Music, Fashion…and Now Beverage
A BevNET Chat With Russell Simmons

Russell Simmons doesn't want to be number 2

@@img1 NEW YORK, NY – JULY 21 — “Forget about number two, we want to be number one,” Russell Simmons exclaimed with a confident smile. Fielding BevNET’s questions in his penthouse office in the heart of Manhattan’s garment district, Russell laid out his vision for the newly launched DEFCON 3. “We’re the smart energy soda for Generation E.”

When it comes to vision, Russell Simmons has never been shortsighted. Known as the “Godfather of Hip Hop”, Russell founded Def Jam Recordings, a pioneering label that introduced early rap acts such as Run DMC and LL Cool J. Through his privately owned conglomerate Rush Communications, Russell’s hip hop empire has expanded to include clothing lines (Phat Farm and Baby Phat), a movie production house (Def Films), television show (“Def Comedy Jam”), a magazine (Oneworld) and an prepaid debit card (Rush Debit Card).

Competing in a category crowded with over 150 products in the US alone, DEFCON 3 has managed to differentiate itself from other energy drinks. For one, Simmons and team headed by VP Marketing Jennifer Louie, are quick to point out that DEFCON 3 is not just another energy drink, but an energy soda. The 12 oz. silver and blue can certainly doesn’t resemble the vast majority of 8.4 oz energy drinks that are associated with the category. However, the suggested retail after tax retail price at 7-Eleven of $2.40 certainly puts DEFCON 3 in the neighborhood of energy drinks. The drink is in 95% of 7-Elevens stores throughout the country. Following a 60-day exclusive period with 7-Eleven, the company plans to expand its presence to other retailers.

Another novel aspect of the soda is its commitment to the urban youth community. Stated on each can is the promise “A portion of the proceeds of DEFCON 3 goes back to the communities for building, restoring and enhancing peoples lives. Energize yourself and empower your community by drinking a healthier, smart energy drink that gives back.” Russell informed us that 2% of the soda’s gross proceeds will be channeled to his ongoing urban youth outreach program Hip Hop Summit Action Network (HSAN). Through it’s gatherings in major cities throughout the country, HSAN works inform young people on issues related to equal access to high quality public education and literacy, freedom of speech, voter education, economic advancement, and youth leadership development. HSAN is run by former NAACP executive director, Reverend Benjamin Chavis.

@@img2 If Simmons wants DEFCON 3 to be number one in the realm of energy beverages he certainly has a long road ahead. But then again DEFCON 3 is in a very unique position. The product has behind it an experienced marketing team that understands how to leverage Simmon’s unique reputation and position in the hip hop community. Where other Softdrink companies spend money sponsoring field promotion such as concerts, DEFCON 3 can simply attach its name to existing events produced by Rush Communications. And the cross promotional synergies don’t end there. Simmons told us that he is seriously looking into having a DefJam artist perform a song call DEFCON 3.

In its promotions, the company is targeting 18-35 year olds. Its brand mantra is “Energize, Empower, Excel”, an appropriately alliterative slogan considering its target audience, Generation E. The company defines Generation E as mulit-demographic segment bound together by its appreciation of hip hop culture.

It’s far too early to assess the performance of DEFCON 3 in the market. As of late July, the DEFCON 3 marketing team has held promotions in New York, DC, Dallas, San Francisco, Los Angeles, Miami, Detroit, Las Vegas, Sacramento, San Diego. Promotions will include: heavy radio endorsements; street presence at 7-11 stores; signature, trend setting events such as summer jams, black expos; and exclusive events such as SuperBowl parties, NBA parties, fashion events and Hamptons parties. In addition to DEFCON 3, Russell added that the company is planning to extend its beverage portfolio in the near future to possibly include coffee drinks and a vitamin/sports water series.

BevNET views DEFCON 3 and the Russell Simmons Beverage Company as a welcome addition to beverage industry. The drink will be among the many considered for inclusion in our forthcoming TOP TEN ENERGY DRINKS list, and the company will certainly be discussed in further detail in our market research report ENERGY DRINKS 2003. Both the TOP TEN list and the report are due out September 1.