Dive Brief:
- PepsiCo is launching a ready-to-drink energy beverage called Baya through the North American Coffee Partnership, its nearly 30-year-old joint venture with Starbucks.
- The drink, which contains caffeine naturally found in coffee fruit as well as the antioxidant vitamin C for immune support, is available in three flavors: Mango Guava, Raspberry Lime and Pineapple Passionfruit.
- Baya is the latest offering in the fast-growing energy drink sector to reach the marketplace as consumers look for more functional attributes in the food and beverages they consume.Â
Dive Insight:
PepsiCo has moved quickly to establish a deep presence in the energy drink space during the past few years.
The beverage and snack giant doubled-down on the category in 2020 when it purchased Rockstar for $3.85 billion and partnered with Bang. And last year, PepsiCo introduced a line of energy drinks called Mtn Dew Rise Energy (later renamed Mtn Dew Energy following a lawsuit) targeted for morning consumers. It also offers Amp under the Mt Dew banner.
Now, its latest launch taps into the successful ready-to-drink beverage partnership established by the company with coffee giant Starbucks in 1994. NACPÂ generates more than $2.8 billion in annual retail sales, and it’s a dominant leader in the ready-to-drink coffee category with almost an 80% share, according to Starbucks.
Baya, which will be sold in grocery stores, national retailers, convenience stores, gas stations and eventually Starbucks itself, allows PepsiCo to add another drink to its energy portfolio while tapping into the name and widespread recognition of the coffee chain giant.Â
The U.S. energy drink sector is one of the strongest performers in the nonalcoholic space. Retail sales of energy drinks rose 9.2% in 2020, according to Mintel, and are projected to reach nearly $20 billion by 2025 — nearly doubling during the past 10 years.Â
In what has quickly become a crowded energy drink space with brands like Monster, Red Bull and Celsius, PepsiCo and Starbucks are hoping their ingredients will help them stand out. Even companies that don’t specialize in energy drinks are entering the category.  Molson Coors’ Zoa, for example, has positioned itself as an above-premium energy drink with natural ingredients, vitamins, electrolytes and amino acids.Â
With Baya containing vitamin C and getting its caffeine naturally from the coffee fruit, it could join Zoa and similar brands in attracting consumers who are not only looking for a boost but also want to feel good about it when they do.
Even before the COVID-19 outbreak, a 2019 study from Kerry found 65% of consumers looked for function in what they eat and drink. The pandemic has supercharged the drive for these offerings, with Research and Markets estimating that the global functional beverage market will be worth $158.3 billion in 2023.Â
The Starbucks name also could help Baya standout, but it doesn’t always guarantee success. Coca-Cola announced last May it was discontinuing sales of Coca-Cola Energy in North America amid its disappointing performance after a little over a year on the market.
