Alternative Energy (Shots and bars): Buying Energy by the Shot

Make room for the new kid on the block: Energy shots, those concentrated versions of energy drinks that are beginning to mirror the high sales figures of their parent product.

Granted, some customers buy energy shots to add to their energy drink in a kind of shot-and-chaser strategy. But for an increasing number of buyers, the shots themselves are the real target, which is why so many c-store owners now position them away from the cooler.

Shots are tracked as nutritional supplements rather than beverages and their introduction is forging an emerging category into a major growth sector for c-stores and other retail channels. 

7-Eleven has increased its space allocation for liquid vitamin supplements—the category energy shots dominate—for 12 straight quarters. Energy shots now represent 25% of the sales in the health and beauty category at Circle-K, even though the category includes everything from toothpaste and band-aids to antacids and poison ivy cream.

“I would classify it as outstanding growth,” Sandra Colvin, the 7-Eleven category manager for vitamins and supplements, told BevNet. Starting with the single 5-Hour Energy product, she says, “we went from a bottle, to a shelf, to a shelf and a half, and our individual stores are going further depending on what their customers want.”


Less Space

Selling energy shots is highly advantageous. The small package size means retailers can place them in multiple locations without taking away from other items. Because most people drink them warm, they don’t need to take valuable cooler space. And the standard $2.99 price gives them a nice ring.

Retailers report brisk sales to truck drivers, who want energy in a product that doesn’t mandate a bathroom break in the near future. Many energy shot buyers are customers who need energy but don’t consume energy drinks. Others like the promise of no “sugar crash” with shots, which unlike energy drinks contain little or no sugar.

To date, the growth of the energy shot has largely centered around 5-Hour Energy, which in one year grew from $13 million to $59 million in convenience stores and from $6 million to $26 million in grocery, drug and mass channels, according to numbers from Nielsen and IRI.

While several other big players and a gaggle of independents are moving to compete with 5-Hour, it remains the one to beat. 

”I probably order about 10 boxes a week,” said Bruce Cullen, a 7-Eleven operator in Springfield, Ore. “5-Hour seems to be like the Red Bull of the category. It just keeps plugging away. A lot of items, if they’re fads, they’re just boom-then-splat. This has been very consistent.”

Interestingly, energy shots are currently sold in only about 40% of the convenience channel. With only modest increases in distribution and pull-through, by the end of the year, 5-Hour Energy could be close to $250 million in sales.

The category grew to $100 million last year, just three years after the introduction of 5-Hour Energy, Nitro2Go and ZipFizz. Industry analysts say that new brands and broader distribution will drive the category higher by the end of this year and as high as $500 million by the end of 2009.


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