Energy drink sales are forecast to be muted unless consumers get re-energized

Investors in the energy drink sector have been jolted by Nielsen data over the past several months that indicated energy drink sales have slowed down considerably.

Weighing in on the development, UBS said that its dive into the data does not necessarily suggest that energy drinkers are switching to other categories. Analyst Peter Grom’s read is that consumers are becoming more cautious with discretionary purchases in general, including reducing their energy drink consumption. The trend is that consumers are lowering their energy drink purchase frequency, and the outsized household penetration gains over the last few years have been difficult to match. Notably, convenience store traffic continues to see pressure.

“The combination of these factors has impacted category growth, leaving brands to contend with heightened competition while also navigating a slowing category. In our view, barring any meaningful shift in the consumer backdrop, we believe that category growth is likely to stay muted through the balance of the year (likely growing more on the order of ~LSD% for the year), with a return to normal growth likely in 2025.”

Where the energy drink players stand: Bang has seen a bounce in sales tracked by Nielsen at retail outlets. Of note, Bang Energy is owned by Monster Beverage (NASDAQ:MNST), which acquired its parent company, Vital Pharmaceuticals, in July 2023 for $362 million. Monster’s (MNST) other brands have ceded market share over the last few months. Meanwhile, Celsius Holdings (NASDAQ:CELH) saw market share gains peak at 10.9% back in May, then drop and ultimately stabilize at ~10% from June through early-September. Industry leader Red Bull has benefited from a number of new offerings, such as Curuba Elderflower Summer Edition launched in early May and the launch of sugar-free versions of both Red Bull’s Amber and Red Editions in early June. Notably, Alani Nu has made its mark in the energy drink category, with a peak market share of 4.6% in early September. Alani Nu, founded in 2018 by entrepreneur and fitness influencer Katy Hearn and her husband Haydn Schneider, is a health and wellness brand that has quickly risen to prominence. Other upstart energy drink brands have collectively lost market share over the last few months, per Nielsen data. Beverage heavyweights PepsiCo (PEP) and Coca-Cola (KO) have seen slowing energy drink sales, along with the rest of the sector.

In terms of share price, Monster Beverage (MNST) is down 9.4% on a year-to-date basis, while Celsius Holdings (CELH) has shed 43%.