Innovation Ventures LLC, the manufacturer of 5-Hour Energy, is planning a major expansion that includes broader sales and marketing initiatives, new product lines, export to international markets, and a third manufacturing and distribution facility, according to a recent article in Forbes. The company has created a new offering for $400 million in notes to fund the expansion of the 5-Hour Energy brand.
5-Hour is unquestionably the dominant player in the energy shot category with roughly $600 million in sales in 2011 and a 90 percent share of the category. Innovation Ventures is selling approximately 1.4 million bottles of 5-Hour every day and has averaged a gross profit margin of 80 percent from 2007 through 2011.
While 5-Hour has successfully fought off competitive efforts by major beverage companies including the Coca-Cola Co. Inc., Monster Beverage, and Red Bull, the company is not resting on its heels. Its expansion plans appear to be rooted in the expectations for continued growth of the energy shot category, one that Mintel, a global research firm, projects to reach $2.5 billion in sales by 2016. 5-Hour will attempt to “broaden the scope of our marketing to reach more diverse demographics,” according to documents on the $400 million note offering, including new efforts to reach female consumers.
You can read the full article from Forbes here.