Sports and energy drinks sales are growing around the world. With new countries like India and China becoming relevant, analysts estimate the market will grow with CAGR of 10% in the near future (BCC Research 2015). This paper will analyse whether there is a place for new companies in this expanding and crowded market.
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Traditionally, the largest markets for sports and energy drinks are the US and Japan. The Europe also constitutes a significant portion of the market. The UK citizens, for example, have consumed 1,7 billion pounds worth of energy and sports drinks in 2013 (British Soft Drinks Association 2015). However, the latest growth of the market has been driven by new countries starting to consume such drinks. India started to become an area of interest for energy drink producers in 2011. The market was estimated at 159 million dollars at that point and is growing steadily at 20-30% CAGR (Technopak Food Team 2011). That market offers great opportunities for new businesses. As of 2016, it is starting to reach its prime and is not yet fully overtaken by huge global conglomerates. At the same time, due to Red Bull’s promotional efforts population in India is much more accepting of energy drinks consumption (Technopak Food Team 2011).
India also boasts a growing middle class which means more disposable income and more interest in sports and fitness. That presents an opportunity for sports drinks producers to stake a very significant claim in the emergent market. China also shows similar tendencies with more people becoming interested in sports and growing energy drinks consumption (BCC Research 2015). Those markets, however, present a significant challenge for the standard model of energy drinks marketing and distribution. The emphasis on extreme sports in marketing campaigns is inefficient as Chinese and Indians are not traditionally interested in such activities. While this puts larger traditionalist companies at a disadvantage, smaller, more adaptive enterprises might find a market for themselves easier by focusing on other aspects of energy drink consumption, such as fashion or lifestyle (Technopak Food Team 2011).
The more traditional markets, like the US, are also far from stale. The sports drinks market in America is growing, and new players are entering it. BodyArmor is the newest contender. It managed to attain popularity by boasting more natural contents and gaining support from the NBA star Kobe Bryant. The market is not shifting yet but with DrPepper purchasing an 11% stake in the company its future is predicted to be bright (Trefis Team 2015). However, replicating BodyArmor’s success is unlikely, as the American market is dominated by Gatorade, which boasts 77% market share. That makes this market rather impenetrable for most businesses, excluding small local start-ups or projects backed by other big players in the soft drinks market.
Overall, with the new potentially huge markets in China and India, the prospects for a new company entering sports and energy drinks market look bright. Those new markets will require a lot of analysis and planning but a well-executed campaign still has the chance to make a new company dominant. The more traditional markets such as the US and Europe are less perspective with huge conglomerates already dominating them with tried and true marketing methods. In order to ensure a successful market entry, the company must be ready to take risks and adapt quickly. Doing so can potentially yield great profits.
BCC Research 2015, Healthier Lifestyles Pumping Up Global Sports and Energy Drinks Markets, Notably Asia-Pacific Region, According to BCC Research, Web.
British Soft Drinks Association 2015, Changing Tastes the UK Soft Drinks Annual Report 2015, Web.
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Technopak Food Team 2011, Energy/Sports Drinks in India, Web.
Trefis Team 2015, Sports Drink Wars In The U.S. To Get Exciting?, Web.