A number of factors determine demand for energy drinks. The first determinant is price, as the demand for energy drinks is relatively price-elastic. This means that as the price of energy drinks increases, the demand decreases to a greater degree, relative to the price change. Demand for energy drinks is also comparatively income-elastic, meaning that as consumers incomes decrease.
The demand for energy drinks decreases to a greater degree, relative to the income change, and vice versa.The energy drinks industry is affected by macro environmental factors of the industry that will lead to change. First, the entry or exit of major firms is a trend in the industry that will likely lead to change.
More precisely, merger and associationhave been widespread in the energy drinks market. Several leading companies have been looking to drive revenue growth and improve market share through the increased economies of scale found through mergers and achievements. Consumer lifestyles and tastes also affect demand for energy drinks. The reduced importance on family meals and the increased desire for convenience food and takeaway products may increase demand for energy drinks, especially RTD products, as they are packed to meet this grab-and-go lifestyle. Along the same lines, as people become busier, they look for energy drinks to provide energy and rejuvenation, thereby encouraging growth in the practical beverage groups. While this presents an opportunity, it is not expected to override the other factors that are negatively impacting demand for energy drinks at this time.