5-hour’s Unconventional Consumption Strategy

5-hour unhappy

A clip from 5-hour’s Yummification TV commercial.

The television ad begins with a series of queasy and uncomfortable looking people, each of whom appear to have just consumed something rather unpleasant.

A voiceover intones: “For those who still find the taste of 5-hour Energy a little… strong… don’t miss the 5-hour Energy $100,000 Yummification contest!”

It was, like most 5-hour Energy commercials, a bit of an oddball spot, framed as if shot by a crusty cable access producer whose best days — if there were any to be had — were last seen in 1982. What was markedly different about this ad, however, was 5-hour’s admission that, for some, the product’s consumption is sometimes limited by its taste.

Launched in July, the “Yummification” campaign was primarily a call to current customers to consider other consumption occasions for the energy shot by using it a blending ingredient, a practice that many have already embraced. Living Essentials, the parent company of 5-hour, asked viewers to submit a video detailing the creation of their blended beverages, offering cash prizes of up to $50,000.

“We’ve known for a long time that people are mixing 5-hour Energy with their favorite beverages to create something they really enjoy, and we hope this contest encourages others to do the same,” Manoj Bhargava, founder and CEO of Living Essentials, said in a statement.

However, it was also an attempt to reconnect with those once-and-only-once consumers, as well as to address the trepidation of others by asking them to mix the energy shot with any non-alcoholic beverage. The rationale: by diluting what some describe as the medicinal taste of 5-hour, consumers would be better able to enjoy the functional benefit, that of a caffeinated energy boost.

“I think it’s interesting because they’re embracing what is a perceived weakness and offering a solution instead of ignoring it,” said Thomas O’Connell, a founding partner at Heart, a Boston-based creative agency. “That solution is, [5-hour] may not be straight up for you, but as part of a concoction, it can play an interesting role.”

O’Connell pointed to Living Essentials’ promotion of 5-hour as an energy-infuser — as opposed to a stand-alone product — as one that could open the door to greater brand appeal, particularly in world where customization is increasingly important to consumers.

“They continue to play up that value, but understand and allow it to be sort of ‘made to fit you,’ which is [about] viewing the product as an ingredient versus the end goal,” he said. “It’s a really interesting strategy that allows it to be open to consumer interpretation and allows people to play with the brand and fix it against flavor profiles that may work best for them.”

Yet while the Yummification campaign was one piece of a strategy to build upon an already billion-dollar business, a question remains: can 5-hour find any more buyers than it already has?

There’s no question that since pioneering the category a decade ago, 5-hour has dominated the energy shot category. The brand owns over 92 percent of the market, according to recent sales data provided by IRI, a Chicago-based market research firm. The numbers showed 5-hour reaching $1.07 billion in dollar sales over the 52 weeks ending on July 13, 2014; Living Essentials sold nearly 285 million of its 1.93 oz. shots in that time, or about 781,000 bottles per day. Mind-boggling numbers for sure, but like any company operating within a capitalist-driven economy, Living Essentials is looking for more.

Demand for the supplement seems to have plateaued in recent years, and while 5-hour is one of the tiny set of energy brands that can boast annual U.S. retail sales of $1 billion or more, Living Essentials has felt a steady decline in revenue at traditional outlets. Sales of 5-hour slid by 4.16 percent in the aforementioned year-long period, following a 7.43 percent plunge in a comparable 52-week timeframe ending on Aug. 11, 2013.

Aiming to expand its consumer base (and by extension, sales), Living Essentials has focused some of its marketing efforts on what it believes to be untapped demographics in woman and senior citizens. Over the last three years, the company has made strides to reach both consumer sets: it hands out samples of 5-hour at AARP conventions and places ads in the organization’s magazine, and found rapid success with a pink lemonade flavor that was designed to win over female customers.

5-hourThe company also leans on the countertop-friendly size of 12-pack displays– a big part of its growth at convenience stores — as a way to take advantage of unconventional retail opportunities for beverages. 5-hour Energy was notably featured in the popular meth-addled drama “Breaking Bad”: the energy shots were sold in protagonist Walter White’s car wash.

Speaking at the recently held National Association of Convenience Stores (NACS) show, Brandon Bohland, a special markets manager at Living Essentials, told BevNET that the company has looked to placement of 5-hour at places like bowling alleys, golf courses, cruise ships and even auto parts stores as a way to reach new consumers.

And unlike traditional energy drinks, the relatively diminutive size and weight of the products creates a seemingly endless range of distribution and retail possibilities; Bohland pointed to the placement of 5-hour at an outpost near the top of a volcano as evidence of the brand’s versatility.

With 200 grams of caffeine infused into each bottle, 5-hour is simply about reaching the “average person that needs to get through their day,” Bohland said.

Nevertheless, it’s clear that the taste of the flagship 5-hour product has been one of the biggest impediments to new sales of the brand. The company acknowledged as much with its Yummification campaign, and though Living Essentials markets a range of flavors intended to appeal to wide market of consumers, Bohland noted that most retailers only carry one or a few of the varieties.

Where selection is lacking, Bohland said that mixing 5-hour with other drinks is often a popular way of consuming the product, and appears to be one of the simplest ways to address the taste issue. And even when flavor variety is plentiful, mixing is embraced; at the NACS show, Bohland noted that many attendees of the event would pass by the 5-hour booth, pick up a shot and pour it into a bottle of water.

The Yummification contest ended at the end of August and, though successful in the eyes of the company, it’s likely that it won’t be brought back for a second run, Bohland said. Commercials promoting the winning formulations are, however, still playing on television, and at a glance, one might think that Living Essentials is creeping into the category of liquid water enhancers, as it promotes MiO-like usage of the product (at least in terms of function).

Yet when asked if the company views 5-hour as a brand now playing in the segment dominated by MiO, which markets an energy sub-line, Melissa Skabich, the director of communications for 5-hour, slammed the door shut.

“5-hour Energy is the leader of the energy shot category and doesn’t compete in the same space as liquid water enhancers,” Skabich said.