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Market for Energy Drinks
Markets for some products suddenly explode.
This was the case in recent years with energy
drinks. Red Bull was developed in Austria by
Dietrich Mateschitz, who based it on a drink
he discovered being sold in pharmacies in
Titailand. Red Bull entered the u.s. market in
I 997. At that time, only a few energy drinks,
such as jolt Cola, were available, and they
made up only a sliver of the soft drink mar-
ket. By 2009, however, sales of energy drinks
were growing by 10 percent per year, which
was a rate faster than sales of other soft
drinks, even though energy drinks sell for
three times as much per ounce as soda. Ute
market for energy drinks has found a particu-
larly valuable niche with students wanting an
extra boost of energy while engaging in sports
or studying. One report predicts that energy
drinks might replace coffee for the current
generation of teens and yotmg adults.
The success of Red
and Rockstar attracted the notice of the large
beverage firms, as well as entrepreneurs look-
ing to introduce new products into a hot
market. Coca-Cola signed an agreement to
distribute Monster Energy in 20
Economics in YOUR
Will You Drink Red Bull or Monster?
canada, and six western European countries.
Pepsi signed an agreement with Rockstar to
distribute the drink throughout North
America. New, mostly small, startup compa-
tlies also appeared nearly every month.
2009, 210 different energy drinks were for
sale in North America.
The intense competition among firms
selling energy drinks is a striking example of
how the market responds to changes in con-
sumer tastes. Although intense competition
is not always good news for firms trying to
sell products, it is a boon to constmters
because it increases the available choice of
products and Jowers the prices consumers
pay for those products.
AN INSIDE LOOK on page 88 dis-
cusses Red Butt's use of advertising to
'Popsi Rlr11fios Position in En•'liY·Drink
2009; Kristi E. S.'aitz,
and canadean. 'Botlled
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