The popularity of energy shots is in a precarious position.
For consumers who wanted an energy boost without having to down a lot of liquid, energy shots proved an enormously popular alternative for a few years.
For some retailers, the category still is popular.
“In 2015, it was a good category,” said Gary Tabor, marketing and sales manager for Jay Petroleum Inc. in Portland, Ind., which operates 35 Pak-A-Sak convenience stores. “I think we were up about 4.5%, so I’m pretty happy about that.”
In the 52 weeks ending Dec. 27, 2015, energy shot sales in c-stores rose 3.5% to almost $799 million, according to IRI. Unit sales in the category were up 4% over last year. As in previous years, 5-hour Energy dominated the market in 2015, accounting for nearly 94% of total c-store sales.
While many other players have attempted to elbow their way into the energy shot category and thus onto convenience store counters, few have made significant inroads, for two good reasons: brand power and price.
“There are a lot of upstarts, and of course there are some 99-cent options coming out there,” Tabor said. “We stay away from them just because we don’t want to bring the market basket down. I’ve got a good thing going with 5-hour; I don’t want to trade my consumer down.”
“5-hour Energy owns the marketing spend in the category,” said Ryan Mathews, founder and CEO of Detroit, Mich.-based Black Monk Consulting.
Even with its top market position, 5-hour Energy has been inclined to launch new promotions and new flavors, including limeade, because of declining sales the last few years.
Of course, c-stores are adept at launching their own energy shot promotions.
Putting energy shots in front of consumers’ eyes is standard practice for good reason, Mathews added. “At best, it’s probably more of an impulse buy so, like all impulse buys, it should be featured at the register.”
Pak-A-Sak’s strategy is that the best place to merchandise energy shots is right up at the cash register. In fact, they have set a policy in place to ensure it, according to Tabor. “To ensure the pull all the time, on our inspection form that’s one of the issues we look at in stores, to make sure that rack is always full.”
“Create a display at your counter with both sleep and energy products side by side,” said Bob Phibbs, a retail consultant based in Coxsackie, N.Y. “Usually people who need one can use the other. Add a sign—something like, ‘We got you covered.’”
Similar to other c-store operators, Pak-A-Sak doesn’t foresee any significant changes in the way it approaches the category in 2016.
“I don’t think you could do a whole lot more than keeping them at the primary register, keeping it full and attractive looking. That’s the best you can do. We strongly rely on 5-hour Energy, and we work through their promotional schedule,” Tabor said. “Promotional activity helps a little bit.”
Energy shots are still popular with baby boomers, Tabor explained.“We’re seeing 40- and 50-year-old men getting those. In fact, I think I read a couple of years back that 5-hour Energy’s biggest consumer was men over 50. It seemed really odd to me, but if I think about it, it really does fall in line.”
For more on the latest trends and innovations in 38 key c-store categories, check out Convenience Store Decisions‘ March Category Management Outlook issue.