and Jeff Klineman
One of the most powerful forces in the beverage industry this week declared that products in the rapidly-expanding 4 oz. or less shot market are not beverages.
The decision means, in a sense, that energy shots, whose sales are expected to approach $1 billion this year, have arrived as a product category and not simply a derivative of energy drinks. They will no longer have to share the floor of the NACS Show with beverages – instead residing in the Health and Beauty Care section – and therefore will not, in most instances, be fighting it out with energy drinks for attention and budget share from beverage buyers. Most energy shots are not distributed by beverage wholesalers, although that is changing, as large beverage companies have been jumping into the energy shot game.
It was a battle that had spilled off the floor of the most recent NACS Show and into a courtroom in North Carolina, where category leader Living Essentials, which produces 5-Hour Energy, had filed suit to prevent the association from classifying the shots as beverages.
Carl Sperber, communications director for Living Essentials, said NACS’ decision comes as part of a settlement of that suit.
“NACS had the intent to categorize 2 oz. energy shots as beverages, which we found very alarming for a number of reasons,” Sperber said.
Shots and beverages are inherently different, Sperber said. The core purpose of a beverage – barring any other functional properties it may have – is to refresh the drinker. Shots, on the other hand, are not meant as refreshments, merely as small, liquid delivery systems for functional ingredients.
Sperber said the company feared that if NACS classified shots as beverages, stores might treat them as such and confuse consumers.
“What if someone did take some 5 Hour Energy because they were thirsty and took too much of it?” Sperber asked.
The association, which held its annual trade show in Chicago Oct. 4-7, responded to requests for comment by referring back to the organization’s press release. The release said that the group decided on the new energy shot subcategory “after requesting, obtaining and processing input of key industry stakeholders.”
“The general consensus was that energy shots belong in Health and Beauty Care,” the release said.