Private-Label Energy Boosts Profits

A little more than a year after teaming with Boo Koo Holdings Inc. to launch GazZu Energy, a proprietary 16-ounce energy drink, the Circle K brand is taking the next logical step and extending the private-label energy lineup to include 2-ounce shots.

Dubbed GazZu Shooters, the shots are more than lightening in a bottle for consumers—they’re the ideal vehicle to continue driving Circle K’s margins just as the GazZu Energy drinks have done since they were rolled out to its stores last year.

Russ Kidd, Circle K’s senior category manager of packaged beverages, said the GazZu Energy drink line is "exceeding our expectations at this time and continues to gain traction.

"Consumers are making a connection with it," said Kidd, adding that
Circle K never executed an "in-your-face" promotion or campaign to launch the brand. Instead, the company relied on the product itself to drive sales through in-store samples, grassroots efforts and word-of-mouth marketing.

The private-label business is gaining momentum among consumers who want quality products at better prices. More important to retailers, however, are the improved margins that come with private-label products versus their domestic or name-brand counterparts.

"It’s become more lucrative for serious retailers," Kidd said. "Meaning, there’s becoming a price gap that’s considerable, (for example), between private-label soft drinks and the domestic soft drink brands."

While Kidd declined to offer specifics, he said, "There is a substantial margin difference between domestic and true private-label" products at Circle K, which also has its own private-label soft drink.

"The reason that we did shooters is it’s just a natural progression of the energy drink segment," Kidd said.

Energy drinks have come a long way since the trend-setting 8-ounce Red Bull drinks were unveiled years ago, and brands are now offering sizes up to 24 ounces and flavors that run the gamut. "Of course now, the energy drink line has really expanded out to coffees and a multitude of flavor profiles, even to include vitamins, depending on which company you’re looking at," Kidd said.

The energy shots, on the other hand, target a consumer "who is looking for something to last a little longer," Kidd said. The shots are portable and more versatile, and can be consumed hot or cold or mixed into coffee.

GazZu Shooters, available in berry, cherry and orange mango flavors, are positioned in three areas in Circle K: near the coffee bar, inside the energy cooler door and at front counter displays. They retail for $2.99 each, versus the $2.49 for the GazZu Energy drinks.

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