Bursting With Energy

Sultry Sales

One new energy-shot sales trend WSCO’s general retail manager Darrell Looney sees is that some shots are being touted as aphrodisiacs. “The last NACS show was the first time I really noticed the presence of products that specifically spoke to potency and endurance,” Looney said, adding that it’s probably too soon to tell how much of a market driver this will be.

Though he struggled with the idea of selling “aphrodisiac energy” because of his store’s conservative culture, which doesn’t even include selling explicit magazines, Looney plans to give one such product a try.

The main reason shot sales are soaring, of course, is the advertising behind them, especially ads featuring celebrities saying the energy boost gives them an edge in competition. Product endorsements from sports figures with attractive, athletic bodies are powerful sales drivers. To put it bluntly, sex sells, and rarely has it been used as blatantly as it’s used to promote energy shots—at least in prime time. And that certainly can’t be bad for sales.

Few products have ever burst on the scene with the quick and enormous success that energy shots enjoy. By the end of 2008—a mere three years after being introduced to the marketplace—sales of energy shots had grown to $100 million, with category leader 5-Hour Energy increasing its sales by more than 400% in a mere 12 months, according to Information Resources Inc. (IRI).

Industry experts expect shot sales will continue on the same trajectory in 2009, and at least one beverage category executive said energy shots will be a $500 million business by the end of 2010.

Many shot consumers appear to be first-time purchasers of personal energy products. “My sense is that energy-shot customers are older than energy-drink customers,” said Darrell Looney, general manager for the retail division of WSCO Petroleum, which operates 50 stores in Portland, Ore. “I think the shots have expanded the demographic.”

In part, that may be because most shots contain little or no sugar, thus avoiding the “crash” associated with some sugar-laden energy drinks and providing comparatively fewer calories, both of which tend to be more middle-aged than youthful concerns. Also, the shot’s smaller size reduces the need for a bathroom break, which is especially appealing to truck drivers, or  executives planning for that long afternoon meeting.
Convenience Factor
The convenience of shots and the widespread availability in convenience stores have spurred the category’s growing success. “Some energy-drink customers are moving to energy shots because they’re quicker to drink and you don’t have to drink 8 to 12 ounces to get the effect,” Looney said. “However, the biggest key is marketing.”

WSCO’s larger stores typically carry 10-12 different energy-shot products. “It’s going to be interesting to see how many new ones come out during the next year, and which ones ‘stick’ in the marketplace,” Looney said. “What’s hot today could be old news by tomorrow afternoon.”

Today’s energy shot consumers expect a wide selection of flavors and brands from which they can choose, Looney said. For maximum effectiveness, he positions energy shots on the front counter near registers and at other locations throughout the store where they can trigger impulse and incremental sales increases.

“I’ve had a lot of success placing them near the coffee and condiment bars,” Looney said. “Customers go to the condiment bar with their hot dogs or other food. They’re looking for what’s available to go with their food, and see that colorful energy shot display. Everyone knows what happens after you eat—you get a little sleepy and want a nap. What better to go with a hot dog and a bag of chips than the quick pick-me-up of an energy shot?”

Power Up with Variety
As far as choices go, Looney said availability and profit run the show, and even though customers may really like a particular shot product, there’s no guarantee he can keep stocking it. “I see something I want and get our distributor to order it,” he noted. “By the time it’s gone there might be two or three other products that offer better profit opportunities because managing inventories is as necessary for wholesalers and distributors as it is for us.”

Gary Hemphill, managing director for the Beverage Marketing Corp., said the demand for energy shots is part of a fairly broad consumer need state.  “It’s something that’s always existed, but prior to the introduction of energy drinks and shots, people would go about getting their energy in different ways—caffeinated colas, coffee and so forth,” Hemphill said.

Basically, Hemphill pointed out, manufacturers recognized the value of getting consumers to focus on their energy needs by naming their products “energy drinks” and “energy shots” and compacting them into easy-to-drink containers. Energy products also represent a new era in beverages because people have moved beyond expecting simple refreshment from their beverages and are increasingly open to getting functional benefit from them.

“Energy has been the greatest success story in functional and I think you’ll see more as time goes on,” Hemphill said.
Convenience store chains have also been quick to capitalize on the demand for energy shots. Circle K, for example, launched its proprietary line of energy shots called GazZu Shooters last year with BooKoo Energy.

Russ Kidd, Circle K’s senior category manager of packaged beverages, said the GazZu Energy drink line is exceeding the company’s expectations 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.

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.

Energy Shots Offer Great Ring
Product demographics are broadening as companies make a greater effort to market to consumers beyond their core consumer base, Hemphill said, and energy is an area of need applicable to virtually any consumer at any time.

“Convenience stores are a perfect channel for energy shots because they tend to be products people buy and consume immediately,” Hemphill said. “And while you will eventually see a value-priced energy shot, I would expect these products to continue to be priced at a premium to traditional refreshment beverages.”

Rick Reddick, national category manager for packaged beverages and beer for Houston-based ConocoPhillips, said the value that energy shots offer is another motivating factor for consumers.

“We saw it was going to be a fast-growing category and it hasn’t disappointed,” Reddick said. “It’s a strong ring—$2.99 is the current price point on most brands—and good profit margin. We wanted to take advantage of the quick popularity in energy shots’ growth, so we decided to put them on our counter where they would start as a strong impulse item and become a destination item for most customers.”

Because energy shots are small items that are easy to shoplift, having them on the counter offers another benefit, Reddick observed: security. “Keeping them in clear sight of the sales associates on duty makes it easier to prevent theft and also support the product with suggestive selling tactics,” he said. “It also helps us manage our counters, which are the prime real estate in any store, and associates are more likely to lend active support to the product than if it was placed in other areas of the store.”  CSD


Speak Your Mind