The energy drinks market - France

1.2 A growing global market

Energy drinks market size World, ****-****, in billions of dollars CAGR: +*.*% Source: grandviewresearch The energy drinks market was valued at $** billion in ****, and is expected to reach $*** billion by ****. This equates to a CAGR of *.*% between **** and ****. There are several reasons for this growth: firstly, energy drinks offer an immediate burst of energy, which is often more energizing than coffee. For example, a guarana bean (***) contains twice as much caffeine as a coffee bean. Secondly, incumbent companies can capitalize on societal health trends by offering energy drinks with more perceived health benefits, such as sugar-free products. Finally, the presence of giants such as Red Bull and Monster at various events around the world will continue, leading to greater consumption among younger consumers. North America has the largest market share in ****, accounting for **%. Asia Pacific is expected to be the fastest-growing market between **** and ****. The market is expected to grow considerably in the economies of China, India and Japan, due to consumers' willingness to experiment with new flavors, and strong demand from immigrants living in the country, who are showing an interest in a variety of beverages. Product launches in the region to target and attract large numbers of consumers have stimulated ...

1.3 Strong growth in the French market

Energy drinks market size World. ****-*****.in million dollars CAGR: +*.**% Source: ****

In France, in ****, *.* liters of energy drinks were consumed per capita. Compared with other countries, this is neither high nor low, but rather average consumption. Nevertheless, when measured in aggregate value terms, the market is small compared with the UK or Germany, for example.

However, the French energy drinks market is growing even faster than the global market; between **** and ****, the market grew at a CAGR of *.**%, which would take it to *** million euros in ****. This growth is partly due to the current low penetration rate of energy drinks in France. For example, Red Bull was not authorized for retail sale until ****. In addition, prices have fallen, fuelling demand.

1.4 A concentrated market in the hands of a small number of players

The energy drink market is highly concentrated, with the top three brands accounting for **.*% of total sales in France in ****. Red Bull is the market leader with over half of the energy drink market share, followed by Monster with **.*%. Private labels and other brands have lost market share to these giants. This implies that the market is in fact oligopolistic in structure, with extremely high barriers to entry.

Market share by brand France, ****, in Source: ****

2.1 The soft drinks market

An overview of the soft drinks market Sales in the soft drinks market France, ****-****, in € billions Source : LSA Conso, LSA Conso, LSA Conso, LSA Conso, LSA Conso Over the past * years, sales of the BRSA (***) market have grown steadily, reaching *.** billion euros in ****. Overall, with the exception of **** and ****, sales in the carbonated soft drinks market have risen fairly steadily, to an estimated *.** billion euros in ****. Sales in the non-carbonated BRSA market have risen steadily, to an estimated *.* billion euros in ****. a   We can see that sales trends in the BRSA market rose in ****, with an increase of +*.*% compared with ****. This is partly due to the strong increase in sales in the non-carbonated BRSA market, +*.*% compared with ****. The biggest drop in the evolution of BRSA market sales is seen in ****, with an evolution of *.*% compared to +*.*% in **** (***). Finally, there is some recovery in ****, with sales of the BRSA market rising by +*.*%. The state of the soft drinks market in **** In France, sales of soft drinks are concentrated around fruit juices (***). While sales of fruit juices fell by -*.*% in value in **** compared with ****, those of colas rose by +*.*% in value compared with ****. Overall, the BRSA market grew by +*.**% in value ...

2.2 The place of energy drinks among BRSAs

Retail sales volume of non-alcoholic beverages by category France, ****, in millions of liters Source: ****

In ****, sales of enegetic beverages in France totaled ** million liters. This represents just *.*% of the total market considered in this chart, which is dominated by Coca-Cola. This confirms the growth potential of this market.

Overall, according to LSA, energy drinks account for **.*% of total soft drinks sales, compared with *.*% of soft drinks sales in ****. We also note the difference between the volume and value of energy drinks compared to other types of drinks, which is explained by the fact that the price per liter of energy drinks is almost * times higher than that of soft drinks: *.** per liter for energy drinks versus €*.** per liter for the average soft drink in hypermarkets and supermarkets. [***]

Reasons for consuming BRSA

According to a study carried out by Kantar, the stimulating/energetic qualities of soft drinks and juices rank *th in terms of reasons for consumption. Indeed, while the hydrating aspect accounted for **% of responses, **% of respondents cited the energizing aspect. This shows the potential of energy drinks to meet the needs of the French in terms of beverage consumption.

Reasons for consuming BRSA and juices France, ****, in Source: ****

According to ...

2.3 Demand trends

Interest in energy drinks is non-cyclical

Google Trends index of "energy drink" searches France, ****-****, in Google Trends index Source: ****

The graph below represents the proportion of searches for a given keyword in a specific region and for a specific period, in relation to the time when the rate of use of this keyword was highest (***). Thus, a value of ** means that the keyword was used less often in the region concerned, and a value of * means that the data for this keyword is insufficient. The value *** was reached for the week of December **, ****.

The trend over the last five years is one of increasing interest in energy drink searches. Nevertheless, there are certain periods, for example between April ** and **, ****, when interest soars; this happens especially if Red Bull holds an event in France. During that week in April, the Red Bull Air Race was held in Cannes. Outside these periods, interest remains stable and non-cyclical.

Consumer profile

Energy drinks are a market that appeals mainly to young people: less than a third of buyers of the four main energy drink brands are over **.

Percentage of buyers over ** of leading energy drink brands France, ****, as % of total buyers Source: ****

This is ...

2.4 The impact of Covid-19 on the industry

There is no indication that the energy drinks sector as a whole will be particularly affected by COVID-** over the long term. Beverages remain non-cyclical and demand is fairly stable.

Successive confinements have meant that people spend less time outdoors, and therefore consume fewer activity-related energy drinks. In addition, brand exposure has dropped considerably due to the cancellation of sporting events. Nevertheless, Red Bull and Monster continued to market their products extensively through their athletes, who often have social media accounts. For example, Instagram remains a hot spot for product placement for Red Bull, so it's plausible to assume that this mitigates the adverse effects of reduced marketing and exposure.

However, the health crisis may have done a great disservice to the smaller energy drink companies trying to make a place for themselves in the market. Their survival was threatened by a lack of liquidity. Smaller companies have much lower capital reserves and, with sales affected by the Covid-** crisis, this had an impact on the risk of bankruptcy.

3.1 Overview of market structure

Combining ingredients

Energy drinks are made up of various ingredients such as caffeine, taurine, sugar, guarana, B vitamins and herbs. The amount of each ingredient varies by brand, but generally energy drinks contain between ** and *** milligrams of caffeine, between *,*** and *,*** milligrams of taurine, between ** and ** grams of sugar and between ** and *** milligrams of guarana. B vitamins are also commonly included in energy drinks, the most common being B*, B* and B**. Herbs such as ginseng, ginkgo biloba and green tea extract are also commonly included in energy drinks, although the quantities of each herb vary by brand.

Production

Energy drink production is a complex and meticulous process that begins with the brewing of ingredients. The ingredients are mixed in precise proportions to give the drink its taste and consistency. Once the mixture is ready, it is heated to a specific temperature to pasteurize it. After pasteurization, the mixture is cooled and filtered to remove impurities. Once filtered, the mixture is bottled and sealed. Finally, the bottles and cans are labeled and packaged before being dispatched to points of sale.

Distribution

Energy drinks can be distributed in a variety of ways. First of all, they can be sold in stores, such as ...

3.2 Production

Production overview

Depending on the product and the company, the distribution network differs accordingly. We can distinguish three different profiles of players in the production (***) of energy drinks:

Specialists in industrial subcontracting , who generate most of their revenues by producing for third parties, such as Coca Cola European Partners France (***); Private label specialists (***) who produce mainly for mass-market brands; Own-brandmanufacturers (***)

Companies and employees on the rise

Industry, companies and employment France, ****-****, in units Source: ****

To obtain the above chart, we use NAF code **.**B "Production of non-alcoholic beverages", where energy drinks are included. However, the category is broader than just energy drinks, which means that the above chart must be analyzed with caution. Nevertheless, we note that in this category, the number of companies and employees has increased. In ****, there were *,*** employees in France, and in ****, this number was *,*** and seems to have stagnated at around *,*** since ****. Similarly, the number of companies in the sector has risen steadily, from ** to *** between **** and ****. Indeed, these two factors demonstrate that the sector has become more fragmented in terms of players BEF estimates that the number of energy drink companies in France stands at **, while the number of employees is around ***.

However, as ...

3.3 Distribution

Overview

Top five distribution channels for energy drinks France, ****, in Source: ****

Hypermarkets and supermarkets are the most common distribution channels for energy drinks in France, accounting for around **% of sales. E-commerce remains a very limited channel, with only *% of sales made online. This is partly due to the fact that energy drinks are bought and consumed on immediate demand, and by the younger generation who buy them during school hours or during outdoor activities. As a result, the Internet segment is mainly aimed at consumers looking for more exotic flavors.

An industry heavily affected by marketing

Red Bull and Monster are known for their aggressive marketing strategies. They are present in most extreme sports and attract young people in particular. Indeed, Red Bull also has a strong presence in student circles, and doesn't hesitate to sponsor events such as BDE campaigns, integration weekends, sporting events and so on. Inaddition, Red Bull has a permanent student ambassador in every major French school, who is paid and whose role is to promote the brand, notably by distributing freesamples . They also sponsor alternative, even transgressive events, such as an illegal concert in the catacombs of Paris.

Since its creation, Red Bull has established itself ...

4.1 Products

Product components

According to caffeinformer, the five most common ingredients in energy drinks (***) are vitamin B**, vitamin B*, caffeine, vitamin B* and taurine.

Formats range from ** cl cans (***) to * l bottles. In between these two styles, many brands innovate with hybrid formats. Energy drinks derive their stimulating effect mainly from the sugar-caffeine combination. The amount of sugar contained in a typical drink is similar to that found in traditional sodas.

However, most brands also add other ingredients to enhance the stimulating properties. Below is a list of the typical ingredients in a can of energy drink.

In addition, the inclusion of ingredients varies from brand to brand, as can be seen below.

Breakdown of energy drink ingredients Red Bull, Monster, Rockstar Source: ****

Caffeine is generally included in all energy drinks. Taurine is also frequently used, but some brands like Burn Energy Drink also use alternative ingredients such as ginseng to differentiate their drink.

4.2 Price analysis

You will find below an overview of the prices and descriptions of the following * brands: Red Bull, Monster, Rockstar, Crazy Tiger.

Red Bull

Red Bull, created in ****, is recognized as the best-known energy drink brand on the market, and the leader in terms of both value and volume. The drink is distinguished by its caffeine and glucuronolactone content, which gives it a stimulating effect and a feeling of well-being. Red Bull is also known for its innovative advertising campaigns and associations with sporting events. The Red Bull Formula * team, for example, was founded in **** and quickly became a success thanks to its outstanding performance. The Red Bull brand is associated with the Formula * team, and this association enables it to benefit from high visibility and brand awareness. Thanks to this association, Red Bull can leverage the marketing power of the Formula * team to promote its energy drink.

Here's a table summarizing the different prices for the different sizes of the classic Red Bull reference offered on the Carrefour website:

In addition to the classic reference, the Red Bull can is available in * other flavors priced at €*.** each on the Carrefour website: blueberry, watermelon, apricot-strawberry, dragon fruit, coconut-acai and a sugar-free Red ...

4.3 Supply trends

The giants enter the game

Indirectly, Coca Cola has been present in the French energy drink market for some time through its **.*% minority stake in Monster Energy. However, in ****, Coca Cola entered the French energy drink market with the aim of reaping market share from Red Bull more aggressively, launching two products under the Coca Cola brand. What sets these drinks apart is that they do not contain taurine. [***] In ****, Coca Cola's market share in France was around *.*%.

Indeed, the energy drinks market is in high demand; in ****, Coca Cola's main rival, Pepsi Co, bought Rockstar for a price of around *.* billion euros. Although Coca Cola and Pepsi are struggling to overtake Red Bull in terms of sales, these moves are being made partly as part of a diversification strategy in the beverage market, but also to seriously challenge the status quo of the energy drinks market, which has great potential for growth in the future. [***]

Innovation in the light of health concerns

Finally, it's worth noting that the energy drinks sector is under intense scrutiny. High levels of sugar, caffeine and taurine are leading to a general consensus on the negative health consequences associated with the consumption of these drinks. ...

5.1 More flexible but still vigilant regulations

In general, energy drinks sold in France are subject to EU regulations, which lay down specific provisions for the labeling of energy drinks, implemented in Regulation (***) No. ****/**** on the provision of food information to consumers. Under this regulation, energy drinks must be labelled with the words " High caffeine content. Not recommended for children, pregnant or breastfeeding women" , followed by the amount of caffeine per *** ml in brackets

On a national level, energy drinks are a somewhat controversial subject. France has been slow to legalize energy drinks; until ****, taurine was an illegal component, forcing players like Red Bull to adopt the recipe used for retail drinks in France. Since then, ANSES has regularly assessed the possible harmful effects of consuming various products, including energy drinks. In addition, the French government has created a specific control system under which all energy drinks must be declared to the DGCCRF in order to verify their compliance

Due to the health issues very much present in the public debate, the main energy drink manufacturers in France (***) decided at the end of **** to create an association: Boissons Énergisantes France. The aim of this association is to provide a single point of contact for the State on all ...

5.2 Health issues remain a grey area

The French government has commissioned several reports on the health effects of energy drinks. A major report by the Institut de Veille Sanitaire (***) in ****, based on data collected from **** to ****, showed that over-consumption of energy drinks could present risks of caffeine intoxication. However, it did not lead to any changes in legislation.

EASA (***) published a scientific opinion in **** recommending that healthy adults limit their caffeine intake to *** mg per day. A ** cl can of energy drink contains an average of ** mg of caffeine.

The report also points out that it is essentially the abusive use of these beverages that present risks. [***] For example, intensive consumption is targeted in the context of significant physical activity and, above all, in a festive setting, mixed with alcohol. The latter mixture is responsible for a large proportion of accidents linked to the consumption of energy drinks, which is why energy drinkers discourage the mixing of the two

According to ANSES in France, **% of energy drinkers consume them at parties (***), including **% who mix them with alcohol, and **% as part of a sporting activity

5.3 World customs nomenclature and harmonized system

The Harmonized System is an international nomenclature for product classification. It enables participating countries to classify traded goods on a common basis for customs purposes. At international level, the Harmonized System (***) for the classification of goods is a six-digit code system. [***]

The HS comprises some *,*** item/product descriptions, which appear as titles and subtitles, organized into ** chapters, grouped into ** sections. The six digits can be broken down into three parts. The first two digits (***).

The harmonized system was introduced in **** and has been adopted by most of the world's countries. It has undergone several changes in product classification. These changes are known as revisions, and came into force in ****, ****, ****, **** and ****. Detailed changes to each HS nomenclature are available on the links attached below.

For the compilation of market calculation statistics for this study, we have selected the following area:

For company and employee sector analysis: [***]

- **.**Z " Production of non-alcoholic beverages"

6.1 Segmentation

• Red Bull
• Monster Energy
• Crazy Tiger
• PepsiCo
• Rockstar Energy Drink
• Coca-Cola Groupe
• Distrisun
• Truc de Fou