Tesco has launched an energy drink at 25p a can - undercutting its supermarket rivals and raising fresh concerns that budget products are devaluing the market.

The 250ml Polish energy drink N-Gine Blue, which has been rolling out to Tesco’s UK stores over the past few weeks, was described by one observer as having one of the lowest single-can price points seen at launch. It is currently the cheapest energy drink in the mults.

Asda is selling Emerge at 30p for 250ml - it recently dropped the price from 39p - while a big seller in indies is 35p Euroshopper Energy Drink from Booker. The average price of Red Bull in the supermarkets is £1.22 for 250ml.

Booming sales of low-priced energy drinks are a key reason for the market’s 10.1% volume growth - which exceeds its 8% value growth [SymphonyIRI 52w/e 9 June 2012]. According to Brandview data, the average volume price of energy drinks in the major supermarkets has fallen 14% over the past year, from £3.38 per litre to £2.92. The effect is even more marked when the mults are stripped out of the SymphonyIRI sales figures, with value sales at other retailers up just 5.1%, while volume has rocketed 13.8%.

“Own label and value brands have a role to play but should not be prioritised versus premium and mainstream brands that deliver high cash profit,” said Red Bull strategy & planning manager Gavin Lissimore.

Some suppliers are concerned that shoppers who enter the market at a low price point won’t move to more premium lines, a fear given credence by Kantar Worldpanel research that found 86% of shoppers who buy budget drinks never trade up.

“We aim to offer a range of products to suit every budget,” said a Tesco spokesman, adding N-Gine was popular with Polish shoppers.

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