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Is there a market for energy drinks in India?

By Nanditta Chibber in New Delhi
May 24, 2006 16:54 IST
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When it comes to energy drinks in India, the market, still in its infancy, would be gulping it more at nightclubs than at the gym.

So when a new energy drink like Effect tries to make place for itself in the nascent market, it will have to look at these clubs, though first, "the strategy would be to position it as a functional health drink", says Jeetendra Dharewa, managing director, SDM International, which is bringing the product from Miller Brands Germany (an exclusive partner of SAB Miller) to India.

Now, an energy drink is distinct from a sports drink. While an energy drink is aimed at boosting... what else?... energy, sports drinks like Gatorade by PepsiCo aim at replenishing body fluids.

While sports drinks are generally not found as mixers at clubs, energy drinks are. Austria's Red Bull, world leader of the energy drink market, dominates the Indian market too, and has  become a popular mixer at clubs since its 2003 launch.

"We don't position it that way, but it has become popular with the clubbing crowd," admits Arjun Singh Chauhan, sales coordinator, Red Bull.

Dharewa wants to give the clubbing and non-clubbing crowd a better energy drink: "People here only know Red Bull, but there are better brands available so why not introduce a better brand?"

Effect is a good combination of taste (it claims to have taken out the medicinal taste of energy drinks) and packaging, he claims.

But is there a big market for energy drinks in India? Seems so, if we go by estimates made by Effect, a new entrant planning a pan-India presence by 2007, as also by Red Bull. Both project a 100 per cent annual growth.

The retail price of Rs 75 for a 250-ml can of most energy drinks like Red Bull, Effect and Fullpower is not a deterrent, claim energy drink marketers. "The spending power of people has increased," says Dharewa.

Fullpower is currently out of stock in the Indian market, but the India office of Bachler Power Drinks Austria plans to re-stock shelves with  a "considerably less caffeine content energy drink suitable for all",  according to Ajay Hasija, who runs Fullpower's operations in India. 

Energy drinks consumption is projected at 20-22 million cans in India this year, according to Hasija. While Red Bull is talking about a volume of 5 lakh cans a month, Effect seeks to do a moderate 15,000 cans a month by 2007.

Red Bull, with an "assessed market share of 95 per cent of the market" in Chauhan's words, "sees no competition with new entrants in the Indian market, as many energy drinks have come and gone, unable to sustain themselves". Now, that's market strength, or should we say, market energy!

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Nanditta Chibber in New Delhi
Source: source