Coke, Pepsi To Launch New Energy Drinks

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Coke, Pepsi To Launch New Energy Drinks

As the energy drink category continues to grow, Coca-Cola and PepsiCo are frenetically adding new fighter brands to take on Red Bull, but industry watchers are split on whether these entries have a chance to succeed, Brandweek reports.

"There really is no more room in the category. But [Coke and Pepsi] will keep introducing products," said Simon Sinek, president of marketing consultancy Sinek Partners in New York. "It ends up being too much of a good thing."

Others disagree: "Whether these particular drinks will ultimately cut it or not, there certainly is room for plenty of energy drinks," said Gerry Khermouch, editor of Beverage Insights in West Nyack, N.Y. "The category's still growing fast. Pricing has held up remarkably well. And both soft drink bottlers and beer wholesalers seem to be more receptive than ever to them."

Coke's plans include the addition of a Von Dutch drink based on of the trucker cap fashion brand, as well as a Tab energy drink for women. Pepsi will target young males with its new Mountain Dew MDX "energy soda" line extension.

Both cola giants are looking to unseat Red Bull, which has ruled the segment since 1997. Red Bull owned a 43.1 percent share of dollar sales at convenience stores in the second quarter, according to Beverage Digest in Bedford Hills, N.Y. In supermarkets, where boomers are beginning to discover the beverage, it has a 51.7 percent dollar share.

As the energy category continues to soar (it was up 63 percent for the quarter), cola sales are shrinking, leaving some experts bullish about the prospects for energy drinks.

"The 'majors' have comparatively low-share in this still-fragmented segment," said Kaumil Gajrawala, beverage analyst at investment bank UBS in New York. "Profitability is massive, so it's important for the bottlers that they don't miss this opportunity."

Pepsi has made a decent showing to date with SoBe Adrenaline Rush, SoBe No Fear and Mountain Dew Amp. The drinks made up a 16.7 percent share of Q2 c-store dollars.

MDX, an energy drink/Mountain Dew soda, will be available in 14-ounce bottles in regular and sugar-free versions in November. The drink was tested this summer.

Coke, which tried and failed to enter the category with a drink called KMX, caught up quickly this year with Full Throttle in January. Its chief bottler, Coca-Cola Enterprises, also has partnered with Rockstar. The two lines carry a combined 13.5 percent share.

"We realized we needed distinct brands with distinct personalities and unique selling propositions," said Mary Herrera, director-marketing for sports and energy drinks at Coca-Cola North America. "The category is still young. There's plenty of room for more competitors."

Coke hopes to make more headway with regular and sugar-free versions of Von Dutch launching next month. Tab Energy, in pink Burberry-style 10.5-ounce cans, will follow.