Episode summary
From Coffee to Cans: A U.S. Caffeine Shift
Thoughts on the Market (Morgan Stanley)
· · Guests: Dara Mohsenian
Summary
Younger U.S. consumers are changing how they get caffeine, with energy drinks increasingly competing with coffee and carbonated soft drinks. Dara Mohsenian argues the shift is being driven by simple consumer needs: people want more energy, but they also want new flavors, new brands, and more convenient ways to consume caffeine throughout the day.
Survey data from roughly 3,000 U.S. consumers suggests the category still has room to grow. Among current energy drink consumers, a net positive 19% expect to increase consumption over the next three months, and the strongest intentions come from the 25 to 34 and 35 to 44 age groups. Mohsenian says that suggests young energy drink users are not aging out of the category; they are carrying the habit with them.
He also argues the market is expanding rather than simply taking share from other drinks. Only 20% of incremental energy drink consumption came from coffee switching and 22% from carbonated soft drinks, while most demand was incremental. He expects energy drinks to remain the fastest-growing caffeinated segment, with high single-digit growth supported by zero sugar innovation, affordability, convenience, and broader distribution.
Key takeaways
- Dara Mohsenian says 61% of consumers who increased energy drink consumption did so because they needed more energy.
- Mohsenian says a net positive 19% of current energy drink consumers expect to increase consumption over the next three months.
- He argues the strongest forward growth intent comes from ages 25 to 34 and 35 to 44, showing the habit can persist as consumers age.
- Only 20% of incremental energy drink consumption came from coffee switching and 22% from carbonated soft drinks, so most demand is additive, not zero-sum, according to Mohsenian.
- Mohsenian expects energy drinks to be the highest-growth caffeinated segment, growing at a high single-digit rate, supported by innovation and affordability.
Notable quotes
“Younger consumers have grown up with many more choices to jumpstart their day”
“The reason people are drinking more of these caffeinated beverages is pretty straightforward. They want more energy”
“When we spoke to current energy drink consumers, a net positive 19% expected to increase their consumption over the next three months”
“This means that the consumers who embrace energy drinks at the very young ages don't appear to be aging out of the category as they become older”
“It's also important to point out that caffeinated drinks is not a zero sum game”
How the episode opens
Welcome to Thoughts on the Market. I'm Darren Mosinian, Morgan Stanley's US household products and beverage analyst. Today we're going to talk about how the next generation of US consumers is really redefining their daily caffeine boost.
It's Monday, August 31st at 10 a.m. in New York. For generations of Americans, caffeine has been synonymous with coffee.
You wake up, make a pot, or stop at a coffee shop and start your day. But the picture today is different. Younger consumers have grown up with many more choices to jumpstart their day.
Walk into a convenience store, gym, or college library these days, and you'll see that energy drinks are increasingly becoming an alternative for getting their caffeine boost. The reason people are drinking more of these caffeinated beverages is pretty straightforward. They want more energy.
Among consumers who increased their energy drink consumption over the prior 3 months, 61% said they needed more energy. Experimentation is important, too. 44% cited trying new flavors and 37% said they were trying new brands.
Our survey of roughly 3,000 US consumers points to significant runway for energy drinks going forward. When we spoke to current energy drink consumers, a net positive 19% expected to increase their consumption over the next three months. That's well above our prior surveys and is true for both men and women.
Perhaps more interesting is who expects to drink more. Demographics have always been a key driver of energy consumption. The younger generation is increasingly choosing energy drinks over historically coffee and carbonated soft drinks.
In our survey, importantly, if you look at the 25 to 34 year old and 35 to 44 year old age groups, they actually showed the strongest forward intentions to increase consumption. This means that the consumers who embrace energy drinks at the very young ages don't appear to be aging out of the category as they become older.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- caffeine consumption
- energy drinks demand
- consumer beverage trends
- younger generation spending
- household products
Watch the episode
Watch “From Coffee to Cans: A U.S. Caffeine Shift” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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