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Catherine Colbert

Expect jockeying in 2012 among the top 3 energy drinks

by Catherine Colbert | Dun & Bradstreet Editor

February 8, 2012 | No Comments »

Companies among the upper echelon of the hip energy drinks market are ready to rock ‘n’ roll. During the past few months, the top three beverage makers in this niche — Red Bull, Monster, and Rockstar — have been busy making some strategic moves.

As new and aggressive entrants, such as 5-hour Energy Shots, pick up steam and work to whittle away at the trio’s hard-earned stake, makers of Red Bull, Monster, and Rockstar are looking to ensure they retain their combined 80% share of the energy drinks market.

These companies are part of a growing nonalcoholic beverage market, which according to D&B’s First Research analysts generates $300 billion globally each year. Some big names mingle in this space: US-based Coca-Cola, PepsiCo, Dr Pepper Snapple, and Monster, as well as Britvic (UK), Cott (Canada), Danone (France), Nestlé (Switzerland), Red Bull (Austria), and Suntory (Japan).

With a 40% share in the world’s energy drinks, Red Bull is a stalwart that is striving to stay on top. Rather than resting on its laurels, enjoying a 10% growth rate from its taurine– and caffeine-spiked drinks, the company is looking elsewhere for even bigger returns. To capture a more enticing 35% growth rate, the company has devoted time and energy to wooing consumers with its Red Bull Energy Shots, a product that counts Monster and 5-hour Energy Shots among its competitors. Selling more than 4 billion cans of Red Bull annually, the beverage maker has been targeting Western Europe and the US for growth while also expanding in Brazil, Japan, India, and China.

The success of the industry’s #2 Monster brand spurred upscale soda maker Hansen Natural Corporation, founded in 1990, to change its name in January to Monster Beverage Corporation. It also began trading under the MNST ticker. The transformation coincided with a two-for-one stock split that doubled the number of outstanding shares of common stock to about 174 million. Now that Monster is the leading brand in the beverage maker’s Direct Store Delivery segment, which accounts for more than 90% of sales, the name change was inevitable. To continue to loom large, Monster Beverage is more focused on luring trendy types by rolling out new energy drinks each year than resuscitating the part of its business that makes juice-based beverages and sodas, which consumers have bypassed for more mainstream options during the economic downturn.

Still shining brightly but considering its next move, third-ranked Rockstar recently enlisted the help of investment bank Goldman Sachs to explore options for the brand. The energy drink company is mulling over a possible sale, going public, making a new investment, or selling debt, according to the November 2011 issue of trade publication Beverage Digest.

In this high-energy niche of the nonalcoholic beverage market, product developers and suppliers don’t rest long. Their target trendy customers are fickle, so keeping them satisfied and continuing to pique their interest is enough to make most executives pretty exhausted. Perhaps this is why Red Bull’s founder and chief executive Dietrich Mateschitz, age 67, reportedly drinks up to 10 cans of the company’s 8-ounce gold each day.

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