Energy Drinks Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in the Energy Drinks Industry

The incorporation of Environmental, Social, and Governance (ESG) factors within the financial and accounting processes confer to the introduction of responsible investing. Contribution to ESG has taken its pace since 2013; fairly, energy drinks is a market where ESG can be examined in detail.

Notable leaders in the energy drinks sector recognize the transitional shift of consumers’ demand for potential energy boosters to enhance their physical and cognitive performance. This sector provides a wide variety of products ranging from calorie-free products to lactose intolerant products inclusive of soft drinks, fruits and vegetable syrups, carbonated drinks, ready-to-drink beverages, and many others.

Since 2020, after the global, Covid-19 pandemic the market has witnessed a positive impact on its expansion due to rising concerns for health, medical, ease, and increased quality and variety of these drinks are the significant factors behind the rising demand in the supply and demand of this market. Due to the closure of restaurants and retailers in the pandemic, the sale of these products expanded through the digital inclusion of e-commerce platforms for providing orders to the reach of customers around the world. Therefore, the packaging and traceability of energy drinks became a critical factor in growth strategies by governments worldwide.

ESG Trends

The ‘E’ in the ESG - the environmental criteria, is a primary factor that makes investment in this sector uniquely interesting to investors. Companies in the energy drinks industry promote the development of alternative methods for packaging instead of using standardized plastics without hampering the product quality. However, this focuses on making use of more biodegradable approaches to reduce environmental degradation.

Leading companies and organizations in the energy drinks space are also maintaining their commitments toward Corporate Social Responsibility (CSR) through their strategy of labeling all the ingredients used in the manufacturing of the product. Moreover, the market has also reduced the negative impacts caused by alcohol consumption by providing its consumers with caffeinated mixtures as beverages. 

The energy drinks industry can help achieve the United Nations - Sustainable Development Goals (UN - SDGs). While mentioning a few of the SDGs that come into focus are Health and Well-being, Gender Equality, Sustainable Consumption and Production, and Reduced inequalities. E-commerce channels have helped guarantee business continuity through various strategies and policies such as the inclusion of digital portals and the development of a wide variety of drinks to help the delivery of products across the globe while promoting good health and well-being of its consumers.

Promoting the reuse and recycling of plastic and glass bottles along with aluminum cans, helps companies in the energy drinks sector promise environmental benefits - reduced CO₂ emissions, decreased energy consumption, enhanced end-of-life products, and conservation of natural resources. One of the industry leaders in this energy drink theme has enabled government agencies to adopt creative solutions to conserve natural resources by banning single-use of plastics and extra-packaging of products.

Challenges for the energy drinks industry from an ESG perspective

The biggest challenges facing the market are the traceability and packaging of their products. While considering the traceability factor it covers how large and complex the supply chain could be. Thus, indicating the efforts of the companies towards sustainability, disclosure of ingredients used, and the formulation of product shelf life. A company needs to achieve sustainability with traceability hence, directing towards the factors on which efforts and investment should be enhanced.

Secondly, the packaging of these energy drinks is a significant challenge faced by this sector. Since biodegradable materials are still not a perfect alternative to plastic packaging the companies are continuously enhancing their efforts toward adopting greener and sustainable packaging without hampering the product quality. 

Growth of the Energy Drinks Market

In 2021, the global Energy Drinks market size was valued at USD 86.35 billion and is expected to expand at a compound annual growth rate (CAGR) of 8.3% from 2022 to 2030. By 2021, North America accounted to held a massive revenue share of more than 30.0% thereby depicting that energy drinks act as the most liked supplement among the age group of 18 to 34, popular, especially among men. Whereas the sector is predicted to observe substantial growth in the Asia Pacific region from the period of 2022 to 2030 due to the rising economies of India, China, and Japan indulging in experimenting with new flavors and options for the consumers.

Key Companies in this theme

    • Red Bull

    • Taisho Pharmaceutical Co. Ltd.

    • PepsiCo. Inc.

    • Monster Energy

    • Lucozade

    • The Coco-Cola Company

Scope of the Energy Drink Industry ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Energy Drink Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the energy drinks sector, globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment