Mintel report shows Chinese energy drink consumption increased by 25%, four times more than the US

A new Mintel report shows that Chinese consumers drank an additional 545m liters of sports drinks in 2015 compared to the previous year, a 25% volume growth.

The growth, Mintel further pointed out, “is nearly four times the annual growth in America” during the same time period.

In the meantime, the global market for energy drinks rose by a 10% last year to reach 8.8bn liters, according to the report. Mintel’s Global New Products Database also shows that more energy drinks were launched globally in 2015 than in any year since 2008.

“The number of energy drink products launched is growing 29% between 2010 and 2015,” Mintel said.

Energy drinks are successful, yet controversial

Alex Beckett, global food and drink analyst at Mintel, said, “Energy drinks remain the controversial, yet undeniably successful, wild child of the soft drinks family.”

“Energy drinks are benefiting from being championed by giant brands, which devote huge investment to advertising and high profile marketing initiatives to project an exciting and edgy image,” Beckett explained.

“However, in less developed regions, local energy drink brands are emerging and gaining distribution as a more affordable alternative to multinationals, adding pressure for major players to project a brand identity that consumers from Beijing to New York want to be associated with, and pay more for,” he added.

China’s ‘Red Bull’ still dominates domestic energy drink market

China’s number one domestic energy brand, Red Bull, is manufactured by a local Red Bull Wei Sheng Su Gong Neng Yin Liao (红牛维生素功能饮料), which is a separate company from the Austria’s Red Bull GmbH.

Chinese Red Bull, which is not carbonated, has a majority market share of 80.6% in value and 78.2% in volume in 2015, according to Mintel. It increased by 1.4 percentage points and 1.1 percentage points respectively in value and volume compared to 2014.

“This is impressive as Red Bull has not launched any new product in China in 2015, yet it is still growing market share,” Mintel said.

Besides Red Bull, two brands potentially posing a challenge are Wahaha’s Qili (娃哈哈集团 启力) and Dali’s Hi-Tiger (达利食品集团 乐虎), because they both have similar ingredients to Red Bull such as taurine, caffeine and vitamin B6.

Qili managed to grow market share by 0.5 percentage points in value to 3.2% and 0.2 percentage points in volume to 4.9% in 2015, mainly due to extensive distribution networks in tier two and three cities as well as improved brand awareness through TV advertisements and sponsorships, according to Mintel.

In addition, Hi-Tiger entered the energy drink market in 2013 with a low price strategy - a 250ml pack retails at RMB 5 (less than $1) - which brings competitive advantage to the brand and resulted in a 0.3 percentage points in volume increase to 5.3% in 2015.

Despite the fact that Red Bull GmbH entered the Chinese market in early 2014 after a years-long process, it has not been listed as a top energy brand in China, according to Mintel.

Chinese marketers should focus less on sports-related occasions

For young Chinese consumers, promoting energy drinks for sports and exercise related occasions might not be effective for energy drink companies, Mintel suggests, as they are “digitally savvy, informative and daring.”

“Therefore, various purchasing and drinking occasions including via on-trade channels for sports and energy drinks are needed to target the young, who are likely to have many interests, apart from sports, such as fashion, music, and video games,” Mintel said.

Mintel added three international products that can offer marketing inspiration to Chinese energy drink companies in terms of occasions other than sports include: Michel Adam F-88 Fashion Energy Drink, Monster Energy, and Red Bull’s The Summer Edition Energy Drink Kiwi-Apfel.