Worth a Shot

Size matters. The wizardry of the shot category has always been that it took a billion-dollar category, the energy drink, and created another billion-dollar form factor out of it in a 2 oz. package.

By reducing an energy drink to its essential function – and doing so with a well-executed first-mover advantage – 5-Hour Energy has made a billionaire of its owner and created a way for millions of people to have a new option for getting their caffeine.

The growth of the brand quickly seeded a pile of copycat brands, none of which have been able to grab any kind of long-term piece of the market, no matter if they were coming from established companies or new ones.

But that doesn’t mean that beverage companies aren’t still intrigued by the higher margins and lower shipping costs of the format. No matter how hackneyed a play the copycat energy shot might be, there are plenty of brand owners tinkering with the possibility that they can extend their platform into pocket sized bottles.

shotsSeeing products go small, however, has different meanings in different categories. As other shot companies have proven, a small package doesn’t necessarily equal a big bite of the market. Companies remain intrigued because the shot signifies the opportunity to spread a brand and its specific function more widely in a much smaller space, but brand owners need to be aware of the limitations as well.

One of the latest developments is the migration of the format to newer, higher-margin functional products. Entering store shelves late this year and earlier next are shots based on such high-growth categories as high pressure processed (HPP) juices and cold-brewed coffee. They join other functional products like probiotics and pain relievers as ways to take the package in a new direction and change the face of the category from the stereotypical trucker grabbing a 5-hour Energy at the register.

Brooklyn-based juicery Jus by Julie, for example, is rolling out its line of 1 oz. “Booster Shots” at Whole Foods as part the brand’s plans to expand beyond its three brick and mortar locations and direct-to-consumer online shop. Other juice bar chains like Project Juice and Pressed Juicery are also dabbling in the wellness shots space, but Jus by Julie’s entry marks the first time such a product has been available in the grocery channel.

“We’re the first to market with such a product,” says company co-founder Alan Maleh. “We saw people were looking for these functional benefits in a smaller, on-the-go format.”

Having Jus by Julie’s larger format juices go head to head with the cold-pressed outfits occupying the Whole Foods cooler would have been daunting enough, but the task at hand, of introducing a new shot type into the natural channel might be even more daunting. That’s because the liquid itself requires a switch from traditional shot merchandising. 5-Hour’s made its moolah as an at-register, impulse purchase – but the required refrigeration of a beverage shot like Jus by Julie’s presents an uphill battle from the get-go.

Still, being first to the store could be a big advantage. And while there might not be a defined planogram for refrigerated juice shots, there are other cold entries: upon Jus by Julie’s entry into the grocer, Maleh found that several stores were stocking the booster shots in the dairy aisle, next to the likes of probiotic beverage brand Goodbelly’s range of shots.

Maleh’s first choice might not be the dairy aisle, but Goodbelly – similarly packaged in 4-packs – is an example of brand that’s been able to thrive in the space, despite some of the aforementioned issues. Powered by consumers’ continued interest in probiotics, Goodbelly’s also been able to make the leap from the natural channel to more conventional grocery outlets in recent years.

“After a little bit of confusion of whether it was a yogurt product or something else, people started to understand it,” says Goodbelly’s CEO Alan Murray. “People are looking to get their probiotics in different formats.”

The number one selling shot in the natural channel belongs to yerba mate beverage brand Guayaki, which introduced the first all-organic beverage shot in 2009 at Whole Foods. Positioned as the 5-Hour equivalent for the health conscious customer, Guayaki’s shot line extension has had a nice long run at Whole Foods since, having a leg up on new entrants by  being a line extension of an existing successful beverage brand.

“For us, our brand was already growing and popular and so the shot rode that wave of people that already liked our products, and now they had another option for different usage occasions,” says Guayaki co-founder David Karr.

Other shots are still finding their footing in the channel. Daniel Sullivan, the founder and CEO of Temple Turmeric, says the shots space is an ever-evolving category. Recently his brand’s 3 oz. Pure Prana Energy Shots migrated out of Whole Foods’ grocery department into its Whole Body section, which Sullivan says has its pros and cons.

“Most people that shop for turmeric are going into that section of the store, so now I have an opportunity to direct those consumers to a drinkable solution instead of pills,” he says. “But we’ve also had to decentralize our product line.”

Food and beverage industry consultant Eric Schnell is familiar with the challenges of the segment. As the co-founder of green tea-based beverage brand Steaz, Schnell saw his company’s energy shot line extension come and go. Today he continues to fight in the space with I AM, a shot brand that markets a four SKU line of liquid supplements boasting a range of functionalities, from focus, to mood enhancement, to energy to sleep aid. But he’s cognizant of the potential limitations of the space.

“If you’re an entrepreneur entering the natural beverage shot category you need to be introducing a product that’s very unique and very disruptive,” says Schnell. “It needs to be something that hasn’t been done before.”