Welcome to Caffeine Country
America is a caffeinated nation. Supporting an $11 billion industry, Americans consume more than 300 million cups of coffee each day from coffee shops, whose numbers have grown 18-fold since 1990. But Robert Bohannon, a scientist in Durham, N.C., is convinced there's a market for even more caffeine products—specifically in baked goods. Now he's hoping to persuade chains such as Starbucks (SBUX) and Dunkin' Donuts to sign on to sell his Buzz Donuts and Buzzed Bagels.
"Not everyone likes coffee," says Graham Wilson, a spokesman for Bohannon. "These products are an alternative if you like your morning pastry and want a boost without having to drink coffee."
Bohannon's forthcoming products are just the latest offerings of a rapidly growing, multibillion-dollar industry of caffeine-fueled products. From caffeinated gum like Jolt to ultra-caffeinated coffees such as JavaFit—even caffeine-laced body creams and leg-toning nylons—dozens of new products are hitting the shelves each year. The "energy drink" category alone grew 60% from 2005 to 2006, to about $2.6 billion wholesale, according to the New York-based consulting group Beverage Marketing, and shows no signs of slowing down.
"Companies have tapped into a bona fide consumer need for energy," says Gary Hemphill, Beverage Marketing's managing director. "People understand these products and I think the need is there. Through the course of a day most people could use a little extra energy."
The market has grown in tandem with busy schedules and longer work commutes that have cut into Americans' sleep time. About 7 in 10 adults get less than the recommended eight hours of sleep per night on weekdays, according to the National Sleep Foundation in Washington, D.C.
So what are consumers doing with all the energy they get from the Kickbutt Amped Energy Ballz, Enviga (a joint venture between Coca-Cola (KO) and Nestlé (NSRGY)), and Meth Coffee they consume? Hemphill says some want to stay alert longer at work and others may be looking to suppress their appetites or up their stamina in a workout. Others are using the products recreationally, to stay awake for late nights at clubs or while gaming. The market for energy drinks in particular tends to skew to a younger male audience, says Hemphill.
Jazzed Up on Doughnuts
Bohannon's products wouldn't be the first caffeinated foods on the market. Oatmeal, that staid breakfast food, now comes in a caffeinated version called "Morning Spark," from Sturm Foods of Manawa, Wis. And standard chocolate products, such as Hershey's (HSY) Special Dark contain about 30 milligrams of caffeine per serving.
Bohannon's background isn't in the kitchen but in the laboratory. A molecular biologist with a PhD in molecular virology, he has developed new tests for infectious diseases such as bird flu and HIV. In recent years Bohannon decided to put his scientific knowledge to work in the marketplace by starting his own company, Onasco, through which he'll sell his caffeine-infused foods. He has patented the idea of using tasteless caffeine in baked goods.
Energy Drink Sales Soar
There's scant data tracking the growth of caffeine-infused food products on the market, but it's clear that sales of energy drinks are surging. Red Bull is still the leader in that category, with about 50% market share. Murrieta (Calif.)-based Redux beverages launched a drink called Cocaine in September. With 280 milligrams of caffeine in each can, it offers more than triple the power of Red Bull's 80 milligrams. A cup of regular drip-brewed coffee contains about 135 milligrams of caffeine.
While some companies experiment with new formulas, others are tinkering with the classic sources of caffeine. Javalution Coffee of Fort Lauderdale sells coffee products with double the caffeine of regular coffee. Chief Operating Officer Tony Fanzari says the JavaFit Diet Plus and Energy Plus formulas are his best sellers. He says studies show the energy formula enhances athletic performance by 33% and the diet formula helps speed the metabolism.
"I've fought obesity my whole life, and I used to weigh 350 pounds," Fanzari says. "Using our products, I'm down to 234, and I'm keeping it off."
Hooked on Java
But in the rush to inject so many products with an addictive substance, how much is too much? Research shows that people who consume too much caffeine experience dehydration, anxiety, jitters, and increased heart rates. And many people are all too familiar with the feeling of a crash after the high has passed. But judging from the growth in the market, caffeine is a habit few seem willing to shed any time soon.
"The timing is right, because people are open to trying new products with an added benefit to them," says Hemphill. "People aren't just looking for nourishment or refreshment in what they consume; they are becoming more sophisticated and experimental, and the marketplace is, too."
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