Sports and energy drinks enjoyed another successful year with overall growth of 18%, according to Britvic's soft drinks category report. Big players such as Lucozade, Red Bull and Powerade continue to dominate, but private label sports drinks also got a look-in with growth of more than 25% in 2006 - evidence that a growing number of retailers are looking to cash in on an extremely profitable category.
All the interest is down to the fact that customers are increasingly looking for soft drinks with an added function, whether it's to give themselves a boost half-way through the working day, or after a session at the gym. By stocking the best-sellers and catering for the trend, you can ensure you don't miss out on your share of the profits.
One company that has developed massively since its introduction to the UK in the mid-90s is Red Bull. UK managing director Nigel Trood believes there's room for further growth for the both the iconic blue and silver can and the sports and energy category as a whole. And a larger 355ml can is just one way Red Bull hopes to achieve this growth. Sales support will also be offered to retailers with the relaunch of the Red Bull Academy, which will offer retailers tailored merchandising advice, and global events such as the Red Bull Air Race and the company's Formula One team will continue to build the brand's presence in 2007.
"The energy drinks market has continued to grow above expectations," he says. "People are very aware of health, but also very busy and want to fit as much into their lives as possible. Retailers need to get their heads round the market that has changed so much over the past two years. Carbonates are at best flat and at worst experiencing a real decline. The advantage for smaller retailers is that they can respond to the changes quicker than the supermarkets because they can decide to change something round the very next day and experience the benefits."
Trood believes Red Bull's advantage is that it doesn't just cater for one type of occasion and is often the choice of office workers, builders and gym-goers alike. He is also confident the larger can will deliver incremental growth for retailers.
He adds: "The idea behind the 355ml can is quite simple. We have always recommended that people drink between one and two cans and our research showed people were after a can size between the two. It's already been successful in the US and through correct merchandising there are still a lot of opportunities for retailers to increase sales of Red Bull here."
GlaxoSmithKline (GSK) bosses are also confident of a bright future for the functional drinks market. Lucozade Sport experienced strong growth again last year and has recently been revamped with tropical and raspberry flavours replacing the mixed berry and lemon variants. The Lucozade brand achieved sales of £300m and holds a 57% share of the category, according to Britvic's category report.
GSK category planning controller Helen Tomlinson says: "It's been another fantastic year for the energy drinks market. It's important convenience retailers give the right amount of space to the sector. They also need to focus on the big brands, especially when there is limited space available. Retailers need to get the basics right and devote at least 20-25% of their chiller space to the category."
Lucozade Energy once again enjoyed double-digit growth despite already being a well-established brand. GSK recently pumped £8.25m behind the brand with a high-profile marketing campaign earlier this year.
Tomlinson continues: "Another success has been Lucozade Hydroactive, which is growing in all out-of-home channels and is the kind of drink a lot of people will pick up on their way to the gym. The market has benefited from the fact that people are very busy but still want to get as much out of their lives as possible. NPD is hugely important to the category. It's important to maintain excitement at the fixture, especially as so many products are bought on impulse."
Tomlinson believes retailers should consider the possibility of secondary sitings which can particularly help drive sales in the summer months. She adds: "The growth in energy is set to continue. It has in part come at the expense of sectors such as fruit carbonates and it's likely to continue over the next three to five years."
At Coca-Cola Enterprises (CCE), which supplies Powerade and the more recently introduced 500ml energy drink Relentless, head of marketing Sarah Mitchell also believes consumers are showing an increased level of interest in functional sports and energy drinks.
"As consumers continue to evolve their lifestyles to meet today's 'time-poor' culture, and continue to become involved in more sporting and active lifestyles, we are expecting that the growth in this area of the category will be maintained," she says.
"Powerade has enjoyed impressive growth of 29.5% in the past 12 months and Relentless, which was launched in February 2006, has been embraced across the core action sport and music culture and the brand message is now moving into the mainstream."
CCE is dedicating £1.7m to support the Relentless brand over the next 12 months, while a try-me-free promotion is currently running on bottles of Powerade ahead of the drink's tie-in with the 2007 Rugby World Cup in France as the official sports drink of the tournament.
Bottled water companies have also been quick to tap into the sports and energy drinks market with recent launches. Danone Waters has launched Volvic Revive - a no-added sugar functional water containing ginseng and guarana and available in Citrus Kick and Berry Blast variants, while Aqua-Pura has launched two new drinks - Aqua-Pura Activa and Reviva in a variety of flavours including citrus, tropical, summer fruits and orange.
Danone Waters category strategy manager Steve Flanagan says: "With Volvic Revive not only hydrating but also increasing alertness, it is the perfect solution for those constantly on the go and looking for a quick and refreshing pick-me-up. We have high expectations for the product, especially over the summer months when bottled water sales are at their highest."
Aqua-Pura marketing director David Patmore adds: "We spotted a market opportunity for a mineral water-based range that will act as a complete hydration system for people who want to get the most out of their exercise. Our new sports waters Activa and Reviva are ideally placed to meet this demand and we're confident that their positioning will provide a simple solution for active consumers."
Dilip Patel, Londis, Regent's Park, London: "We've certainly seen growth in a lot of the sports and energy drinks we sell, including Powerade, Lucozade and Red Bull. For us, the typical customers are builders and office workers. We provide seven facings for Red Bull, six for Lucozade and five for Powerade. The soft drinks chiller is placed right next to the door so customers can see it as soon as they come in. I think people see sports and energy drinks as a healthier alternative to some other drinks on the market. I personally think Red Bull might sell even more if it was available in a bottle format."