This SWOT analysis of energy drinks explores how this market is both a benefit and a cause for concern for many individuals.
Energy drinks are an interesting drink. It’s basically a method of keeping yourself alert when you’re otherwise ready for bed. It doesn’t get the same positive buzz like nootropics do. Instead, energy drinks have caused several deaths.
And yet, the big brands behind Red Bull, Monster Energy, and Rockstar energy drinks continue to push out products to their niche audiences. There must be a good reason for this, right? But for as many strengths these drinks have, just as many weaknesses or threats await.
This SWOT analysis of energy drinks explores how this market is both a benefit and a cause for concern for many individuals.
Strengths: A concentrated industry
Energy drinks. You either love them or never think about them. But when you walk into your favorite convenience store, you’ll likely see them lined up on the shelf next to the sodas.
Monster, Rockstar, and Red Bull drinks are the most popular in this industry. From catchy slogans like “Red Bull gives you wings” to the colorful, edgy design of the Monster brand, these companies build memorable products that entice customers in their home and the stores.
What is an energy drink, really?
Well, it’s a drink that gives you an energy pick-me-up when needed. You know when exhaustion takes hold of you, but you still need to do one more round of studying before bed? Or you’re ready to spend the rest of the night playing a new video game, but fatigue is creeping up on you at 3AM? You should reach for an energy drink as your go-to solution to keep those eyes awake, brain alert, and mind focused. Or at least that’s what these companies want you to do.
Most drinks contain a variety of ingredients including ginseng, taurine, and caffeine. While the first two may be optional, caffeine is in nearly every energy drink on the market. Caffeine is a stimulant, linked to energy boosts and performance enhancement. It’s the simple and (legally) easy way to wake up your system, so to speak.
These drink companies focus on brand image and social need. It seems people are always on the go these days. Whether it’s keeping up with their children, working a demanding job, or finishing up college, it’s like there’s never enough time in the day. Once the evening hits all anyone wants to do is curl up and rest … but that’s not always possible. Instead of trudging through the hours in a groggy haze, energy drink companies propose their drinks to help. And that’s exactly what people do — reach for the closest, delicious energy drink and keep going like that old energizer bunny.
Weaknesses: The health-conscious crowd says, “No, thanks!”
The health-conscious community doesn’t want energy drinks anywhere near their bodies. Some ingredients and stimulants, like caffeine, are controversial. One day caffeine is deemed OK by health officials, but by the next, some new study claims caffeine can be harmful. So, which is it?
Energy drink companies can’t dictate this information. But they can change up their formulas to shift the conversation. Although they maintain stimulants, most companies have added vitamins (like vitamin b) into their formulas.
For instance, Monster drinks have incorporated both vitamin B and B12 into several of their popular offerings. It’s likely, with the new development of flavors, they’ll continue to do so. But older brands, like Red Bull, promote their same old products over and over. Although well-known in this industry, without innovation, Red Bull will collect dust on the shelves.
Other big name companies, like PepsiCo, are trying to break into this industry with their own variation of energy drinks. That means the small guys need to spend more and moon in advertising just to keep up. But, can their budgets compare to PepsiCo? That depends on the target market.
For instance, Monster focuses on consumers into sports and aggressive music. This is a small but targeted niche. Other companies are focusing on esports. They hire these professional athletes to promote products directly to fans. But this approach relies on favoritism and word of mouth. With such a limited distribution model, not to mention energy drinks are rarely top-of-mind for consumers, these products aren’t a necessity.
Opportunities: Zero sugar alternatives
Many of these energy drink companies are branching into offering alcohol products. It’s a smart move: A bigger audience awaits. People interested in their energy drinks may be more inclined to try an alcohol equivalent and vice versa. We can thank brand loyalty for this.
Such a change allows these companies to connect with more people. Remember how Monster focuses on a niche group of aggressive music and sports lovers? That can easily expand when branching into alcoholic beverages. Perhaps the market will grow or they can target a whole new consumer base.
An opportunity awaits in the health space too. Even though health-focused consumers cringe from energy drinks, these companies can use consumer complaints to their advantage. For example, you can now buy a “zero” type energy drink. It has 0 sugar and only 10 calories (compared to 50+ grams of sugar and hundreds of calories for the regular version). These drinks still give an energy boost, but without the drama of bloated calories and bad sugars.
Threats: An aging generation
Energy drinks are linked to death. The high caffeine and other various ingredients receive the blame. For this reasoning, children and pregnant women are often told to not consume energy drinks because it could be harmful to their bodies. That has spurred public concern regarding the use and consumption of energy drinks. The government may also step in to regulate this market more thoroughly because of these tragic cases.
Target markets are aging. For instance, Red Bull marketed directly to generation Y. But they’re getting older. They may not have a use for these drinks anymore. Or it may not be safe to consume in large quantities. Such a change could spell disaster for Red Bull because other energy drink companies, who offer healthy alternatives and wacky flavors, are stealing what little attention Red Bull still maintains.
People are more likely to reach for bottled water, healthy smoothies, and low-calorie drinks these days. There’s also cheaper alternatives if all they want is more energy. A cup of coffee is only a couple dollars, but an energy drink can be as much as $10, depending on your location. Energy drinks are a niche drink with many possible threats and weaknesses that can undermine monetary success.
