CStore Decisions

  • Home
  • Today on CSD
  • Categories
    • CBD
    • Foodservice
    • Fuel & Gas
    • Health & Beauty
    • Independent Operators
    • Operations & Marketing
    • Technology
  • CStore Playbooks
    • CBD Playbook
    • Foodservice Playbook
    • Technology Playbook
    • Alcoholic Beverage Playbook
    • Tobacco Playbook
  • Products
    • Hot New Products Contest
    • Beverages & Cold Vault
    • Candy, Gum & Mints
    • Snacks
    • Tobacco
  • Resources
    • Digital Issues
    • Research & Downloads
    • Podcasts/How To Series
    • On Location
    • FAQ
    • 2022 Top 111 Chains
    • Leaders in Convenience
    • Rack Prices
    • Sponsored Content
    • Videos
    • Webinars / Digital Events
    • White Papers
  • Events
    • 2021 Chain of the Year
    • Convenience Directions
    • NAG Convenience Conference
    • Young Executive Organization
  • Join
    • National Advisory Group
    • Safe Shop Assured
    • Young Executive Organization

Boosting Energy Sales

By Howard Riell | January 12, 2012

Share

Although some c-store operators admit to being worried about regulators turning their focus toward energy products, many believe the category has at least another year of strong growth ahead.

By Howard Riell, Associate Editor.

Sales of energy shots are soaring despite the lingering recession. New products, flavors and marketing messages are making it one of the most interesting categories in the store to watch.

And in an election year, when Americans appear so evenly split on so many fundamental issues, it shouldn’t be a surprise that the newest light on the horizon making retailers sit up and take notice is relaxation shots (see sidebar).

The two-ounce energy shot segment, which provides a concentrated punch of caffeine, B vitamins and amino acids, has become the hottest drink category in the country, with sales expected to have nearly doubled in the last year to about $700 million.

The energy shot category is still dominated by 5-hour Energy, according to Tim Cote, vice president of marketing for Plaid Pantries Inc. in Beaverton, Ore. “But other brands are starting to gain some traction as the category grows. For example, in our 103 stores, Monster’s Worx brand is starting to show some numbers and various 99-cent brands are picking up more and more placement and consumer acceptance.”

Marketing will likely bring price points down to even more affordable levels. “My guess is that retail pricing in this category is going to start falling,” Cote said. “We are already seeing a significant uptick in the amount of price promotion given to the 5-hour brand in both grocery and c-stores in my market area.”

While newcomers are seeking a share of the energy category, some retailers think they are a little late to the dance.

“When it comes to energy shots, that’s a battle that has been fought and won,” said Rick Yost, operations manager for Westbrook, Maine-based Dead River Co., which recently sold its Maine c-stores to Circle K and now operates 40 retail fuel offices in Maine, Vermont, New Hampshire and Massachusetts. “5-hour Energy rules the category. Anyone trying to enter this category now has missed the boat. The other major players—Monster, Red Bull, etc.—may be behind, but they have carved out a core following.”

The only penetration that Yost and his colleagues see comes when Tweaker or Stacker runs a 99-cent promo, which helps drive sales with value customers. “As soon as their suggested retail price moves back to the $1.99–$2.99 price point, the consumer migrates back to 5-hour. It is the only item on our valuable counter space that does not deliver 50 points of margin. It is there due to the sheer volume it does,” he said.

One of the reason retailers are confident energy shots will continue to grow is the consumer base. Younger consumers are starting their day with an energy shot versus a coffee drink or even a soft drink. It seems like it’s an alternative to kick off the day.

“We are seeing some traffic throughout the day, but what I’ve seen pick up quite a bit lately is younger customers starting their day with an energy shot,” said John Zikias, vice president of marketing at Louisville, Ky.-based Thorntons Inc., which operates 166 stores throughout the Midwest.

Energy State
“The energy needs state is certainly hot,” said Gary Hemphill, managing director of Beverage Marketing Corp., a research and consulting firm based in New York City, “whether the products come in drink form or shot form. They’ve done very well, and 5-hour Energy has been far and away the number-one brand in that segment.”

Identifying the customer is, as with any product segment, crucial to successful marketing. “I think that the energy drinks skew younger,” Hemphill said. “And when I say younger I mean teens and 20-somethings, and more male than female. But the need state for energy is huge, and certainly spans more than that core target for the drinks. I think the shots skew older.”

Farmington Hill, Mich.-based Living Essentials spends much of its estimate $60-million annual marketing budget on ads targeting working adults for its 5-hour brand. Of late, the brand has been pushing its healthier aspects, such as its lack of sugar and list of vitamins and nutrients.

“Energy drinks and shots have resonated with consumers because it’s a very broad category that is in high demand,” Hemphill said. “At some point during the day virtually anyone can say that they have a need for energy. Some people will get it from coffee and others will get it from caffeinated carbonated soft drinks. But a growing number of people prefer either energy drinks or shots. That’s because the products have been formulated specifically for energy. In the cases of products like coffee or soft drinks, it’s pretty much a side benefit to the product; their reason for being isn’t specifically to provide energy.”

The expectation among Beverage Marketing Corp.’s brain trust, Hemphill said, is that the energy demand is going to continue growing whether the products come in shot form or drink form.

“Overall, when you look at the volume of categories, whether it’s drinks or shots, volumetrically it’s still relatively small. It’s when you start to look at dollars that the category becomes fairly significant, and that’s because of the price points of the products,” Hemphill said. “They’re very lucrative for everybody, whether it’s the brand owner, the distributor or the retailer. So across the board companies have been very focused on marketing the products well and getting broad distribution.”

A Shot of Relaxation

There are a handful of relaxation drinks and shots in the market, but the jury is still out as to whether the products are going to develop into a bonafide category. “The question is whether consumers want them and there is a question in terms of the efficacy of the products—that they actually do work, and relax you,” said Gary Hemphill, of Beverage Marketing Corp.

What’s happened, simply, is this: marketers have seen the untapped power of products that address energy state needs and are looking for the next functional home run. “So far they haven’t found it,” said Hemphill, “but certainly with the success of energy they will continue to look to see if they can find something that comes close to meeting that success.”

So-called Relaxation shots with names like Snoozeberry, iChill, Unwind, Dream Water, Mini Chill, Blue Cow, Koma Unwind Chillaxation and Drank—more than 350 players in all, according to some estimates—are helping to soothe shattered nerves and take the edge off of life. Some contain melatonin or valerian.

“It’s too early to tell whether this will catch on in our markets,” said John Zikias of Thornton’s Inc. “We started testing some of those, but I don’t have much information. At the NACS show this year there were quite a few of those samples, as well.”

Can the category survive this nascent period? “Consumers are always looking for something new,” Zikias concluded. “We haven’t seen any tremendous amount of sales out of it yet, but we are trying it out in a number of our stores.”

Related Articles Read More >

Choice Market Takes on Tech
7-Eleven Expands Convenience Through Tech
Samco Expands Family Business
Candy, Gum & Mints Rebound
Safe Shop Assured

CStore Decisions Newsletter

Sponsored Content

  • Create Some Positivity at the Pump: 3 Ways to Fuel Customer Experiences
  • How Minuteman Food Mart Ensures a Consistent Customer Experience Across 44 Stores
  • Three Challenges Disrupting C-Store Operations and How to Overcome Them
  • Why Wait? Converting to E15 is easy.
  • It’s time you profited from your checkout line

Get the Magazine

Subscribe Now!
Subscribe Now!

Manage Current Subscription
CStore Decisions
  • New CSD Print Subscription
  • Manage current print subscription
  • CBD Retail Trends
  • CStore Products
  • NAG Convenience Conference
  • Convenience Directions
  • Rack Prices
  • Subscribe to CSD’s E-Newsletter
  • About CStore Decisions
  • Advertise

Copyright © 2022 WTWH Media LLC. All Rights Reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of WTWH Media
Privacy Policy | Advertising | About Us

Search CStore Decisions

  • Home
  • Today on CSD
  • Categories
    • CBD
    • Foodservice
    • Fuel & Gas
    • Health & Beauty
    • Independent Operators
    • Operations & Marketing
    • Technology
  • CStore Playbooks
    • CBD Playbook
    • Foodservice Playbook
    • Technology Playbook
    • Alcoholic Beverage Playbook
    • Tobacco Playbook
  • Products
    • Hot New Products Contest
    • Beverages & Cold Vault
    • Candy, Gum & Mints
    • Snacks
    • Tobacco
  • Resources
    • Digital Issues
    • Research & Downloads
    • Podcasts/How To Series
    • On Location
    • FAQ
    • 2022 Top 111 Chains
    • Leaders in Convenience
    • Rack Prices
    • Sponsored Content
    • Videos
    • Webinars / Digital Events
    • White Papers
  • Events
    • 2021 Chain of the Year
    • Convenience Directions
    • NAG Convenience Conference
    • Young Executive Organization
  • Join
    • National Advisory Group
    • Safe Shop Assured
    • Young Executive Organization