Consumers Rush for Energy

John Scully got started on Red Bull before Red Bull got started on him.

Now 41 and working as a mortgage broker in Cleveland, Scully remembers that first sip, taken in a bar in Thailand where he’d backpacked when he was a 20-something college graduate long on adventure and short on money. "You sort of got addicted to them," he said. "Everybody mixed ‘em in their Mekong whiskey."

Red Bull’s predecessor was sold in Thailand in the 1980s, about the time Scully was hoofing it through the country. When he returned home it would be years before the drink launched in full force as Red Bull in the U.S., but he was already an avid drinker. "I had to buy them in Thai stores in Cleveland when I got back," Scully said. "I’d bring them into the office by the case."

And that’s just one Midwesterner’s story. Volumes of books could be filled with similar stories, fascinating case studies of American consumers whose brand dedication to any one or two of dozens of today’s energy drinks is dictated by a number of factors, chief among them taste, price, promotions and overall effect.

Apart from the nostalgia, for instance, Scully is still fiercely dedicated to Red Bull because of its "nice little aftertaste."

Like no other segment in the beverage category, isotonics and energy drinks are a force to be reckoned with. Data from The Nielsen Co. shows energy drink sales were up 15% last year, a share researchers estimate will grow 12% annually over the next three years until it becomes a $9 billion segment. Compare that to 2002 when energy drink sales were about $1.2 billion.

Because of consumers like Scully, Red Bull, that granddaddy of authentic energy drinks, is the market leader. The company saw $1.3 billion in sales last year, according to Information Resources Inc. (IRI), while Monster Energy was second with less than half that, or about $630 million. Both Monster and Red Bull’s sales are up more than 35% each over last year.

A category peppered with dozens of brands and flavors and proprietary drinks like Circle K and Boo Koo’s GazZu, or Sheetz c-stores’ Liquid Z, the recognizable category leaders still dominate the lower end of the scale, though new contenders are unleashed monthly if not weekly. Rockstar, Full Throttle, Monster, Amp, Sobe No Fear and Adrenaline Rush are all proving to be liquid gold for c-stores.

 

Customers Want Value

Price and taste are often qualifying factors for consumers looking to catch a buzz from these drinks, but the quality of the energy buzz itself is just as important.

Allen Apgar, of Morristown, N.J., traditionally sticks to Monster and Rock Star, though he recently began adding NOS to his brand rotation. His taste qualifications require the brand offer a sugar-free alternative, but beyond that his purchases are steered mainly by price and discounts.

"When I see buy-one-get-one-free, it’s like Christmas for me," Apgar said. "I load up on them to save a few dollars." He usually buys one energy drink per day. "I look for a price around $4 or less for a 16-ounce can, but would not go above $4. At that point, I’d go with a bottle of soda or juice."

A two-for-one promotion was playing out at a Sheetz c-store in North Ridgeville, Ohio, recently when 21-year-old Adam Rolland stopped in with his boss, Brian Grace, on the way to a construction job. "He needs three or four of these to get going in the morning," Grace said of Rolland.

Rolland opted instead for a 23.5-ounce can of Jolt Energy for a mere $1.69, but his purchase had less to do with price than it did taste: "It is cheaper, but I like it because it actually tastes like pop," he said, adding that he typically buys his energy drinks at 1 a.m. to help him stay awake. "I’m a college kid, what can I say."

The college-age consumers are a vital segment for the energy drink sector, though sometimes in ways retailers may not prefer. According to a 2007 Wake Forest University study cited by The Los Angeles Times, about 25% of 4,271 students who had consumed alcohol at 10 universities in the past month said they mixed energy drinks with their alcohol.

The alcohol-energy blend came under fire last month when a number of states’ attorneys general argued that Anheuser-Busch was targeting its Tilt and Bud Extra brands, an energy-alcohol mix, at underage drinkers. As a result of the investigation, Anheuser agreed to stop producing the alcoholic energy drinks.

But consumers often snatch up these beverages simply for the mental and physical pick-me-up they offer, usually by way of a powerhouse mix of taurine, guarana, ginseng, B-vitamins or other ingredients that put coffee and caffeine-only drinks to shame.

Dan Shortridge, a newspaper reporter from Georgetown, Del., harkened his Red Bull loyalty to his college days and early days in newspaper work. "I had some friends who were drinking it and they turned me on to it," Shortridge said. "I was working long shifts at work. It kept me up and helped me stay focused."

Shortridge sticks to his core Red Bull brand at Wawa c-stores in Delaware, but occasionally dips into the Monster brand. "Red Bull has all the promotions and end caps all over the place anyway," Shortridge said. "You always see it out there."

 

Price Consideration

Another loyal Red Bull drinker, Eamon Poller, of New York City, will stick to his preferred drink as long as it prices below $2.50, though he’ll go as high as $3 if he’s away from his local 7-Eleven. Price promotions on other brands prove to have little effect on Poller. If there’s no Red Bull, he said, "I’d just go with a Coke or Mountain Dew."

But not all are so choosy. Scully, of Cleveland, said he buys at least 10 energy drinks a week from his local BP, usually Red Bull as a morning drink, but on occasion entertains another brand. And he’ll dig into his pockets for a well-flavored beverage: "I’ll pay the premium just for the quality," he said.

Haverstraw, N.Y., resident Max Flores is a coffee aficionado, so it’s little shock to find his energy beverage of choice is Java Monster. "It’s great, especially when it’s warm outside," Flores said. "Instead of going for a hot coffee or iced coffee, which I can’t stand, I can get a coffee-flavored beverage with a little bit of a kick."

Beverage makers are taking notice of consumers like Flores, who are looking for a drink with a coffee taste but a little more oomph. Starbucks recently launched a new energy drink concept, +Energy, where customers can add a shot containing B-vitamins, guarana and ginseng to any drink. And Coca-Cola, maker of the Full Throttle energy drink, has added Full Throttle Coffee to its lineup with three flavors: mocha, vanilla and caramel.

Like Apgar and Poller, Flores has a cap on what he’ll pay for an energy drink, whether it’s coffee-based or ultra-premium. "I won’t go above $3, and that is even kind of high for me," he said. "I drink one or two of these a day, and with the cost of gas being what it is, I can’t justify spending $6 a day on two drinks."

Interestingly, both Poller and Apgar said the item they’re most likely to purchase with their energy drinks is gum. Flores tends to purchase energy drinks in place of coffee, so he often opts for a light snack with his drink, such as a doughnut or bakery item.

Other consumers are far less decisive in their purchase, and while it seems rare, some will snag a brand simply for its image. Take 22-year-old Claudia Mohsen, a Midwesterner who started drinking Cocaine energy drinks when they first hit the market because of the edgy promotions and glaring name.

In recent years Mohsen has cut back on her energy drink intake and is now purchasing just a handful of such products each month. Still, she admits a drink’s marketing genius or unique packaging often lures her. "It’s not as much flavor-based," she said. "I used to love it, but I got sick of it because I was drinking like two to three a day."

 

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