By Alan Rappeport in New York
Kraft is entering the energy drinks arena with the roll-out next month of a caffeinated version of its MiO ?water enhancer?.
The move will put the largest food company by revenues in competition with products such as 5-hour Energy, which sells flavoured caffeine ?shots?, and Red Bull, the carbonated soft drink.
However, Kraft?s foray comes as consumer companies face regulatory pressure to stop marketing such products to children.
Irene Rosenfeld, Kraft?s chief executive, said: ?We?ve had a smashing success with MiO and I think this is the perfect platform for the category.?
Ms Rosenfeld said MiO Energy would be targeted at ?millennial? male consumers who tend to buy energy drinks at convenience stores. She said that original MiO, which is a coloured, calorie-free, flavoured liquid that is added to water, is poised to generate $100m in revenues for its first year on the market.
A regular sized bottle of MiO Energy contains the caffeine equivalent of 18 cups of coffee.
Kraft estimates the total US energy drink market represents $6bn in annual sales. According to Euromonitor, US energy drink sales volume grew by about 17 per cent between 2005 and 2010. Analysts at Bernstein Research project sales to increase by low to mid single-digit figures during the next several years.
?There was a question among big beverage players about whether energy was going to be a fad or a lasting category,? said Stephen Powers of Bernstein. ?It?s becoming more mainstream and popular.?
PepsiCo is present in the market with AMP Energy and analysts speculate that Coca-Cola, which distributes Hansen?s Monster Energy, is ripe for an acquisition in the category. However, Muhtar Kent, Coke?s chief executive, downplayed the category?s prospects in September. ?As a long-term perspective, there will be a tapering off of demand,? he said. ?It?s not something that will be here to stay in 20 years? time.?
Health officials say drinks that are high in caffeine can have adverse effects on children and that mixing them with alcohol poses health risks.
A study this year from the American Academy of Pediatrics warned of ?potentially serious adverse effects in association with energy drink use?.
? The Financial Times Limited 2011
