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“I probably order about 10 boxes a week,” said Bruce Cullen, who owns a
7-Eleven in Springfield, Ore. “5-Hour seems to be like the Red Bull of
the category. It just keeps plugging away. A lot of items, if they’re
fads, they’re just boom-then-splat. This has been very consistent.”
For the retailer, the energy shot advantage is threefold: their small
size – about about the size of a white out bottle -- allows them to be
placed just about anywhere in the store, although they sell best next
to the register. Additionally, they can be consumed warm, saving
valuable cooler space, and their standard price, about $2.99, gives
them a significant ring.
Living Essentials, whose first product was the Chaser brand of hangover
remedies, launched 5-Hour Energy in late 2004. After bombarding the
television cablesphere with advertisements telling consumers to “avoid
the crash” in the past year, Living Essentials has managed to carve out
sales numbers that would easily put it in top 10 energy drinks
nationwide.
“The kids are buying energy drinks,” says Carl Sperber, the marketing
director for Living Essentials, which makes Five-Hour energy. “We’ve
found an audience among working adults. If you’re a 35-year-old man, do
you really identify with a product called Monster or Freek? It’s found
appeal with those who just want energy. They want to slam something
down in a couple of seconds and feel great for the rest of the day.”
What’s more, the product still is only sold in about 40 percent of the
convenience channel. With only modest increases in distribution and
pull-through, by the end of the year, 5-Hour Energy could be close to
$250 million in sales. Not bad for a product that won’t yet be four
years old.
“The big obstacle is continued distribution,” says Sperber. Despite
ubiquity in Walgreen’s, 7-Eleven, and other major chains, he says,
“We’re still knocking on doors. The big box stores are starting to
beckon, and we still don’t have Coke, Pepsi or Red Bull ubiquity yet.”
But they’re gearing up for it. Last year Living Essentials purchased a
145,000 square-foot warehouse in Wabash, Indiana and taking its staff
up from four employees to 30.
“I think if bigger and more legitimate companies get in, things will
really grow,” Sperber says. “Having more legitimate players in it
always helps the category. But we have a pretty big start, and I don’t
know if there’s anything that Coke, Pepsi or Monster will bring to the
table that will work better than ours.”