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Xtreme Energy


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A slideshow presentation summarizing a situation analysis of the energy drink market

A slideshow presentation summarizing a situation analysis of the energy drink market

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  • 1. Ben Carter
    Bridget Conrad
    Shannon Durkin
    Mike Daugherty
  • 2. Beginnings of the Industry
    Started in the 1980’s with Jolt Cola
    In 1995 PepsiCo launched it’s cola brand, Josta
    2001 was the inaugural year for brands as we know them today: 8 million in sales
  • 3. Industry Characteristics
    The main point of purchase is at convenience stores
    Other stores are beginning to see increasing sales due to bulk purchase options, which are cheaper for the consumer
    Mintel, 2008
  • 4. Growth
    Between 2003-2008 the sector has seen a 36 percent increase in growth
    Energy drink users are up 17 million since 2008
    Mintel, 2008
  • 5. Trends
    New business, hence no new trends
    Heaviest trend is in the public concern over the heavy usage of energy drinks by teenagers
    Mintel, 2008
  • 6. Brands
    The business is mostly dominated by smaller companies
    Coke and Pepsi have not been able to over take (or even catch up to) the market leaders
    Shocking considering Coca-Cola and Pepsi’s strengths as companies
    Mintel, 2008
  • 7. Leading Brands
    Red Bull
    PepsiCo’s Amp
  • 8. Age Demographics
    Adults 18-24 and 25-34 make up 57% of the energy drink market (Mintel, 2008)
    According to Mediamark (2008) there is a 29.7% penetration in the adults 18-34 market
  • 9. Gender Demographics
    The number of female energy drink users grew by 74% between 2003-2008 (Mintel, 2008)
    The penetration in the market of women is 22.5% (Mediamark, 2008)
  • 10. Ethnic Demographics
    Blacks and Hispanics accounted for 41% of total energy drink consumption in 2008
    One out of two (47%) Hispanic teenagers will consume energy drinks
    Mintel, 2008
  • 11. Sales
    Red Bull has a low market penetration among teens, despite a high preference for it, probably because of the high price
    Mintel, 2008
  • 12. Usage
    Hispanics are most likely to use energy drinks to awake
    Energy drinks are most often used in the late afternoon, but 38% of users also drink in the morning
    Mintel, 2008
  • 13. Usage
    Mintel, 2008
  • 14. Buying Patterns and Frequency of Use
    From 2003-2008 energy drink consumption increased by 21% (that’s 10 full glasses/user)
    Hispanics and blacks are ethnically the most frequent users of energy drinks
    Mintel, 2008
  • 15. Competition
    Primary Competition
    Secondary Competition
  • 16. Competition
    Product Positioning
    Pricing Strategies
    Sales Force
  • 17. Distribution
    Strengths and Weaknesses
    Opportunities and Threats
  • 18. Pricing Policies
    Mintel, 2008
  • 19. Pricing Policies
    Since 2002, energy drinks prices have fallen 32%
    Adoption of energy drinks in supermarkets and wholesale discount clubs
    Developing single serve multi-packs, and larger cans
    Mintel, 2008
  • 20. Pricing Policies
    Even with the 32% pricing decrease energy drinks are still considered very pricey in the non-alcoholic beverage category.
    Rank 2nd in price behind Ready to Drink (RTD) coffees
    Number one obstacle in obtaining new-users
    Mintel, 2008
  • 21. Pricing Policies
    Mintel, 2008
  • 22. Communication & Promotions Strategy
    The energy drink industry has always been one heavily focused on the alternative audience
    Alternative, or extreme sports
    Red Bull racing, Dale Earnhardt #88 Amp Chevrolet, Monster Army
    (Mintel, 2008)
    Alternative lifestyles
    7 Eleven stores featured Inked energy drink, specifically targeted to persons with tattoos
    New Zealand Herald, 2007
  • 23. Communications & Promotions Strategy
    You won’t find energy drink companies producing spots for the super bowl
    The big competitors choose to steer clear of the “corporate” norms
    Prefer fast and original, a reflection of their key users
    Racy slogans and campaigns, and an association with extreme sport
    Mintel, 2008
  • 24. Communication & Promotions Strategy
    Energy drinks are heavily centered and associated with the action and extreme sports industry
    Sponsor numerous
    extreme athletes, teams,
    and events
    Red Bull New Years Eve, No Limits- 12.31.2008
  • 25. Communication & Promotions Strategy
    Rather choose a lighter approach, preferring edgy humor to explain their products benefits
    Red Bull: uses humor-generating animated sketches convey their promotional messages
    Amp: uses similar racy humor, in a effort to reach the “Everyday Man”
    College Student demographic
    46-64 demographic
    Red Bull Commercial
    Mintel, 2008
  • 26. Communication & Promotions Strategy
    Another key part aspect of energy drink promotions are the use of Guerilla and
    Grass Roots marketing.
    companies employ numerous street teams who trek all over the country, setting up shop at extreme sports venues, college campuses & spring break destinations.
  • 27. Environmental and Social Factors
    A primary issue facing the energy drink industry is the concerns about health risks associated with the extremely high levels of caffeine found in them
    It is easily available to highly impressionable children, who are not educated about the potential dangers of energy drinks
  • 28. Environmental and Social Factors
    Energy drinks give their “boost” from the extreme amounts of caffeine contained in them
    A standard Red Bull(8.4oz), for example, contains 80mg of caffeine, three times the amount of a 12 oz Classic Coca-Cola
    Others contain considerably higher levels
  • 29. Environmental and Social Factors
    Extreme Caffeine
    Wired X505 24oz and Fixx 20oz, contain 505 and 500mg of caffeine respectively.
    That amounts to upwards of 250mg of caffeine per 12oz, compared to the 34.5mg per Classic Coke
    Consuming one can of either of these beverages equates to the equivalent of drinking 14 Coca-Colas, 12 Pepsis, or 9 Mountain Dews
  • 30. Environmental and Social Factors
    In October, 2008, 100 scientists and physicians sent a letter to the FDA asking for additional regulation in the energy drink industry, on the basis that it puts its young consumers at risk of caffeine intoxication
    They requested that energy drinks list their caffeine contents on the can, set a limit to the amount of stimulant found in the drink, and require warning labels
    USA Today, 2008
  • 31. Environmental and Social Factors
    Case in Point: Prince Edward Island, September, 2008
    The island lifted a 25-year ban on canned beverages and found that without the ban young students began bringing energy drinks to school. Teachers reported problems with students becoming suddenly hyperactive, followed by a lethargic crash, commonly known as the caffeine high and crash.
    Banned at Souris Regional High
    Doctors and physicians share the opinions of the
    teachers and administrators
    Called for a restriction of sales at grocery stores to youths under the age of 18. They equate energy drinks to the likes of tobacco and cigarettes
    There is also concern that the long-term effects of energy drinks have not been thoroughly researched.
    The Toronto Sun, 2008
  • 32. SWOT
    STRENGTH: Energy drinks provide a energy boost without the crash
    WEAKNESS: They are too expensive
    OPPORTUNITY: Juice flavored energy drinks would appeal to both Hispanic users, and morning users
    THREAT: Heavy and irresponsible use by teenagers may lead to laws restricting their sales to anyone under 18
  • 33. Questions?