(Bloomberg) — Once synonymous with the energy drink industry, Red Bull and Monster are losing market share in an industry-wide shift toward health and wellness, where their sugary, high-octane drinks are losing out. appeal.
Os players Traditional brands are trying to protect their territory—they still control more than half of the U.S. market—while new sugar-free brands are gaining popularity. The emergence of these competitors began during the pandemic, “as consumers began to prioritize their well-being,” said Sally Lyons Wyatt, Circana’s chief counsel for consumer goods and foodservice insights.
Austria-based Red Bull pioneered the energy drink category by linking it to extreme sports. The brand has also become a fixture on the club scene. In 1997, it brought the drink to the US, while Monster — then known as Hansen Natural — launched its version at almost the same time. Copycat brands such as Coca-Cola’s KMX and Pepsi’s Amp Energy soon proliferated. This ended up generating criticism about the potential health hazards of the products.
Celsius, marketed as a drink with “healthier” ingredients, has become particularly popular, with the help of influencers fitness on social media. The company claims that its fruit-flavored drinks are enriched with vitamins and other nutrients.
“This has attracted a whole new set of consumers who might not otherwise touch energy drinks,” said Jefferies analyst Kaumil Gajrawala, who covers beverage stocks.
Although Red Bull and Monster did, these were primarily targeted at calorie-conscious men as they aged rather than catering to the broader market of health-conscious consumers. “It was an extension of the existing brand,” said Kenneth Shea, beverage analyst at Bloomberg Intelligence.
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Red Bull was created in 1984, when Dietrich Mateschitz discovered a Thai energy drink called Krating Daeng — which means Red Bull in Thai — teamed up with its owner, tweaked the recipe, added fizz, and brought it to the global masses. The sports car that covered sports from Formula 1 to football and mountain biking.
Meanwhile, Hansen Natural’s share price soared nearly 70,000 times between 1997 and 2012, when the company changed its name to Monster Beverage.
The rapid expansion of the energy drink market continued to benefit Monster and Red Bull. Both have seen strong revenue growth in the US in recent years, even as new competitors have gained market share.
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Big rivals in the beverage sector are not standing still. Keurig Dr Pepper, which launched Venom Energy and distributes Adrenaline Shoc, is making a new push into the energy drink market with investments in Nutrabolt’s C4 Energy, Bloom Nutrition, Black Rifle Coffee’s energy drinks, and an acquisition of U.S. $1 billion from Ghost.
All three brands target different consumers, said Justin Whitmore, chief strategy officer at Keurig Dr Pepper. C4 focuses on fitness enthusiasts, Bloom targets women, and Ghost targets social audiences at events like music festivals.
The energy drink category is growing faster than other beverage segments and is particularly popular among millennials and Gen Z, Whitmore said. “The category that we believe has the potential to stay,” he said. “The need is very clear.”
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Celsius is trying to compete with even newer competitors by offering larger 470-milliliter cans, retro-inspired flavors and on-the-go powder sachets, said Kyle Watson, its chief marketing officer.
An October survey by Piper Sandler found that energy drinks were teens’ preferred source of energy, beating out coffee and soda.
In an effort to protect their turf, traditional companies have launched new products and brands targeting different consumer segments. Red Bull introduced its fruit-flavored “Editions” line in 2013, with and without sugar.
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After several years of exceptional growth, competition in the US could be the biggest challenge for 32-year-old Mark Mateschitz, who took control of Red Bull in 2022 following the death of his father. The company, privately held and discreet about its operations, appears to be placing more emphasis on sugar-free drinks. For the first time in its “Editions” line, it launched versions with and without sugar at the same time in October.
Red Bull did not respond to requests for comment.
In 2019, Monster launched Reign, a brand aimed at exercise enthusiasts, marking a shift from Monster’s typical association with extreme sports and gamers. Reign was created to compete with fitness-focused Bang Energy — which it later sued and acquired. In 2023, Monster introduced the Reign Storm, a sleeker, more minimalist version designed to appeal to the same health-conscious consumers that Celsius had won over.
Reign Storm has had “limited success so far,” said Stifel analyst Mark Astrachan. Reign held about 3% of the market in 2024, compared with about 12% for Celsius, based on market share by dollar sales data from Circana cited by Celsius. Red Bull’s Editions series also lags behind, representing about 2% of the market, a fraction of other brands including the original Red Bull, according to Circana data on market share by volume for the 52 weeks ending December 1 .
Investors are aware of the threat. Monster shares are down 9.3% this year, the first annual decline since 2018.
Monster is committed to reviving the Bang brand with new launches next year, CEO Rodney Sacks said during the company’s second-quarter earnings call.
Monster’s diverse portfolio could protect it from giving up more ground, Stifel’s Astrachan said. The company also believes there is a market for sugary drinks.
“Everyone is focused on zero sugar,” Sacks said on a conference call with investors earlier this year. “But we believe there is a market in the U.S., especially in the Midwest, where consumers still want a full-sugar product.”
Demand for sugar-free energy drinks is expected to continue to drive industry growth. Consumers are increasingly looking for value and opting for beverages that promise complete benefits, said Lyons Wyatt. “It’s more than just energy. It’s extra energy.”
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