THE METEORIC RISE OF ENERGY DRINKS $7.1B $174M (e) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Red Bull Internal Data, IRI, Mintel Article: FT.COM March 20 2012
ENERGY DRINKS Mintel revised its 5 year forecast of Energy drinks from 64% to 86% growth $14,000 TTL US ENERGY DRINKS $ SALES AND GROWTH PROJECTIONS $11.9 B 40% $12,000 34% 35% 30% $ SALES, MILLIONS $10,000 $8,000 $6,000 $4,000 10% 8% $7.1 B 14% 14% 13% 13% 14% 13% 25% 20% 15% 10% $ GROWTH % 5% $2,000-1% 0% $- 2006 2007 2008 2009 2010 2011 2012 (F) 2013 (F) 2014 (F) 2015 (F) 2016 (F) $ Volume % Growth vs YA -5% SOURCE: MINTEL ENERGY DRINKS AND SHOTS REPORT JUNE 2012
BEVERAGE GROWTH PROJECTIONS Energy Drinks are well posi@oned to outpace all other categories through 2016! CATEGORY GROWTH NEXT 5 YEARS TOTAL US 86% 49% 32% 18% 17% 14% 6% ENERGY DRINKS RTD COFFEE ISOTONICS* WATER TEA JUICE CSD Source: Mintel Beverage Category Growth Projec@ons are for TTL US (*Isotonics forecasts only available for FDMx and through 2015)
ENERGY DRINKS GROWTH WILL ACCOUNT FOR 50% OF ALL NON-ALC PACKAGED BEVERAGE GROWTH IN NEXT 5 YEARS $ Shr Pt Chg 2006 2011 6 4 Energy Drinks $7,080 b 2 Isotonics $3,477 b Coffee $8,504 b Tea $4,375 b 0-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% Bottled Water $6,752 b -2 Juice $15,933 b 2011-2015 % Chg (f) -4 CSD $43,118 b -6 Source: Category size: 2011 Mintel CSD, Juice, Coffee All Outlet; Energy Drinks, Tea, Isotonics, Water FDMxC. Forecasts based on latest mintel projections at highest
US BEVERAGE CATEGORY FORECASTS Energy is the only beverage categories forecasted to hit double digit growth each year through 2016, while CSD remains rela@vely flat MINTEL $ FORECAST, TOTAL US 2011-2016 12% 14% 14% 13% 13% 14% 13% 1% 3% 3% 5% 7% 7% 7% 7% 6% 6% 6% 6% 6% 4% 4% 3% 3% 3% 4% 4% 3% 4% 3% 3% 3% 3% 1% 1% 1% 1% 1% 1% 1% -2% 2011 2012 (f) 2013 (f) 2014 (f) 2015 (f) 2016 (f) CSD JUICE BOTTLED WATER COFFEE RTD TEA ISOTONICS* ENERGY DRINKS ONLY SOURCE: Mintel Beverage Category Growth Projections are for TTL US 2011-2016. *Isotonics forecasted for FDMx through 2015
BEVERAGE GROWTH RATES ENERGY HAS LED TOTAL BEVERAGE GROWTH OVER THE LAST 5 YEARS TOTAL US CATEGORY $ GROWTH RATES CSD JUICE BOTTLED WATER COFFEE RTD TEA ISOTONICS* ENERGY DRINKS ONLY 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% 34% 14% 14% 8% 10% -1% 2007 2008 2009 2010 2011 2012 (f) SOURCE: Mintel Beverage Category Growth Projections are for TTL US 2011-2016. *Isotonics forecasted for FDMx
BEVERAGE GROWTH PROJECTIONS AND IS FORECAST TO GROW DOUBLE DIGIT FOR THE NEXT 5 YEARS TOTAL US CATEGORY $ GROWTH FORECASTS CSD JUICE BOTTLED WATER COFFEE RTD TEA ISOTONICS* ENERGY DRINKS ONLY 16% 14% 14% 13% 13% 14% 13% 12% 10% 8% 6% 4% 2% 0% 2012 (f) 2013 (f) 2014 (f) 2015 (f) 2016 (f) SOURCE: Mintel Beverage Category Growth Projections are for TTL US 2011-2016. *Isotonics forecasted for FDMx and are through 2015
INDUSTRY EXPERTS AGREE ON ENERGY GROWTH FORECASTS ANNUAL GROWTH FORECASTS Euromonitor Mintel Canadean 12% 14% 13% 13% 14% 13% 10% 9% 8% 9% 9% 9% 9% All major forecast Think Tanks predict consistent high growth for Energy Drinks 2012-2016 5% 2% 2012 2013 2014 2015 2016 58% AVERAGE 5 YEAR GROWTH FORECAST 41% 27% 24% 18% 11% and all are consistent in predicting Energy as the fastest growing beverage segment over this time period. 0% Energy CSD Water Isotonics RTD Tea RTD Coffee RTD Juice SOURCE: MINTEL, CANADEAN, EUROMONITOR FORECAST REPORTS
THE 5 THINGS THAT WILL DRIVE THIS GROWTH OVER THE NEXT 5 YEARS 1 BASELINE GROWTH FROM CORE BRANDS THROUGH IMAGE BASED MARKETING Top three are 87% of category 2 CONSUMER INSATIABLE NEED FOR AN ENERGY BOOST Energy as a state of mind 3 UNEMPLOYMENT RATE IMPROVEMENT Increase in disposable income $ 4 GROWTH OF CORE DEMOGRAPHIC TARGET, ESPECIALLY HISPANIC SHOPPERS 16% Hispanic population growth 5 CATEGORY INNOVATION 108 new products (2011) SOURCE: MINTEL ENERGY DRINKS AND SHOTS REPORT JUNE 2012
DEMOGRAPHIC FACTORS CONTRIBUTING TO GROWTH UNEMPLOYMENT POPULATION GROWTH Key Energy Drink Consumers- teens, Hispanics, and African Americans- exhibit higher than average unemployment. Asians and Hispanics offer growth potential for energy drinks manufacturers. The Hispanic population is projected to grow by nearly 16% during 2011-16. TEENS The teen consumer base shrunk from 27% of energy drink consumer base in 2007 to 16% or energy drink consumer base in 2011. ADULTS AGE 18-24 Energy drinks usage incidence among adults in this age group remained unchanged during 2007-11 ADULTS AGE 24-34 Contributed the largest share to consumer growth in the category SOURCE: MINTEL ENERGY DRINKS AND SHOTS REPORT JUNE 2012
TOP 5 REASONS FOR DRINKING ENERGY DRINKS 1 2 3 4 5 For an energy boost To stay awake For mental alertness For taste For refreshment 68% 53% 44% 40% 34% SOURCE: MINTEL ENERGY DRINKS AND SHOTS REPORT JUNE 2012- AS A PERCENTAGE OF USERS
PURCHASE MOTIVATIONS FOR OTHER CATEGORIES ARE DRAMATICALLY DIFFERENT ENERGY DRINKS COFFEE 66% 80% 56% 48% 55% 48% GIVE ME AN ENERGY BOOST RESTORE MY ENERGY WAKE ME UP CSD WAKE ME UP I LIKE THE TASTE EASILY AVAILABLE TO ME 86% 72% 70% 70% I LIKE THE TASTE TO HAVE SOMETHING COLD QUENCH MY THIRST GOES WITH MY FOOD Source: Cheskin A&U, total Pick Me Ups, 2010
Consumer: Decision Influencers Variety of beverages is important to two thirds of restaurant- goers, despite the tendency to order the same beverage. Clearly consumers want the op@on of choice. Decision influencers It is important to me that restaurants offer free refills It is important to me that restaurants include a beverage in combo meals It is important to me that restaurants offer a wide variety of beverages It is important to me that a restaurant offers specific beverage brands 0 20 40 60 80 100 Level of agreement Source: MINTEL
ENERGY DRINK USAGE AND FREQUENCY 2011 17% 4.52 Men are more likely than women to drink Energy Drinks 2009 15% 4.46 Adults age 18-24 are twice as likely as average to drink Energy Drinks 2007 15% 4.62 Adults with children are more likely to drink Energy Drinks 2005 11% 3.81 % of Adults who drink Energy Drinks SOURCE: MINTEL ENERGY DRINKS AND SHOTS REPORT JUNE 2012 How many glasses of energy drinks did you have in the past 30 days?
THE FACE OF IMMEDIATE CONSUMPTION BEVERAGE HAS CHANGED DRAMATICALLY IN THE LAST FEW YEARS AT RETAIL SINGLE SERVE BEVERAGE RANKING IN $ FDMC 1 RED BULL $1,983,635,262 2 GATORADE $1,943,517,518 3 COCA COLA $1,899,405,493 4 MOUNTAIN DEW $1,747,610,722 5 MONSTER $1,694,984,263 6 PEPSI $1,299,158,429 7 DR PEPPER $918,916,663 8 POWERADE $781,120,352 9 ARIZONA $748,896,247 10 STARBUCKS COFFEE $650,948,611 Source: Nielsen L52W FDMxC. Single serve = >1L
UNIQUE FEATURES OF THE ENERGY CATEGORY The Category is BRAND driven, not Flavor Driven. 77% 16% 4% 4% ORIGINAL/SF FLAVORS ZERO ADDL FUNCTION Purchased throughout the day After Lunch In the Morning In the Evening With Lunch At Night When Socializing 20% 24% 31% 31% 47% 60% Nielsen G&C Data, through 1 st Oct 2011, Mintel Aug 2011
THE ENERGY DRINK CONSUMER IS THE QSR CONSUMER % OF CONSUMERS WHO SHOP IN QSR % OF CONSUMERS WHO BUY ENERGY DRINKS GEN POPULATION 85% 17% ENERGY DRINKERS 92% -- QSR SHOPPERS -- 30% INDEX 108 176 Source: 2012 Simmons Market Survey, 2010 Census.gov BUT FEW QSRS STOCK
NO ENERGY DRINKS MEANS THAT 1 IN 3 QSR SHOPPERS HAS TO GO TO A COMPETING ENVIRONMENT TO PURCHASE THEM
ENERGY DRINKS ARE INCREMENTAL PURCHASES PURCHASE INTENT INCREMENTALITY REWARD 81% RISK 70% Source: 2012 CINT Panel Study
ENERGY DRINKS REPRESENT A HUGE OPPORTUNITY FOR QSR! 52,960,000 Energy Drinkers in the US Drinking 91 Cans per year each 92% already go to QSR with 81% purchase intent for Energy Drinks 11.31 Visit/PP/Mo Source: 2011 Mintel QSR Report, 2012 CINT Panel Study If just 10% of their visits contain an energy drink @ 70% incrementality $1B OPPORTUNITY
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