Coca-Cola eyeing energy drinks space, reports claim

09 Nov 2018 --- Coca-Cola is reportedly planning to introduce a range of energy drinks under its own brand name, further signaling the company’s intent to offer beverages for all occasions. According to Reuters, the company is looking to launch two versions – “Coca-Cola Energy” and “Coca-Cola Energy No Sugar” – made with guarana extract and naturally-derived caffeine sources.

The Coca-Cola Company has announced a number of deals and acquisitions over the past months underlining its ambition to become a total beverage company. In September, the company acquired Organic & Raw Trading Co., the maker of Australian kombucha brand MOJO. This signaled the first time that Coca-Cola had acquired full ownership of a brand in the kombucha category.

Coca-Cola also reached a definitive agreement to acquire UK-headquartered coffee chain Costa Limited for £3.9 billion (approximately US$5.1 billion) last summer. In August, it acquired a minority ownership stake in Bodyarmor – a fast-growing line of premium sports performance and hydration beverages. 

Coca-Cola in 2015 acquired a nearly 17 percent stake in energy drinks maker Monster Beverage Corp, making it the largest shareholder. However, Reuters reports that the partnership has taken a turn as a result of Coca-Cola’s foray into the energy drinks category. As a result, Coca-Cola is currently in arbitration with Monster Beverage as own brand energy drinks would violate their initial 2015 agreement with regards to direct competition.

Data provided by Innova Market Insights show that energy drinks is now the smallest of the ten soft drinks subcategories in terms of NPD, accounting for just 2 percent of the first half of 2018 total launches. Numbers have fallen fairly consistently over the past five years to stand at less than half the 2013 level, reflecting among other aspect concerns over caffeine, taurine and sugar content.

North America has the largest market in value terms and is also showing the best growth, reflecting premiumization in the market, with value added with low and zero options, limited edition flavors and clean labeling. Europe dominates in terms of NPD, with a 53 percent share in the first half of 2018, but North America is clear second on 18 percent, Innova Market Insights reports.

Concerns about sugar content have resulted in a growing raft of reduced sugar options, the market researcher reports, with sugar-free now the number three positioning overall, used for 13 percent of H1 2018 launches, just ahead of low calorie on 12 percent. Interest in low and zero options has seen growing use of natural sweeteners, such as stevia.

Coca-Cola’s reported use of guarana comes at a time when interest in natural ingredients is on the rise, driven by a continued consumer emphasis on clean labeling. Although no additives/preservatives, organic and natural positionings are not in the top five positionings for the first half of this year, they are all seeing rising levels of use.

Challenging environment?
Linked to headaches and hyperactivity, among other health issues, the sale of caffeinated drinks, which are often also high in sugar, is coming under increased scrutiny. Both the South Korean and British governments recently announced their resolve to curb the availability of such beverages to children, in an attempt to “protect children from products that are damaging to their health and education.”

The UK government, for example, announced at the end of August that it is seeking views from the public on ending the sale of energy drinks to children and young people.

However, with busy lifestyles informing the nutrition choices of many consumers, there could be ample room for energy drinks that can tap into trends towards healthfulness and naturalness.