Jump-Start Beverage Sales with Energy Drinks
The $6.6 billion energy-drink market is the place to be, especially for operators targeting the Gen-Y audience.
By Allison Perlik, Senior Editor -- Restaurants & Institutions, May 19, 2008
If energy drinks aren’t yet on your menu or even your radar, consider this eye-popping news: The market for energy-boosting beverages has ballooned by more than 400% over the past five years. Sales have grown from $1.2 billion in 2002 to an estimated $6.6 billion in 2007, according to market-research firm Packaged Facts, which projects that the market will reach $9.3 billion by 2011.
“People are busy. They have a lot going on, they’re tired and that quick little pick-me-up has become very popular,” says Beverage Manager Jason Passmore at Houston-based casual-dining chain Joe’s Crab Shack, which introduced three energy-drink cocktails last May and recently added an alcohol-free version flavored with passion-fruit syrup.
At Joe’s, caffeine-fueled drinks such as the Starburst (an energy drink mixed with orange rum and citrus-vanilla Italian liqueur) appeal most to the 25-and-under crowd who may be kicking off a night out with dinner, Passmore says, noting that the mixed drinks outsell the energy drinks served on their own.
Findings from market researcher Mintel International show that younger diners are indeed driving sales in the segment: More than 30% of teen-agers and consumers age 25 or younger say they drink energy drinks, compared to 14% of adults.
Energy Drinks for Every Menu
Starbucks is the latest megabrand to bank on energy drinks’ potential. This month, the Seattle-based coffee giant’s U.S. stores introduced the “+ Energy” platform, which invites customers to perk up any beverage with a shot that combines B vitamins, guarana (a South American fruit with a high concentration of caffeine) and ginseng.
“Our entry [into the energy-drink category] offers a significant opportunity for us to complement our current customers’ lifestyles and reach out to new customers,” CEO Howard Schultz wrote in a recent letter to company partners. “Other entrants into this space use caffeine as a supplement in their energy beverages, which makes Starbucks a natural---and gives us a unique position in the marketplace with Starbucks coffee as well as build equity in our brand.”
Atlanta-based PJ’s Coffee is trying its hand in the category with a different approach. The regional chain’s new Energy Latte (r.) features yerba maté, a South American plant typically steeped in hot water for a tea-style drink that promotes energy and alertness. PJ’s uses a liquid concentrate to mix the drinks, which can be ordered hot (yerba maté mixed with milk and then steamed), over ice or frozen.
Director of Franchise Support Thom Swain expects the Energy Latte to resonate best with the under-30 crowd, especially among Latino consumers, who are more likely to be familiar with yerba maté’s benefits, and students. He describes the drink’s unique flavor profile as herbal, a touch sweet and slightly spicy.
Add a Little Oomph
Energy drinks have crept into higher-end dining rooms, too. At chic restaurant Wish at The Hotel in Miami, Caleb Edwards sees two distinct markets for the amped-up concoctions: younger groups who order them throughout the evening to fuel long nights on the town and older customers who use them for an initial boost. Guests, especially those in the hotel’s rooftop bar, are moving away from standard vodka-based energy cocktails to bomb-style drinks, where a shot is dropped into a rocks glass half-full of an energy drink, he says. The Vegas Bomb, with a shot butterscotch schnapps and whiskey, is a popular choice.
Making money on energy-drink cocktails is trickier than typical mixed drinks, Edwards notes, because the mixer comes in individual cans rather than from the fountain or in larger bottles. 
“Often if someone wants [an energy drink] and vodka, the bartender will pour some in the drink, give them the rest of the can and charge for both,” he says. “If you don’t do that, you need to be sure to use the rest of the can in another drink; otherwise, you’ll lose money.”
Another solution is getting the energy component from another source such as guarana powder. Edwards uses a pinch of the more cost-effective booster in cocktails such as The Sleepless Night (r.), which also includes acai-blueberry vodka, tropical-fruit liqueur and white cranberry juice. For customers, seeing an ingredient like guarana that they perceive as more natural than sweet, carbonated energy beverages can be a selling point, too, he says.
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