Carl Sperber, creative director for Living Essentials, has at least one theory for why his company's 5-Hour Energy shots have gained a foothold in the competitive energy drink segment.
Its tiny 2-ounce bottles are marketed with a straight-forward pitch designed to reach adults, Sperber said. The broader energy drink market, led by the likes of Red Bull, Monster, Rockstar and AMP, takes a different approach, he said.
"If you look at the canned energy drink array out there, if you look at the names, if you look at the graphics on the cans, it's obvious who they have in mind for this — teenage boys," Sperber said. "I have teenage boys at home, and they're the last people on Earth who need more energy."
Since its launch in 2004, 5-Hour has carved out a niche in the energy drink market that's added a new twist to the segment and attracted plenty of competition from bigger players.
These shots, sold in 2- or 3-ounce capsules depending on the brand, pack about the same punch as larger canned energy drinks, which are usually 8 or 12 ounces.
For the 12 weeks through mid-May, 5-Hour Energy accounted for 9 percent of energy drink sales at convenience stores, according to Beverage Digest, a New York-based trade publication. That placed it behind only larger canned versions of Red Bull and Monster Energy and well ahead of any other energy shot.
Other major players are moving in. Red Bull recently launched an energy shot. NOS, a Coke brand, has a shot and Monster, distributed by Coke, has a smaller version called Hitman.
Pepsi's AMP brand has an energy shot. It also has a distribution deal with Rockstar, a major energy drink company with a shot.
These shots enter a growing market for energy drinks, said John Sicher, editor and publisher of Beverage Digest. Sales volume for energy drinks grew 4 percent last year.
"The energy shots appeal to people who want the energy function but not to have to drink 8 ounces or 16 ounces of liquid," said Sicher said. "As people become more and more aware of energy drinks, I think a bigger and bigger subset of consumers will find the energy shots interesting."
Energy shots are the second major product for Living Essentials, based in Farmington Hills, Mich. In 2001, a year after it was founded, Living Essentials launched Chaser, a pill the company says can help prevent hangovers.
Living Essentials still markets Chaser, but 5-Hour Energy, developed a few years later, accounts for most of its business, said Sperber, who joined the company eight years ago.
5-Hour was designed to address what Living Essentials thought were weaknesses in the energy drink market, Sperber said.
Most energy drinks come in large cans, taking up space in store coolers and requiring someone to consume lots of liquid for their boost, he said. Many also have large amounts of sugar.
5-Hour is small, sugar-free and doesn't have to be chilled, making it an attractive impulse item for check-out lines. A single unit is sold for about $3.
After an initial market test in 2004 at GNC stores, 5-Hour has spread quickly to other outlets, including Wal-Mart, Sperber said. It recently added a 24-pack designed for warehouse stores Costco, BJ's and Sam's Club.
5-Hour is not concerned about competitors, Sperber said. It's built a sizable lead and continues to differentiate the brand with a no-nonsense pitch based on the function of the product, he said.
5-Hour's biggest challenge is getting more people to try the product, Sperber said. Some people are wary it will make them feel jittery and wired, he said.
5-Hour, which comes in original, extra strength and decaf, is regulated by the FDA as a dietary supplement. The original contains B-vitamins and about as much caffeine as a cup of coffee.
"We feel there's a lot of people who know about the product but haven't tried it yet," Sperber said.
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