The Energy Drinks Industry: An Overview

If you're looking for a pick-me-up, a coffee may give you the jolt you need. But if you're like the millions of other people who don't want a cup of java, you may end up reaching for an energy drink. These companies that produce these beverages say they increase your energy and alertness as well as provide you with a physical boost. That's because they contain significant amounts of caffeine.

Energy drinks are part of the broader soft drink category, which includes carbonated beverages, fruit and vegetable juices, bottled water, sports drinks, beverage concentrates, ready-to-drink tea, and ready-to-drink coffee. According to experts, energy drinks are the most popular supplements for teens and young adults in the United States along with multivitamins. The majority of these drinks are consumed by men between 18 and 34.

Global energy drink sales reached $57.4 billion in 2020. The industry is expected to grow by a compound annual growth rate (CAGR) by 7% between 2020 and 2025. This growth is attributed to rising incomes and an increase in sports activities and urbanization. A greater network of channels through which these drinks are sold, including supermarkets, convenience stores, and e-commerce sites, is expected to help fuel sales growth in this industry.

North Americans consume more energy drinks than any other geographic market in the world. But research shows that the Asia-Pacific region is expected to be one of the fastest-growing markets for the industry, thanks to more disposable income and changing demographics while marketing efforts by the industry in Europe will help it grow between 2020 and 2025.

Want to know more about the biggest players in this industry? Keep reading to learn about the largest companies in the energy drink market as well as some of the emerging trends.

Key Takeaways

  • The energy drink industry is a booming business with several key names leading the pack.
  • Red Bull, Monster, and Rockstar are among the biggest names in this saturated market.
  • Red Bull is a privately-owned company and the dominant force in the market.
  • Monster is publicly traded and entered into a strategic partnership with Coca-Cola in 2014.
  • Rockstar was sold to PepsiCo in 2020.
  • Global energy drink sales reached $57.4 billion in 2020 and are expected to grow by 7% between 2020 and 2025.

Red Bull

Redbull is owned by the Austrian company Red Bull GmbH. The company introduced the drink in Austria in 1987, marking the beginning of the global energy drink industry. Red Bull comes in 8.4-ounce cans in a handful of varieties, including original, sugar-free (give calories), Total Zero (no calories), and Editions (cranberry, blueberry, tropical, zero-calorie orange, and zero-calorie cherry). The drinks’ main ingredients are caffeine, taurine, B vitamins, sucrose, glucose, and carbonated water.

Red Bull is sold in 171 countries, where it employs more than 12,000 people. The first cans were sold outside Austria in 1994 in Germany and 1995 in the United Kingdom. Sales in the United States began in 1997 and Canada in 2004. Sales are surging in emerging markets, such as India (up 37%), Brazil (up 30%), and Africa (up 25%). The company continues to focus on its efforts to expand in the U.S., Western Europe, and the Far East.

The company is a private company owned by chief executive officer (CEO) Dietrich Mateschitz, along with Thai businessman Chalerm Yoovidhya and his family. Because the company is privately owned, there is very little financial information available. According to the company, more than 7.9 billion cans of Red Bull were sold in 2020. That's a jump of 5.9% from sales recorded in 2019. Group sales reached €6.307 billion in 2020, thanks to markets in Turkey, Germany, Russia, and Canada.

Monster

California-based Monster Beverage (MNST) is a holding company that was founded in 1985. It employs more than 3,500 individuals and is headed by CEO Rodney Cyril Sacks. The company began selling Monster Energy drinks in 2002 after unsuccessfully launching another drink to compete with Red Bull in 1997. Monster is the second largest energy drink company with a market share of 39% after Red Bull.

Monsters drinks come in 16-ounce cans in 36 varieties. The company has eight different brands, including the original Monster drink, Burn, NOS, and Predator. The original Monster Energy comes in five different flavor profiles. One 16 fluid ounce can of Monster Energy contains 160 milligrams of caffeine (or 10 mg per fluid ounce)—considered very high—and 80 milligrams of taurine, an amino acid considered to be a dietary supplement and mental stimulant.

The Monster drink is sold in more than 100 countries and was ranked among the world's top beverage companies. The company ranked second in the energy drinks industry in 2019 after Red Bull. In 2014, the company entered into a long-term strategic partnership with Coca-Cola (KO), which purchased a 16.7% stake in Monster. This move made Monster the exclusive energy play for Coca-Cola. The soft drink giant's distribution network reaches more than 200 countries. The two companies have done business together since 2008.

The company's stock trades on the Nasdaq. The stock was up 1.1% on a year-to-date (YTD) basis as of May 10, 2021. Its market capitalization as of that date was $48.22 billion. Monster reported consolidated net sales of $4.60 billion for the fiscal year 2020—an increase of 9.5% from the previous year. The company doesn't report sales per individual brand. Gross profits reported as a percentage of net sales were reported for the year at 59.2%.

Rockstar

Rockstar International founder and owner Russ Weiner introduced Rockstar Energy in San Francisco in 2001. Its marketing strategy includes affiliations with action sports, motorsports, live music, and models. Rockstar comes in 8.4-ounce, 16-ounce, and 24-ounce cans, in 30 flavors, ranging from Rockstar Original energy drink to zero carb (10 calories) and zero-calorie versions, recovery drinks, coffee flavors, and more. Rockstar is sold in convenience and grocery stores in more than 30 countries.

Weiner sold the privately held company to PepsiCo (PEP) in 2020 for $3.85 billion. The soft drink company reaches consumers in more than 200 counties, adding Rockstar to its beverage lineup, which includes Pepsi, Gatorade, and Tropicana. The company said it planned to relaunch the Rockstar brand in the United States and internationally before integrating it into its supply chain.

Although PepsiCo doesn't release financial information about specific brands, we can make some determination about how Rockstar is poised to position itself within the company. Sales of Rockstar topped $851 million in 2019.

Top Emerging Companies and Trends

The energy drink market is saturated, making it more difficult for smaller and newer companies to compete. This means there's no threat to Red Bull, or Monster, and Rockstar’s market dominance. Energy shots like 5-Hour Energy may rank ahead of Rockstar in energy beverage sales but its closest competitor, 6-Hour Power, would rank near the bottom of the list. And energy drink mixes, including MIO Energy and Crystal Light Energy, aren't even considered major players in this market.

There may be room in the energy drink market for companies that differentiate themselves from the leading players, which look remarkably similar in their advertising, promotions, and sponsorships. Competitors face challenges such as distribution, obtaining shelf space, and generally offering something unique from the big three.

Monster and Rockstar, and less so Red Bull, are on top of the trends in the energy drink and soft drink industry, allowing them to widen their product offerings to compete with smaller players, including Bang. This brand showed significant growth in the market in 2020, faring much better than other natural energy drinks thanks to its lineup of flavors and high caffeine content, which is favored by those who are frequent consumers.

We can expect to see the following trends in the energy drinks industry in the future:

  • A boost in the availability of plant-based energy ingredients in these beverages, including guarana and maca
  • Nootropic energy to help increase help the consumer's focus and mental clarity
  • The reformulation of drink formulas to include kola nut and natural caffeine, and more exotic flavors

Experts warn that the sleep patterns of teenagers can be drastically altered with the excessive consumption of energy drinks.

Examples of On-Trend Energy Products

 
Red Bull

Monster

Rockstar

Protein
 
Muscle Monster Energy Shake
 

Coffee
 
Java Monster; Muscle Monster Energy Shake, coffee flavor

Rockstar Roasted Mocha

Organic
ORGANICS by Red Bull  
Rockstar Organic

Cane Sugar
   
Rockstar Organic

Green Tea
 
Monster Rehab Green Tea + Energy
 

Zero Calorie

Red Bull Total Zero, Red Bull Zero Editions

Monster Energy Zero Ultra

Rockstar Sugar Free, Rockstar Pure Zero

No/Low Carb

Red Bull Sugarfree

Monster Energy Lo-Carb,

Rockstar Zero Carb

Electrolytes
 
Monster Rehab

Rockstar Recovery Lemonade, Rockstar Xdurance

Other

Red Bull Editions (five fruit-flavored varieties)

Monster Extra Strength with nitrous oxide

Rockstar Roasted with Almond Milk, Rockstar Horchata

Notes: This is not an exhaustive list of product offerings that fit the categories shown. There is also some overlap between categories. For example, zero-calorie drinks also have zero carbs.

Monster Energy Drink FAQs

How Old Do You Have to Be to Drink Monster Energy?

While there is no legal age limit to how old you have to be in order to drink Monster Energy, the company agreed that it would not market any of its energy beverages to children under the age of 12 in the U.S. This includes marketing and selling drinks, coupons, and samples in and around K-12 schools, as well as advertising in areas where children are the primary audience, such as television, radio, and the internet.

How Did Monster Beverage's Stock Split Work?

Monster split its stock four times between 2005 and 2016. The company did a two-for-one split on Aug. 9, 2005, and Feb. 16, 2012. Shareholders received four shares for each share they had on July 10, 2006, and three shares for every one share held on Nov. 10, 2016.

Who Are Monster Beverage's Major Shareholders?

The company's top individual shareholders include Rodney Sacks (49.8 million shares), Hilton Schlosberg (48.5 million shares), Mark Hall (750,106 shares), Emelie Tirre (254,427 shares), and Thomas Kelly (83,926 shares).

What Institutional Investors Hold Monster Beverage Stock?

As of Dec. 30, 2020, Monster's top institutional investors were FMR (30.8 million shares), Vanguard Group (29.2 million shares), Blackrock (25.6 million shares), Loomis Sayles & Company (22.5 million shares), and AllianceBernstein (17.2 million shares). More than 65% of the company's shares are held by institutions.

The Bottom Line

The energy drink industry has been growing profitably for years as other once-popular beverages have declined, and it appears on track to keep growing despite regulatory and health challenges. One of the three leading companies is privately owned, limiting options for investors who want direct exposure to Red Bull through this category. But investors can still reap the benefits of public beverage stocks like Monster along with exchange-traded funds (ETFs) that focus on the food and beverage industry.

Disclaimer: The author does not own shares of or have a financial interest in any company mentioned in this article.