Energy boost for all ages
October 25, 2011
by Allison Gibeson
The growth exhibited in the energy shot category by Living Essential’s 5-Hour Energy product has been driven in part by expanding the target demographic of energy products. The company discovered just because the over-55 crowd isn’t drawn to energy beverages doesn’t mean they don’t want an energy boost. In fact, they desire an alternative to energy beverages, according to Living Essentials.
“We also recently developed a new program targeting baby boomers — a group who is responding very positively to the energy shot category,” said Elaine Lutz, spokesperson for 5-Hour Energy, a product of Living Essentials, Farmington Hills, Mich. “Boomers, who pride themselves on being active and engaged and never ‘acting their age,’ are a natural opportunity for 5-Hour Energy.”
According to Mintel International, Chicago, the brand’s biggest growth opportunity may be consumers over the age of 65. Mintel said as the population of consumers over 55 is expected to grow at a much faster rate than those 18 to 34, Baby Boomers may become a loyal consumer base that helps generate long-term growth for the segment.
Most consumers who use energy products do so to receive an energy boost, to stay awake and to maintain mental alertness, said Garima Goel Lal, beverage analyst with Mintel. She said consumers do not really want experiential benefits from energy products — it’s all about the functional benefits. So for many consumers 16 oz is too much to consume to receive an energy boost, while 2 or 2.5 oz is an appropriate amount.
“Consumers see these as value-added products, and that’s why they are willing to pay the price,” Ms. Goel Lal said.
While older consumers have contributed to the growth of the market, Ms. Goel Lal said 5-Hour Energy has done a good job targeting consumers of all ages. The company has experienced success with its commercials appealing to the problems of the “2:30 feeling” and “fix the tired.” Also, the recent launch of the Extra Strength Grape variety has been successful. Additionally, the company participates in NASCAR sponsorship as a marketing and advertising initiative.
“A broad range of busy, active or working adults use 5-Hour Energy when they have a hectic morning, experience an afternoon lull or when they just want a boost in energy,” Ms. Lutz said. “It’s a help for everyone from busy moms juggling hectic schedules to first responders pulling long shifts to truck drivers on long hauls to office workers.”
Ms. Goel Lal said all-natural shots have the potential to be successful if they can prove they are truly safe and perform as marketed.
“There is a new age of energy drinks and energy shots that have started using different ingredients … caffeine is a big factor in attracting attention from medical parties as well as politicians,” Ms. Goel Lal said.
To this end, 5-Hour Energy offers a decaf product, and Ms. Lutz said the company’s products as a whole use other energy ingredients, blending amino acids, nutrients and caffeine together with B vitamins. She said the regular product contains only as much caffeine as a cup of coffee and has no sugar or herbal stimulants such as guarana or yohimbe.
Hain Celestial Group, Mel-ville, N.Y., recently introduced Celestial Seasonings Kombucha Energy Shot.
“Now this features the first product to combine two hot trends in the ready-to-drink category — Kombucha and energy — in an all-natural refrigerated beverage,” John Carroll, executive vice-president and chief executive officer of Hain Celestial U.S., said in a conference call with financial analysts on Aug. 23. “These products will launch in (November) in the natural channel, and are getting great distribution pick-up already.”
Red Bull had offered an energy shot, but the company’s decision to exit the shot market is a sign energy beverages and energy shots are very distinct markets. Ms. Goel Lal said Red Bull wasn’t successful in shots because the company already had a position in beverages, and it was hard for consumers to perceive shots as an alternative.
According to SymphonyIRI Group, a Chicago-based re-search firm, 5-Hour Energy shots had sales of $930,790,600 for the year ended Oct. 2 in outlets excluding Wal-Mart Stores, Inc., while the Stacker2 6-hour power energy shot product had sales of $29,090,080 during the same period. 5-Hour Energy’s extra-strength shot had sales of $28,895,100 during the year, and private label had sales of $12,243,670.
Ms. Goel Lal said establishing brand trust and distribution sometimes make it difficult for new players to come into the market.
“Our business continues to grow, and our customers continue to be very enthusiastic about 5-Hour Energy,” Ms. Lutz said. “At this point we believe our market penetration still has a lot of upside potential as only a relatively small percentage of the adults in the U.S. choose 5-Hour Energy.”