At a time when most energy drink brands are publicizing new,
bigger cans, it turns out that the biggest profits are actually coming
from the smallest packages.
Energy “shots,” concentrated two-ounce versions featuring the same
basic energy mix of caffeine and b-vitamins as their larger brethren,
are riding a wave of runaway sales multiples that echo the frenzied
growth of first-generation energy drinks like Red Bull and Monster.
Last year, just three years after the introduction of 5-Hour Energy,
Nitro2Go, ZipFizz and their ilk, the category grew to nearly $100
million. With new brands and new distribution avenues coming on-line,
however, the category is expected to reach a new level by the end of
the year. According to at least one beverage executive, by the end of
the next year, energy shots could be a $500 million business.
“We feel like this is the next big category to explode,” says Mike
Fine, who oversees the fast-growing NOS energy brand for the Coca-Cola
Co.’s Fuze subsidiary. Using its newfound ability to get into the Coke
distribution network, NOS is planning to jump into the category in a
big way in May. By leveraging Coke’s advertising and marketing
resources, Fine plans to attempt to emulate the rapid growth of 5-Hour,
which increased its sales by more than 400 percent last year.
The reasons for Fine’s optimism are twofold: like espresso to coffee
drinkers, energy shots appeal to a slightly different group of
consumers than core energy drink users, but they also have significant
overlap in that group. In their ability to satisfy consumers’ need for
energy, the shots offer retailers a product that complements the energy
category, but they don’t fight for cooler space with the traditional 16
oz. and 8 oz. drinks. For some consumers, they are an add-on product to
go with their energy drink in a kind of shot-and-chaser strategy. But
for others, the shots are their own target.
Retailers say energy shots are selling to truck drivers and yuppies
alike, but that the sales demographics seem to include customers who
need energy but might not have drunk energy drinks in the past. With
little or no sugar in the product, energy shots are advertised as
helping consumers avoid the “crash” associated with sugar-laden energy
drinks. Small enough to make it through a TSA airport security check,
consumable in one gulp, and low in calories while still high in
stimulants, the reduced size of the energy shot also has one main
advantage that the previous generation does not: the reduced bladder
impact of the significantly smaller volume of liquid -- as some call
it, the “pee factor.”
“The bathroom factor is huge,” says Danny Lim, who oversees energy
purchases for D&J Market & Deli, in Poulsbo, Wash. “You just
don’t have to go. Truck drivers, they don’t like to pull over.”
To date, the growth of the energy shot has largely centered around
5-Hour Energy, which in one year grew from $13 million to $59 million
in convenience stores and from $6 million to $26 million in grocery,
drug and mass channels, according to Nielsen and IRI numbers. While
several other big players and a gaggle of independents are moving to
compete with 5-Hour, it appears that Living Essentials’ product is the
one to beat.