Fast Growth For Light Energy Heavyweights

Steve Haley, the founder of Celsius, which had, up until recently, been termed the “calorie burning drink” was talking about a change in direction.

Haley admitted he’d spent a lot of time and money trying to position Celsius properly in stores and in the minds of consumers, but that after years of trying to avoid having it be defined as an energy drink, he was now ready to embrace that designation. Which kind of makes sense, as the product has zero calories and about 200 milligrams of caffeine. Letting consumers know that his product wasn’t just a fat-burner, but was also a workout partner and a zero-calorie energy drink, a product with a purpose for their everyday lives, he decided, just made sense.

Haley wasn’t the only attendee of the Coast Brands summit unafraid to identify as a zero calorie energy drink. In fact, there seem to be new advantages in being identified as an energy drink that is only zero-calorie, or mainly low calorie, rather than having the low calorie option be served as a mere line extension.

Distributors liked Haley’s message: Celsius is moving into chains across California, powered by Coast Brands’ ability to engage retailers and distributors for products that the organization believes has reached a critical stage in development, where the capital and potential are there for brands, if only the proper connections can be made.

But Celsius isn’t the only low-calorie energy brand making that connection. Xyience is another zero-calorie energy drink that is hitting its stride, ramping up sales in a big way nationally on the back of its association with the rough-and-tumble world of mixed martial arts.

“I can’t say enough about Xyience,” said Mark Miller of Hensley Distribution in Arizona. “We expect it to do 200,000 cases this year.”

That’s a massive increase for a company that a few years ago teetered on the verge of colapse, but new leadership and a streamlined focus have turned Xyience into one of the energy drinks that distributors who have lost their connections to Rockstar, Monster and Red Bull turn to for a powerhouse in the category.

“We’re doing great with it,” said Satwant “Sam” Gill of 5 Star Beverage in San Diego, with a smile that distributors only flash when the cases are flying.

How has that happened with energy drinks, a category that has always stood for more – as in more caffeine, more sugar, more product, more packaging? It’s because the low calorie brands are specializing – they have grown not just as companions to their core brands but as useful parts of their own category. They aren’t identified just as a way to avoid getting fat, but in fact as a way to help consumers get fit. Both Celsius and Xyience have a strong presence in the gym and nutritional supplement shop channels. And while they have had to share that space with other thermogenic products like Redline or even more extreme workout-type products, Celsius and Xyience have been more successful in straddling those channels and mainstream retail.

When compared to edgier gym products, both have pulled off another coup by improving their flavor profiles to the point where consumers aren’t afraid to guzzle them even when they aren’t working out. That focus on flavor has broadened the potential for other usage occasions to the point where multipacks and mainstream distribution channels make more sense than they might have in the past.

Since both products are strong in convenience channels – especially Xyience – the increased availability has resulted in increased usage.

While those two products are creating standout opportunities for retailers and distributors to develop alternative sources of revenue to the big three, they also represent just a couple of the brands that are developing viable low calorie options for beverage sellers. A pair of other energy drink brands presenting at the Coast event demonstrated a focus on their low-calorie versions that was equal to their full-calorie lines.

For example, recently-revived Kronik energy held off on the reintroduction of its three flavors until “we could get the flavor on the low-calorie right – we don’t want our low-carb drinkers to feel like they’re making a compromise,” said John Gaston, the company’s president.

Meanwhile, HER energy, a female-focused product, sells more than twice as much of its 10-calorie, low-carb line as its full-calorie lemonade flavored energy drink. And it shows a focus on its consumers that seems to be as potent in its own way as Xyience and Celsius are toward workouts. The makers of HER have decreased the caffeine content of their products while pursuing affiliations with women’s charities and causes, and as a result the product is finally gaining traction after a few years of floundering. Again, with Coast brands’ help it is spreading rapidly in the West, but owner Brett Jacobson says he does feel like that’s also because marketing and promotional efforts are starting to register with consumers as well.

So what does seem to be working is the use of light energy as a way to separate a product from the mass of what is now a fairly mature category. Either by having the lightness be a part of the product’s reason for being – i.e. a workout product or one with a specific demographic focus (and yes, that works both ways, as the guys drinking Coke Zero will attest) – or by pushing flavor to the forefront. In fact, Celsius will be debuting a new set of products with sweetener-of-the-moment Stevia in the near future to combine all of those attributes in the natural channel, as well.

The bigger companies have noticed that lighter products are one of the few ways to attract and retain new consumers in the category, as well – Monster’s new products, for example, have featured introductions of low-calorie alternatives to growing product lines like Import and Java Monster rather than just new flavors. That kind of staging allows the diet product to stand on its own as a viable new introduction.

And those diet alternatives aren’t something that larger companies have just become aware of – sugar free Red Bull and zero-calorie Rockstar have long had adherents that encompass energy drink fans who can’t handle the extra calories any longer. But the new generation of Celsius and Xyience seems to be intent on succeeding as part of a group of products whose absence of calories is just part of their nature. And in a category that has long been the poster-child for me-tooism, that dogged independence seems to have been the catalyst for their newfound growth. •