After 5 Hour Who’s Next

Of course, we can easily forgive this lack of awareness when taking a look at the numbers. As of Sept. 7, Living Essentials, the company that markets 5-hour Energy, has secured a market share of 91.4 percent in the energy shot segment, according to IRI, a Chicago-based market research firm. This figure could explain why some of the shot alternatives might feel like newly-hired interns up against Donald Trump.

Yet regardless of consumer consciousness, alternatives do exist in a variety of forms. Natural channel darlings such as Guayaki and TumericAlive have long-term plans to challenge 5-hour Energy in chain retailers. More easily-comprehensible brands such as Tweaker, Stacker 2 and Dream Water have already landed mainstream distribution deals and must now find a way to educate the masses.

“We’re just still trying to make a name for ourselves even though we’re in over 30,000 stores,” said Zonnia Knight, marketing manager for Dream Products, LLC, the company that markets Dream Water.

But no matter the brand or strategy, a set of challenges continues to inhibit the growth of the shot category beyond the clear juggernaut. It remains to be seen if alternative shot brands can overcome the roadblocks of consumer perception, limited resources and 5-hour Energy’s dominance. But at their own pace and in their own way, these brands are making the push.

Guayaki, a provider of yerba maté in loose-leaf and ready-to-drink formats, has established a strong relationship with Whole Foods through exclusive launches of shot products. In January, the brand released its newest shot — Wildberry Reishi Yerba Mate — through an exclusive partnership with the retailer. That product will be available to all other retailers in February 2015. However, Guayaki co-founder David Karr doesn’t expect many mainstream retailers to pick it up, and much of that can be tied to the company’s structure.

Even with its array of maté-centric products, from tea bags and loose-leaf to glass bottles and cans of ready-to-drink beverages, Guayaki remains a small company with only so much interior firepower. Karr said that his sales team has been much more focused on expanding the distribution of its core products, leaving the shots to fend for themselves in the natural channel.

“We’ve never tasked our sales team to get after it and to make those products have wider distribution,” he said.

That’s not the case for Dream Water, a sleep-aid shot that began as an 8 oz. beverage and morphed into a 2.5 oz. shot only after its owners witnessed the rise of 5-hour Energy. Since the product’s rebranding in 2009, Dream Water has landed shelf placements at some of the country’s most prominent retailers – Walmart, Walgreens, CVS and Duane Reade, to name a few. The company’s executives are still working off the category leader’s influence, requesting store operators to place the product near 5-hour Energy and other energy drinks that draw impulse purchases. But unlike those products, Dream Water doesn’t wake you up. Instead, it helps you go to sleep.

5-Hour Energy’s dominance in the category has created an issue of perception for Dream Water. Consumers still associate a shot bottle with energy, Knight said. And when a product offers something other than energy, everyday shoppers struggle to see the value of an instantly-consumed shot that often costs more than a 16 oz. energy drink. She called the feeling a “price shock.”

Part of these issues of perception can be attributed to the companies themselves. Dream Water, like so many other brands in the nascent shot category, is small, privately-owned and new to the industry. And because of the category’s green state, the collection of brands has formed a morass of innovation instead of a widely-known set of competitors with unique functions.

“I’m actually kind of surprised that it’s not a larger category,” Knight said.

Daniel Sullivan, founder of TumericAlive, has a few theories of his own to explain the category’s conflicts. Let’s start with his company’s PurePRANA. In a 3 oz. bottle, it packs ashwagandha, holy basil tulsi, yerba maté, turmeric, ginger, cardamom, spearmint, coconut nectar, coconut oil, lemon, sea salt, black pepper and cinnamon. He said that each of these ingredients work together to optimize the many functions of the shot — optimized oxygen intake, healthy hormone response and a general calming effect, among others. He takes pride in the formulation, but also recognizes the uniqueness of the product in relation to its size.

“There might not be many functional ingredients that fit in that format,” he said.

Standard ingredients in cold-pressed juice products, such beets, carrots or cucumbers, just don’t bring enough value in a 3 oz. shot format. On the other side of the spectrum, you don’t need much turmeric, ginger or black pepper to feel the effects. Sullivan said that the limited number of ingredients that are compatible with this format could explain the category’s slow development.

Another factor to consider: theft. There’s only so much extra space by cash the register, a common location for 5-hour Energy, and these small shot bottles don’t bulge in pockets like a 20 oz. bottle of Coke. PurePRANA has a $4.99 suggested retail price and contains premium ingredients. When shots are located in the aisles, distributors and sales representatives are concerned, he said.

“That was one of the first things that they brought up with me,” Sullivan said.

There’s no shortage of barriers to the shot category, but that hasn’t dissuaded the players. Karr admitted that he doesn’t have big hopes for Guayaki shots in the short term, but he envisions mainstream penetration some time down the road.

With more than enough store presence, Dream Water has prioritized the marketing end of the business. Active on social media and other forms of online marketing, the company has also launched billboard placements in Los Angeles and New York City. “Did you get your 8 hours of sleep? Go buy a Dream Water at [insert nearby store here],” a billboard might read. One of them sits in Times Square. Knight said that the company is targeting high-traffic areas near retailers offering the product.

Sullivan wants to round out TumericAlive’s presence in the natural channel before approaching mainstream retailers in, say, 18 months. But he nonetheless recognizes the promise of the shot category. It’s on trend with its portability and efficiency. And after the top dog, it seems that there’s no clear competition.

“It’s one of those things that’s steadily gaining awareness and traction,” Sullivan said. “It’s still very much in the beginning of where we can take this product.”