whats selling a view from the customers

CSD conducts customer surveys on isotonics and energy drinks in markets across the U.S.

The growth of bottled waterhas been well documented, butdata shows energy drinks and isotonics are growing at comparable oreven faster rates. What’s even moreimpressive is that all three of these categories have wide-ranging appeal thatcross gender lines and attract customersof all age groups.

To the surprise of no one, Pepsi’sGatorade dominates isotonics withseven of the top 10 brands reporting$1.5 billion in sales for the 52 weeksending July 2, 80.3% of the total for theentire convenience store channel,according to Information Resources Inc.(IRI).

Pepsi’s Powerade brand hung toughfinishing with the remaining three itemsin the top 10 registering $333.7 millionin sales.

Overall, the category rang up $1.86billion in convenience sales, up 12.3%from $1.66 billion in the previous 52weeks, IRI reported.

Energy drinks are also providingretailers a rush of new opportunities.IRI reported that for the 52 weeks ending July 2, category sales in conveniencestores rocketed 45.2% to $2.1 billion, upfrom the previous year’s total of $1.4billion.

Red Bull is still the category leader($775 million) accounting for 36.9% ofsales, but Monster Energy is making astrong push by nearly doubling salesfrom $174.6 million to $327.5 million.Other brands of note include MonsterEnergy XXL, which increased sales astaggering 1,931.2% from $3.7 millionto $76.6 million and Coke’s FullThrottle, which jumped 234.4% toreport sales of $140.4 million.

Consumer Feedback
Sales data alone doesn’t tell the entire story. Convenience Store Decisions took tothe streets to see what factors influencedconsumers’ beverage purchases. Exitpolls and consumer surveys were conducted in Colorado, Los Angeles, NewJersey, New York and Pennsylvania.

Consumer shopping patterns forsports beverages and isotonics mirroredIRI data with Gatorade being the topbrand purchased in the category amongthe customers interviewed.

Interestingly, Gatorade customers inmarkets separated by an entire country—Los Angeles and Philadelphia—saidthey were buying Gatorade simplybecause they “have always boughtGatorade.”

Julienne Payne, a customer at anam/pm store in Murrieta, Calif., wasdrawn to the store’s Gatorade promotion, which was two 24-oz. bottles for$3. She said promotions are very important to her, but not as important asbrand.

At a Philadelphia Wawa, GlennHeines said he regularly purchasessports beverages for his kids and isloyal to Gatorade. Price isn’t a factor, hesaid, but made purchasing decisionsbased on “brand recognition and trustin the brand.” He also indicated that hewould, like several other customers,make bulk purchase if stores ran promotions like “two-fors” or even by thecase.

At a QuickChek in North Bergen,N.J., Louis Sanchez said he preferredPowerade to Gatorade because “it tendsto be on sale more,” he said. But hefinds the brand’s variety in conveniencestores to be limited, so he ends up purchasing Gatorade at times just becausemore flavors are available.

Eighteen year-old NickVasquez, of Stony Point, N.Y.,who, along with his fatherJack, bypassed a bottledwater promotion at aHess Express in WestHaverstraw, N.Y., andwent straight for theGatorade. The youngerVasquez said taste was important, buthe would quickly switch brands basedon sales promotions or price differencesof 50 cents or more.

The elder Vasquez was guided byhistory. “I’ve had Gatorade since I wasI kid. It’s the only brand I trust,” hesaid, admitting that he has had bothPowerade and All Sport in the past fewmonths because they were on sale.

Energy Buzz
Cliff Prausa, the former national category manager for non-alcoholic beverages at Circle K, now the national salesdirector for Kronik Energy, said whenit comes to making buying decisions,customers can be fickle, but there arethree areas they are not willing to compromise:

Taste
A pleasant tasting drink is a primaryconcern for energy drink customers.“Consumers’ personal taste preferencesimpact their decision for a preferredbrand,” Prausa said. “One taste profiledoes not fit all consumers so variety iskey.”

Ingredients
Since consumers are looking for aquick pick-me-up, supplements haveproved to be important. More consumers are verifying the ingredients onthe label before purchasing.

Value
The primary demographic for energy drinks is young males that lead on-the-go lifestyles, so price is important.The value proposition of 16-oz. cans ismoving customers into that packagesegment, Prausa said. Energy drink makers recognizedthese factorsyears agoand, as a result, successful manufacturers havebeen able to infuse their products intothe nightlife scene. For example, RedBull has proved to be a popular drinkmixer and its popularity at night hascarried over into daytime purchases,consumers report.

Store clerks and customers at four ofthe five markets (California, Colorado,New Jersey and Pennsylvania), saidmornings and early afternoons were thetop-selling times for energy drinks.Only in New York was there a consensus for late afternoon and early evening.When the New York customers wereasked what their morning pick-me-upwas, all respondents answered eithercoffee, juice or colas.

At a Los Angeles Chevron, MichaelPaulnoic, said his choice comes down totwo brands, Monster and Red Bull.Much like Prausa, of Kronik Energy,pointed out, Paulnoic’s choice is drivenat the cooler by his need for value(Monster Energy’s 24-oz. can retails for$2.29) or brand (Red Bull’s 8.3-oz. cansells for $1.99). “Price is not a big obstacle,” when it comes to energy drinks hesaid. “But I will grab value.”

In Philadelphia, 7-Eleven customerBob Trueller committed his loyalty toRed Bull primarily because he can mixit with alcohol. Like many of the sportsbeverage consumers with Gatorade, hesaid he was first introduced to Red Bullbefore he knew of other energy drinkbrands and it’s the only one he trustsregardless of price.

Rod Eakins, of Bergenfield, N.J., onthe other hand, likes Full Throttlebecause it is easier to drink. “I’ve triedseveral brands and that one has low carbonation so I can drink it quickly toincrease its effects,” he said. But, headded, price is an issue. At $2.49 a can,he would switch brands based on a promotion as long as the savings was 25cents or more.

Incidentally, Mountain Dew Amp,which retailed for $1.39 at thePhiladelphia Wawa, was very popularwith several teens, who cited priceexclusively as the reason for their purchase. All other energy drinks regardless of size and brand were $1.99.

TOP 10 BRANDS OF SPORTS DRINKS/ISO

52 weeks ending 7/2/2006: (in Millions)
52 weeks ending 7/2/2005: (in Millions)
% Change:
Dollar Share of Category for 52 weeks ending 7/2/2006:
Gatorade, PepsiCo Inc.
$862.2
$716.4
20.4%
46.4%

Powerade, Coca Cola Co.

287.9
248.2
16.0
15.5

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Gatorade Fierce, PepsiCo Inc.

186.8
181.4
3
10.1

Gatorade X Factor, PepsiCo Inc.

182.1
191.8
-5.1
9.8

Gatorade Frost, PepsiCo Inc.

129.8
143.8
-9.7
7
Gatorade Rain (NEW), PepsiCo Inc.
65.1
0
0
3.5
Gatorade Xtremo, PepsiCo Inc.
43.5
66.2
-34.3
2.3

Powerade Option, Coca Cola Co.

26.0
$4,246.00
586,450.7
1.4

Gatorade, Endurance Formula, PepsiCo Inc.

21.6
5.4
297.6
1.2
Powerade Arctic Shatter, Coca Cola Co.
19.8
18.4
7.4
1.1

Source: Information Resources Inc.

TOP 10 BRANDS OF ENERGY DRINKS

52 weeks ending 7/2/2006: (in Millions)
52 weeks ending 7/2/2005: (in Millions)
% Change:

Dollar Share of Category for 52 weeks ending 7/2/2006:

Red Bull, Red Bull North America Inc.
$775.5
$650.0
19.3%
36.9%

Monster Energy, Hansen Natural Inc.

327.5
174.7
87.5%
15.6%

Rockstar, Rockstar International

210.6
139.8
50.6
10

Full Throttle, Coca Cola Co.

140.4
42.0
234.6
6.7

SoBe No Fear , Pepsico Inc.

137.2
99.0
38.5
6.5

AMP, PepsiCo Inc.

97.0
72.1
34.6
4.6

SoBe Adrenaline Rush, PepsiCo Inc.

78.8
79.8
-1.2
3.8

Monster Energy XXL, Hansen Natural Inc.

76.6
3.8
1,931.2
3.7
Hansens Lost Energy, Hansen Natural Inc.
22.3
20.7
7.6
1.1

Boo Koo, The Love Factor Inc.

19.9
11.2
77.2
0.9

Source: Information Resources Inc.

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