Energy Drink Brands Making Inroads in Latin America

According to a Statista report, the global revenue of energy and sports drinks reached approximately $159 billion in 2021 and is estimated to increase to $233 billion by 2027.

While the U.S. largely dominates the energy drink market, the Latin American market segment has experienced significant growth in recent years and is expected to reach approximately $8.4 billion by the end of this year.

At 2023’s outset, the sales volume of sports and energy drinks in Mexico amounted to approximately 33 million liters, Statista noted. The region’s most popular brands in the category include: Red Bull, Monster Energy, and Rock Star. Red Bull reported a global revenue of nearly $10.9 billion in 2022 alone.

Despite these brands being known for containing caffeine, taurine, and sugar as their main ingredients, a new wave of no-sugar, low-calorie, and natural ingredient energy drinks is emerging. Companies are attempting to fulfill consumers’ growing demand for healthier options.

An evolving market

Throughout Latin America, you can find a diverse range of energy drinks. The market seeks energy drinks with low or no caffeine, as well as sugar-free options with no artificial additives.

To meet consumers’ evolving demand, companies like Red Bull, Monster, and Coca-Cola are innovating by reducing the amount of sugar, caffeine, and taurine in their products. New beverages are tapping into Latin America’s desire for natural products to provide the same benefits as caffeine or taurine, but in a healthier form. That’s the case of OCA, a plant-based energy drink powered by tapioca, an extract from the cassava root that taps into the richness of the region’s flavors and culture.

FI Latam recently interviewed Reinaldo Padua, OCA’s chief brand officer, to analyze the Latin American energy drink market.

What are the biggest challenges of the Latin American market?

Reinaldo: Even though energy drinks are one of the fastest-growing categories in the industry, one significant challenge involves the competition from substitute products. The growing need for energy among consumers has been satisfied by an increasing number of offerings from categories other than energy drinks, including: sports drinks, juices, RTD tea, etc; these products have included energy ingredients, giving consumers more alternatives to consider when they need a boost of energy.

Another important challenge is the negative perception and concerns surrounding traditional energy drinks. Concerns are mainly around the quality and naturalness of ingredients and the jitters and crash experienced with these products.

Addressing these challenges involves bringing products that truly deliver a healthier alternative, but also changing the generalized perception about the category.

What strategies have you taken to make OCA appealing to Latin American consumers?

Reinaldo: OCA breaks the consumption barriers of traditional energy drinks. We stand out as the “better for you” energy drink in the market. We are present in most Latin American countries, we are the first natural energy drink with no jitter and no crash, which sets us apart as a unique offer in the market.

Moreover, our availability in modern trade, gyms, and convenience stores across the region ensures easy access for our consumers. Offering a range of distinct flavors different from the standards available in the category helps us capture the attention and diverse preferences of Latin American consumers.

How are you setting your brand up for long-term success?

Reinaldo: First, we remain dedicated to closely listening to (customers’) requirements and energy drink consumption barriers. This enables us to develop product line extensions that become the ideal solution for their energy demands throughout the day, with natural ingredients.

We’re committed to offering energy levels that precisely fit (consumers’) daily needs, adapting to each key moment and situation, such as night consumption, exercise, etc. We’re also very focused on our approach to continue to grow our global footprint.

CPG Brands Adapting Marketing Messages to Reach Latin Consumers

According to a recent Kantar report, Latin America is home to nearly 40% of the global CPG and FMCG brands that are growing.

Here’s a look at the most popular CPG brands in Latin America, along with key strategies for food and beverage companies to appeal to the region’s consumers.

1. Coca-Cola
Coca-Cola Company has a presence in more than 10 Latin American countries, with 2.1 million points of sale throughout the region.

According to a 2023 report from Coca-Cola FEMSA, the largest bottler and distributor of Coca Cola products, during the first trimester Coca-Cola has increased revenue by 12% and continues to grow in Mexico, Brazil, Guatemala and Uruguay.

The Mexican market is the most important for Coca Cola Company; in 2021 Mexico represented 45% of the total units sold by Coca-Cola throughout the Latin American region, according to Statista.

2. Grupo Bimbo
Grupo Bimbo has been one of the leading bakery companies in the world since 1945. It has 215 bakeries and more than 1,600 sales centers in 34 total countries. Latin America represents nearly 50% of the company’s global market.

Bimbo’s 2023 first quarter report revealed that Latin America´s sales have grown 8.6%. More specifically, sales in Mexico increased 19.8%, attributable to favorable performance of price and product mix.

3. PepsiCo

PepsiCo sells products in more than 200 countries and territories around the world and, in 2022 reported $8.91 million in profit.

PepsiCo Latin America has a presence in 34 emerging and developing markets like snacks, beverages, cookies, crackers and nutrition, which have generated 11% in net revenue in 2022, the company reported.

4. Lala

Lala Group is a Mexican dairy company that operates 29 production plants, and 172 distribution centers, with 628,000 points of sale in Mexico, Brazil, the U.S. and Central America. In the second quarter of 2023, net sales increased 5.6%.

Lala is the second-most preferred brand in Mexico and fourth in Latin America´s food industry according to Kantar. The company is investing in the meat sector, with its line of products such as Chorizo ​​for grilling and Argentine chorizo.

5. Nestlé

Nestlé has a presence in 22 countries, with Mexico and Brazil serving as key markets. Latin America represents over 12% of the company’s global sales.

Latin America is invaluable to Nestlé, because it’s the principal supplier of various items distributed worldwide, like coffee, cocoa, and milk.

Advice for Appealing to Latin America

Latin America has been a challenging market for some CPG brands, especially in the past few years when the region experienced political, social and economic instability.

Gabriel Castellanos, CEO, Hispanic LatAm, Insights Division, Kantar said in a company report that “As several countries in Latin America experience political and/or economic challenges, the link between brand and financial growth becomes particularly important.” In the context of a global slowdown, this might sound discouraging, but brands that leverage their strengths may actually be standing in front of a “pot of gold” of potential growth, he indicated.

Most popular brands in Latin America have executed new strategies to penetrate new markets. Perhaps the most impactful strategy is embracing society’s fast digital transformation.

The E-market has grown significantly as a selling channel in the past few years. In 2023, this digital sales channel forces the creation of more personalized commercial and marketing strategies based on metrics and specific data about the market and the consumers. More and more brands are implementing tailored messaging.

“While businesses face challenging conditions in several Latin American markets, those that have adopted new digital platforms and investment in innovative ways to engage with customers have delivered growth and strengthened their brand across the region,” said David Roth, CEO, The Store WPP EMEA and Asia and Chairman of Brand Z, in Kantar’s report.

Meanwhile, CPG brands are investing in strategic partnerships to manage their operations in a more granular way and understand local consumers and sales channels in the region. This helps brands to penetrate new markets, identify new segments and opportunities to develop new products or adapt the brand to the consumers preference – for example, catering to millennial and Gen Z consumers that prefer purpose-driven brands.