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Energy Drink Market Full Of Pep

Energy drinks are a rapidly expanding niche market, and August saw a mainstream player enter the contest for dollars spent in America by young adults searching for functional beverages to increase stamina and alertness.

The market, now estimated to be worth $10 million, has been predicted to grow to $300 million or even as much as $2 billion in the next few years.

Anheuser-Busch, the world's largest brewer, has announced it is developing a carbonated, orange-flavored drink that will contain guarana and vitamins C, B-6 and B-12óbut the brewer said the product will not contain alcohol. Market testing for the product, which may be called 180 Degrees (as in an about-face), will begin by year's end.

Anheuser-Busch hopes to compete with the market dominated by Austria's Red Bull, and other drinks such as Rush, Shark and Go-Go Express. Energy drinks frequently contain caffeine, amino acids, vitamin C, the B-vitamins, ginkgo biloba or ginseng. The drinks are targeted to 18- to 30-year-old consumers who want a lift for extreme sports or who want to stay up late to party, many at so-called raves.

Energy drinks are also at home on natural products retailers' shelves and in mainstream grocery stores. Beverages such as Hansen's Energy, Gatorade's Torq, Arizona Ice Tea's Rx Energy or Odwalla's Serious Energy are marketed to healthy people on the go, says Yudi Bahl, an analyst at U.S. Bancorp Piper Jaffrey.

These drinks already are available, but Anheuser-Busch may change the market. "They will take energy drinks to a different level in both branding and distribution," Bahl said. A-B plans to distribute its product through its current wholesaler distribution system.

Other new entrants in the functional drink category are being marketed directly to the party- and club-going set. Hansen's, for example, had a subsidiary, the Gluek Brewing Co., introduce Hard-E, an energy-fortified malt beverage that contains 5 percent alcohol, and The Joseph Group, based in Des Moines, Iowa, will start selling a vitamin-fortified 4.2-percent-alcohol beer that the company claims will not dehydrate the drinker. Whether these two products will find a place on natural product retailers' shelves remains to be seen. (See next month's NFM for a story on selling "sin" products.)

Bahl predicts these products will find their home at conventional stores.

© by Marty Traynor

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