Creating a Buzz with Energy Drinks

By Angela Altass

Energy drinks have come under scrutiny with the Canadian Food Inspection Agency (CFIA) issuing recall warnings for various non-compliant brands being illegally imported and sold to consumers at retail.

The CFIA and the Canadian Beverage Association (CBA) are advising retailers, including convenience stores, to make sure the products they are selling meet Canadian regulations and requirements.

“All beverages manufactured and distributed by CBA members meet Canadian regulations,” says Erich Schmidt, director, communications and public affairs, Canadian Beverage Association. “Despite this, non-compliant caffeinated energy drinks continue to be introduced into Canadian markets and sold to consumers in retail settings, including convenience stores. Retailers should take action to ensure that all caffeinated energy drinks meet Canadian food safety standards. The CFIA has contacted retailers, including convenience stores, to provide information to help retailers understand their responsibilities.”

To keep up to date on the regulations regarding energy drinks, retailers need to know about Canada’s new supplemented foods regulatory framework.

“In 2022, Health Canada’s Supplemented Foods regulatory framework came into force, which formally established regulatory limits for supplemental ingredients, including caffeine and taurine,” says Schmidt. “It also introduced front and back of package labelling requirements with the Supplemented Foods Identifier and the Supplemented Food Facts Table. Health Canada’s Food and Nutrition Directorate has designed both components to help ensure legibility for consumers while limiting the space occupied on labels.”

The new regulatory framework replaces the previous requirement for individual approval of energy drinks through a Temporary Marketing Authorization Letter (TMAL) process.

“To account for reformulations and new labelling requirements, food products with supplemental ingredients and a valid TMAL are eligible for transition to the supplemented foods regulatory framework as of July 21, 2022,” says Schmidt. “The transition period to adopt the new labelling requirements ends on January 1, 2026. Any new supplemented food coming onto the market must comply immediately with the latest regulations.”

In 2023, Canada’s energy drink market grew to $1.4 billion USD, notes Schmidt. The Canadian energy drink market now makes up 9.3 per cent of total non-alcoholic beverage spending by category in Canada.

“Despite the top five companies occupying over a quarter of the market, competition continues to increase in the energy drink segment, particularly for products featuring more plant-based ingredients,” says Schmidt.

The energy drink category has seen new entrants featuring perceived better-for-you options, cleaner ingredients as well as sugar-free, says Craig Thibodeau, VP business development, Hilary’s Salesmaster Inc.

“Unlike many brands that have added new sugar-free options, 5-hour Energy shots have always been sugar-free,” notes Thibodeau.

Energy drink producers continue to innovate by chasing new functional benefits, such as focus, hydration and pre-workout, as well as partnering with confectionary brands for co-branded market entrants, notes Thibodeau.

“We believe that energy products will continue to grow for the foreseeable future and the lines that separate energy drinks from other beverage categories will continue to blur,” says Thibodeau. “Traditional soft drinks, water, coffee, non-alcoholic and even some alcoholic beverage segments are all potential sources of volume for additional growth. Functional innovation, new entrants, and new flavour extensions by the current market leaders will fuel the process.”

Energy drinks and shots should be placed in impulse sections, such as checkout coolers and on the front counter near candy and gum, says Thibodeau.

“Stay in stock,” Thibodeau advises store owners. “It sounds like a basic piece of advice but all too often we see 5-hour Energy racks with spaces where the best-selling flavours should be and that’s lost revenue for the stores. Offer attractive pricing on multiple bottle sales and look to place an additional display in an extra location in the store, if you have room, such as by the coffee area or near salty snacks.”

5-hour Energy has been selling in the Canadian market since 2005 and provides some of the highest profit per linear inch in the convenience and alternative channels, says Thibodeau.

Taste is increasingly important and Canadians are looking to fulfill specific functional needs from energy drinks, says Sean Cauterman, director, growth brands, energy and water, PepsiCo Beverages Canada. More than one-third of Canadian households buy energy drinks, making energy one of the fastest growing segments in beverage, says Cauterman.

“We know flavour variety continues to be a motivator for consumers in the energy category,” says Cauterman. “Rockstar energy drink has expanded its line-up with six product launches in 2024. Speaking to a consumer base that is authentic, highly motivated and passionate, we’ve partnered with Canadian country music star Josh Ross and pop sensation Lu Kala to help launch these flavours in Canada.”

The newest additions to the Rockstar line-up, Punched Charged Cherry and Punched Electric Berry, will be hitting shelves in October, available nationally in 473ml cans.

“Research indicates consumers are also looking for functional needs that vary from sustained energy to cognitive mental energy and focus,” says Cauterman.

Flavour fusions continue to grow within the energy drinks category, says Andrew Drayson, CEO and managing director, DD Beverage & Nutrition.

“Convenience stores need to differentiate themselves from only carrying the standard corporate brands and offer their customers some different options to help their businesses grow and have their stores become more of a customer destination,” says Drayson. “Variety is important, and variety not only comes in flavours but in brands. No different than the craft beer industry, consumers are wanting to support and purchase independent brands versus the mass produced big corporate brands. People love the Beaver Buzz flavour portfolio, which includes the very Canadian Saskatoon Berry and the GRIZZLY Energy can is very Canadian with the grizzly bear logo as well as the mountains and trees.”

Beaver Buzz Energy recently launched a new Dr. Buzz flavour, with a sweet, peppery taste, and a new sugar-free brand in GRIZZLY Energy in a Sour Gummy flavour.

“Although sugar-free options are growing, a lot of consumers still want a sugar-based option due to taste as well as some consumers having gut health issues, who are not able to consume artificial sweeteners,” notes Drayson.

The performance energy category has more than doubled share since 2019, says Anjana Gonsalves, regional director, beverage, Canada, Nutrabolt.

“Mainstream brands are surrendering share to new entrants in performance energy, such as C4 Energy, Celsius, Alani Nu, and Ghost,” says Gonsalves. “While mainstream brands excel in their well-established awareness, focusing on the performance category, C4 Energy outshines our competitors. C4 Energy has proudly been the first to introduce licensed SKUs into the Canadian marketplace with our recent launches of C4 Energy Hawaiian Punch and C4 Energy Grape Popsicle, both of which are fully compliant with Health Canada regulations.”

Grocery stores, mass retailers, and convenience stores continue to be the preferred shopping destinations for energy drinks, says Gonsalves.

“Females are more likely to buy single cans while males are more likely to purchase multi-packs or buy in bulk,” says Gonsalves, noting that the primary drivers influencing consumer choice of energy drinks in store are the lowest price and promotional deals, such as BOGOs.

There is an emergence of an energy water category with brands such as WakeWater, Pure North, Sparkling Ice Caffeine, says Josh Douglas, director of sales, WakeWater Beverage Company.

“Energy drinks are a large and growing category but it’s not nearly as developed in Canada as in Europe and other parts of the world,” notes Douglas “We have seen consumers move to better-for-you beverages and we encourage retailers to continue to look at better-for-you in the energy category. WakeWater has 0 sugar and 0 sweetener with 85mg of caffeine from green tea and the natural amino acid L-theanine to help reduce jitters.”

Making sure the brands that you carry comply with Canadian regulations is the first priority when selling energy drinks. Further information is available from the Canadian Food Inspection Agency: www.inspection.canada.ca/en.