An energy shot in the arm
October 23, 2012
by David Phillips
The energy shot is a difficult product to cate-gorize, falling somewhere between a beverage and a supplement. The category is also one of the fastest growing parts of the beverage market, and there is evidence that the segment — populated by tiny bottles — has big potential.
“The latest data from Mintel (International, Chicago) suggest that the energy shot segment will grow by 116% from 2011–2016,” said Jennifer Stolte, senior director of marketing for Celestial Seasonings, a business unit of the Hain Celestial Group, Melville, N.Y. “Strong growth projections like these show that there is significant unmet demand for energy shots, and we want to provide these types of products in the way our consumers prefer — naturally.”
And that is why Hain Celestial recently launched an additional product under its Natural Shots banner — this one made from green tea. The new products are single-serve, shelf-stable energy shots that combine green tea with B vitamins and ginseng.
Enerji green tea shots join Kombucha energy shots in the Celestial Seasonings Natural Shots product line, which was first introduced in 2011. The company hopes the well-established health halo that hovers over the Celestial Seasonings brand, with its broad line of teas, will provide a strong point of differentiation in a category dominated by one big brand.
Living Essentials L.L.C. has nearly 90% market share in the energy shot segment with its 5-Hour Energy brand, said Jenny Zegler, senior beverage analyst with Mintel international. The research firm completed a report this past June that looked at energy beverages, energy shots and energy mixes, and as Ms. Stolte noted, it has projected continued growth for the category.
“Sales were at $1.6 billion a year through March, and we expect they will reach $1.9 billion for the entirety of 2012,” Ms. Zegler said. “We project that by 2016 that will grow to $3.4 billion.”
To some extent energy shots, which are sold in 2-oz and 3-oz bottles and consumed at room temperature, are an outgrowth of energy drinks, where Red Bull and Monster are the dominant brands. However, their merchandising and demographic appeal are also reminiscent of caffeine pills, which for years have been sold as supplements at the checkout counter in convenience stores.
Energy shots contain few or no calories or carbohydrates, and the sources of energy include caffeine, guarana (a plant that produces seeds with twice the concentration of caffeine as coffee beans), and B complex vitamins.
Ms. Zegler said the appeal of energy shots has to do with their energy-boosting function, and that appeal speaks well to a “working class” demographic.
“Like energy drinks, they are geared toward people 18 to 34, but also toward mature adults,” Ms. Zegler said. “They are going after the working class — people that might have two full-time jobs, and are having a hard time finding time to also take care of their house and the family. They need that boost somewhere in the day.”
To a large extent these are non-coffee drinkers, and they are turning to these products rather than to coffee or caffeinated soft drinks.
Living Essentials is looking to expand that base by appealing to older consumers with an advertising and promotional campaign in the AARP Bulletin, the magazine of the American Association of Retired Persons.
The biggest threat to the category, Ms. Zegler said, is consumer concern about safety. Concerns about consuming combinations of ingredients such as caffeine and taurine, an amino acid found in many energy drinks, along with anecdotes about people consuming too much caffeine have threatened the energy drink category and may have an effect on the shot market.
These kinds of concerns may be where the Celestial Seasonings line has an opportunity, Ms. Stolte said.
“5-Hour Energy obviously has the majority share of the energy shot market, and we aren’t trying to go head-to-head with them,” she said. “Rather, our strategy is to create a segment within the category based on our research findings, which tell us that a significant percentage of energy shot users and non-users would choose a natural energy shot alternative. We leverage ingredients known to be healthful — like kombucha, a traditional fermented drink and tea, and green tea — in our shots.”
In an effort to curb potential health concerns, Celestial Seasonings products clearly state the source of the caffeine and the amount, Ms. Stolte added. The company is planning additional line extensions beyond the recently introduced Enerji.
Other brands that are competing for market share in the category include Worx, a reworking of a Monster brand entry and Street King, (also known as SK), which is owned by rapper 50 Cent, who contributes the profits to organizations that benefit hungry children.