually teenagers and young adults who indulge in sports activities. However, this scenario is changing as energy drinks are being consumed as a routine and lifestyle beverage. An increase in consumption of energy drinks along with alcoholic beverages in bars is also gaining popularity among the young urban population, which is boosting the entire energy drinks market.

Intelligent product positioning strategies designed to match specific consumer lifestyles will continue to be a key success factor for the market. Introducing new concepts, strong marketing initiatives, and penetration in emerging markets are expected to extend growth patterns. Energy drink producers are re-positioning their drinks to offer the best benefits as sports drinks by reducing calorie content. Sophisticated and aggressive marketing and branding strategies of energy drinks manufacturers such as association with extreme sports and sports events, is also helping energy drinks gain popularity among young consumers. Energy drinks manufacturers are also introducing a new variety of flavours, such as single or blended fruits, berries, and cola amongst many others to attract a larger consumer base.




The increasing concerns about physical well-being and leading a healthy lifestyle is a major growth driver of the sports & energy drinks market. The willingness of consumers to consume natural and healthy beverages has been the key factor for the success of these drinks. The low calorie and zero calorie beverages segment is the fastest-growing segment of the diet food & beverages market. Manufacturers aggressively market low calorie and zero calorie drinks as the demand for these products is increasing.

Consumers are now becoming aware of the amount of ingredients such as sugar, caffeine, taurine, and guarana present in drinks. This is making beverage manufacturers address the issues of health concerns and offers opportunities for the growth of sugar-free sports and energy drinks brands.




Increasing consumer concerns towards high caffeine, ginseng, and taurine content in some energy drinks have affected the market growth, and this trend is expected to continue in the near future as well. However, negative reaction towards energy drinks in the media hampers the market growth for the energy drinks industry. Sports and energy drinks are high priced as compared to soft drinks and colas. In some markets, energy drinks are dearer than alcoholic beverages. Moreover, the ingredients, packaging, marketing, and distribution increase the cost of these drinks. Product differentiation lowers the level of the rivalry; but at the same time, decreases the commodities’ price and forces players to spend more on advertising, thus increasing rivalry.

Fixed costs are fairly high, and it is often necessary to incur costs in research and development, particularly when testing the health benefits of sports and energy drinks. Private label energy drinks prove to be a significant part in end users’ diet, indicating that the price—even for such specific products for which consumers have high expectations—is an important determinant of the purchase. The overall buyer power in this market is assessed as moderate. Therefore, high cost of production resulting in higher product prices restrains the growth of the market.

Sports & energy drinks face stiff competition from other beverages such as dairy beverages, canned beverages, and fresh fruit juices. This increasing competition is a challenge faced by sports & energy drinks manufacturers.




Emerging or developing countries such as China and India prove to be the best new markets for sports & energy drinks. New geographies need to be tapped with favourable 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 Southeast Asian countries. Brand value of big players helps them to augment their sales by entering newer areas.

Distribution channels need to be strong enough to cater to the widespread market of such drinks. Countries in South America such as Brazil and Argentina have great sales potential for sports & energy drinks. Further, making these beverages more visible and accessible would help in penetrating the market to a greater extent.