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HerbalEGram: Volume 6, Number 8, August 2009
Review of the Growing Energy Shot Market
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A new report has been published by New Nutrition Business (NNB) about an emerging new product and market category: so-called “energy shots.” The report focuses on shots sold mainly in the United States and the United Kingdom.
This report, Energy shots: birth of a new premium-priced, high-growth category, suggests that energy shots serve a larger niche of people than energy drinks: They appeal to many people who want more energy to get through their ordinary day—not just fans of extreme sports, the health conscious (as shots contain little or no sugar, compared to many energy drinks), and those already in the energy drink niche. Shots also deliver the benefit of an energy drink without excess liquid. Overall, the report suggests that the energy shot category of functional beverages will continue to grow rapidly. The article was written by Julian Mellentin, a specialist in food, nutrition, and health. It was published in June 2009 after a vigorous interview and research process from January 2009 to March 2009.1 NNB is a London-based trade journal on international food and nutrition.
“We interviewed all of the people named in the report (senior execs at 5-Hour Energy®, 6-Hour Power®, Red Bull®, Coca-Cola®, etc.),”said Mellentin (e-mail, July 13, 2009). “We additionally interviewed a number of senior execs off the record—they were happy to talk but didn’t want attribution. Totally I think we did 24 interviews in the US, UK, the Netherlands, Denmark, and Australia.”
Mellentin received his data from what he describes as the best sources: Information Resources Inc (IRI), Nielsen, and the beverage companies themselves. According to Nielsen data, based on actual sales at retail outlets, the total retail sales were $250 million during a 52-week period that ended in February 2009, a statistic cited in Mellentin’s report. According to Bevnet.com, a website cited in Mellentin’s report, the shot category, which has existed for less than 5 years, has brought in over $500 million as of 2008. In fact, 5-Hour Energy, the US market leader and creator of the energy shot category, reported their sales to Mellentin as of June 2009 as 2.5 million bottles a week, which is estimated by Mellentin to be equivalent to over $350 million a year.
In the report 5-Hour Energy is examined thoroughly as well as 5 other energy shot products which are profiled in case reports. 5-Hour Energy was launched by Living Essentials, the makers of Chase-Plus Freedom from Hangovers® tablets. Carl Sperber, Living Essentials co-founder, said he and others tasted energy drinks at a trade show in 2004 and decided to improve upon the idea. Mainly the company decided to eliminate sugar and excess liquid, so that the health-conscious could have an energy-boost without drinking something too filling, which is how the innovative idea of the energy shot was born.
Now 5-Hour Energy is the leader in the shots category, even over the bull in the room, Red Bull, the first and leading energy drink in the United States. Red Bull jumped on the energy shot wagon as of April 2009, which has only sold $119,050 worth in a 52-week period ending on June 14, 2009, in the food, drug, and mass market channels, according to data from IRI, a Chicago-based market research firm that monitors sales in supermarkets, drugstores, and mass merchandisers (excluding Wal-Mart, club, and convenience stores). 5-Hour Energy pulled in $64,518,000 according to data from the same source during the same period.
“Red Bull has the distribution muscle, the brand awareness and the marketing power to make a success of this market. However, the market leader—5-Hour Energy is so far ahead that it won’t be easy to overtake them,” said Mellentin. “It’s a basic law of marketing that if you dominate a category, as 5-Hour Energy does, you have a strong consumer ‘share of mind’ that can be hard to overturn. Red Bull has been successful in regular energy drinks because it was ‘first to market’ (in the US) and was the brand that created the new category of energy drinks. 5-Hour Energy is the new category creator and first brand to market energy shots—hence our headline (in the report) about it being the ‘next Red Bull’ of energy shots.”
There’s also an herbal side to most energy drinks, though not for the top energy shot, 5-Hour Energy, which prides itself on having no herbal stimulants: “We didn’t want anything weird or from the jungle—just things that you body needs or already makes itself,” said Sperber as he was quoted in the report by Mellentin. Red Bull has only a synthesized version of caffeine, making it also non-herbal; however, competitor shots such as Monster® Hitman from Hansen Beverage, Rockstar®, Amp® from PepsiCo, and Full Throttle® Quick Shots and NOS® power shots—both from Coca-Cola—have herbal ingredients such as Asian ginseng (Panax ginseng), guarana (Paullinia cupana) ginkgo (Ginkgo biloba), green tea (Camellia sinensis) and milk thistle (Silybum marianum).
One noteworthy element sometimes absent in the report is the explicit quantitative description of the actual amount of caffeine in the various drinks. In some products this occurs because the amount of caffeine is not declared on the respective labels. In the case-study Mellentin presented about 5-Hour Energy, company co-founder Sperber said, “There’s actually very little of it [caffeine] in there–about as much as in a half-cup of coffee.” This comparison is also present on the label but the exact caffeine amount is lacking. The reference to a cup of coffee is a non-descript and variable measure. For example, a landmark 2003 study from the University of Florida, published in the Journal of Analytical Toxicology, analyzed brewed coffee from places like Starbucks, Dunkin’ Donuts and Einstein Bros®, etc.2 Notably, a 16-ounce serving of brewed Starbucks coffee, sampled over 6 consecutive days from the same Starbucks store, delivered a caffeine content that ranged from 259–564 mg. However, it should be noted that some brands of energy shots do declare the amount of caffeine on their labels; for example, NOS from Coca-Cola contains 125mg of caffeine and Red Bull contains 80mg. Both of these caffeine designations are mentioned in the report.
The NNB report is intended for anyone in the beverage business, marketers or product developers, who are looking at creating new concepts based around innovative beverage ideas. It aims to show the common success factors that one finds in high-growth beverage markets and argues that the same factors for success can be seen in Europe in products such as probiotic shots.
More information about the NNB report on energy shots is available on the website, http://www.new-nutrition.com/ENERGYSHOTS.asp.
—Kelly Saxton Lindner
References
1. Mellentin J. Energy shots: birth of a new premium-priced, high-growth category: Strategies, tends and case studies from the US and UK [report]. London, UK: New Nutrition Business; June 2009.
2. McCusker R,Goldberger B, Cone E. Caffeine content of specialty coffees. J Anal Toxicol 2003;27:520–522. |
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