What’s behind energy drink growth?

Investing.com -- Energy drink sales are surging, and it’s not just a macroeconomic rebound driving the trend, according to Jefferies. 

“Category growth is accelerating... and it’s not all macro,” the firm’s analysts said in a note this week, highlighting that energy drinks are growing 15% thanks to better execution, product innovation, and rising consumer value perception.

Retail sales for the category rose nearly 15% over the last quarter, with volumes up 13% and pricing contributing 2%. Jefferies emphasised that “execution has stepped up,” with energy drinks gaining shelf space and visibility. 

“Energy features and displays helped generate 17% more dollars for the category over the last year,” the firm noted.

Innovation is also said to be playing a key role. Nearly a quarter of category sales over the last month came from new products, nearly double the 2024 figure, said the firm.

“Red Bull only started launching sugar-free flavors last summer,” Jefferies said, and now sugar-free accounts for ~40% of innovation dollars. 

Monster, Celsius, and others like Alani Nu and Bloom are also “helping expand the sugar-free market.”

Consumers are also more willing to pay. “Consumer sentiment toward the category’s value versus cost is improving,” Jefferies wrote, noting that energy drinks have maintained relatively stable pricing compared to coffee and soft drinks. 

Since 2021, energy prices have risen only 15% versus 44% for carbonated soft drinks.

Importantly, energy drinks are still attracting new customers. “Household penetration is trending up again after stalling in 2024,” Jefferies said. 

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

New buyers reportedly made up 25% of households and 6% of category spending so far this year.

Jefferies said that it sees Red Bull as the clear winner, but in public equities, it maintains Buy ratings on Monster and Celsius. “Energy is playing to win, and it’s working.”

Should you invest $1,000 in MNST right now?

Don't miss out on the next big opportunity! Stay ahead of the curve with ProPicks AI – 6 model portfolios powered by AI stock picks with a stellar performance in 2024.

Unlock ProPicks to find out