Ben CarterBridget ConradShannon DurkinMike Daugherty
Beginnings of the Industry
Started in the 1980’s with Jolt Cola In 1995 PepsiCo launched it’s cola brand,
Josta
2001 was the inaugural year for brands as we know them today: 8 million in sales
Wikipedia 2008
Industry Characteristics
The main point of purchase is at convenience stores
Other stores are beginning to see increasing sales due to bulk purchase options, which are cheaper for the consumer
Mintel, 2008
Growth
Between 2003-2008 the sector has seen a 36 percent increase in growth
Energy drink users are up 17 million since 2008
Mintel, 2008
Trends
New business, hence no new trends
Heaviest trend is in the public concern over the heavy usage of energy drinks by teenagers
Mintel, 2008
Brands
The business is mostly dominated by smaller companies
Coke and Pepsi have not been able to over take (or even catch up to) the market leaders Shocking
considering Coca-Cola and Pepsi’s strengths as companies Mintel,
2008
Leading Brands
Red Bull Monster Rockstar PepsiCo’s Amp Coca-Cola
Age Demographics
Adults 18-24 and 25-34 make up 57% of the energy drink market (Mintel, 2008)
According to Mediamark (2008) there is a 29.7% penetration in the adults 18-34 market
Gender Demographics
The number of female energy drink users grew by 74% between 2003-2008 (Mintel, 2008)
The penetration in the market of women is 22.5% (Mediamark, 2008)
Market Penetration among Mothers
Children under 12 months
24.3%
Children 12-23 months 24.9%
Children under 2 years
24.1%
Ethnic Demographics
Blacks and Hispanics accounted for 41% of total energy drink consumption in 2008
One out of two (47%) Hispanic teenagers will consume energy drinks
Mintel, 2008
Sales
Red Bull has a low market penetration among teens, despite a high preference for it, probably because of the high price
Mintel, 2008
Usage
Hispanics are most likely to use energy drinks to awake
Energy drinks are most often used in the late afternoon, but 38% of users also drink in the morning
Mintel, 2008
Usage
18-24 25-34 35-440
10
20
30
40
50
60
70
80
90
Energy BoostTo Stay AwakeRefreshment
Mintel, 2008
Buying Patterns and Frequency of Use
From 2003-2008 energy drink consumption increased by 21% (that’s 10 full glasses/user)
Hispanics and blacks are ethnically the most frequent users of energy drinks
Mintel, 2008
Competition
Primary Competition
Secondary Competition
Strengths
Weakness
Competition
Product Positioning
Pricing Strategies
Sales Force
Promotions
Distribution
Trends Strengths and
Weaknesses Opportunities and
Threats
Pricing Policies
Everyday retail prices for select energy drink brands, June 2009
Red Bull 8.4oz $2.00
Red Bull 16oz $3.69
Monster 16oz $2.49
Mega Monster 24oz $3.49
Rockstar 16oz $2.49
AMP 16oz $2.29
Mintel, 2008
Pricing Policies
Since 2002, energy drinks prices have fallen 32%
Why? Adoption of energy
drinks in supermarkets and wholesale discount clubs
Developing single serve multi-packs, and larger cans
Mintel, 2008
Pricing Policies
Even with the 32% pricing decrease energy drinks are still considered very pricey in the non-alcoholic beverage category.
Rank 2nd in price behind Ready to Drink (RTD) coffees
Number one obstacle in obtaining new-users
Mintel, 2008
Pricing Policies
Prices for select non- alcoholic beverages, 2007
Beverage Price/Gallon Price per 16oz
RTD Coffees $22.25 $2.66
Energy Drinks $18.15 $2.27
Fruit Juice $5.06 $.63
Sport Drinks $4.22 $.53
Bottled & Can Teas $4.13 $.52
Carbonated Drinks $2.88 $.36
Bottled Water $2.17 $.27
Mintel, 2008
Communication & Promotions Strategy
The energy drink industry has always been one heavily focused on the alternative audience Alternative, or extreme sports
Red Bull racing, Dale Earnhardt #88 Amp Chevrolet, Monster Army(Mintel, 2008)
Alternative lifestyles 7 Eleven stores featured Inked
energy drink, specifically targeted to persons with tattoos
New Zealand Herald, 2007
Communications & Promotions Strategy
You won’t find energy drink companies producing spots for the super bowl
The big competitors choose to steer clear of the “corporate” norms
Prefer fast and original, a reflection of their key users Racy slogans and campaigns, and an
association with extreme sport
Mintel, 2008
Communication & Promotions Strategy
Energy drinks are heavily centered and associated with the action and extreme sports industry
Sponsor numerous extreme athletes, teams, and events
Red Bull New Years Eve, No Limits- 12.31.2008
Communication & Promotions Strategy
Rather choose a lighter approach, preferring edgy humor to explain their products benefits Red Bull: uses humor-
generating animated sketches convey their promotional messages
Amp: uses similar racy humor, in a effort to reach the “Everyday Man”
Advertising_and_Promotion_-_Clip_1.wmv
College Student demographic
46-64 demographicRed Bull Commercial
Mintel, 2008
Communication & Promotions Strategy
Another key part aspect of energy drink promotions are the use of Guerilla and Grass Roots marketing.
companies employ numerous street teams who trek all over the country, setting up shop at extreme sports venues, college campuses & spring break destinations.
Environmental and Social Factors
A primary issue facing the energy drink industry is the concerns about health risks associated with the extremely high levels of caffeine found in them
It is easily available to highly impressionable children, who are not educated about the potential dangers of energy drinks
Environmental and Social Factors
Energy drinks give their “boost” from the extreme amounts of caffeine contained in them
A standard Red Bull(8.4oz), for example, contains 80mg of caffeine, three times the amount of a 12 oz Classic Coca-Cola
Others contain considerably higher levels
Environmental and Social Factors
Consuming one can of either of these beverages equates to the equivalent of drinking 14 Coca-Colas, 12 Pepsis, or 9 Mountain Dews
Extreme Caffeine
Wired X505 24oz and Fixx 20oz, contain 505 and 500mg of caffeine respectively. That amounts to upwards of 250mg of
caffeine per 12oz, compared to the 34.5mg per Classic Coke
Environmental and Social Factors
In October, 2008, 100 scientists and physicians sent a letter to the FDA asking for additional regulation in the energy drink industry, on the basis that it puts its young consumers at risk of caffeine intoxication
They requested that energy drinks list their caffeine contents on the can, set a limit to the amount of stimulant found in the drink, and require warning labels
USA Today, 2008
Environmental and Social Factors
Case in Point: Prince Edward Island, September, 2008
The island lifted a 25-year ban on canned beverages and found that without the ban young students began bringing energy drinks to school. Teachers reported problems with students becoming suddenly hyperactive, followed by a lethargic crash, commonly known as the caffeine high and crash.
Banned at Souris Regional High
Doctors and physicians share the opinions of the teachers and administrators Called for a restriction of sales at grocery stores to youths under
the age of 18. They equate energy drinks to the likes of tobacco and cigarettes
There is also concern that the long-term effects of energy drinks have not been thoroughly researched.
The Toronto Sun, 2008
SWOTSTRENGTH: Energy drinks provide a energy boost
without the crash
WEAKNESS: They are too expensive
OPPORTUNITY: Juice flavored energy drinks would appeal to both Hispanic users, and morning users
THREAT: Heavy and irresponsible use by teenagers may lead to laws restricting their sales to anyone under 18
Questions?
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