Red Bull Summit Details State of Energy Drinks

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Red Bull Summit Details State of Energy Drinks

By Angela Hanson, Convenience Store News - 01/28/2013

MINNEAPOLIS -- Red Bull offered an in-depth look into the state of the energy drink market during its 2013 Energy Summit, held here on Friday. Presentations on market research and the evolution of energy drinks delivered a number of insights for retailers and marketers looking to increase their sales of energy products.

Among the goals of the daylong event were to explore drivers for category growth and future potential; provide category insights; and share development, trends and performances. Stan Madrid, Red Bull’s director of marketing, provided a 2012 year in review and discussed the company’s goal to become a "lifestyle brand." Rather than simply be known as a supplier of energy drinks, Red Bull has become a media entity that produces and distributes content such as "McConkey," a movie based on the life of professional extreme skier Shane McConkey that’s being released this winter.

On the economic side, Kaumil Gajrawala, UBS Global's managing director for beverages, predicted that the 2013 economic outlook would be "not good, but OK," noting in his presentation that "maybe…OK is good." While there are still considerable challenges ahead, Gajrawala said the economy is "better than you're told it is," and added that historically, the first year of a second-term presidency is the most productive year in Washington.

Things are looking up for the energy products category as a whole. Many products are being marketed on the energy and functional benefits they provide, regardless of whether they specifically fall into the energy product segment, according to David Lockwood, director of consulting for Mintel. He also pointed out that energy drinks are one of the few products that did not decline during the recession. The current drivers behind energy drinks include ultra-clear category positioning; high brand loyalty; their use at all times of the day; market penetration (while slowing, it has not peaked); and further room for growth in the channel. A new study from the Food and Drug Administration shows that the amount of caffeine consumed has not changed -- in other words, consumers have merely changed where they get their caffeine from, Lockwood stated. This can be used as a defense against health concerns that have risen alongside energy product sales, but the court of public opinion needs to be watched, he cautioned.

Although energy drinks are popular and often sought out by consumers, there are things retailers can do to improve their sales, advised James Ford, head of U.S. insights and category development for Red Bull. The need for energy is "universal," he said. Energy drinks are not just consumed by young men, and energy product consumers are racially diverse. Energy growth is coming across all channels, Ford said, as the face of immediate consumption drinks has dramatically changed in recent years. Sales come primarily from single cans, but multipack sales are expected to increase.

Retailers should try to "get into the shopper mindset," said John Showalter, director of category development for Red Bull. Display support can include energy product barrels near the cash register, plus energy products should be placed in heavily-shopped areas for "fill-in" shoppers who are open to adding items to the one or two things they came to purchase.

Energy consumers are more likely to buy on spur of the moment than general consumers, said Rick Oberhofer, director of category development for Red Bull. Additionally, 47 percent of convenience store transactions involve only one item, he said. Retailers can considerably boost profits by getting consumers to add one more item to each transaction, and energy drinks are a good way to do that.

Presenters also discussed the rise and spread of the energy category, and Red Bull specifically, detailing ways in which the brand has and will continue to engage consumers through a variety of unique content. Its digital efforts will remain a focus, as will sporting events and music festivals.

Following the Energy Summit, Red Bull hosted the international team competition night of its Crashed Ice event, during which skaters raced down an icy track in a combination of hockey, boarder-cross and downhill skiing as part of the 2013 Ice Cross Downhill World Championship.