No, Bhargava didn’t mean that 5-hour Energy could clean a bicycle chain or remove rust from garden shears. He was referring to his belief that both WD-40 and 5-hour Energy are synonymous with the space in which they operate. Each has competitors, but Bhargava claimed that “to be a category, there have to be at least two relatively major players.” And among energy shot brands, there’s 5-hour and there’s everyone else, he noted.
Things haven’t changed much since then. Today, 5-hour Energy products comprise nearly 91 percent of all energy shots sold in the U.S., with approximately $1.05 billion in sales over a 52-week period ending on Nov. 1, according to market research firm IRI. By comparison, Stacker 2, the closest competitor to 5-hour, did nearly $39 million in sales during the timeframe.
Meanwhile, SK Energy, which launched in 2011 and was hailed as a possible challenger brand to 5-hour, folded last year, despite millions of dollars in investment and the backing of rapper and actor 50 Cent. The big energy drink companies all went for it, with products from Red Bull, Monster, NOS, and Rockstar all rising and falling in short order. And it’s not just well-capitalized brands that have struggled to compete with 5-hour. Dozens of other entrepreneurial-launched energy shots have come and gone, overwhelmed by 5-hour’s distribution clout and brand recognition.
Nevertheless, entrepreneurs continue to enter the space, armed with innovative, better-for-you variations on the standard ingredients. Focused on health and wellness, new brands are leading with natural formulations and trendy ingredients and concepts, such as moringa and cold brew coffee, as way to reach new and existing energy shot consumers. At the same time, a growing number of cold-pressed juice makers are launching shot line extensions, some of which promote an energy component derived from vitamin-rich ingredients.
The Coffee Approach
A former branding and marketing executive, Neel Premkumar is the founder of Stur, a natural drink mix brand, which he launched in 2012. Later that year his wife gave birth to twin daughters, and, like many new parents, they found themselves exhausted trying to balance work and home life. He became a regular consumer of energy shots, and often wondered why there was no high-quality coffee-based version on the market. For Premkumar, the idea seemed intuitive and simple.
What he’s learned, however, is that packaging and production are a time-consuming and costly process. No matter how well-positioned the alternatives might be – and he’s captured the imagination of some of the right people, including “Beverage Whisperer” Ken Sadowsky, an investor in the brand – building it has cost time and money.
“We spent a lot of money early on getting the packaging right,” Premkumar said. “Handling aseptic and retort production with a small, custom package was a financial hurdle.”
After two years of trial and error, Premkumar launched Forto in 2015. Made with a base of cold brew Fair Trade-certified coffee and blended with milk, Forto is fortified with added caffeine from green coffee beans. The shots are shelf-stable and packaged in patented 2 oz. bottles that are shaped like a disposable coffee cup topped with a lid. Available in Espresso, Mocha, Caramel and Vanilla varieties, Forto is USDA certified organic, something that Premkumar views as an edge over competing products, particularly as consumers grow increasingly wary of artificial additives.
Each shot contains 200 mg of caffeine per bottle, a level that presented “taste challenges” early on. However a recent reformulation has improved Forto’s flavor, Premkumar said. The revised liquid also came with a label revamp intended to better position Forto as an energy shot brand. “Forto Strong Coffee” and a “Drink To Go,” have been replaced by “Forto Coffee” and a “2X Energy Shot” on product labels.
Sold in over 12,000 stores nationwide, Forto shots are distributed at at a range of convenience, grocery and drug stores, including Casey’s, Sheetz, Circle K, Albertsons, Publix and Rite-Aid. The brand is also available at Hudson News locations at airports across the U.S., Gold’s Gym, and Barnes & Noble book stores.
Forto is most commonly merchandised in front-of-store displays and often shares shelf space with 5-hour Energy shots, Premkumar said. The brand’s miniature coffee cup package has been a critical point of differentiation for Forto, yet it’s familiar enough so that at “a glance most consumers can identify” that it’s a coffee-based energy shot. Moreover, the package and brand proposition has induced trial among regular coffee drinkers and, for some, become part of their daily routine.
“We really bring a whole new consumer into the category,” Premkumar said. “Someone who is typically drinking coffee in the morning… and this is a to-go cup in the afternoon.”
The Superfood Energy Shot
For one new superfood shot, the opportunity might lie with the “mommy demographic.”
Moringa, a relative newcomer to the superfood scene, is a nutrient-rich leaf lauded for its anti-inflammatory and antioxidant properties. Kuli Kuli is one of a handful of U.S. companies that market moringa-based products. Kuli Kuli partnered with Whole Foods Market and the Clinton Foundation – the latter supporting the company’s mission-based sourcing initiatives – to develop a line of shots, which also contain green tea extract and are packaged in 2.5 oz. bottles.
Described as “a cross between a green smoothie and an energy drink, with the health and energizing benefits of both,” the shots contain the caffeine equivalent of a cup of coffee and five grams of sugar. The line comes in three flavor varieties – Coconut Lime, Ginger Lemon and Raspberry. They are carried by Whole Foods in all of its locations nationwide and also sold at H-E-B stores in a Texas and number of independent natural food chains across the U.S.
Popelka believes there is significant opportunity to expand distribution of Kuli Kuli shots into mainstream retail channels, as more consumers, particularly millennial-aged mothers, seek out clean energy products. She cited a report on the energy shot category prepared by market research company Mintel, which found that women with children are significantly more likely to drink energy shots than men and women without kids. The reason? Mothers are thinking about their health and longevity and opting for more natural choices, Popelka said.
“The ingredient deck [for Kuli Kuli] is incredibly simple and straightforward,” she said. “Consumers have commented on how there’s ‘nothing scary’ or unknown in the product unlike more conventional energy shots.”
However, Popelka conceded that moringa is relatively unknown in the U.S. To that end, Kuli Kuli’s marketing efforts are primarily focused on educating consumers about the benefits of moringa. The company has found some traction by comparing it to more established plant-based ingredients and promoting the shot format’s convenient delivery method for nutrition and energy.
“The nice thing about the shot is it’s a quick, easy, and efficient way to get your greens and a caffeine boost,” Popelka said. “It’s like a wheatgrass shot and espresso shot in one.”
Amid a maturing and crowded category for cold-pressed juice, some suppliers have turned to shots as a way to take advantage of growing consumer demand for on-the-go and healthy energy as well as to extend their presence on shelf. They also see opportunity in consumers who are fine-tuning their approach to nutrition.
“Product knowledge is just becoming increasingly high,” said Christel MacLean, the co-founder of Saratoga Juice Bar. “So when people want to get that pick-me-up for their workout, they know what they’re adding and why.”
She noted that as more consumers become sophisticated about potent and nutrient-dense ingredients like turmeric, many are turning to the shot format as a standalone energy boost throughout different parts of the day.
Which is why Saratoga Juice Bar, which has produced and sold juice shots at its retail store in upstate New York since its launch in 2013, introduced a wholesale line of 2 oz. shots as a complement to the flagship bottled juices it began distributing last year. The shots are sold at natural and speciality retailers, including Wegmans, in five states along the East Coast, as well as some gyms and college campuses near Saratoga.
Sold individually and in 6-pack cartons, the products require refrigeration and are most often merchandised along with cold-pressed juices and in grab-and-go coolers, according to Saratoga’s National Sales Manager Shawn Wilbur. Although the shots have only been on the market for a few months, Wilbur said that they have been extremely well received by Saratoga’s retail partners and consumers, and claimed that company “can’t make them quickly enough.”
The early success has spurred interest among grocery store chains – and beyond. Saratoga is currently in talks with a handful of large convenience and drug retailers, Wilbur said. He noted that along with rising demand for healthier shots, the products offer higher margins than other juice products and take up a fraction of the shelf space.
“The shots open up doors where big bottles of cold-pressed juice weren’t able to get into,” Wilbur said. “It gives us a lot more opportunity to get our brand out there.”