People the world over are raising a toast to the growing mainstream acceptance of energy and functional drinks.

Almost non-existent in the 1990’s, the global market for these drinks has reached $1.1 billion according to market research company Mintel International Group Ltd., and has “experienced phenomenal growth of over 700 per cent between 2000 and 2005.”

One might get the impression energy drinks are fueling up one tired world.

While still a relatively new craze outside of Asia, energy drinks were first pioneered in Japan in 1962 when Taisho Pharmaceuticals Co., Ltd. combined taurine, an amino acid found in many of the body’s organs to aid digestion, with vitamin B ingredients to create what is still Japan’s most popular brand, Lipovitan D.

“Japan was building the country and everyone worked hard and long hours. Energy drinks were a necessity for people to survive,” says Paul Yamaguchi, writer on Japanese nutracueticals for various publications in New York.

More recently, low-calorie versions for women and vitamin-fortified energy drinks for children have been created.

Over a dozen brands produce “functional drinks” containing calcium, iron, amino acids, b-carotene, fiber, hangover cures, or ingredients to help joint flexibility or thin blood.

This working of energy drinks into Japan’s traditional mentality of “you are what you eat” can also be seen spreading across the West and Europe with thousands of private labels such as Pimp Juice, Gay Fuel and Rockstar targeting niche markets.

And the flourishing energy drink market is predicted to flood even farther into, and from, the West as it dries up a bit in the East.

“Although Asia Pacific remained the leading region with a 58.1 per cent share of global volume in 2004, its market share is expected to gradually decline as other markets evolve. By 2009, it’s forecasted to have fallen below 50 per cent,” says Sophie Carkeek, Senior Market Analyst and author of Global Energy Drinks 2005 for Zenith International Ltd.

“North America holds the next largest share, at 14.7 per cent, and has seen impressive volume gains for the 1999 to 2004 period. By 2009, North America should have increased its share to roughly a quarter while West Europe’s share will have dipped slightly to 11.5 per cent. East Europe, Latin America and the Middle East should all steadily increase their global market share,” says Carkeek.

Red Bull (first released in its home country, Austria, in 1987), the undisputed worldwide leading champion, sold more than 1.9 billion cans to over 120 countries last year and estimate a turnover of 2.5 billion cans for 2005.

Both Red Bull, launched in America in 1997 but only achieving national distribution a year and a half ago, and Lipovitan, which after 20 years is only sold in four states, met slow growth abroad.

The initial introduction of energy drinks to various foreign markets was limited because of differing regulations on content levels. And the category under which a drink is classified depends on each country.

For example, a 100 ml bottle of Lipovitan D has between 1000 mg to 2000 mg of taurine, and in the US is labeled a “liquid vitamin supplement” rather than an energy drink. A 250 ml can of Red Bull, not yet available here, contains 1000 mg of taurine and would fall into Japan’s category of soft drinks.

Only 20 ml to 100 ml size bottles are considered energy drinks here. And the government requires medicinal labels on drinks containing over 1500 mg of taurine.

From July 2004, some weaker medicinal drinks could be bought at convenience stores and vending machines, but drinks with over 1500 mg of taurine are only sold in pharmacies.

“Our product has more serious users whereas energy drinks are more of a casual beverage,” says Hiroya Hamano, Public Relations Manager at Taisho.

Some believe Lipovitan’s slow infiltration to the West was also due to a reluctance to adopt Japan’s workaholic image.

Associated with the tired, over-working salary man, standing on the train station’s platform in “oyaji pose,” with one hand on his hip and the other tipping back the contents of a small brown glass medicine bottle, while waiting for his long commute, energy drinks were even taboo for Japanese women until the last decade.

“Society’s image was that women shouldn’t drink them because it wasn’t lady-like, so I used to hide in the station’s toilet to drink mine,” says Namie Iawata, 33. “Within the past couple of years the image has changed. It’s not just an energy drink; it’s a healthy drink, like taking supplements. If we want to lead a healthy lifestyle the drinks compliment that.”

The largest markets in Japan are made up of women in their thirties and men over 40 years of age, who usually drink about three bottles a month. Lipovitan dominates the local market with 59.8 per cent of female and 74.7 per cent of male consumers choosing it over other brands (with Otsuka’s Oronamin C as second choice), according to Internet research company Macromill Inc.

The main reasons for consumption are to recover a loss of energy from exercise or work, gain stamina and receive vitamins or minerals.

New York based Brain-Twist Inc.’s October release of Defense, an immune boosting beverage promoted as a primary way to combat flu season, is setting the stage for a functional drink market in the West.

Available only in 7-Eleven stores in the U.S., Defense is the first drink to use a technology called “FreshCan” to store the maximum potency of vitamins and minerals in a protected environment so they do not dissolve into the beverage until opened by the customer.

“We envision a whole new platform of functional beverage products based on FreshCan technology,” says Larry Trahtenbroit, President and CEO.

Apart from Defense, most drinks, sold in flashy bullet cans in the West and Europe, are “casual beverages” aimed at athletes and party-goers and usually contain amino acids, vitamin C, ginseng, B-vitamins, ginkgo biloba, sugar, glucose, taurine and about the same amount of caffeine as found in coffee or tea. Caffeine is the only physically addictive ingredient in most energy drinks.

“Scientifically, many, or even all, energy drinks do not work. They just produce psychological effects. There is no scientific study to support that even taurine (produces energy),” says Yamaguchi.

But based on market figures, a whole lotta people are buying them up whether they buy into them or not.

“Energy drinks are a means of survival. They’re great for those times of emergency when you know that you are about to fall asleep at work. I sometimes buy the multivitamin ones convinced it will help my recovery after a hard night out, but I don’t think it really helps,” says 23-year-old Ryan Kerr from Scotland.

Trying to cash in on the party scene market, a handful of energy beers, like B to the E by Anheuser-Busch, Moon Shot by New Century Brewing and Corona’s Hard E, hit the U.S. market last autumn.

“They seem to be the beer industry’s response to loss of market share to wine and cocktails,” says Julie Bradford, editor of All About Beer Magazine, North Carolina.

“Basically, how can beer compete with Red Bull and vodka in the club circuit? I think the only reason they exist is to try to win back young drinkers beer has lost.”

Mobius, a pale lager infused with caffeine, taurine and ginseng, hopes to enter Japan’s market, where many Japanese enjoy weeknight drinking-benders, by the end of 2006.

“Most Asians appreciate a well-made beer and Mobius is the choice for the smart drinkers,” says Robert Spencer, former bartender, chemist and home brewer who created Mobius. “You can lose your inhibitions because of the 5 percent alcohol, but still have the energy to do something with it,” he claims. “More importantly, there is no hangover the next day.”

However, Spencer should expect some fierce competition as Red Bull is planning its release in Japan by the end of this month.

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