Shots: Small Package, Big Steps

Barely a year ago the alternative shot category – that part that’s not roughly defined as 5-Hour Energy – still looked nascent. With single brand dominance as the long-standing norm, innovative companies had only scratched the surface of the form factor’s potential. But surveying the shot landscape today, particularly in the wake of Natural Products Expo West 2018, the category seems like it just got a jolt of energy – or maybe a mouthful of vinegar.

Today, coffee shots are increasingly positioning themselves as an alternative energy source, while juice and tonic makers are helping consumers find value and new functionality in healthy 2 oz. doses with lines geared toward immunity, vitality, and a natural boost featuring high concentrations of ginger and apple cider vinegar.

COFFEE AT THE CHECKOUT COUNTER

Although founder Neil Premkumar said he believes coffee shots have a long way to go in consumer awareness, his brand Forto has been on a fast track for growth over the past year. Securing investment from JAB Holding Company, distributing through Keurig Dr Pepper (Forto joined prior to DPS’ acquisition), and partnering with Hershey for a co-branded chocolate flavored SKU, the coffee shot line has seen its retail placements rise to more than 40,000 stores over the course of 2017 and the first months of 2018.

“We have spread the brand pretty wide and the sales have really climbed,” Premkumar told BevNET. “We’re kind of building a broader energy shot category. I think over time there’s going to be a completely different side-by-side category of ‘coffee shot.’”

According to Premkumar, Forto’s sales only have 8 percent overlap with energy shot leader 5-Hour Energy. Most of the volume, he said, is coming from cafes and consumers who are seeking a grab-and-go alternative to their afternoon coffee. Like 5-Hour, coffee shots are well positioned for consumers who want the energy but aren’t seeking a larger beverage, but while 5-Hour sourced its base from energy drink consumers, Forto’s base, Premkumar said, comes from the coffee drinkers.

Many coffee drinkers do not want to replace their morning ritual of brewing coffee at home or swinging into Starbucks on their way to work with a quick shot, Premkumar said. But in the afternoon, when consumers’ primary concern is energy, sales shoot up.

“The morning cup is a customized, personalized cup, whereas the afternoon is the pick-me-up,” Premkumar said. “That’s part of why we exploded so quickly.”

Bizzy Coffee co-founder and CEO Alex French also recognized the split between coffee and energy consumers, and has adjusted his company’s strategy accordingly. The startup brand currently offers three different black coffee shots, with line extensions planned for later this year. Currently growing in retail while selling via e-commerce, French said that while afternoon usage is high, he’s also seen many consumers embrace the brand in the morning, particularly among those who get up early to exercise.

Promoting the brand on its website as “Bizzy Coffee for busy people,” French said for one side of the business he’s looking toward the Crossfit/HIIT-loving intensive workout practicing demographic, whom he said doesn’t want a full cup of coffee sloshing around in their stomach during intensive workouts. Other consumers are simply overscheduled, and when running from appointment to appointment they don’t have the time to wait in line at a cafe.

“When you’re up super early, say 4:30 in the morning, you don’t want to spend extra time brewing coffee, you kind of want to just go and get the functional aspect of it,” French said. “The shot category is all about function. Very, very rarely is about anything other than that.”

Party-going millennials and older Gen Z college students are another potential base Bizzy Coffee hopes to tap into, French said. The shots mix well with alcohol – even beer – to insert some extra energy into a night out.

As coffee shots grow, Premkumar said he sees the differentiation between the two categories breaking down, with shots coexisting within the growing coffee market. At Expo West, several coffee brands unveiled shot line extensions, including Kohana Coffee and Sir Owlverick’s. Sir Owlverick’s co-founder Lillard Anthony Wong told BevNET the company wanted to provide a clean energy source for a marketplace that has seen consumers increasingly seek out healthy alternatives to soda and other sugary beverages.

“Ten percent of Americans only drink coffee for caffeine, they don’t sip it for any other reason,” Premkumar said. “That already is tens of millions of people, so there’s a huge market for this. It’s just a question of how you tap into that market.”

JUICE SHOTS FIND VALIDATION

Shots, long a staple of juice bars, are gaining noticeable traction in consumer packaged goods as shoppers begin to embrace on-the-go functionality. Innovation has also poured into the space with brands like California Juice Co. experimenting with trending ingredients like cannabidiol (CBD).

As the juice cleanse trend washes out, JUS by Julie has in the past few years been increasingly focused on its line of cold pressed juice booster shots. Featuring ingredients like chlorophyll, turmeric, and ginger to give consumers the same functional benefits they sought in larger packaged juices without the high sugar content. But for years, buyers rebuffed them. Now, the company says, retailers are getting up to speed.

“Two years ago traditional grocery guys ran by this whole idea,” Mike Robert, VP of sales for EJZ Foods, a division of JUS by Julie parent Dora’s Naturals, told BevNET. “Now they’re slowing down and really looking at it. Suddenly the trend catches on and it becomes a much bigger deal.”

As juice takes off and vinegar trickles into stores, other kinds of wellness shot innovation were on display at Expo West. Notably Zupa Noma plans to debut a line of soup shots, based on its meal replacement drinkable soup line.

Justine Monsul, founder and CEO of ginger and turmeric shot maker Monfefo, told BevNET she feels that buyers are now recognizing the value and potential of the category. Monfefo, which sells at a premium price of $4.99 per 1.7 oz. bottle, has seen increased sales and retail expansion over the past year. While there are still many skeptical consumers, Monsul said she has often compared the product to a shot of alcohol, noting that consumers enjoy the same invigorating shock to the system a shot of tequila might have, but in a healthy product.

“Distributors and stores are now more than happy to take on the product,” Monsul said. “A lot of stores are asking for shots. Despite the fact that there’s a lot more competition out there, it’s cool to see that buyers are recognizing this trend and, at least for me, it’s now a lot easier to start selling the products in more types of stores. I think probably a year from now we’ll be seeing shots in more conventional locations like Target, Costco, or Trader Joe’s.”

FERMENTING OPPORTUNITY

Apple cider vinegar is also beginning to emerge as another potential “health booster.” Brands like Vermont Village, Ethan’s, and Fire Brew are, like juice shots, seeking to provide a spicy kick with added better-for-you benefits. At Expo West, Ginger Shots unveiled a new sub brand – Tulua – which allows the company to play outside of its namesake ingredient with turmeric and apple cider vinegar shots. However, while juice shots are beginning to click with retailers and consumers, vinegar is still figuring out how to introduce itself. According to Ethan’s founder Ethan Hirschberg, the new vinegar trend has momentum but it is young and consumers are learning just how they will integrate it into their daily diets. The shot format, he said, provides opportunity to define multiple use occasions – from having it with breakfast to pre-workout booster.

But Hirschberg sees challenges in establishing the category, calling it a “mini-segment within a segment within a segment” of all-around wellness beverages that requires heavy levels of education and careful positioning in order to make the sale. While apple cider vinegar comes with purported health benefits such as reducing blood sugar levels and aiding in weight loss, companies are still feeling their way through the best way to market the product, particularly when brands such as Ethan’s command a premium price.

“We’re definitely relying on a kombucha-like education within the natural products industry to make this thing go,” Hirschberg said.

Andrew Lawrence, brand manager of Vermont Village, told BevNET that companies are still figuring out where to place shots in stores. While placement at the register seems obvious, there’s room to experiment; he’s tried placing the product in coolers or on the shelf next to multi-serve vinegars.

Vermont Village markets a line of apple cider vinegar shots as well as multi-serve sipping vinegars. Shots, he said, made sense to produce as a way to give the company’s daily vinegar drinkers a travel and convenience option. The company has an “omni-channel” retail strategy for the line, he added, noting potential for growth in c-stores, grocery, and specialty stores.

“The sipping vinegar for us has been like a rocket ship,” Lawrence said. “The shots have been on the same trajectory, but it’s a little bit slower. It’s the customer education part, they’re used to getting apple cider vinegar in a bottle, and so to train and convince them they can have something they actually enjoy in this different format has been really interesting.”