Functional drinks enjoyed another year of double-digit growth in 2005, with the category up 12% to £438m in value terms, according to the Britvic soft drinks category report 2006.
Functional drinks target gym-goers and other sport participants as well as drivers looking for that extra boost to keep them alert. This means there are plenty of shopping occasions for retailers to take advantage of in this growing category.
The top performer in the crowd is Lucozade, which increased its value sales by 25% to £253m. Its nearest rival, Red Bull, also grew in 2005 by 13% to £124m.
GlaxoSmithKline (GSK) category planning manager Tim Haddon believes that the future of the soft drinks market depends on manufacturers understanding shoppers' lives and their needs.
"People today are living ever more active lives and they want products that help them with their busy lifestyles," he says. "Consumers are increasingly looking for soft drinks that offer functional benefits, more than just refreshment. This is why we've continued to see strong growth in the energy and sports drinks sector."
A great deal of Lucozade's growth in recent years has come from the success of its still Sport range. GSK says heavyweight TV ads on air now as well as high-profile sponsorship including the drink's high profile at this year's London Marathon, will help generate increased sales for retailers.
Some £10.8m has been earmarked for a media package to support the brand during 2006. The first set of ads will run until the end of May with a second burst due to hit screens later in the summer.
Lucozade brand manager Angela Eves explains: "The TV ad is designed to clearly show that the difference between first and second place can be down to the correct preparation for a race or game. It is designed to raise awareness and prompt trial while cementing the brand's status. With such high-profile activity taking place in the coming months, Lucozade Sport will be at the forefront of consumers' minds. Retailers should ensure that they stock up on Lucozade Sport to take advantage of the increased consumer demand."
Coca-Cola has also helped growth in the sports drink sector through sales of its Powerade range. The company's isotonic drink grew by 19.5%, according to AC Nielsen figures for January 2006. October 2005 saw the launch of Powerade Aqua+, a fruit-flavoured sports water drink aimed predominantly at women. Recent promotional activity for the brand has included an on-pack text-to-win promotion as part of the drink's association with the English, Welsh and Irish Rugby Unions. "Rugby and Powerade are the perfect fit and top-class sporting events have the ability to connect with consumers on all levels of sporting passion," says category development manager Anita Pollard. "Last year Powerade experienced significant growth and the promotion helped it develop even further as a credible sports drink in the UK."
Already popular in the US, Gatorade was recently launched into the UK vending market by Britvic, although there are no current plans to extend the still energy drink's availability. Britvic category director Andrew Marsden explains: "Britvic already has Red Devil and Purdey's as part of its functional drinks range. Gatorade fulfils a specific need in the vending market, rehydrating gym-goers and athletes after workouts and matches. At this stage there are no plans to introduce Gatorade into the take-home market."
The 250ml energy drink market continues to be dominated by Red Bull but a number of manufacturers, most notably Coca-Cola, have made attempts to dent its dominance. October 2005 saw the soft drinks giant launch Sprite3G. The drink, which contains glucose, guarana and caffeine from green coffee beans, has shown early promise with a 2.7% value share of the energy drinks sector (AC Nielsen February 2006).
Although its impact is yet to be seen, Coca-Cola also launched Relentless in February - a 500ml fruit-flavoured energy drink with caffeine. The company is also reported to be launching a still sports energy drink this year and has already applied to register the trademark name Voltage.
Bullish outlook
However, Red Bull's 12% growth this year keeps it in the top spot. The company will look to extend the drink's dominance with the launch of a new two-pack available through cash and carry outlets this month. The launch follows a successful trial of the format in the forecourt market and is designed to upweight purchase.
According to Mintel analyst Ellen Shiels, energy drinks have moved from niche to mass-market and their sales have doubled every year since their introduction. Shiels says energy drink sales are being driven by a 24-hour lifestyle. "The UK has the longest working hours in the EU and in order to get the most out of every day, consumers are increasingly looking at products with an extra kick," she explains. "Values have been driven by the fact that energy drinks command a substantial premium over other soft drinks, as consumers are prepared to pay a relatively high price for an energy boost."
Other soft drinks manufacturers have been quick to jump on the success of the energy drinks market. Irn-Bru manufacturer Barr Soft Drinks launched Irn-Bru 32 in February. The addition was the first major extension to the brand since the launch of Diet Irn-Bru 26 years ago. Representing a £3m investment, the drink is being supported by a nationwide promotional campaign including TV, radio and outdoor advertising.
Specifically looking to appeal to 18- to 30-year-olds, Red Alert has been relaunched with a new look to bring it into line with its sister product, vodka energy drink Reloaded. The company is quick to point out that although the drink can be used as a mixer, it is also ideal as a pick-me-up on its own. Marketing controller Richard Clark says: "Red Alert is an exciting brand. We are aiming to get into the mindset of 18- to 30-year-olds to keep them going in their hectic social lives. By going along a lifestyle route and with the new can designs, I am sure we can cement our place as a leader in the energy category."
Manufacturers have also looked to make a difference with new flavours. One such example is Velocity energy drink, which recently launched cranberry and lemon & lime flavoured drinks on top of its original variant. Promotional activity for the brand includes sponsorship of a 20-venue music tour hosted by Radio 1's Trevor Nelson.
So whether you're tapping into the gym culture, or meeting the demand for pick-me-up boosts, it's clear your soft drinks fixture won't be complete without a dedicated section for functional drinks.