Sweet significance: Sugar reduction not major priority for energy drink consumers in ASEAN CLMV markets – Growth Asia Summit 2024

05-Aug-2024 - Last updated on 05-Aug-2024 at 05:39 GMT

Hippo Energy Drink has revealed that sugar reduction in beverages is not a major priority for most consumers in Cambodia, Laos, Myanmar and Vietnam.

Thai natural energy drink brand Hippo Energy Drink has revealed that sugar reduction in beverages is not a major priority for most consumers in the Cambodia, Laos, Myanmar and Vietnam (CLMV) markets despite an ongoing trend for this in the rest of the region.

Hippo Energy Drink specialises in the development of energy drinks that use natural caffeine from green tea sources, adding functionality to these products with vitamin Bs and taurine.

But despite its focus on being a ‘natural’ energy drink looking to provide a better option than artificial ones, the brand has opted to continue using sugar as a major sweetening agent in its products due to specific demands from consumers in its stronghold markets.

“Despite the low-sugar trend gaining momentum in South East Asia and the larger APAC market, in Cambodia, Laos, Myanmar and Vietnam there still remains a strong demand for higher sugar intensity amongst energy drink consumers,” Hippo Energy Drink parent company IC Beverage General Manager Inthad Thassaneephab told the floor at our recent Growth Asia Summit 2024.

“In this region, there is a very specific sweet spot to be found in terms of energy drink innovation that involves sugar content, taste and pricing – and we have found that at this point in time, sugar content needs to be above 17% to 18% in order to appeal to local energy drink consumers.

“One of the main reasons here is that the largest consumer base for these drinks in CLMV are 'blue-collar' workers such as labourers that require a lot of energy to complete their jobs and get through the day, and sugar is the simplest and most direct way for them to get that as well as satisfy their tastebuds.”

However, that is not to say that the energy drinks market in CLMV has not developed over the years, as there is now an increased demand for unique flavours, functions and overall origin stories.

“Some 30 years ago, the only requirement for an energy drink to succeed here was just taste – now a lot more is needed to differentiate oneself from competitors as consumers not only want taste but also the inclusion of vitamins, functionalities and a good origin story,” he added.

“More intense flavours still appeal the most here, and we are seeing mixed fruits do the best overall, but in general there is a major opportunity for firms in this space as consumers are looking for more unique and niche options.

“This can be differentiation in terms of flavours or functional ingredients, and we are seeing a lot of big brands in the market do this by reformulating to maintain taste but add things such as vitamins, fibre, collagen and so on.”

At the end of the day though, the main purchasing driver for consumers in this region is pricing, and there are already concrete energy drink case studies to demonstrate this.

“Price is a very sensitive issue here – in the first quarter of 2023, several of the most popular big energy drink brands here increased prices due to logistics and ingredients price hikes, but when just one of the brands choses to retain its original pricing, its market share immediately leapt from third to second place,” he said.

“As such, when all the big brands launch new products here, few launched at higher prices and most of them opted to go with products at the same initial cost because that is just how sensitive the market is.”

Thailand energy drinks

The Thai energy drinks market is largely dominated by a couple of local players such as Red Bull and Carabao, and according to Thassaneephab the largest market here also caters to consumers working jobs which require a great deal of physical labour.

“Energy drinks are definitely not viewed the same as sports drinks and not seen as meant for [professional or office] workers in Thailand – in fact, there is quite a low perception of this market here in the sense that it is viewed as unhealthy and meant for labourers with high energy needs,” he said.

“We conducted a taste test locally with 200 participants, letting them try our new flavour – but although 90% responded that the taste was good, the willingness to make an actual purchase dropped to around just 10% as soon as we told them this was in fact an ‘energy drink’.

“So it is clear that perceptions here are still quite fixed about energy drinks, and we are looking at pivoting our marketing as a healthier product by perhaps focusing on finding the right active component that can shift these consumer perceptions – but are also well aware this is going to need o be a very unique component in order for this strategy to work.”