FoodNavigator-USA was speaking to analysts from Mintel and Euromonitor following the launch of two new market entrants: Sheets Energy Strips (caffeine and vitamin-laced dissolvable energy strips backed by NBA star LeBron James) and On Point Energy (an energy shot developed by two ex-Marines).
Euromonitor: Energy shots can capture ‘office audience’
While Red Bull’s recent decision to exit the $1bn+ market had been seen by some as a sign that the shot market was cooling, it was more a reflection that the energy drinks and shots markets were distinct, and that success in one did not guarantee success in the other, claimed Richard Haffner, drinks analyst at Euromonitor.
He added: “Energy drinks and shots are appealing to different groups. Energy drinks are about rebelliousness, and are associated with extreme sports, young people, and young men in particular. They are all about a social scene.
“Shots appeal to a wider group including older people, women and professionals, the office audience, and are not about being rebellious, but conformity: staying alert, working harder. Drinking one is not a social activity; it’s more of a solitary thing to keep you going.”
He added: “It hasn’t worked very well the other way around, but if the makers of shots could work out how to appeal to energy drink users too, that would really boost sales.”
There is room for new entrants
While cynics might argue that Sheets – the dissolvable energy strips plugged by LeBron James - were just an expensive way to get daily B vitamins and lacked the other ‘energizing’ ingredients contained in most energy shots, they had the advantage of being portable, convenient and new, he said.
“I can see this kind of product being successful, as long as it delivers what it says it will deliver. The fact that they have a different formula to energy shots could be a point of difference.”
Conversely, while the formula of On Point Energy was similar to that of market leader 5-hour-energy, its distinct packaging and focus on appealing to the military or people supporting the military – along with its charitable aims – gave it a real point of difference in the market, he said.
“I think there would have been a market for Cram [the energy shot the On Point Energy team was originally planning to launch for college students] but I think it would have been more of a niche product.”
Mintel: Shots have more universal appeal
Garima Goel Lal, senior analyst at Mintel, said that growth in the US energy shots market had slowed a little during the recession, but the market was still exhibiting very robust growth.
“Energy shots have potentially more of a universal appeal than energy drinks, which are typically aimed at 18-34-year-olds. We’re seeing that 55+ year olds are buying energy shots.”
If firms could come up with new formats – sheets, gums, chews and so on – they could also capture the more price sensitive consumer, she added.
“Livewire Energy (energy chews) is trying to tap into this, and it has good distribution in convenience stores.”
Meanwhile, the growth of private label energy shots suggested that some consumers were prepared to switch to cheaper products as long as they contained the same ingredients, she said.
Suppliers must address safety concerns
But if energy shots were to realize their full potential, firms had to win consumers’ trust, and those trying to appeal to a more conservative audience needed to address concerns about safety as well as promoting the drinks as more natural/less sugary than some energy drinks, she said.
While energy shots are dietary supplements – and include recommended dosages on pack – they are frequently stocked on the counter at retail outlets rather than in the dietary supplements fixture, prompting some critics to argue they are being marketed as conventional foods/drinks, and that consumers might ‘overdose’ on caffeine and vitamins.
In a recent conference call with analysts, Rodney Sacks, chief executive of Worx Energy shot maker Hansen Natural Corporation, said sales of energy drinks and shots combined were up 15.8% in the 13 weeks to June 25, according to Nielsen data.
Sales of 5-Hour –Energy were up 33.4% over the same period, he said.