Energy is a category with a ballsy edge: you only have to look at some of the macho brand names Relentless, Red Bull, Extreme, Monster and their packaging to see that they appeal, in particular, to young men; therefore a perfect product for forecourts.
The major players all claim special positions in the market. Red Bull claims the number one functional energy drink position and Lucozade claims pride of place as the nation’s favourite sports and energy drink, while challenger brands Relentless and Rockstar are claiming fastest growth.
What they all agree on is a bright future. Market research company Mintel forecasts that by 2018, sports and energy drinks will have grown by 37% in value and 30% in volume terms against 2013, reaching an estimated £2bn and 891 million litres respectively; although the pace of growth has slowed mainly as a result of the weaker performance of sports drinks. So, energy is where it’s at.
But this is also a crowded category with literally hundreds of SKUs to consider and with so much on-shelf ’shouting’ going on via vibrant, look-at-me packaging, it is no wonder retailers can end up confused about the marketing mix they should go for. Energy drinks, adds Mintel, continue to dominate new product development with low-calorie varieties making gains, as it were, and innovation in flavours, like berry, launched to widen the appeal beyond young men. The more the merrier then but still, a very busy party.
Consider the source
Stop anyone in the street, even an ’oldie’, and ask them to name an energy drink and Red Bull will be on their lips.
As this is being written (mid February) Red Bull is about to launch a zero calories drink (also zero carbs and zero sugar). Actually it contains 1.8 calories per 100ml but under Euro regulations a drink can be labelled ’zero’ if it contains no more than four calories per 100ml.
As you might expect, Red Bull, leading the functional segment, is keen to point out that this is the bit that is driving all the growth."But the functional category is changing," says Gavin Lissimore, Red Bull head of category marketing. "Flavours now account for one quarter of all the value sales of functional in independents".
The Lucozade brand, now in the hands of Lucozade Ribena Suntory, has got into the carnival spirit with the launch of new Lucozade Sport Brazilian guava flavour and new Lucozade Energy ’The Brazilian’ (mango & mandarin flavour). David Stratton, brand development director Lucozade, says: "Limited editions are great at attracting new users and delivering incremental sales to the sports and energy category. With 63% of Britons expecting to increase their leisure spending as a consequence of the 2014 FIFA World Cup Brazil, we are confident our Brazilian-inspired variants will drive further category growth."
The new launches will feature in the upcoming £12m Lucozade marketing campaign including TV, sponsorship and in-store support.
Some of the marketing support has been as innovative as the brands. Last September, for example, Britvic’s Mountain Dew teamed up with Microsoft in an on-pack promotion offering consumers the chance to win a new Xbox One, which was billed as the most eagerly awaited entertainment product of 2013. At the same time, the company reintroduced its limited-edition Game Fuel variant. This was directly aimed at the core: 16-24 year old males.
In the Extreme
Vimto, a brand more associated with the more sedate cordial, squash and soft drinks market, was awarded the licence to produce sports and energy drinks under the Extreme brand by the Extreme Sports Company last July.
Extreme Energy is a carbonated stimulation drink, packaged in a black bottle containing caffeine, taurine, glucosamine and vitamins whereas Extreme Sport is a still tropical-flavoured drink. It is claimed as the only action sports-focused isotonic sports drink on the market and contains glucose and dextrose to replenish lost fluids and carbohydrate stores during and post exertion.
An established and influential brand with a global presence, Extreme dates back to the introduction of the Extreme Sports Channel in 1999, which remains the world’s leading 24/7 TV channel dedicated to extreme sports and the associated lifestyle. Its success has been down to the brand’s ability to recognise and cater for the emerging youth culture surrounding extreme sports. The TV channel reaches 26.1 million consumers each month and research has found 66% of the new drink’s target audience currently watch it.
Emma Hunt, Vimto Soft Drinks marketing manager, adds: "There has also been a significant rise in 18-34 year olds participating in extreme sports, more than any other group of outdoor sports. Therefore, there has been a rise in demand for sports drinks from this audience."
As of January, a £1 price-marked pack (PMP) was launched for the Extreme energy and sports range into the convenience channel, to help boost sales at a time of year when consumers are likely to be strapped for cash.
The launch was supported by a van sales distribution drive and in-depot activity where all displays were fully dressed with point of sale.
The £1 PMP will be available in convenience throughout this month and again at key seasonal trading periods throughout the year.
The driving range
With energy drinks representing 42% of soft drinks sales within forecourts, getting the offering right is critical says Rockstar manufacturer, A G Barr.
"The energy category continues to drive the soft drinks market," says Adrian Troy, head of marketing. "Energy is now worth over £1bn and is growing at 5%, ahead of the soft drinks market."
He says that energy drinks are a must-stock for forecourts, catering to the requirements of drivers looking to help maintain concentration levels on long journeys. "It is essential that forecourt retailers give enough space to the overall energy category and also to the sub-segments which are catering for the ever-changing needs of UK shoppers."
He adds: "There are three key trends which forecourt retailers need to take into account when ranging their energy fixture." These are NPD, the growth of low calorie and value. Get these three right and you will be quids in.
Big-can energy has grown by over 20% by value but the key trend is the development of flavours. In the 500ml big-can format, flavours are fuelling market growth at +48% by value. Four of the top five fastest-selling big can flavours are Rockstar flavours (xdurance, punched guava, bubbleburst and punched fruit punch), says Troy.
Rockstar SuperSours, launched last year, has already delivered over £12m of sales. The company is also tapping into the demand for low sugar with Rockstar pure zero, a new flavoured zero sugar big can drink.
"Low calorie variants are growing at +17% year-on-year," says Troy. "The low- calorie energy market is currently worth £43m and is estimated to grow to £200m over the next five years. However, there is currently little consumer choice. The launch of Rockstar pure zero will fill a genuine need in the market and forecourt retailers should stock up to keep their energy sales soaring in 2014."
On his third point, value, Troy says that price-marked packs currently make up 29% of all impulse energy sales and drove 53% of impulse energy growth in 2013.
All of Rockstar’s popular big-can flavours are available in 99p PMPs throughout the year, offering a clear profit opportunity for forecourt retailers.
It’s a relentless line-up
Coca-Cola Enterprises (CCE) is updating its Relentless energy drink range (now worth £56m), adding a new cherry variant, to replace berry from the end of the month, and relaunching its sugar-free alternative to grow the brand further in 2014.
The sugar-free variant is relaunched as Relentless origin ultra with refreshed packaging in a strong silver and white design, targeting 18-30 year-olds.
Caroline Cater, operational marketing director at CCE, says: "The new cherry variant has received positive feedback when tested by consumers and we expect it to perform well once introduced to the established Relentless range."
Both new products will be available in 500ml plain cans with a recommended retail price (rrp) of £1.39 as well as in £1 PMPs.
The milk with more
Sometimes the tongue-tingling energy stuff isn’t everyone’s cup of tea. There is another way.
The Nurishment brand, the UK’s best-selling nutritionally enriched milk drink, supplies consumers with much of the day-to-day goodness they need, including vitamins, minerals, calcium and as much as 20g of protein per pack.
"Growing consumer demand for functional drinks presents a clear opportunity for forecourt retailers to generate additional profits," says Nyree Chambers, head of marketing at Enco Products, manufacturer of Nurishment.
"As consumers’ lives become more hectic, they’re looking for more than just great taste from their food and drink they’re also looking for products that will help to take care of their bodies.
"Nurishment meets this demand by helping to replenish, through its exclusive mix of vitamins and minerals, consumers’ lost energy, especially when they don’t have time to stop."
The range is available in numerous formats. In addition to Nurishment Original cans, Nurishment Extra in a 310ml PET format is described as ideal for drinking on the move.
Devoted to you
Boost Drinks says it is enjoying fantastic growth in both sales and market share in the independent sector; just rewards for being the only brand devoted to indies.
Recent numbers from SalesOut MAT volume data, which condensed epos information from over 100,000 retail purchase points showed that, where the core Boost range is stocked, it is the number two energy brand.
As this sample does not include the multiples, it is therefore a much more accurate view of the category for Forecourt Trader readers, says Boost managing director Simon Gray.
He is pleased with the brand’s growth: "There has been a strong performance by the core energy range, which is clearly seen as fantastic value by the consumer while yielding a strong margin for the retailer. This year I am expecting to see increased demand for the 1ltr PET bottle which I feel has great potential to grow in off licences, for example, as part of a take-home offering."
Last year saw the launch of Boost’s biggest trade campaign to date Champion of the Independents which was designed to raise awareness that Boost is the only brand dedicated to the independent retail sector. The campaign will continue in 2014.
As well as being the only brand totally focused on the independent retail sector, Boost is also the only brand that covers all three sectors of sports and energy drinks stimulation energy, glucose and sports/isotonic including both plain and PMPs.
This year will see many more promotions, point-of-sale and launches to ensure the brand maintains its position as number two functional energy drinks brand within the impulse channel.
This will include specific activity for both trade and consumer audiences.
Simon Gray concludes: "Boost is now considered a valued brand, not just a value brand, and we will continue to maintain this by offering great-tasting products at great prices."
Case for own label
As well as all those ’monster’ brands, there are a number of own label and secondary brands fighting for space.
"While it is great to offer variety to customers, in many cases this is just not possible as shelf space is at a premium," says Nick Brown, category manager, own label for Bestway Cash & Carry group.
He advises: "Look at format size. Instead of stocking four or five 250ml SKUs, look at reducing this and introduce larger formats, such as a 440ml can or resealable 500ml bottle, as these are growing pack sizes in the market. Each brand has to earn its space so only stock the best sellers and include an own label, such as Best-in, as many consumers are looking for value especially in the current climate.
"Best-in Stimulation drink outsells Coca Cola 330ml can within Bestway and Batleys, so is a proven best seller."
The margins for stimulation and isotonic drinks range between 30-50% profit on return so have parity with soft drinks as a whole. "This allows retailers the opportunity to either sell at RRP or pricemark and make a healthy margin, or promote as a multibuy or snack/meal deal for increased cash," says Brown.
"The 250ml has always been the key SKU but larger formats are the growth drivers," he adds. "Within Bestway, energy and stimulation drinks are in double-digit growth and although 250ml accounts for the majority of stimulation sales, larger formats are experiencing triple-digit growth with Relentless and Rockstar flavours doing particularly well."
Finally, Mintel’s latest report issued in July 2013 says the market peaked in 2011 but could and should do better.
"There remains unmet demand in terms of packaging variety, with more than half of users reporting that there should be more convenient formats," says Heidi Lanschützer, food and drink analyst. "Women are significantly more likely than men to hold this view," she adds, "suggesting that NPD in the area of portability may help to increase the appeal of energy and sports drinks among females."
Nemal Shanmuganathan, Shans Group, Midlands
Nemal Shanmuganathan, a forecourt trader from the Midlands, strongly recommends stocking Boost. Sales of energy drinks have been growing steadily by around 12% year on year across his five retail outlets and, of that, Boost is the second-best seller with a 40% share.
Nemal says: "For us, the energy drinks sector is particularly important as we have seen it grow more than any other part of the soft drinks category."
Shans Group has three forecourts and two convenience stores in the Birmingham and Coventry area.
Nemal has run the forecourts for over 15 years, while the convenience stores are a relatively new venture and something he is keen to grow in the future.
While purchasing Boost products from wholesalers, Palmer & Harvey, Nemal also works very closely with the company’s sales team.
"As a supplier I’d rate Boost really well. In the short time we’ve been working with them, the experience has been good and we get good profit margins on their products, better than every other energy brand to be honest.
"Across the board, the lltr bottles are our best sellers in the Boost range. Consumers love the value, and they give us the best profit margin. Boost is our second best-selling energy drinks brand and third best out of all soft drinks. In our forecourts, 500ml bottles are also very popular, especially for those on the go."
Past and present
The most famous soft drink of all time was originally marketed as an energy booster. Coca-Cola was named for its two stimulating ingredients: coca leaves and kola nuts (caffeine).
In the UK, Lucozade was introduced in 1929 as "a hospital drink for aiding the recovery" according to Wikipedia.
Moving to the present day, Key Note’s 2014 market update, Fruit Juices, Energy & Juice Drinks is wittily headed: "Energy drinks take zest from juices and dilute the squash category".
It points to energy drinks as particularly resilient, displaying outstanding growth despite a challenging economic context and mounting concerns regarding the health implications of regular consumption. The category has edged market share from its rivals in the juices and juice drinks categories, finishing 2013 with command of over 30% of the market.
Globally there has been a bit of a downside with some of these types of drinks being banned in some parts of the world, and requiring warning labels and age restrictions in others.
It cannot be denied that there has been adverse publicity both here and abroad for these ’stimulating’ drinks due to their caffeine and sugar content (although it must be said, not as adverse as the publicity over other c-store staples: alcohol and tobacco). So, it must be said, forecourts sell what people want.
Vimto Soft Drinks category manager, Paul Johnson, shares some sales tips:
Sports and energy is the largest soft drinks category within impulse so allocate enough space for your range in store.
Merchandise similar products together.
Stock brands that stand out on-shelf to appeal to the target market and use any point-of- sale material to grab shoppers’ attention to the range.
Place enough energy and sports drinks in the chiller as there’s likely to be high demand for a cold, ready-to-drink offering from shoppers in this category.
Try to avoid stocking too many ’me too’ brands and look for a selection that meets demands for different target markets.
Look for well-supported brands with promotions or price-marked packs to drive impulse sales.
Andrew Aitchken, who has two forecourts in Scotland, says:
"We sell a dozen cases (x 24 cans) of energy drinks a week in our two service stations By-Pass in Haddington and Rigg in Dunbar. And that is in tiny shops.
"They’re a tremendous seller. It’s every day, every week. We sell four to six cases of Red Bull and over half a dozen cases of others: 30 different varieties in total.
"Our prices are competitive and the products pull in around 25% profit on return."