Kraft Set to Energize

Expected to roll out caffeinated version of MiO in December

NORTHFIELD, Ill. -- Kraft is entering the energy drinks arena with the rollout next month of a caffeinated version of its MiO "water enhancer," according to a report by the Financial Times. The move will put the food giant in competition with products such as 5-hour Energy, which sells flavored caffeine "shots," and Red Bull, the carbonated soft drink, the report added.

"We have certainly seen strong growth in the energy drink category," Kraft CEO Irene Rosenfeld told the newspaper. "We've had a smashing success with MiO, and I think this is the perfect platform for the category."

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 colored, calorie-free, flavored liquid that is added to water, is poised to generate $100 million in revenues for its first year on the market.

MiO Energy will be a 1.62-oz, 18-serving bottle containing the caffeine equivalent of 18 cups of coffee, said the report.

"There was a question among big beverage players about whether energy was going to be a fad or a lasting category," Stephen Powers of Bernstein told the paper. "It's becoming more mainstream and popular."

PepsiCo is present in the market with AMP Energy and analysts speculate that The Coca-Cola Co., which distributes Hansen's Monster Energy, is ripe for an acquisition in the category. Muhtar Kent, Coca-Cola's CEO, downplayed the category's prospects in September, however. "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 with high concentrations of caffeine can have adverse effects on children and that mixing them with alcohol poses health risks.

Kraft acknowledged the potential misuse of MiO, but said it was marketed for people older than 18. "We always hope that consumers will use our products appropriately," Liza Laibe, senior brand manager for MiO, told the paper, noting that an overdose of the product would not taste good. "We never encourage any kind of overuse."

Northfield, Ill.-based Kraft Foods, with 2010 revenue of $49.2 billion, offers brands including Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo , Oscar Mayer, Philadelphia, Trident and Tang.