beverage REPORT part 2 Retailers seek merchandising strategies for hopped-up energy category By Jerry Soverinsky t’s just past midnight on an unsea- young clerk, noticing the three energy takes a swig and heads back out into sonably warm December Chicago drinks that the man has placed on his the night. night. The hip Lakeview neighbor- counter. It’s a repeated theme, but not just hood, just blocks from Wrigley “Busy night,”the driver replies as he with taxi drivers. With bar patrons. IField,is alive with activity.I wander finishes his purchase, opens a drink, Couples returning from dates. Stu- into a convenience store, pay for a dents. They’re buying energy large coffee and grab a stool by the drinks. Maybe not as much as window to watch a kaleidoscope of THE they’re buying soda, beef jerky and activity unfold before my eyes. To BOTTOM LINE M&M’s, but enough so that I self- appreciate Chicago’sdiversity,there’s Energy-drink sales have spiked over the past consciously look at my black, no better perch. five years, prompting a recent Packaged Facts decaffeinated coffee and suddenly Several taxis are in line outside to report to predict the beverage segment will feel old and out of touch (kind of access the gasoline pumps. Business continue to grow annually at 12% with total like when my niece mentions Face- isheavy tonight,andthebanterinside sales, topping $9 billion by 2011—a whopping book or Mischa Barton). the store remains loud and constant. 650% increase from the category’s $1.2 billion “On a busy night, a Saturday A 30-something man files out of in sales in 2002. night for sure, we’re selling tons of his muddied yellow taxicab and Many experts suggest allotting one cooler Red Bull,”says the c-store’s night entersthestore.He’sbeenherebefore, door for energy drinks and to place it next to clerk, who prefers not to be identi- it seems; he heads directly to a refrig- sports drinks. Others recommend grouping fied. “The bars, they bring a lot of erator in the rear,retrieves a few specific energy SKUs by target audience: the business. But [nonweekend] drinks and hands them to the cashier. supercaffeine, health/wellness, sports. nights, still, we’re always selling “Busy night, huh?” remarks the [energy drinks]. Teenagers, drivers. M a r c h 2 0 0 8 CSP 55 beverage REPORT part 2 Very popular.” that will top $9 billion by 2011, a phe- Hemphill, managing director of Bev- It’s a buying pattern that affects nomenal 650% increase from the cat- erage Marketing Corp., New York.“As more than just this eclectic North Side egory’s $1.2 billion in sales in 2002. such, it’s vitally important that opera- store.Energy-drink purchases are grow- These impressive numbers and con- tors give this category its due with ing exponentially across the country, sumer preferences will play a signifi- ample shelf space and high visibility at and retailers are scrambling to sort out cant role in buying and retailing multiple locations. ... Finding the the best strategies for leveraging the cat- decisions. For with this exponential proper store location and space allot- egory’s popularity. growth has come an onslaught of ment is therefore key.” energy-drink suppliers,all eager to ride How many energy drinks should Positioning + Location the consumption craze. retailers stock and where should they A recent Packaged Facts report pre- “C-stores are the single biggest put it? While the specifics are unique dicted that energy drinks will distribution channel for to property and location,there are uni- grow annually at 12% with sales energy drinks,”says Gary versal strategies to consider. PERSONAL IMMERSION ’ve never been one to follow popular fads, and so this sudden Iobsession with “energy drinks”—drinking to fuel the body, maintaining efficient metabolic something or other ... well, blah, blah, blah. It all seems just a bit too commercial for me. And their ingredients? I mean: Caffeine? Taurine? Guarana? Don’t try to sell me. I’m a busy adult, I can barely make time to watch four hours of television each night. How do you expect me to sift through the reams of scientific data differentiating between ginkgo biloba and L-carnitine? Whatever happened to just good ol’ high fructose corn syrup? But now I’m dating myself, huh? And so, in an effort to jump full-throttle into the energy-drink phenomenon and finally understand all of the hoopla, I embarked recently on an ambitious consumption experiment: I would attempt to sit comfortably (and passively) on a couch, watching C-SPAN2 in my climate-controlled Chicago apartment while drinking only energy drinks. Would they elevate my alertness? My stamina? My sanity? Here’s what I discovered. There’s a presentation of a 2008 budget issue by an Iowa congressman, so I begin by downing two Red Bulls and a Monster. I smile as I lick the ginseng from my lips; both drinks taste surprisingly good. I check the nutrition information, and I feel reassured when I see B12. (I remember seeing that listed on my Frosted Flakes box, too.) I hear the phrase “fiscally prudent middle class” and reach for a second Monster. 56 CSP M a r c h 2 0 0 8 First, by “store location,”Hemphill that, breaking the category down by caffeine, for women, health/wellness, is referring to where retailers position major-brand attributes seems to be the sports/activity related, ethnically tar- energy drinks within their stores,a mat- suggested strategy. geted: Placing like brands together may “Positioning energy drinks make it easier for customer purchases.” “Energy drinks may become the near carbonated beverages and sports drinks may make the most Space Allotment daily vitamin of choice.” sense,” says Cara Morrison, Bevology president Tom Hicks, whose CARA MORRISON founder of Cogitamus Consult- San Francisco-based company pro- Cogitamus Consulting ing and author of the Packaged duces SuperFly and Zenergize energy- Facts report“Energy Drinks in the drink tabs, agrees with the brand ter of determining appropriate adja- U.S.”“What may be most important is attribute-grouping strategy; he recom- cencies, a retailing decision that directly the positioning of brands within the mends placing energy drinks near affects consumer engagement.And for energy-drink cooler spaceitself....Super- sports drinks. However,he stresses that Despite the early hour, I’m surprisingly alert. I hear a bird chirping from What is with my searing abdominal pain? I reach for another Red Bull— outside. I count 37 chirps over a two-minute period while a promo runs my 11th for the day—downing half the can before executing a double for Book TV. backflip and half-Tsukahara on a makeshift vault that I spontaneously build out of dirty socks. Holy cow, it’s difficult sitting still. Not sure how much the segment “Improving Electronic Government” is contributing to my restlessness. I reach for a Full Throttle, and it immediately hits the spot. I begin whistling “Question Time” at the British House of Commons—finally. And it’s all an obscure country-music tune, sobbing uncontrollably. commercial-free! There’sa clip of Gordon Brown. I laugh uncontrollably when I see that they’ve fonted his title as “Labour Prime Minister.” “There’sno ‘u’ in ‘labor’!!!” I scream at my television, without response. I’m digging my newfound heart arrhythmia and flip the channel to Frustrated and without any feeling in my forehead, I race outside and C-SPAN2 Espanol. I understand everything, despite never having studied run a respectable 10K while pulling a 2004 Fiat. Spanish. I take a swig of Amp and then mute the TV’s sound entirely, supplying my own voice track to a piece that features presenters from the Woodrow Wilson International Center for Scholars. I’m definitely plugged in! With some assistance from my girlfriend, who handcuffs me to my bedpost (noideawhereshegotthose—wink-wink),I’mreadyforbed.Myexperiment complete, I drink a glass of water,though I don’t feel tired. I break free from My restlessness is overwhelming, and even a speech by the Department the nickel-plated cuffs and rush out onto to the wintry Chicago streets, of Homeland Security’s Michael Chertoff can’t motivate me to focus. I though what happened immediately after that is still a bit hazy. pause when my third-grade teacher enters the room, holding a sign that I awake four days later and discover I’m in a southeastern Dominican reads, “Did you return your hall pass?” I always had a crush on Ms. Republic resort, wearing SPF 50 clothing and mumbling something about Mattheson, so I’m pleased when she seems attentive as I offer her a sip needing to make a la carte restaurant reservations. I head to the bathroom, of XS (I’m on my third). She giggles before whispering, “You were always rubbing the sleep from my eyes, and admire the healthy tan that I’ve good at phonics.” As I lean forward to kiss her, I realize that I’m French- somehow acquired. I nod my head, approvingly. Yes, people really are on kissing my high-def Vizio. My heart is pounding. I must really be tosomething,Ithink.I’mfinallyunderstandingthewholeenergy-drinkcraze. embarrassed. Next up: Rock Star. I head to the resort’s copious buffet in search of a Red Bull. M a r c h 2 0 0 8 CSP 57 beverage REPORT part 2 store positioning alone is not enough. about seven shelves per door, we ded- says Hemphill of Beverage Market- How much space to allot the category icate four shelves to energy drinks— ing.