Is Mountain Dew Kickstart Taking on Gatorade?

Mountain Dew Kickstart's line-up: Fruit Punch, Orange Citrus, Pineapple Orange Mango, Strawberry Kiwi, Black Cherry, and Limade.  Image courtesy of stupiddope.com.
Mountain Dew Kickstart’s line-up: Fruit Punch, Orange Citrus, Pineapple Orange Mango, Strawberry Kiwi, Black Cherry, and Limade. Image courtesy of stupiddope.com.

Following on one of their most successful drink launches in recent memory, Mountain Dew has added two additional offerings under their Kickstart drink portfolio.  The Kickstart offshoot started to segment drinks by dayparts in 2013 and brought out two beverages targeting morning consumption.  In 2014 they followed on the morning drinks with two more flavors catered toward evening occasions.  Their most recent offerings – Pineapple Orange Mango and Strawberry Kiwi – are infused with coconut water (full press release found here), but does not overtly fit an actual drinking occasion.  This makes the latest launch appear off strategy because it’s not geared specifically toward the morning, afternoon, or evening.  How do these two drinks fit into the Kickstart portfolio?  What is the purpose of this launch?

The “fit” debate may very well go back to the purpose of coconut water.  Coconut water was targeted as a healthier alternative to sports drinks like Gatorade and Powerade.  On an equivalized volume comparison, coconut water contains similar amounts of electrolytes but fewer calories and sodium, making it a strong substitute for the sports drinks marketed toward fitness-oriented consumers.  In essence standalone coconut water is meant for hydration and recovery purposes.  When mixed with Mountain Dew’s caffeinated citrus sodas, these drinks could be positioned as competition to sports drinks.  A lightly carbonated energy drinks – with juice flavors and coconut water – can be termed as a hydration drink to compete with the Gatorades and Powerades out there.  These latest release of Mountain Dew Kickstart would not need to fit under a daypart segmentation.  It could be a morning drink for people that exercise in the morning, or it could also serve an evening recovery drink after workout or recreational sports.

Mountain Dew's Kickstart newly launched flavors: Pineapple Orange Mango and Strawberry Kiwi.  Both variants are infused with coconut water.  Image courtesy of PRNewswire.com.
Mountain Dew’s Kickstart newly launched flavors: Pineapple Orange Mango and Strawberry Kiwi. Both variants are infused with coconut water. Image courtesy of PRNewswire.com.

If this is Mountain Dew Kickstart’s positioning around the new offerings, the only challenge would be where caffeine fits into the equation.  Sports drinks are supposed to replenish what the body loses during sport events (electrolytes, sugars, salts, liquids) and caffeine would not fall under this criteria.  While the body may craves some energy following an intense workout, it could be debated that the workout itself provides energy as a result of the activities.  Caffeinated sports drinks may not be detrimental like alcoholic energy drinks but it’s relevance is questionable due to the caffeine.  This may ultimately be an attempt to expand the Mountain Dew masterbrand beyond soda and energy drinks by reaching toward athletic consumers.

Or is it?

This brings us to the purpose of launching these two flavors of Mountain Dew Kickstart.  Bevnet’s Neil Martinez-Belkin suggested this launch had more to do with creating success for O.N.E coconut water brand than extending Mountain Dew’s reach (article link here).  Martinez-Belkin reminds us that months ago PepsiCo expressed intentions to include coconut water as an ingredient across multiple lines of business.  Driving Kickstart infused with coconut water is simply a method of increasing coconut water;s public exposure.  It may be because after buying O.N.E. coconut water that the beverage brand is still lacking robust market exposure.  This make senses given both Coca-Cola and Pepsi – owners of ZICO and O.N.E – have re-deployed efforts to focus on their core business: carbonated soda.  Marrying a powerhouse brand like Mountain Dew with coconut water increases coconut water’s consumer relevance without having to fully invest behind coconut water as a beverage brand.  This is not to say that Pepsi may not be supporting O.N.E. coconut water in the future, it just means they are looking for creative options to build up the coconut water segment.

The Mountain Dew Kickstart launch raises a few eyebrows though it helps coconut water more than it appears in the public eye.  For a global beverage manufacturer where many products fighting to keep their budgets, this is a creative way to grow a business that may be losing the fight to maintain funding against other beverages in Pepsi’s portfolio.  O.N.E. coconut water would justify increased budgets if these two new Kickstart flavors sold well.  And if this experiment is a hit between Mountain Dew and coconut water, we could see Tropicana infused with coconut water or even Pepsi cola infused with coconut water in a few years.  If that does happen, you can point to the success of Mountain Dew, which has been one of Pepsi’s increasingly consumed soda brands despite the overall declines in soda.

 

The O.N.E. coconut water line-up for Canada. Is the U.S. looking to grow this brand by marrying up coconut water with more lines of product?
The O.N.E. coconut water line-up for Canada. Is the U.S. looking to grow this brand by marrying up coconut water with more lines of product?

5-hour Energy Improves Shot’s Taste

The 5-hour Energy line-up.  As stated in a press release, all their energy shots will undergo taste improvements this year. Image couresty of 5-hour Energy's twitter page.
The 5-hour Energy line-up. As stated in a press release, all their energy shots will undergo taste improvements this year. Image couresty of 5-hour Energy’s twitter page.

Taste exists as the primary and most crucial hurdle for consumables to overcome.  Even with marketing support, no product could sustain success if they produced really bad-testing drinks.  5-hour Energy kicks off 2015 by announcing that they’ve improved on the taste profiles for their entire line of energy shots (link here).

If 5-hour Energy has been able to find sustained success the past 10 years, their products could not have tasted that bad.  This is merely a product tweak, though an important change since it affects their total energy shot portfolio.  After improving flavor profiles, 5-hour Energy will be a better position to leverage their insights around demographics (targeting women & seniors) and frequencies (usage occasions and mixing opportunities).  That said, no one can equally focus on three different priorities.  So what should the energy shot provider do first: grow their customer base by targeting women & seniors, or increase consumption among their current customers?

Related post: 5-hour Energy’s Quest for New Growth

It seems like the answer was part of the statement by their director of communications, Melissa Skabich.  Here’s a partial statement from her:

“The message is clear. Our customers want an energy shot that tastes great, and we’ve given them what they’ve asked for,” said Melissa Skabich, director of communications for 5-hour Energy. “The new and improved taste of 5-hour Energy shots is a testament to our ongoing commitment to always improving our product, and we’re extremely proud of what we’ve created.  Fans of 5-hour Energy shots won’t be disappointed because we still offer the same 10 great flavors, as well as decaf,” Skabich added. “We’re optimistic that the better-tasting product will result in increased demand through the existing and new user base.”

Even as Skabich mentions existing user base, it would be clear that this is more about growing the new user base.  After all, there is only so many energy shots a single consumer can drink.  There is stronger growth potential for 5-hour Energy by targeting new demographics.  In fact, changing the taste is positioning them to reach new consumers more than satisfy brand loyalists.  Current customers will be rewarded with better tasting shots, but the priority is to attract new users.

Marketing to new users could prove more difficult than increasing consumption from their loyal customers, though the payoff will undoubtedly be more rewarding.  Following their Yummification campaign, 5-hour Energy already understands when people use their shots and what tastes delicious when mixed with it.  Leveraging these insights, they can target women & seniors through advertising or in-store coupons or bundled products.

5-hour Energy says they will be launching a new national advertising campaign in February to market the energy shots’ new and improved taste.  Be on the lookout for what would appeal to women and seniors, as it’s likely that the campaign may cater to them just as much as it caters to their current customer base.

5-hour Energy's Yummification contest from 2014.  Through this contest, the energy shot manufacturer was able to uncover new usage occasions and great refreshments to mix with the energy shot.
5-hour Energy’s Yummification contest from 2014. Through this contest, the energy shot manufacturer was able to uncover new usage occasions and great refreshments to mix with the energy shot.

Red Bull Expands Editions Line-Up

The expanded Red Bull Editions Line-up.  From left to right, Orange, Cherry, Red, Blue, and Yellow.  Image courtesy of cspnet.com.
The expanded Red Bull Editions Line-up. From left to right, Orange, Cherry, Red, Blue, and Yellow. Image courtesy of cspnet.com.

It seems that Red Bull has found more success introducing energy drinks than energy shots or cola, as their recent launches like the Red Bull Total Zero and the three Editions flavors have fared much better.  So it should come as no surprise that the energy drink behemoth continues building sales momentum behind their energy drink assortment.  At the 2014 National Association of Convenience Stores (NACS) show, Red Bull announced three new members to the Editions family.  Joining the Red (Cranberry) and Blue (Blueberry) Editions are the Yellow (Tropical Citrus), Orange (Orange), and Cherry (Cherry) energy drink flavors.  The Orange & Cherry options contain zero calories and zero sugars, while the Yellow option returns with nationwide availability after a two month test exclusively with 7-Eleven.  These new flavors will be available starting mid-February in 355ml (12oz) cans, while the 250ml (8oz) cans will transition to a multi-pack sku.

Among the three new flavors, Cherry may be the only true new addition to Red Bull’s portfolio.  The Yellow flavor was brought to market during the 2014 summer months, exclusively with 7-Eleven.  It was known as the Summer Edition to temporarily complement their Red, Blue, and Silver drink line-up from July to September.  Meanwhile, the Orange flavor may have previously existed in limited U.S. markets under the name of BULL Energy.  BULL Energy had different packaging, with limited references to Red Bull, and was available exclusively across soccer venues (as an exclusive product for the New York Red Bulls, the city’s soccer team).

Related Post: Red Bull Celebrates Summer with New Flavor

Regardless of the flavors being truly new innovations or otherwise, this marks an accelerated pace of product introductions for Red Bull than previously recorded.  Before 2012 (year of Red Bull Total Zero launch), it was back in 2009 when Red Bull added to their product line-up, with an unsuccessful expansion into energy shots.  Since the 2012 launch of Total Zero, three new items were added in 2013 (Red Bull Editions) and now three more in early 2015.  Although their pace doesn’t match that of Monster Energy or Rockstar Energy (which launches multiple new products annually), Red Bull’s more recent product expansion activities indicates their commitment to giving brand loyalists more choices.  And this ultimately lets consumers reward Red Bull with more dollars.

Courtesy of BevNet.com – the new Red Bull “Bull” Energy Drink.
Courtesy of BevNet.com – the new Red Bull “Bull” Energy Drink.

With these new introductions, it appears that Red Bull may not be done with their product expansion.  The Orange and Cherry flavors are decidedly different from the Red, Blue, and Yellow items, containing zero calories and zero sugar.  In essence, these two skus align closer with Red Bull Total Zero.  In which case, Red Bull may explore opportunities to build out their “Zero” product line-up.  Would the energy drink manufacturer launch both the Red and Blue flavors under the Zero portfolio?  Also mentioned in the press release was the Editions will be available in single servings (355ml/12oz sizes) and multipack servings (4-packs of 250mls/8oz).  Would Red Bull consider up-sizing some items even more, to join the original Red Bull Energy Drink in a 473ml (16oz) size?  Even yet another option would be exploring additional flavors to bring to market.  Beyond the current flavors, would Red Bull add to the Editions line-up with a Pink (lemonade), Peach (peach), or Purple (grape)?

Related Post: Red Bull Launches New Product: BULL Energy Drink

Incremental offerings for the Editions line-up certainly presents Red Bull with opportunities and risk.  It’s worth noting that Red Bull has quietly swept the Silver (Lime) edition under the rug.  It’s not clear whether Silver is being discontinued, but keeping the current Red Bull flavor portfolio at five flavors is a sound decision.  As long as energy drink consumers enjoy Red Bull’s new products, the energy drink company will continue to deliver popular innovations.  Today, the Red Bull company looks very different from the one back in 2009.  After a period of failed experimentation, a string of successful innovations has helped Red Bull take back control of the energy drink market.

5 Questions with Dollar Shots Club’s Darin Alpert

Dollar Shots Club - why pay more than $1 for a shot? Courtesy of facebook.com
Dollar Shots Club – why pay more than $1 for a shot? Courtesy of facebook.com

Most manufactured products are sold through retailers and typically include a mark-up.  This is necessary for the retailer to earn profits from carrying the product on their store shelves.  It also gives consumers a “one-stop shop” to find all products they need.  Online retailers and companies that sell directly to consumers cut out the retailer and thus can sell their wares at lower prices.  This is the case with Dollar Shots Club, an energy drink company that recently sprouted up that cuts out the retailer.  BevWire recently caught up with Darin Alpert, the Chief Marketing Officer of Dollar Shots Club.

BevWire (BW): First of all, what is Dollar Shots Club?  Are you guys product manufacturers, product distributors, or a combination?  How long have you guys been in business?

Darin Alpert (DA):  Dollar Shots Club is a monthly membership for great tasting, affordable energy shots.  We officially launched in September 2014. We are a combination of manufacturers and distributors. We don’t see a reason for consumers to pay for retail markup of their energy shots.

BW: How did you guys come up with the idea for Dollar Shots Club?  Did the success of “Dollar Shave Club” play into the decision and business model?

DA: Dollar Shave Club was a great motivator.  We saw that one company owns 90% market share of the energy shot market and charges $3 each for their shots.  The reason they are $3 each is because of all the layers of distribution.  We cut out those layers and know how much consumers enjoy products online over retail.

BW: Who is your target market, and how do you plan on communicating with them?  And what makes Dollar Shots Club’s energy shots unique from other energy shots on the market?

DA:  Our target market is people that drink energy shots or energy drinks and want to save money.  We communicate with them via social media. The biggest differentiation is price, taste and convenience. Ours cost less, taste better and are shipped right to your door without having to wait in line at the store.

BW: Seeing that cultivating a strong subscription base is critical, and finding new customers are equally important, what are some of your biggest challenges toward business growth?  What are some strategies Dollar Shots Club is using to overcome these challenges?  What consumer marketing campaigns can we expect to see in the future?

DA:  One of the biggest challenges we have is getting consumers to taste our shots since taste is so crucial. We offer our first month for free so people can try the shots. Once people try the shots they love them! As far as customer base, we are signing up 5-10 people per day and have been doing so since September. Our retention rate is currently above 80%.

The biggest strategy for increasing business exposure has been giving away the first month for free. We don’t want to build the infrastructure of going to events and taking on additional costs so our online advertising promotes the first month for free. We’ve also partnered with like minded partners that can help us get the word out. We’ve got a few things in the works that will increase our exposure 🙂 We can’t talk about them yet though.

BW: Seeing that the business model currently supports one flavor and one market (the 48 contiguous states of U.S.),  how would the expansion plans look like?

DA: We chose our one flavor (Berry) because it is the most popular energy shot flavor. We will expand flavors depending on demand from our membership. We’re here to serve our members needs. We don’t want to take on international expansion until we dominate the United States.

Certainly an interesting approach toward selling energy shots revealed in this interview with Darin.  While many people prefer instant gratification from product purchases, there are a growing number of consumers increasingly comfortable with stocking up and buying online.  Certainly looking forward to seeing Dollar Shots Club change up the energy shots segment.

Vegetable Beverages Hitting Mainstream

Gatorade Lime CucumberWould you drink a cucumber lime-flavored Gatorade?  How about blueberry mint-flavored water?  An article on Beverage Industry on emerging beverage trends claim that vegetable-flavored beverages are increasingly popular because of their “healthy halo” (article link here).  With everyone focusing on healthier options, it makes sense that vegetable flavors reach mainstream status and consumers seek to take in more vegetables.  After all, berry and other fruit-flavored beverages can only deliver so much momentum.  That said, the article describes that consuming a vegetable-only flavor is still in uncommon and many beverage options are a combination of both vegetables and fruits.  How will this particular flavor trend impact beverage makers?  Will these drinks ever reach a level of popularity to take down mainstream colas, juices, or waters?

Beverage manufacturers constantly monitor flavor trends and Pepsi has locked into this trend since 2011, when they launched a Cucumber Lime flavor under the Gatorade franchise.  Pepsi Japan’s limited-time releases of Pepsi Shiso and Pepsi Ice Cucumber also proves this point.  Since most (if not all) beverage organizations monitor consumption trends, it would not be surprising to see manufacturers build momentum and launch more vegetable-infused variants over the next few years.  It just needs to make its way into the North American market.  And this is beginning to catch on more in the U.S.; research firm Mintel tracked over 100 U.S. beverage innovations with vegetable or vegetable-fruit flavors launching in the past year, representing a 20% increase from 2013.  It still stands to be seen whether these vegetable-flavors will launch under the most popular and mainstream beverage lines like Gatorade, Coke, and Pepsi or launch under emerging beverage brands.  No matter the case, any approved product launch puts sales pressure on other items to perform or risk losing the shelf space.  This flavor trend may not have been successful replacing other products’ sales to justify shelf space though it looks that will soon change.

On the topic of reaching critical mass to take down mainstream product categories, it doesn’t look promising.  This isn’t to say that vegetable-flavored beverages will not reach mainstream status themselves, just that it will not overtake other mainstream categories.  For one, this is a flavor trend that integrates the product under a specific beverage segment; it is not a standalone beverage category in itself.  Consider these vegetable-flavored products to pattern after  Campbell’s V8 juices or Bolthouse Farm smoothies, where they represent a growing portion of a drink category (juices and smoothies, respectively) but are not large enough to overtake juices as a whole or smoothies as a whole.  Regardless, these healthier options will compete aggressively for retail shelf space alongside other beverage options.

Image courtesy of foodbusinessnews.net
Image courtesy of foodbusinessnews.net

The Beverage Industry article also describes other beverage flavor trends, include a growing preference toward sweet and spicy combinations.  Consumers increasingly look for flavors that will satisfy multi-sensory experiences.  Some examples include chocolate gojuchang tea (gochujang is a Korean spicy sauce),  spicy ginger mango juice, and mango jalapeno water.  So be on the lookout, soon enough you’ll see more cross-flavored beverages on store shelves.  Be in sweet and spicy or vegetable-fruit flavored, it will sound exotic but your taste buds and your body will thank you for choosing that over another drink.

5-hour Energy’s Quest for New Growth

The 5-Hour Energy Shot Line-up
The 5-Hour Energy Shot Line-up

It seems that the craze over energy shots have died down since 2012 and left 5-Hour Energy as the last company standing.  That shouldn’t be a surprise since existing consumers were fiercely loyal to the brand, to the extent that offerings from energy stalwarts like Red Bull and Monster failed to sustain sales in this segment.  After winning the battle for energy shot supremacy, 5-Hour Energy still faced challenges toward reaching a wider array of consumers.  The energy shot manufacturer need to reach other demographics to continue growing.  That spawned line extensions to reach women, as well as sampling events to reach seniors. This past summer, the company ran a “Yummification” campaign to leverage 5-Hour Energy as a mixer (BevNet’s Ray Latif has an in-depth look at the campaign here).  While all companies have growth barriers, what has 5-Hour Energy done differently to overcome these growth challenges?  And beyond its success, what other opportunities exist for them in the foreseeable future?

It would appear that targeting women and seniors are components of an overarching 5-Hour Energy growth plan, and the strategic objective is to increase consumption.  Reach new demographics isn’t all that different from what other companies do, so catering to women and seniors are not all that unique.  What is unconventional is their “Yummification” campaign.  5-Hour Energy recognized that taste was a blockage that would not be solved despite their efforts to highlight product benefits.  The “Yummification” campaign leveraged fans’ creativity in a contest to create recipes for mixing 5-Hour Energy with other beverages (mainly non-alcoholic ones) to lessen the medicinal taste.  As a side benefit, this contest required submissions through YouTube helped generate a lot of media exposure.  Beyond media impressions, the campaign showcase new usage occasions for 5-Hour Energy.  Contest submissions advertised concoctions to refresh the user during athletic training, waking up, and gaming among many others.  Athletic training, waking up, and gaming are occasions typically paired with other refreshments, such as sports drinks, coffee, and juice & water.  Energy drinks – let alone energy shots – seldom enter the conversation as refreshments during these times.  However, it looks like that will change following the success of their “Yummification” campaign.

5-Hour Energy's Yummmification Contest.  Courtesy of blog.5hourenergy.com.
5-Hour Energy’s Yummmification Contest. Courtesy of blog.5hourenergy.com.

Beyond the campaign’s success, it seems 5-Hour Energy has uncovered business opportunities that they were previously unaware of.  Serving as an ingredient as well as a standalone product gives them many more opportunities to sell itself.  Beyond the regular activities to feature the product as a strong standalone product, mixing the shot with other beverages now gives 5-Hour Energy many cross-promotion and marketing opportunities.  5-Hour Energy could try securing displays in the juice aisle to forge a stronger bond with the juices that could be mixed with their product.  Or secure displays in the coffee aisle to convert or steal coffee consumers.  Regardless of displays or other in-store activation tools, many opportunities have emerged to continue delivering growth momentum.

Judging by the potential that this campaign could provide to 5-hour Energy, it’s a surprise it took them so long to come up with it.  It may be the fact that the segment was riding a hot growth trend that nullified the need for marketing support.  Or that negative media surrounding energy drinks required more immediate attention than developing a sustained growth strategy.  Whatever the case, the campaign has now happened and translated fantastic success.  The one downside is that the campaign won’t be repeated, as said by Brandon Bohland, a special markets manager at the company.  Which means that the recipes submitted for the campaign are the only ones that will exist for the foreseeable future, until 5-Hour Energy creates other contests calling for recipe creations.

Visit 5hourenergy.com/yummification to see the videos and recipes for their Yummification contest.

Big Red Buys Xyience, Ends UFC Partnership

Xenergy Lineup

It seems the beverage industry continues to go through some form of consolidation.  Big Red Inc. – one of North America’s Top 10 beverage organizations – has acquired Xyience effective immediately.  Xyience – one of the more well-known energy drink brands through their sports sponsorships – now joins a drink portfolio that includes Big Red Soda, Hydrive Energy Water, Nesbitt’s, and Thomas Kemper Soda.  While many things may change for Xyience in the future, one thing has already changed as a result of this acquisition: Xyience has ended its UFC sponsorship.  Will ending this sponsorship hurt Xyience’s growth among their core demographic?  How else will their communicate to this group of consumers?  Will the gains from being part of Big Red’s system outweigh Xyience existing as a standalone energy drink company?  What benefits Xyience in this arrangement?

One major factor: Big Red’s national footprint.  Xyience had been working well to gain distribution, winning more doors and regions over the past few years.  However, most of these distribution gains have occurred along the coasts.  There are many areas within the U.S. that Xyience products cannot be found.  Joining Big Red gives Xyience national distribution by piggybacking off of Dr Pepper Snapple Group (DPSG), which is a national distributor and delivers to three-quarters of all Big Red retail accounts.  This change alone provides significant gains for Xyience, allowing the energy drink to challenge Red Bull, Monster, and Rockstar across more geographies.  The best part is that this is organic growth, where Xyience can rely on their brand name to help them do some of the work.

Beyond distribution gains, another growth opportunity for Xyience would be to broaden its target audience.  While the energy drink manufacturer owns a niche following among a select group of consumers, appealing to more consumer groups will help this brand evolve from its current state to a much larger energy drink player.  Hence ending their UFC sponsorship.  Gary Smith – Big Red’s CEO – said as much:

“I’m just gonna soften it (their image) up a little bit, make it a little less hardcore than the image that it’s got today.”

Ending the sponsorship won’t immediately alienate their niche consumers, but provides the opportunity to reach other consumer groups.

If managed properly, Xyience may be primed for explosive growth following its Big Red acquisition.  The brand is very recognizable and will be available in more places where consumers will recognize them.  And in the distant future after new consumer marketing content is built, they will certainly be challenging Red Bull, Monster, and Rockstar for share of mind in addition to share of shelf.

Coca-Cola Builds a Monster

Image courtesy of brandchannel.com
Image courtesy of brandchannel.com

Looks like Coca-Cola realizes what it’s good at and what it isn’t good at.  Their increased stake in Monster Beverage proves as much.  With $2.1 billion invested, Coca-Cola now owns 17% equity in the energy drink behemoth, and in turns switches up their product portfolios.  Coke will give Monster their own acquired or homegrown energy drink brands, which includes Nos, Full Throttle, and Burn among many others, while Monster trades them their non-energy drink products, such as Hansen’s Natural Sodas & Juice Products, Peace Tea and Hubert’s Lemonade.  This deal brings together the world’s largest soda manufacturer and the U.S.’s largest energy drink manufacturer.  Although both sides got a great win out of this, but who needed this deal more – Coca-Cola or Monster?  Let’s start by seeing what each side actually gets out of this arrangement.

For Coca-Cola, acquiring a larger stake in Monster and then trading energy drinks for teas & juices serves as a win in itself.  With consumer habits and preferences changing, fortifying their product portfolio to keep pace with these changes was a necessity.  And with key brands generating bad press lately (think Diet Coke slogan fiasco), Coca-Cola could not afford to keep beverage products that carry high negative publicity potential.   Nos, Full Throttle, and the like most certainly qualify given the category requires caffeine content regulation following linkages to caffeine poisoning.

Energy drinks didn’t necessarily fit into the brand image that Coca-Cola wanted to sustain.  Energy drinks focus around an extreme sports lifestyle, with key sponsorships across mountain biking and motor biking.  Distancing the brand from energy drinks better promotes Coke’s image as a family-oriented product manufacturer.  Furthermore, their marketing acumen is better leveraged across Monster’s non-energy products given Coca-Cola’s existing strength across juices and teas.  Coca-Cola has already made a strong name for itself behind Minute Maid, Simply, Odwalla, Nestea, and Honest Tea.  Giving up energy to return focus to juices and teas helps Coca-Cola stay sharp and work on what they’re good at.

Hubert's Lemonade, now part of the Coca-Cola family.  Will this lemonade brand grow exponentially?  Image courtesy of hansens.com
Hubert’s Lemonade, now part of the Coca-Cola family. Will this lemonade brand grow exponentially? Image courtesy of hansens.com

For Monster Beverages, this deal unlocks a stronger global distribution network to grow their product base.  They’ve also added some larger name-brand energy drinks to complement Monster.  A strong competitor like Nos now becomes a fantastic ally.  Full Throttle owns a cult following despite Coca-Cola’s neglect and has a very good chance of being resurrected.  This arrangement gives Monster a wide assortment of products to target energy drink consumers, both locally and internationally.

Monster has also done a better job at marketing energy drinks than Coke because they’ve invested in resources to build out an entire lifestyle.  Energy drinks are more integrated into a consumer’s lifestyle than some other beverages, given their wide target in terms of drinking occasions.  The soda drink manufacturer was not prepared to build out a 24/7 lifestyle like how Monster, Rockstar, and Red Bull have.  Though Monster’s success isn’t a defined blueprint, they already have the infrastructure in place for one energy drink and this could be scaled up for other energy drinks.

It’s really hard to say who needed this more though Coca-Cola benefits more in this new arrangement.  The soda maker had more to lose because they were never going to catch Red Bull, Monster, or even Rockstar with their homegrown products.  Giving up distribution bought them expertise and healthy beverage brands.  Similarly, Monster’s true success existed in the energy drink segment, so much that they even changed their company name to halo off some brand equity.  Their strength in energy drinks would have prevented them from properly developing their nonenergy product portfolio.

Regardless of who benefited more, this only proves that larger companies must take creative approaches to keep growing.  In the past, it was about building strong brands.  Now, it’s about buying a brand that’s already been built, and making it stronger.

Red Bull Celebrates Summer With New Flavor

The new Red Bull Summer Edition is available exclusively at 7-Eleven locations across Canada and the U.S.
The new Red Bull Summer Edition is available exclusively at 7-Eleven locations across Canada and the U.S.

Building on their momentum of the Red Bull Editions, the energy drink manufacturer will launch a new flavor exclusive to 7-Eleven locations in Canada and the U.S.  Aptly named the “Summer Edition”, the drink’s packaging is a sunny-yellow colored 12oz (355ml) can.  The tropical fruit-flavored drink adds to the Red Bull Editions line-up of the Red (cranberry), Blue (blueberry), and Silver (lime) flavor offerings.  7-Eleven has exclusivity of the Summer Edition in July and August, with a consumer promotion running until September 2nd (per the corporate 7-Eleven news release).  After that, no guarantees whether this becomes available across other retailers or it is truly an exclusive, limited-time offering.  If history proves to be repeated, then the Summer Edition will be here to stay.  Red Bull had previously launched their Red Bull Editions exclusive to 7-Eleven in March, followed by availability at other retailers a few months later.

It’s not the first time beverage companies have partnered with 7-Eleven for exclusive offerings.  Most recently, Gatorade had launched their Gatorade Fierce Green Apple flavor exclusively with the convenience retailer.  The results of that launch is detailed in this Pepsico news release.  The proven success of exclusive launches help 7-Eleven secure more preferred agreements with other beverage manufacturers.  After all, the convenience retail channel generates healthy sales and even healthier profit margins.  And with 7-Eleven adding more retail locations across North America, they certainly have the clout to command more customized products.  For Red Bull, this arrangement is preferable since it helps the energy drink manufacturer lock up more valuable shelf space in the nation’s leading convenience retail chain.  In addition, this also allows them to focus their advertising support behind one product at one retailer, helping to drive a stronger, more focused message.

Red Bull has previously launched the Red Bull Editions exclusive to 7-Eleven before opening it up to all retailers.  Courtesy of flippies.com
Red Bull has previously launched the Red Bull Editions exclusive to 7-Eleven before opening it up to all retailers. Courtesy of flippies.com

In BevNet.com’s article on the Red Bull launch, the publication detailed that Red Bull is slower to launch new products relative Monster Energy, leading to slower sales growth (link here).  The comment is not without merit, as it appears that Red Bull’s sales are more reliant on existing drinks rather than new innovations – especially with a innovation history that includes unsuccessful attempts to diversify with  Red Bull Cola and Red Bull Energy Shots.  However, their recent product launches came from an area where they are the clear leaders and have been quite successful.  And with fewer launches, Red Bull is able to put more attention into each launch, and ensure that it receives full support across media outlets as well as.  Case in point: their launch efforts behind Red Bull Total Zero and the Red Bull Editions have been well executed with media and in-store support.  Even their BULL Energy Drink has garnered strong attention despite catering the beverage to a highly specific market.

The lower frequency also helps Red Bull convey a stronger brand presence that coincides with their premium pricing.  Fewer launches highlight a prestige that will be harder to sustain if launches become fast and frequent.  So with the Summer Edition now available in 7-Eleven, let’s see how Red Bull celebrates with their Summer Edition.  It won’t be forever until they have another product launch, but it will surely be after they make sure the Summer Edition is successfully entrenched with  the customers and consumers.

Rockstar Quietly Introduced Energy Waters

The three flavors of Rockstar Energy's new Energy Waters: Citrus, Orange Tangerine, Blueberry Pomegranate Acai.
The three flavors of Rockstar Energy’s new Energy Waters: Citrus, Orange Tangerine, Blueberry Pomegranate Acai.

Rockstar Energy showcased their Rockstar Energy Water over 18 months ago at the 2012 NACS Show, but never divulged the launch date.  The energy drink manufacturer’s enhanced water offerings were quietly introduced in September 2013, and has recently launched into Canada.  Via Rockstar Energy Canada’s Facebook page – the three flavors of Citrus, Orange Tangerine, and Blueberry Pomegranate Acai – launched February 24.

Beyond their energy drink’s portfolio breadth, Rockstar has been traditionally known for their innovative and attention-grabbing packaging.  Their energy drinks come in aluminum cans that have matte finishes (Rockstar Recovery series) and slim cans with straws (Rockstar Pink).  However, their foray into enhanced waters have stayed with safer packaging resembling other products that define the segment landscape.  Even as packaging can help demonstrate a product’s unique features, Rockstar has chosen to play it safe since they do not have a strong brand name.  Their packaging resembles that the glaceau’s vitaminwater packaging, the clear market leader.  Perhaps Rockstar is looking to enter this segment as a follower and build up credibility as a key competitor in this segment before experimenting with its packaging.

The launch of Rockstar Energy Water is also an indication of the energy drink manufacturer’s goals to diversify beyond energy drinks.  Similar to Starbucks’ aim to expand outside coffee and Monster Energy’s expansion into teas, Rockstar is leveraging their expertise in energy drinks to introduce other caffeinated beverage products.  These new products are targeted toward a different consumer, and will be placed in other beverage sections within convenience and grocery stores.  With more touch points in the grocery aisles, Rockstar now has more opportunities to connect with the shopper: both the energy drink shopper and the enhanced water shopper.

As Rockstar targets a new consumer demographic, their marketing message and vehicles should also change.  Energy drink companies have forged strong ties with extreme sports athletes since their products fit that particular demographic and lifestyle.  Their new beverages may need to start communicating on other media channels (ie TV, print, digital) and communicating differently to identify more closely with this demographic’s behaviors and needs.  While some analysts expect Rockstar Energy Waters to go after the same “energy” consumer, there are bound to be new interest.  At the same time, communicating similar messages within identical media platforms dilutes the overall product awareness.

Rockstar Energy Water Shelf

Even as Rockstar Energy Drink continues to increase its availability, two key challenges they must address are awareness and consideration. Their February launch showed that they have only communicated to the public through sporting events and social media.  How will they improve their awareness?  And with their competition firmly entrenched in shopper’s minds when they are looking to buy enhanced waters, what will Rockstar Energy Water do to have the shopper consider trying Rockstar Energy Water?

Seeing that expansion is a key growth opportunity, Rockstar’s broader portfolio is a good first start.  If they continue supporting these new drinks and work to build both awareness and consideration, Rockstar can become a strong player across both the energy drink and enhanced waters segments.