Energy Drinks – Market Research BBH – ‘Zeus’ Definition Energy drinks are made for the purpose of stimulating energy and giving people a mental and physical boost through periods where there is an increase in motion. Energy drinks are high in caffiene and taurine, these are the ingredients that fuel the body with energy. Secondary Research – Energy Drinks Market • Market has been recession proof; customers see them as value for money. Values of sales of sports/energy drinks are forecast to grow from 941 million in 2008 to £1,035 in 2009. If this is broken down further, to just energy drinks; Market is forecast to grow from 716 million in 2008 to 788 million in 2009, as you can see energy drinks makes up a large proportion of the market. 1 • Product has real resonance amongst men aged between 15 – 34. Mental energy can be targeted towards office workers, teachers and business men alike. BBH found that out of 489 people 34% thought that energy drinks were overpriced & 28% said that they help them get through a busy day. Energy drinks with a taste and flavour are more preferred by male consumers.2 Stats showing markets recession proof:3 • 2006 2008 % change 2006-08 Tea (herbal/Standard) 85 82 -3 Instant coffee 74 73 -1 Fizzy soft drinks 75 73 -2 Bottled mineral water 56 51 -5 Energy/Sports drinks 30 32 +2 Flavoured water 25 21 -4 These findings show that to proceed with energy drinks is a smart and feasible decision, based on current market trends. http://spreadsheets.google.com/viewform?formkey=dFlMN1daUTJqY1hMQXhJWWlHQllJRFE6MA http://researchwikis.com/Energy_Drinks_Market 3 http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=394414 1 2 1 • BBH’s findings lead to the conclusion that Energy drinks were more profitable and more sellable than sports drinks. The energy drink market, when combined with the sports, holds a ¾’s sway in total income, that being 716 to 225million, out of 941 million (2008). The energy drinks target market is aimed at men aged 15-34, with over 65% of all energy drink sales coming from this demographic. An interesting finding was male’s generally prefer energy drinks with strong taste and flavour, surprisingly there are currently no brands offering a range of flavours in their energy drinks.4 Primary Qualitative Research Interviews • Through carrying out qualitative research in the form of interviews, it has been concluded that PowerAde, Lucozade and Red Bull are the most popular choice of energy drink and are the main competition in the market. The following quotes are taken from the interviews to show favoured brands: “Red Bull or Monster, because they are the best brands.” “Red Bull or PowerAde because it’s the largest brand.” “I would probably drink a cheaper brand such as Kick.” • The interviews also showed that people associate energy drinks with words such as: Boost, Fizzy, Energy, Awake, Active and Healthy. • People consider a reasonable price for an energy drink to be around the £1 to £1.20 region. However, any higher than this is regarded as too expensive. • When looking to buy energy drinks, common factors affecting the decision include price and flavours available. “£1 would be a decent price for an energy drink” • It has been discovered through the interview process that people drink energy drinks for reasons such as: tiredness, before exercise and when driving. “When I am tired or to help me concentrate at work.” “To help me concentrate in meetings” “When I am driving long distances for a long time I use them to help me stay alert.” “I would consider drinking them before exercise” (Evidence of the interview process is in the appendices) 4 http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=220162 2 Quantitative Research This survey suggests that the most likely people to be drinking energy drinks on a regular basis are 16-20 year olds who are single. How Often do you Drink Energy Drinks? 1+ A Month 6 Once A Month 6 1+ A Fortnight 6 Once A Fortnight 8 1+ A Week 24 Once a Day 18 0 • 5 10 15 20 25 30 93% of people that participated either put strongly agree or agree to the idea that 99p is a fair price to pay for an energy drink. The few who disagreed tended to be younger people who did not have much disposable income; this is a possible trend in the results of the questionnaire. Is 99p a fair price for an energy drink? 40 Number of people 35 30 27 36 25 20 15 10 5 5 0 Strongly Agree • Agree Disagree 0 Strongly Disagree The sales of energy drinks for this target market are mainly split between supermarkets and corner shops, this means these two places would be best to try and introduce a new product to 3 penetrate the market; as it is where most of the target audience will be shopping for the product. Where do you buy most of your energy Drinks? 30 28 25 20 19 14 15 10 6 5 2 1 0 Supermarket • Corner Shop Wholesalers Internet Pub/Club Vending Machines Orange proved to be the favourite flavour for energy drinks by a margin of 9%, followed by apple and cherry at 13%. However, orange flavoured energy drinks are very common in the market at the moment, meaning other quite popular flavours like cherry and mango may offer a USP for a product to sell with, as there is obviously a want for these flavours that is not being satisfied. Favourite Flavours of Energy Drinks Lemon 4% 10% Apple 11% Orange 3% 3% 13% 4% Strawberry Cherry 1% Raspberry 8% 22% Mint Cranberry 13% Kiwi 8% Watermelon 4 Results show that a high number of people drink energy drinks before sport; however the majority of people will drink them for other reasons showing that there is a large market for energy drinks to be targeted at non sporty people. • A good number of people have also said they drink energy drinks for the taste rather than for energetic benefits. Amount of people • 30 What situations are you most likely to drink energy drinks? 25 27 20 15 19 19 10 11 5 9 12 9 0 Situation The findings from this graph show that there is a strong majority of people that would prefer a healthy energy drink, with 26% of people strongly agreeing and 44% agreeing. This question was asked to gain an understanding of the target market and if a competitive U.S.P could be based on health. Would a 'healthy' brand of energy drink interest you? 44% 30 25 Amount of people • 20 26% 21% 15 10 9% 5 0 Strongly Agree Agree Disagree 5 Strongly Disagree Results indicate that 79% of people would be willing to try a new brand of energy drinks; 52% of people said they would be influenced by either a decent price range or a variety of flavours available. The purpose of this question is to figure out if there is a gap in the market for a new energy drink. Would you be willing to experiment and try new brands of energy drinks on the market? Yes 14 people No 54 people • As a potential energy drink name targeted at the discourse of males aged 16 to 34 the name ‘Zeus’ would be virtuous. Do you think 'Zeus' is a good name for an energy drink? Amount of people 35 30 31 25 20 15 18 10 5 12 1 1 1 2 0 5 3 4 Rating system 6 5 6 Conclusion This report shows how the product of energy drinks could be sold to the market. The secondary research suggests that the current market for energy drinks is growing which therefore means there is more room for competition to come in due to an increase in market share. The current products in the energy drinks market have generally targeted their product at males aged between 16 to 34 and this implies that a new energy drink would need to target the same audience as this is the ideal discourse for this particular merchandise. Within the primary research there are many outcomes, from the interviews taken out it gives of the idea that products such as ‘Red Bull’ are too expensive with an RRP (Recommended Retail Price) of £1.35 as the majority of the participants of our interview said £1 to £1.20 is a reasonable price for this type of product. The interviews also allow promoters and advertisers to see what key words the target audience relate to the product energy drinks. The interview stage is a process of discovery to uncover qualitative open findings. Using the findings of the interviews it can allow researchers to base a questionnaire or another form of primary research on the results. Using the graphed results from the questionnaire it is clear to see correlations between the answers in the queries. For example, a more health conscious energy drink would be a beneficial U.S.P (unique selling point) due to the fact that a high amount of people that drink energy drinks consume the product before sports. Also, there seems to be a distinct lack of ‘flavoured enrergy drink’ within the market therefore another good U.S.P for this particular product would be a variety of different flavoured energy drinks. The end results of the research taken out convey that there is a certain target market for energy drinks; these consumers buy energy drinks for numerous reasons and from several places. Although there is good resonance between the 15-34 market there does seem to be a genuine lack of penetration within the energy drinks market, with particular lifestyles emerging that could be targeted. The research done provides insight towards how energy drinks should be promoted and sold. 7